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HomeMy WebLinkAboutCOM 0625.001 1998-2000 Law Offices Of STEVEN D. STRAUSS P.O. Box 11517, Hilo, Hawaii 96721 Telephone: (808) 969-6684/Facsimile: (808) 934-8898 VIA FACSIMILE and U.S. MAIL 961-8622 December 27, 1999 RECEIVED Steven K. Christensen, Esq. nma.._._ ~y__....._..__._:., Deputy Corporation Counsel oara___..__'j? Office of the Corporation Counsel county Council,f..--- 101 Aupuni Street, Suite 325 Hilo, Hawaii 96720-4262 Re: Roger Christie, et al. v. G. Kay Iopa, et al. Civil No. 95-1026 DAE Deaz Mr. Christensen: Pursuant to the scheduling conference order filed August 19, 1999, Plaintiff Anderson has authorized me to make the following settlement offer. In exchaz oe for Defendants' joint and several payment of $ 500,000.00 to Plaintiff Anderson, Plaintiff Anderson will dismiss and release his claims against Defendants, including State law claims. This offer expires upon the conclusion of the settlement conference scheduled for January 7, 2000. For Defendants' information, Plaintiff Anderson's attorney's fees to date total $ 178,000.00. As required by the scheduling order, I propose that we meet and confer January 3, 2000 at 1:00 p.m. I am willing to come to your office. I look forwazd to your response. Very truly yours, Steven D. Strauss cc: ErnestAazonAnderson Comm. Na_ 2Jr• ~~I File No. CSR Ref. To: ~ Co unlCl~ Ref. Date FEB 0 2 2000 Law Offices Of STEVEN D. STRAUSS P.O. Box 11517, Hilo, Hawaii 96721 Telephone: (808) 969-6684/Facsimile: (808) 934-8898 February 24, 1998 Steven K. Christensen, Esq. Deputy Corporation Counsel Office of the Corporation Counsel 101 Aupuni Street, Suite 325 Hilo, Hawaii 96720-4262 Re: Roger Christie, et al. v. G. Kav Iopa, et al. Civil No. 95-1026 DAE Deaz Mr. Christensen: It has come to my attention that Plaintiffs' written settlement demand October 7, 1996 may never have been communicated to your client. Please confirm that, consistent with your responsibilities under Hawaii Rules of Professional Conduct Rule 1.4(a), such settlement demand was brought to the attention of the County Council for consideration. Please provide me the date of all executive sessions in which such settlement demand was considered. Regazding the demand itself, please be advised that my estimate of attorney's fees is now $ 150,000.00 through trial. Costs aze estimated at $ 25,000.00. Thank you for your attention to this matter. I look forward to your response at your earliest convenience. Very truly yours, Steven D. Strauss cc: clients Leonard Licht, Ph.D., M.P.H. Hilo Lagoon Center 101 Aupuni Street, Suite 118 Hilo, Hawaii 96720 (808) 935-9000 This report is for Ernest Aaron Anderson at the request of Steven D. Strauss, Esq. Basis for Oainion Mr. Anderson has been under my care and treatment from February 15, 1995 to present, receiving individual psychotherapy approximately once per month. My opinion is based on my clinical observations of Mr. Anderson and the information reported to me by him. Personal and Social History Mr. Anderson was born June15, 1937 and raised in Seattle, Washington. He has one brother, Paul, still living. Mr. Anderson currently lives in the j District of Puna, County of Hawaii. Mr. Anderson has two grown sons. Mr. Anderson has design experience in the building field and has held contractor's licenses in Oregon and Washington. Past Medical History Mr. Anderson reports a back injury dating from his mid-twenties. His back injury seems aggravated by stress and worry resulting from his criminal prosecution. He reports no other significant medical history. Psychological History and Current Mental and Emotional Condition Mr. Anderson denies having any significant prior histary of psychiatric illness, hospitalization or treatment. His primary diagnosis is depression with some features of post-traumatic stress disorder such as sleep disturbances and occasional panic attacks. During his course of treatment with me, I understand that Mr. Anderson has been under felony indictment for purchase of sterilized hemp seeds. i Mr. Anderson is a well known community activist and political candidate working toward legalization of marijuana. His back injury seems aggravated by stress and worry resulting from his criminal prosecution. Mr. Anderson's depression results from what he feels are continuing violations of his civil rights. His criminal prosecution has caused him to be alienated from former friends and associates. He reports his ability to market hemp-based foods and other products is likewise impaired by his prosecution, all contributing to his depression. He displays recurring fears and worries of further prosecution. DSM IV mental conditions of Mr. Anderson are: AXIS I: Dysthymic Disorder AXIS II: None AXIS III: Chronic Back Injury AXIS IV: Vocational and Legal Problems AXIS V: 56, 58 Witness Qualifications and Publications See attached VITA. Compensation My fees for preparation of this report and for testimony at trial are: $ 250.00 per hour, plus expenses. Other Expert Testimonv I have not testified as a psychological expert within the last four years. Date: ~ - "Z 4 - C~ E'~ i , ~ ~ z c ~ ~ 7 Leonard Licht, Ph.D 2 Law Offices Of STEVEN D. STItAUSS Y.O. 13ox 11517, Milo, Ilawai'i 96721 Telephone: (808) 969-GG84/facsimile: (808) 934-8898 i+ E:. October 7, 1996 Steven K. Christensen, Esq. Deputy Corporation Counsel Office of the Corporation Counsel 101 Aupuni Street, Suite 325 I-(ilo, Hawaii 96720-4262 Re: Roger Christie et al v G Kay lopa. et al. Civil No. 95-1026 DAE Dear Mr. Clnistensen: Pursuant to the scheduling order operative in the above-referenced case, Plaintiffs submit this settlement demand. Plaintiffs make their demand pursuant to Rule 408, Federal Rules of Evidence in an effort to compromise claims disputed as to validity and amount. Plaintiffs' settlement demand is open through the settlement conference scheduled for October 28, 1996. Due to a felony trial, State v. Robert I31as, Cr. No. 93-440, continued after mistrial to October 28, 1996, [may require a continuance of the settlement conference date. I have sought confirmation from the prosecutors office concerning the likelihood that trial recommence as scheduled. I anticipate I will be able to determine whether a continuance is necessary by October 18, 1996. Facts For many years, Hawaii County residents have purchased bulk hemp seeds from local businesses, including Miranda Country Store, Aikane Ranch Supply and others. [3ird food and other products containing hemp seed have been and continue to be sold at Long's Drug Stores, Woolworth's and other local businesses. Plaintiffs Christie and Anderson are advocates for the promotion of currently lawfid uses of the hemp plant, cnnncrbia .arlircr, and its parts. Since at least 1990, Plaintiffs Roger Christie and Ernest Aaron Anderson have actively worked for expansion of hemp products as food, textiles, biomass and diversified agriculture in Hawaii Cowriy. Plaintiffs Christie and Anderson have also publicly advocated the decriminalization of marijuana possession and the complete legalization of marijuana. October 7, 1996 Steven K. Christensen, Csq. Pagc 2 Plaintiff Christie's work and advocacy for the commercial use of the various components ofthe hemp plant as food, textiles, and medicine began in February, 1987. Plaintiffs Christie and Anderson have written numerous published articles, advertisenrents, letters, including published letters to newspaper editors, and stories concerning the hemp plant and its uses. Moreover, Plaintiffs Christie and Anderson and their hemp advocacy work have been the subject of numerous articles and published interviews. F3oth Plaintiffs Christie and Anderson have spoken out and sought to influence and change minds among their community. In April, 1991, Plaintiff Anderson ordered 500 pounds of hemp seed from Specialty Commodities, Inc., a licensed seed and grain dealer located in Fargo, North Dakota. Unable to timely obtain the 500 pound shipment, Plaintiff Anderson ordered an additional 25 pounds of hemp seed also from Specialty Commodities, Inc. for express delivery. On May G, 1991, Specialty Commodities, Inc. sent approximately 23 pounds ofheat-treated hemp seed via Federal Gxpress® package addressed to Plaintiff Anderson in care of the Hawaii Hemp Council, an association of persons interested in promoting legal uses of hemp and legalization of hemp. Plaintiffs Christie and Anderson are founding members of the Hawaii Hemp Council. On May 7, 1991, members of the Hawaii County Police Department seized the Federal Express ®package of approximately 23 pounds of hemp seeds at the Hilo Airport. AHer obtaining control of the hemp seeds, Hawaii County Police obtained a search warrant and undertook a controlled delivery of the seeds to Plaintiff Anderson. Flawai'i County Police then arrested Plaintiff Anderson and Plaintiff Christie who voiced support for Plaintiff Anderson. On April 2, 1992, the 1 lawai'i County Prosecutor's Office obtained a felony indictment against PlaintilTChristiesnd Plaintiff Anderson fa' promotion of a detrimental drug in the second degree, a crime punishable by up to ten years in prison. On or about July 20, 1992, Hawaii County Police sent a portion of the seized hemp seeds to the Flawai'i State Department of Agriculture Laboratory for germination testing. Irollowing International Seed Testing Association rules, the Laboratory perfbmied gernnation tests on some eight hundred hemp seeds. The Laboratory October 7, 1996 Steven K. Christensen, Esq. Page 3 provided a written report to the Hawaii County Police which report stated zero germination.r Following arraignment of PlaintiffChristie and Plaintiff Anderson, their respective counsel brought a motion to disnuss the indictment under Cederal preemption grounds. During argument to Third Circuit Court Judge Shunichi Kimura on November 20, 1992 on Plaintiffs' motion to dismiss, Defendant Iopa informed Judge Kimura that she had selected PlaintilTs Christie and Anderson for prosecution because of their exercise of their First Amendment rights. She stated, "As a practical matter, no, we're not going to go out, bust the little old lady that's got a bag of bird seeds just because there is one marijuana seed in there. Um, when you get twenty-five pounds within an order for five hundred pounds or more, going to, um a hemp grower, that is very vocally, very outwardly advocating the legalization ofmarijuana The }iawai'i County Prosecutor's efforts to restrain Plaintiff Christie and Plaintiff Anderson from exercising their First Amendment rights to free speech recurced in June, 1994. Following a status conference on or about June 14, 1994 before Third Circuit Court Judge Greg K. Nakamura, successor to now-retired Judge Kimura, Defendant Iopa imposed a condition upon any plea agreement that Plaintiffs Christie and Anderson must agree not to write any more letters to the newspaper about the State's prosecution of them in Cr. No. 92-100. lleputy Public Defender Neilani Graham and undersigned counsel were both present during Defendant Iopa's statement. In a document entitled "State's Pre-Hearing Statement" signed by Defendant Iopa February I, 1995 and filed with the Court, Defendant Iopa tnisrepresented the results of the Hawaii State Department of Agriculture Laboratory germtination testing of the seeds ordered by Plaintiff Anderson and falsely claimed that the Laboratory produced germination rates of G and 9 percent. Defendant lopa's misrepresentation comprises bad faith. At hearing on or about September G, 1995, De Morales, now a patrol officer with the Kona Division of the Hawaii County Police Department, testified that, apart from Plaintil}s Christie and Anderson, the Hawaii County Police Department had never Throughout We prosceulion of Plaintill's, Ikfcndara Iopa has consistcndy misrcprescntal Urc laboratory's rcportal results of six percent and Hint percent abnonual gcnuiuaGou to llre Third Circuit Court and the Hawaii Suprcmc Court as cvideucc of gcnnination while ignoring the laboratoryy's rclwrtcd resulLS of rcro gcnninatiou. October 7, 1996 Steven K. Christensen, Hsq. Page 4 sought prosecution of any other individuals or businesses known to possess and o[1cr for sale commercially available hemp seeds in Hawaii County. Defendant County ofHawai'i's conduct in this case comprises selective prosecution. Plaintiffs Christie and Anderson have been singled out for felony prosecution of possession of lawful, cormmercially available hemp seeds. No others have been so prosecuted. Defendant County of Hawaii has impermissibly and unlawfully sought to prevent Plaintiffs Christie and Anderson from advocating the legalization of marijuana. Defendant County ofHawai'i has impermissibly and unlawfully sought to restrain Plaintiff's Christie and Anderson From participating in currently lawful commerce in hemp products, including lawful hemp seeds. As a result of such unlawful prosecutions, Defendant County of Hawaii has in fact chilled Plainti(fs Cluistie and Anderson, and others, from engaging in lawful commerce in hemp products, resulting in their economic damage. As a direct and proximate result of the acts of Defendant County of Hawaii herein described, Plaintiff's were required to appear in the Third Circuit Court of the State of Hawaii on several occasions as accused criminals. Moreover, Defendant County of Hawai'i's acts have chilled Plaintiffs in their exercise of their rights to freedom of speech under the First Amendment to the United States Constitution. Defendant County of Hawai'i's acts have also delayed and injured Plaintiffs in their respective business activities to their economic datritnent. Defendant County of llawai'i's conduct has also caused extreme emotional distress to Plaintiffs Christie and Anderson. Both Plaintiffs Christie and Anderson have obtained professional therapeutic help for the stress caused by Defendant County of Flawai'i's prosecution of them. I listory of Proceedines Defendant County of Hawaii has twice moved to disqualify Plaintiffs' counsel. Magistrate Judge Barry M. Kurren denied both motions. Defendant County of Hawaii moved for judgment on the pleadings and for partial summary judgment. Defendant County of 1lawai'i also moved to stay proceedings and to compel Plaintiffs to reply to Defendant County of Hawai'i's answer which claimed that Defendants had no custom or policy which caused a violation of Plaintiffs' respective rights. On Sept. 20, 1996, United States District Judge David Alan Ezra tiled his Order denying Defendant County of Hawaii motion for October 7, 1996 Steven K. Christensen, Esq. Page 5 judgment on the pleadings and for partial sununaty judgment, The Order also denied Defendant County of Flawai'i's motion to stay proceedings and to compel Plaintiffs to reply. Judge Bzra sua s~ronte dismissed Plaintits' claims against individual Defendants lopa and Kimura. Judge Ezra's Order also recognized that Plaintiff Anderson presented sutlicient evidence of bad faith and harassment against Defendant County of I-lawai'i such that the federal case should not be stayed by Younger v. Flarris. Defendant County of 1-lawai'i has filed a notice of appeal of the Court's decision. Damaees and Attorn~'s Fees Through expert testimony, Plaintiffs will show that they lost potential income in excess of $ 500,000.00 from the hemp products business which Defendant County of Hawaii effectively shut down through its prosecution of Ylaintitt's. Moreover, Plaintiffs will show that they have suffered emotional distress. If successful, Plaintiffs are entitled to attorney's fees :rnd costs. Attorney's fees are estimated at $ 60,000.00 through trial. Costs are estimated at $ 12,000.00 through trial. Demand plaintiff Christie demands payment of $ 250,000.00 6 om Defendant County of Hawaii and that Defendant County of Hawaii withdraw its appeal of Judge Ezra's order. PlaintitFAnderson demands payment of $ 250,000.00 from Defendant County of Hawaii, that Defendant County of Hawaii withdraw its appeal of Judge Ezra's order and that Defendant County of Hawaii dismiss State v. Ernest Aaron Anderson, Cr. 92-100, with prejudice. In exchange, Plaintiffs will stipulate to dismissal of the federal case against Defendant County of Hawaii. \/eq~ tr~ly,~our's1 1\ S(even,lh. ,trauss cc: clients UNITED STATES D15TR CT COURT DISTRICT OF HAWAII IN THE UNITED STATES DISTRICT COURT JAN 1 i 2000 et„~oblockend mlrr~ FOR THE DISTRICT OF HAWAII WALTER A.Y.H.CHINN,C~ ROGER CHRISTIE and ) ERNEST AARON ANDERSON, ) CV. NO. 95-01026DAE Plaintiffs, ) vs. ) G. KAY IOPA, in her personal ) capacity, ) JAY KIMURA, in his personal ) capacity, ) the COUNTY OF HAWAI I, ) and DOES 1-10, ) Defendants. ) ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PENDENT PARTY CLAIMS WITHOUT PREJUDICE AND DENYING DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT The court heard Defendants' Motion to Dismiss Pendent Party Claims and Defendants' Motion for Partial Summary Judgment on January 10, 2000. Steven D. Strauss, Esq., appeared at the hearing on behalf of Plaintiff; Steven Christensen, Esq., appeared at the hearing on behalf of Defendants. After reviewing the motion and the supporting and opposing memoranda, the court GRANTS Defendants' Motion to Dismiss Pendent Party Claims Without Prejudice and DENIES Defendants' Motion for Partial Summary Judgment. BACKGROUND This case arises out of the state prosecution of Plaintiffs Roger Christie ("Christie") and Ernest Aaron Anderson ("Anderson") for possession of hemp seeds. Anderson had ordered 25 pounds of sterilized commercial hemp seeds on behalf of himself and Christie. See Christie v. Iopa, 176 F. 3d 1231, 1233 (9cn Cir. 1999). Prior to Plaintiffs' arrest, no one in the County of Hawaii ("County") had ever been prosecuted for possession of commercial sterilized hemp seeds. See id. On October 30, 1995, the Hawaii state court dismissed criminal charges against Christie without prejudice and, on March 4, 1998, it dismissed the indictment against Anderson. See id. at 1234. On December 15, 1995, Plaintiffs filed their complaint, alleging 42 U.S.C. ~ 1983 and state tort violations that Deputy Prosecutor G. Kay Iopa ("Iopa"), Hawaii Prosecutor Jay Kimura ("Kimura"), and County had interfered with their right to engage in commerce and violated their rights to speak freely, to petition the government, and to be free from government oppression. See id. This court dismissed the federal claims against Iopa and Kimura, but denied the County's motion for either judgment on the pleadings or summary judgment. See Christie v. Iopa, 121 F.3d 714, 1997 WL 429413 at * 1 (9ch Cir. 1997) (unpublished table decision). The Ninth Circuit affirmed this court's ruling. See id. On remand, this court granted County's Motion for Summary Judgment, holding that "County is not liable under ~ 1983 2 as there is no evidence that a policy of selective prosecution of Plaintiffs existed at the time of the indictment or throughout the proceedings." Order Granting Defendants' Motion for Summary Judgment. Plaintiffs then moved for reconsideration, which this court denied. See Order Denying Plaintiffs' Motion for Reconsideration. Upon denial of reconsideration, this court dismissed the case because it declined to exercise jurisdiction over Plaintiffs' state law claims since there were no longer any federal claims. See Order dated July 23, 1998. Plaintiffs filed a timely appeal to the Ninth Circuit. See Christie v. Iona, 176 F.3d 1231 (9Ch Cir. 1999). The Ninth Circuit affirmed this court's decision granting summary judgment to County as to Plaintiff Christie's claims against it. See id. at 1241. However, as to Plaintiff Anderson's claims, the court held that, Anderson created a triable issue of fact on liability. He produced evidence permitting a rational trier of fact to find that Kimura, a person with final policymaking authority, knew of Iopa's alleged ongoing constitutional violations and (1) approved of those violations or (2) was deliberately indifferent to them. Id. Thus, the Ninth Circuit reversed and remanded this court's holding granting summary judgment to County as to Anderson's claims. On July 23, 1999, Defendant filed a Motion to Dismiss Pendent Party Claims, protesting Anderson's non-federal pendent party claims against Kimura and Iopa. On November 18, 1999, 3 Anderson filed an Opposition to Defendants' Motion to Dismiss Pendent Party Claims, requesting that this court find jurisdiction over the pendent claims. In the alternative, Anderson requests that this court stay any order dismissing Anderson's non-federal claims against Iopa and Kimura until Anderson has had a full and fair opportunity to conduct thorough discovery in this case, the current deadline being February 28, 2000. In addition to the pendent party claims, the court will examine Defendants' Motion for Partial Summary Judgment, filed on December 12, 1997. In that motion, Defendants argue that the court may not award to Plaintiffs loss of profits since all hemp- derived commerce in Hawaii is illegal. On February 5, 1998, Plaintiffs filed a Memorandum in Opposition to Defendants' Motion for Partial Summary Judgment, arguing that the marijuana statutes are vague and are contrary to the intent of the legislature. STANDARD OF REVIEW Rule 56 (c) provides that summary judgment shall be entered when: [T]he pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. 4 Fed. R. Civ. P. 56(c). The moving party has the initial burden of demonstrating for the court that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970)). However, the moving party need not produce evidence negating the existence of an element for which the opposing party will bear the burden of proof at trial. Id. at 322. Once the movant has met its burden, the opposing party has the affirmative burden of coming forward with specific facts evidencing a need for trial. Fed. R. Civ. P. 56(e) The opposing party cannot stand on its pleadings, nor simply assert that it will be able to discredit the movant's evidence at trial. See T.W. Elec. Serv. Inc. v. Pacific Elec. Contractors Assn, 809 F.2d 626, 630 (9`h Cir. 1987); Fed. R. Civ. P. 56(e) There is no genuine issue of fact "where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (citation omitted). A material fact is one that may affect the decision, so that the finding of that fact is relevant and necessary to the proceedings. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine issue is shown to exist if sufficient evidence is presented such that a reasonable fact finder could decide the question in favor of the nonmoving party. Id. The evidence 5 submitted by the nonmovant, in opposition to a motion for summary judgment, "is to be believed, and all justifiable inferences are to be drawn in [its] favor." Id. at 255. In ruling on a motion for summary judgment, the court must bear in mind the actual quantum and quality of proof necessary to support liability under the applicable law. Id. at 254. The court must assess the adequacy of the nonmovant's response and must determine whether the showing the nonmovant asserts it will make at trial would be sufficient to carry its burden of proof. See Celotex, 477 U.S. at 322. At the summary judgment stage, this court may not make credibility determinations or weigh conflicting evidence. Musick v. Burke, 913 F.2d 1390, 1394 (9`" Cir. 1990). The standard for determining a motion for summary judgment is the same standard used to determine a motion for directed verdict: does the evidence present a sufficient disagreement to require submission to a jury or is it so one-sided that one party must prevail as a matter of law. Id. (citation omitted). DISCUSSION I. Pendent Party Jurisdiction Defendants argue that Anderson cannot litigate state tort claims against Iopa and Kimura, because no federal claim exists against them in this action. Defendants point to Avala v. 6 United States, 550 F. 2d 1196 (9`h Cir. 1977), cert. dismissed 435 U.S. 982 (1978) in its argument that the Ninth Circuit is hostile to the concept of pendent party jurisdiction. The A ala court required that an independent federal ground of jurisdiction must exist in order to properly join claims against other parties. See id. at 1198. However, 28 U.S.C. ~ 1367 provides that [I]n any civil action of which the district courts shall have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. 28 U.S.C. § 1367 (a) (1990). In Lake Mohave Boat Owners Association v. National Park Service, 78 F. 3d 1360, 1364 (9`h Cir. 1995), plaintiff Lake Mohave Boat Owners Association ("LMBOA") claimed that the National Park Service ("NPS") violated the Administrative Procedures Act, 5 U.S.C. ~ 553, and the Freedom of Information Act, 5 U.S.C. § 552. In addition, LMBOA sought from Seven Resorts, Inc. ("SRI") restitution of excess rents paid and an injunction to prevent SRI from collecting a rent increase. See id. The Ninth Circuit recognized that LMBOA was requesting from SRI remedies based on state laws. See id. at 1369. However, because the state claims arose out of the same common nucleus of operative fact as the federal law claims against NPS, the court 7 concluded that it had supplemental jurisdiction over the state claims against SRI as well as the federal claims against NPS. See id. (citing 28 U.S.C. ~ 1367). Here, Anderson's causes of action against County are based upon federal statute 42 U.S.C. ~ 1983 and his state tort claims against Iopa and Kimura arise out of the same common nucleus of operative facts as the federal claims.l However, this court previously dismissed the federal claims against Iopa and Kimura. The remaining state claims against Iopa and Kimura are matters of particular interest to the people of the State of Hawaii and such claims should be heard in state court by a state jury. See Souza v Estate of Bernice Pauahi Bishop, 594 F. Supp. 1480 (D. Haw. 1984) (court refused to take pendant jurisdiction based in part on the fact that the claims touched a sensitive area of social policy in Hawaii). Thus, in its discretion, this court will not exercise pendant party jurisdiction over Anderson's state claims against Iopa and Kimura since the federal claims against them have been dismissed. See James v. Sun Class Hut of California, Inc., 799 F. Supp. 1063 (D. Colo. 1992) (court's discretion to exercise jurisdiction is retained under supplemental jurisdiction statute); Hotel Syracuse, Inc. v. Youn 805 F. Supp. 1073 (N.D.N.Y. 1992)(The district court has 'Anderson's claims against County, Iopa, and Kimura all arose from his arrest for possessing commercial sterilized hemp seeds. 8 broad discretion in deciding whether to continue hearing state claims once the federal claim has been dismissed). The court thus GRANTS Defendants' Motion to Dismiss Pendent Party Claims Without Prejudice. II. Summary Judgment Defendants argue that summary judgment is appropriate because Anderson is not entitled to recovery of lost profits founded upon manufacture and sale of illegal products. When the evidence shows that a party seeks to recover compensation for an illegal act, "the court has both the power and the duty to ascertain the true facts in order that it may not unwittingly lend its assistance to the consummation or encouragement of what public policy forbids." Pacific Telephone and Telegraph Co v MCI Telecommunications Corp., 649 F.2d 1315, 1319 (9`h Cir. 1981) . Because the court must discourage illegal acts, it must determine whether Hawaii state law forbids the sale of sterilized marijuana seeds and other hemp derived products. Hawaii Revised Statutes ~ 712-1249.5 (1999) makes it illegal to possess more than two pounds of marijuana. The Hawaii Penal Code defines "marijuana" as, any part of the plant (genus) cannabis, whether growing or not, including the seeds and the resin, and every alkaloid, salt, derivative, preparation, compound, or mixture of the plant, its seeds or resin, except that, 9 as used herein, "marijuana" does not include hashish, tetrahydrocannabinol, and any alkaloid, salt, derivative, preparation, compound, or mixture, whether natural or synthesized of tetrahydrocannabinol. Hawaii Revised Statutes § 712-1240 (1999) (emphasis added). The court must give § 712-1240 effect according to its plain and obvious meaning if its literal application would not produce an absurd result clearly inconsistent with the purposes and policies of the statute. See State v. Park, 55 Haw. 610, 614, 525 P. 2d 586, 590 (1974); See also Kaiser Aluminum & Chem. Corp. v. Boniorno, 494 U.S. 827, 835 (1990). Here, although the definition of marijuana under ~ 712- 1240 unambiguously includes a general category of "seeds," Hawaii's legislature adopted this statute to, inter alia, achieve uniformity between Hawaii's criminal and health laws. See Conf. Com. Rep. 2-72 (Majority) on H.B. 20, 1240 through 1256 (1972). Section 329-1 of the Health Code specifically exempts "sterilized seeds," and other parts of the plant such as the mature stalk, fiber, oil or cake made from seeds from its definition of marijuana. The Health Code defines "marijuana" as, all parts of the plant (genus) Cannabis whether growing or not; the seeds thereof, the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. It does not include the mature stalks of the plant, fiber produced from the stalks, oil, or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the 10 sterilized seed of the plant which is incapable of germination. Haw. Rev. Stat. ~ 329-1 (1999) (emphasis added). In addition, Hawaii Revised Statutes requires that laws upon the same subject matter "shall be construed with reference to each other. What is clear in one statute may be called in aid to explain what is doubtful in another." Haw. Rev. Stat. ~ 1-16 (1999). Since 329-1 and 712-1240 regard the same subject matter of marijuana, it is appropriate to read ~ 712-1240 together with ~ 329-1 to effectuate a clear understanding of the definition of "marijuana." Also, Investigator Layne Yoshida, Office of the Public Defender in Hawaii County, declared that retail businesses in Hawaii county sell brand name birdseed mixtures containing hemp (marijuana) seeds and are not arrested. Further, the Health Code allows possession of sterilized marijuana seeds and other certain forms of the marijuana plant. Since the legislature intended uniformity between the statutes, applying ~ 712-1240 to retailers or purchasers of such hemp (marijuana) birdseed, sterilized seeds, or other parts of the marijuana plant precluded from the definition of marijuana in the health code, would produce an absurd or unjust result inconsistent with the purpose and policy of the statute. Upon review of the facts in the light most favorable to Anderson, this court reviews ~ 712-1240 together with ~ 329-1, 11 and applies exemptions from the definition of marijuana set forth in ~ 329-1 to the definition of marijuana in ~ 712-1240. To do otherwise would produce absurd results inconsistent with the legislature's intent to achieve uniformity between Hawaii's criminal and health laws. CONCLUSION For the reasons stated above, the court GRANTS Defendants' Motion to Dismiss Pendent Party Claims without Prejudice and DENIES Defendants' Motion for Partial Summary Judgment. IT IS SO ORDERED. DATED: Honolulu, Hawai' D VI EZRA CHIE UNI ED STATES DISTRICT JUDGE Roger Christie et al. v. G. Kav Ioga, et al., CV 95-01026 DAE; ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PENDENT PARTY CLAIMS WITHOUT PREJUDICE AND DENYING DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT 12 and applies exemptions from the definition of marijuana set forth in ~ 329-1 to the definition of marijuana in ~ 712-1240. To do otherwise would produce absurd results inconsistent with the legislature's intent to achieve uniformity between Hawaii's criminal and health laws. CONCLUSION For the reasons stated above, the court GRANTS Defendants' Motion to Dismiss Pendent Party Claims Without Prejudice and DENIES Defendants' Motion for Partial Summary Judgment. IT IS SO ORDERED. DATED: Honolulu, Hawai' Y v D VI EZRA CHIE UNI ED STATES DISTRICT JUDGE Roger Christie et al. v. G. Kav Iona, et al., CV 95-01026 DAE; ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PENDENT PARTY CLAIMS WITHOUT PREJUDICE AND DENYING DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT 12 176 F.3d 1231 Page 1 99 Cal. Daily Op. Serv. 4076, 1999 Daily Journal D.A.R. 5209 (Cite as: 176 F.3d 1231) Roger CHRISTIE and Ernest Aaron Anderson, Plaintiffs-Appellants, ~2] FEDERAL COURTS f°~776 v. 170Bk776 G. Kay IOPA, in her personal capacity; Jay Court of Appeals reviews de novo a district court's Kimura, in his personal capacity; grant of summary judgment to determine whether the the County of Hawaii; and Does 1-10, Defendants- district court correctly applied the law and whether, Appellees. viewing the evidence in the light most favorable to the non-moving party, [here are no genuine issues of No. 98-16547, material fact. United States Court of Appeals, ~2] FEDERAL COURTS 0802 Ninth Circuit. 170Bk802 Court of Appeals reviews de novo a district court's Argued and Submitted April 27, 1999. grant of summary judgment to determine whether the district court correctly applied the law and whether, Filed June 1, 1999. viewing the evidence in the light most favorable [o the non-moving party, there are no genuine issues of Plaintiffs brought § 1983 action against, inter alia, a material fact. county, alleging selective prosecution for plaintiffs' possession on sterilized commercial hemp seeds based (3~ CIVIL RIGHTS C^~206(1) on plaintiffs' advocacy of legalization of marijuana. 78k206(I) Cowry's motion for summary judgment was granted County was a "person" which could be sued under § by the United States District Court for the District of 1983. 42 U.S.C.A. § 1983. Hawaii, David Alan Ezra, J., and plaintiffs appealed. See publication Words and Phrases for other judicial The Court of Appeals, Graber, Circuit Judge, held constructions and definitions. that: (1) deputy did not possess delegated final policymaking authority, such that § 1983 liability X41 CIVIL RIGHTS G°~206(2.1) could be imposed on county based on her actions; (2) 78k206(2.1) as to one plaintiff, county could not be held liable on a County cannot be held liable under § 1983 on a ratification or deliberate indifference theory; but (3) as respondeat superior theory. 42 U.S.C.A. § 1983. to second plaintiff; there were issues of fact, precluding summary judgment for county, as to WSJ CIVIL R[GHTS G~206(3) whether county prosecutor ratified deputy's alleged 78k206(3) ongoing constitutional violations, or was deliberately Municipalities aze liable under § 1983 only when indifferent to them. action pursuant to official municipal policy of some nature caused a constitutional tort. 42 U.S.C.A. § Affirmed in part, reversed in part, and remanded. 1983. ~1~ FEDERAL COURTS f^~802 ~6] CIVIL RIGHTS G~206(3) 78k206(3) 170Bk802 Although a constitutional violation must result from On appeal from grant of summary judgment, Court of official municipal policy, a county need not expressly Appeals views the evidence in the light most favorable adopt the policy in order to be liable under § 1983; it to the nonmoving party. is sufficient that the constitutional violation occurred pursuant to a longstanding practice or custom. 42 ~2] FEDERAL COURTS G~766 U.S.C.A. § 1983. 170Bk766 Court of Appeals reviews de novo a district court's ~7J CIVIL RIGHTS 0206(3) grant of summary judgment to determine whether the 78k206(3) district court correctly applied the law and whether, Plaintiffs suing county under § 1983 could not satisfy viewing the evidence in the light most favorable to the the requirement of a longstanding practice or custom, non-moving party, there are no genuine issues of where [hey alleged to the contrary that a county material fact. official had singled them out for unique treatment. 42 Copr. ©West 2000 No Claim to Orig. U.S. Gov[. Works 176 F.3d 1231 Page 2 (Cite as: 176 F.3d 1231) U.S.C.A. § 1983. and when to make plea agreements, deputy's immediate supervisor adopted policies for the ~8] CIVIL RIGHTS C°~206(3) initiation of felony prosecutions, and deputy generally 78k206(3) did not have authority to enter into plea agreements A single constitutional deprivation ordinarily is when significant concessions were at stake. 42 insufficient to establish a longstanding practice or U.S.C.A. § 1983. custom supporting municipal liability under § 1983, but there are three situations in which isolated [13] CIVIL RIGHTS C^~206(4) constitutional violations are sufficient to establish a 78k206(4) municipal policy: (l) when the person causing the County could not be held liable under § 1983 on a violation has final policymaking authority; (2) if the ratification theory for deputy prosecutor's actions with fmal policymaker ratified a subordinate's actions; and respect to prosecution of one plaintiff, where that (3) if a final policymaker acted with deliberate plaintiff provided no evidence that county prosecutor indifference to a subordinate's constitutional knew of deputy's actions before the criminal case violations. 42 U.S.C.A. § 1983. against that plaintiff was dismissed, but suing prosecutor while prosecution against second plaintiff [9~ CIVIL RIGHTS <°.~244 was still pending provided prosecutor with notice of 78k244 deputy's alleged ongoing constitutional violations, Whether an official has final policymaking authority such that county would be liable if prosecutor showed so that a municipality can be liable under § 1983 for affirmative agreement with deputy's actions. 42 an isolated constitutional violation by that person is a U.S.C.A. § 1983. question for the court to decide based on state law. 42 U.S.C.A. § 1983. ~14~ CIVIL RIGHTS f°~206(4) 78k206(4) [10~ CIVIL RIGHTS C°~206(3) To show ratification creating municipal liability under 78k206(3) § 1983, a plaintiff must prove that the authorized Authority to make municipal policy, for purposes of policymakers approved a subordinate's decision and municipal liability under § 1983, may be delegated by the basis for it, and thus, ratification requires, among an official who possesses such authority, but mere other things, knowledge of the alleged constitutional delegation of discretion to act is insufficient, and in violation, but a policymaker's knowledge of an determining issue of delegation, courts consider unconstitutional act does not, by itself, constitute whether the official's discretionary decision is ratification. 42 U.S.C.A. § 1983. constrained by policies not of that official's making and whether the official's decision is subject to review X15] FEDERAL CIV[L PROCEDURE x2559 by the municipality's authorized policymakers. 42 170Ak2559 U.S.C.A. § 1983. Court does not consider evidence or arguments presented for the first time in a motion for illy FEDERAL COURTS "C~- 916.1 reconsideration of summary judgment ruling. 170Bk916.1 Fed.Rules Civ.Proc.Rule 56(c), 28 U.S.C.A. Suggestion as to possible result on prior appeal did no[ bind Court of Appeals on later appeal ~ 16~ CIVIL RIGHTS C,~206(4) - 78k206(4) [12~ CIVIL RIGHTS x206(3) A policymaker's mere refusal to overrule a 78k206(3) subordinate's completed ac[ does not constitute Deputy prosecutor in Hawaii did not possess ratification, for purposes of municipal liability under § delegated final policymaking authority, such that § 1983. 42 U.S.C.A. § 1983. 1983 liability could be imposed on county based on actions of deputy prosecutor with respect to initiation ~17~ FEDERAL CIVIL PROCEDURE x2491.5 of prosecution and plea agreement, though deputy 170Ak249L5 prosecutors have the power to perform many of the In § 1983 action alleging selective prosecution for duties assigned to the prosecutor and, in the process, plaintiffs possession on sterilized commercial hemp they necessarily exercise broad discretion, where the seeds based on plaintiffs advocacy of legalization of county prosecutor, not the deputy, created general marijuana, there were issues of fact, precluding policies for determining when to charge a defendant summary judgment for county, as to whether county Copr. ©West 2000 No Claim to Orig. U.S. Govt. Works 176 F.3d 1231 Page 3 (Cite as: 176 F.3d 1231) prosecutor, a person with fmal policymaking authority, legally responsible for the deputy prosecutor's acts. ratified deputy's alleged ongoing constitutional For the reasons that follow, we affirm as to plaintiff violations, or was deliberately indifferent to them. 42 Christie, but reverse as to plaintiff Anderson. U.S.C.A. § 1983. FACTUAL AND PROCEDURAL BACKGROUND ]18J FEDERAL CIVIL PROCEDURE C^;-X2491.5 170Ak2491.5 [1] Because the district court granted summary Although defendant's actions allegedly violating § judgment, we view the evidence in the light most 1983 might have an innocent explanation, on summary favorable to the nonmoving party. See Jesinger v. judgment motion by defendants, the only question was Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th whether a rational juror could infer a noninnocent Cic1994). explanation. 42 U.S.C.A. § 1983. Plaintiffs advocate the legalization of marijuana, and ]191 CIVIL RIGHTS G~206(4) they aze well known for that advocacy. They also 78k206(4) have worked to expand the commercial use of hemp, Deliberate indifference by a policymaker as a basis of including its use as food and clothing. Commercial municipal liability under § 1983 is a stringent standard sterilized hemp seeds are readily available at stores m of fault, requiring proof that a municipal actor Hawaii, such as Walmart; often, these seeds are mixed disregarded a known or obvious consequence of his with other types of seed and sold as bird seed. In action. 42 U.S.C.A. ¢ 1983. April 1991, Anderson ordered 25 pounds of sterilized commercial hemp seeds on behalf of Plaintiffs. The ]20] CIVIL RIGHTS (^}206(4) police seized Plaintiffs' order and charged them with 78k206(4) Promotion of a Detrimental Drug in [he Second County was not liable under § 1983 on theory of Degree, a felony. Before Plaintiffs' arrest, no one in county prosecutor's deliberate indifference to deputy's the County of Hawaii ever had been prosecuted for alleged selective prosecution For plaintiffs possession possession of commercial sterilized hemp seeds. on sterilized commercial hemp seeds based on plaintiffs advocacy of legalization of marijuana, where On January 9, 1992, deputy prosecutor [opa sough[ a there was no evidence that prosecutor knew anything grand jury indictment *1234 against Plaintiffs, at least of deputy's actions before the criminal case against in part because of then advocacy for the legalization plaintiff was dismissed; prosecutor's general policy of of marijuana: delegating discretion to deputy prosecutors was not As a practical matter, no, we're not going to go sufficient. 42 U.S.C.A. § 1983. out, bust the little old lady that's got a bag of bird *1233 Steven D. Strauss, Hilo, Hawaii, for the seeds just because there is one marijuana seed in plaintiffs-appellants. there. Um, when you get twenty-five pounds within an order for five hundred pounds or more, Joseph Kamelamela and Steven Christensen, Deputy going to, um, a hemp grower, that is very vocally, Corporation Counsel, County of Hawaii, Hilo, Hawaii, very outwardly advocating the legalization of for the defendants-appellees. marijuana. (Emphasis added.) To obtain the indictment, ]opa Appeal from [he United States District Court for the presented false evidence [hat Plaintiffs' hemp seeds District of Hawai i; David Alan Ezra, District Judge, had germinated when tested. Presiding. D.C. No. CV-95-0]026-DAE. After obtaining the indictment, lopa offered to enter Before: FARRIS, NOONAN, and GRABER, Circuit into a plea agreement with Plaintiffs. However, lopa Judges. refused to negotiate unless Plaintiffs agreed not to write any more letters to the newspaper about the case. GRABER, Circuit Judge: On October 30, 1995, the Hawaii court dismissed In this action brought under 42 U.S.C. § ]983, criminal charges against Christie without prejudice Plaintiffs allege that a deputy prosecutor for the and, on March 4, 1998, the court dismissed the County of Hawaii violated their constitutional rights. indictment against Anderson after a jury's deadlock The district court granted the County's motion for had caused a mistrial. summary judgment, holding that the County is not Copr. ©West 2000 No Claim to Orig. U.S. Govt. Works 176 F.3d 1231 page q (Cite as: t76 F.3d 1231, *1234) After Christie's case had been dismissed, on here. See Monell v. Department of Social Serv. of December I5, 1995, Plaintiffs filed the present N.Y., 436 U.S. 658, 694, 98 S.Ct. 2018, 56 L.Ed.2d complaint alleging that Iopa, Hawaii Prosecutor 611 (1978). Nevertheless, Congress did not intend to Kimura, and the County had violated their rights to create respondeat superior liability. See id. at 691, 98 speak freely, to petition the government, and to be free S.Ct. 2018 ("[A] *1235 municipality cannot be held from government oppression. [FN I ] Plaintiffs liable under § 1983 on a respondeat superior theory."); included similar state-law claims. The County moved see also Board of County Commis of Bryan County v. for judgment on the pleadings, arguing in part that it Brown, 520 U.S. 397, 403, 117 S.Ct. 1382, 137 enjoys Eleventh Amendment immunity. The district L.Ed.2d 626 (1997) ("We have consistently refused to court disagreed, but sua sponte granted judgment on hold municipalities liable under a theory of respondeat [he pleadings to Iopa and Kimura. The County superior."). Instead, Congress intended to hold appealed [he Eleventh Amendment ruling to this court, municipalities liable only when "action pursuant to which affirmed in an unpublished disposition. See official municipal policy of some nature caused a Christie v. Iopa, 121 F.3d 714, 1997 WL 429413 (9th constitutional tort." Monell, 436 U.S. at 691, 98 S.Ct. Cir.1997) (unpublished [able decision). 2018. "The 'official policy' requirement 'was intended [o distinguish acts of the municipality from acts of FNI. Plaintiffs later amended their complaint employees of the municipality,' and thereby make clear to also allege that Defendants interfered with [hat municipal liability is limited to action for which their right to engage in commerce. the municipality is actually responsible." Pembaur v. City of Cincinnati, 475 U.S. 469, 479-80, 106 S.Ct. On remand, the County twice moved for summary 1292, 89 L.Ed.2d 452 (1986) (emphasis in original). judgment, arguing that it was no[ legally responsible for lopa's alleged violations of Plaintiffs' constitutional [6] Although a constitutional violation must result rights. The court denied the first motion, but granted from "official munici al olic p p y," a county need not the second. Plaintiffs then moved for reconsideration, expressly adopt the policy. It is sufficient that the which the district court denied. Thereafter, the district constitutional violation occurred pursuant to a court declined to exercise supplemental jurisdiction "longstanding practice or custom." Gillette v. over Plaintitfs' state-law claims and, therefore, Delmore, 979 F.2d 1342, 1346 (9th Cir.1992); see dismissed [he case. This timely appeal ensued. Brown, 520 U.S. at 404, 117 S.C[. 1382 ("[A]n act performed pursuant to a 'custom' that has not been STANDARD OF REVIEW formally approved by an appropriate decisionmaker may fairly subject a municipality to liability on the [2] We review de novo a district court's grant of theory that the relevant practice is so widespread as to summary judgment to determine "whether the district have [he force of law."). court correctly applied the law and if, viewing the evidence in the light most favorable to the non-moving [7][8] plaintiffs cannot satisfy the requirement of a party, there are no genuine issues of material fact." longstanding practice or custom, because they allege Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir.1998). to the contrary that a county official has singled them out for unique treatment A single constitutional DISCUSSION deprivation ordinarily is insufficient to establish a longstanding practice or custom. See Trevino v. Gales, [3][4](S] Title 42 U.S.C. § 1983 provides in part: 99 F.3d 911, 918 (9th Cir.1996) ("Liability for Every person who, under color of any statute, improper custom may not be predicated on isolated or ordinance, regulation, custom, or usage, of any sporadic incidents; it must be founded upon practices Slate or Territory or the District of Columbia, of sufficient duration, frequency and consistency [hat subjects, or causes to be subjected, any citizen of the conduct has become a traditional method of the United Slates or other person within the carrying out policy."); Thompson v. City of Los jurisdiction thereof to the deprivation of any Angeles, 885 F.2d 1439, 1443-44 (9th Cic1989) rights, privileges, or immunities secured by the ("Consistent with the commonly understood meaning Constitution and laws, shall be liable to the party of custom, proof of random acts or isolated events [is] injured in an action at law, suit in equity, or other insufficient to establish custom."). proper proceeding for redress.... (Emphasis added.) Congress intended the tern There are, however, three situations in which isolated "person" to include municipalities, such as the County constitutional violations are sufficient to establish a Copr. ©West 2000 No Claim [o Orig. U.S. Govt. Works 176 F.3d 1231 Page 5 (Cite as: 176 F.3d 1231, *1235) mtmicipal "policy." We consider each in mrn. FN2. When Plaintiffs were indicted, Kimum A. Final Policymaking Authority had not yet been elected County Prosecutor; he was serving as First Deputy Prosecutor [9] First, a municipality can be liable for an isolated (second in command). constimtional violation when the person causing the violation has "final policymaking authority." See City FN3. m [he prior appeal in this case, this of St. Louis v. Prapromik, 485 U.S. 112, 123, 108 court stated: S.Ct. 915, 99 L.Ed.2d 107 (1988) (plurality) ("[O]nly It is unclear who other than the county those municipal officials who have 'final policymaking prosecutor can make policy for the county in authority' may by their actions subject the government initiating prosecutions. As noted above, the to § 1983 liability."); Gillette, 979 F.2d at 1347 county prosecutor's authority stems Crom the attorney general. If the attorney general does ("[T]he Supreme Court held that a single decision by a not intrude into county prosecutions, Christie municipal policymaker may be sufficient to [rigger and Anderson may be entitled to judgment as section 1983 liability under Monell, even though the a matter of law that Iopa and Kimura were decision is no[ intended to govern future situations."). acting as policymakers. Because no such Whether an official has final policymaking authority is motion was made before the district court, a question for the court to decide based on state law. however, we decline to reach that issue at this time. See Jett v. Dallas Indep. Sch. Dist., 491 U.S. 701, 737, Christie v. Iopa, 121 F.3d 714, 1997 WI. 109 S.Ct. 2702, 105 L.Ed.2d 598 (1989) ("[W]hether 429413 (9th Cic1997) (unpublished table a particular official has 'final policymaking authority' decision) (emphasis added); see 9th Cir. R. is a question of state law. As with other questions of 36-3 (allowing the citation to an unpublished state law relevant to the application of federal law, the disposition when relevant as law of the case). identification of those officials whose decisions As is apparent, the coon declined to decide represent the official policy of the local government whether Iopa had final policymaking unit is itself a legal question to be resolved by the trial authority. The mere suggestion that Iopa judge before the case is submitted to the jury.") might possess that authority does not bind us (emphasis in original) (citations and internal quotation now. See Ruff v. Sullivan, 907 F.2d 915, marks omitted . 918 (9th Cir.1990) ("This panel is not bound ) by dicta from prior cases (citation and internal quotation marks omitted); Export The district court held that Hawaii Prosecutor Kimura Group v. Reef Indus., Inc., 54 F.3d 1466, possessed final policymaking authority to decide t471-73 (9th Cir.I995) (stating the same whom to prosecute and whether to approve plea principle). agreements. See, e.g., Marsland v. First Hawaiian Bank, 70 Haw. 126, 130, 764 P.2d 1228 *1236 (1988) The Court in Prapromik recognized that "special (County prosecutors have been delegated "primary difficulties" arise when a plaintiff alleges that an authority and responsibility for initiating and official has delegated policymaking authority: conducting criminal prosecutions within their [f the mere exercise of discretion by an employee respective county jurisdictions."); Amemiya v. could give rise [o a constitutional violation, [he Sapienza, 63 Haw. 424, 427, 629 P.2d 1126 (1981) result would be indistinguishable from respondeat (stating the same principle). On appeal, the County superior liability. If, however, a city's lawful does no[ dispute that holding. policymakers could insulate [he government from liability simply by delegating their policymaking [10][11] Plaintiffs allege, however, that deputy authority to others, § 1983 could not serve its prosecutor Iopa violated their constitutional rights. intended purpose. "Authority to make municipal policy may be Id. at 126, 108 S.Ct. 915. The question therefore delegated by an official who possesses such becomes whether the policymaker merely has authority...." Prapromik, 485 U.S. a[ 124, 108 S.C[. delegated discretion to ac[, or whether i[ has done 915 (citation and internal quotation marks omitted). more by delegating final policymaking authority: Thus, the first question on appeal is whether Kimura [I]f county employment policy was set by [he (or Kimura's predecessor Ono) [FN2] delegated to Board of County Commissioners, only that body's Iopa final policymaking authority to decide whom to decisions would provide a basis for liability. This prosecute and whether to approve plea agreements. would be true even if [he Board left [he Sheriff [FN3] discretion to hire and fire employees and the Copr. ©West 2000 No Claim to Orig. U.S. Govt. Works 176 F.3d 1231 Page 6 (Cite as: 176 F.3d 1231, *1236) Sheriff exercised that discretion in an unconstitutional manner, the decision to act FN4. Plaintiffs assert that this court in Fazio unlawfully would not be a decision of the Board. v. City and County of San Francisco, 125 However, if the Board delegated its power to F.3d 1328 (9th Cir.1997), cert. denied, establish final employment policy to the Sheriff; U.S. 118 S.C[. 1517, 140 L.Ed.2d 670 the Sheriffs decisions would represent county (1998), held that deputy prosecutors have policymaking authority under San policy and could rise to municipal liability. Francisco's charter. However, Fazio did not Pembaur, 475 U.S. at 483 n. 12, 106 S.Ct. 1292 purport to interpret Hawaii law. Moreover, (emphasis in original); see Fiorenzo v. Nolan, 965 Plaintiffs misunderstand Fazio. F.2d 348, 351 (7th Cir.1992) ("[A] municipality is not This court did hold that deputy prosecutors liable merely because the official who inflicted the in San Francisco are policymakers for the alleged constitutional injury had the discretion to act purpose of political patronage liability. See on its behalf; rather, the official in question must id. at 1333. However, the court stated that possess final authority to establish municipal policy "policymaker" has a different meaning in that with respect to the challenged action."). In making context: these determinations, courts consider whether [he [J']he term policymaker as used in this official's discretionary decision is "constrained by context does not mean "one who makes policies not of that official's making" and whether the policy." Rather, the term refers to a position in which political considerations are official's decision is "subject to review by the "appropriate requirement[s] for the effective municipality's *1237 authorized policymakers." performance of the public office involved." Praprotnik, 485 U.S. at 127, 108 S.Ct. 915. Id. (emphasis added) (citation omitted) (alteration in original). [ 12] Applying those principles, the court in Hyland v. Wonder, 117 F.3d 405 (9th Cir.), as amended, i27 As will be discussed below, the delegation at issue F.3d 1135 (9th Cir.1997), cert. denied, U.S. here is unlike the delegation in Hyland. Instead, it is 118 S.Ct. 1166, 140 L.Ed.2d 177 (1998), held that similar to the delegation in Trevino and Gates. there had been a delegation of final policymaking authority. There, the San Francisco superior court Specifically, the Hawaii charter gives the prosecutor judges possessed final policymaking authority over the the authority to "appoint deputies." County of Hawaii Juvenile Probation Department. See id., 117 F.3d at Charter § 9-4 (1991). The charter does not define the 415. The superior court judges, however, "left the duties or powers of deputy prosecutors. Citing Okuda internal management of the Juvenile Probation v. Ching, 71 Haw. 140, 785 P.2d 943 (1990) (per Department to [the chief juvenile probation officer] curiam), Plaintiffs argue that the Hawaii Supreme and attempted not to interfere." Id. (internal quotation Court has held that deputy prosecutors possess final marks omitted). The superior court judges also "did policymaking authority. We are not persuaded. not formulate any policy" regarding internal management of the department [d. (internal quotation [n Okuda, [he prosecutor for the City and County of marks omitted). The delegation thus satisfied both Honolulu recused himself from any involvement in the criteria identified in Prapromik. No[ surprisingly, defendant's case. See id. at 142, 785 P.2d 943. then, this court held [hat the superior court judges had Before [he recusal, the prosecutor's office had delegated final policymaking authority to the chief appointed a private lawyer to serve as the deputy juvenile probation offices See id. at 415-16. prosecutor for the case. See id. at 141-42, 785 P.2d 943. The defendant argued [hat, once the prosecutor By contrast, this court has refused to hold that [he Los had recused himself, the private lawyer could not serve Angeles chief of police had delegated final as a deputy prosecutor, because the charter allowed policymaking authority to rank-and-file police officers. private lawyers to try cases only under the "direction See Trevino, 99 F.3d at 920 ("The police officers who of the prosecuting attorney." Id. a[ 143-44, 785 P.2d shot Bahena were no[ 'officials with final policy- 943. The Hawaii Supreme Court disagreed: making authority' and they were not ordered to shoot This contention founders on the rock of common by the police chief, the City Council or anyone else sense. There is no way, given the volume oC possessing final policy-making authority."); Los criminal cases handled by the prosecuting attorney Angeles Police Protective League v. Gates, 907 F.2d of [he City and County of Honolulu, that the 879, 882-83, 890 (9th Cir.1990) (stating a similar prosecutor can personally supervise each and proposition). [FN4] every case. Copr. ©West 2000 No Claim to Orig. U.S. Govt. Works 176 F.3d 1231 Page 7 (Cite as: 176 F.3d 1231, *1237) Under Charter § 8-105, the prosecuting attorney is empowered to appoint deputies, and under the The foregoing discussion establishes that Iopa lacked provisions of *1238 Charter § 8-104, it is obvious final policymaking authority to initiate or terminate that it is intended that those deputies may perform prosecutions. Her decision to prosecute a case was the functions of the prosecutor.... constrained by policies not of her making, and she was So also the supervision of private counsel, subject [o review by the municipality's authorized employed for a particular case, can be policymakers. accomplished by a duly appointed deputy. Id. at 144-45, 785 P.2d 943. Iopa likewise lacked final policymaking authority over plea agreements. First, the County Prosecutor, The Hawaii court's decision in Okuda establishes that not Iopa, created standards and criteria to govern plea deputy prosecutors have the power to perform many of agreements. Second, although Iopa exercised the duties assigned to the prosecutor and that, in [he discretion when making and negotiating plea process, [hey necessarily exercise broad discretion. As agreements, she generally did not have authority to noted above, however, delegating discretion is not enter into those agreements when significant equivalent to delegating final policymaking authority. concessions were at stake: "All felony plea See Prapromik, 485 U.S. at 126, 108 S.Ct. 915 ("If the agreements which contemplate the reduction [or] mere exercise of discretion by an employee could give dismissal of charges shall be approved by the First rise [o a constimtional violation, the result would be Deputy or [he Prosecuting Attorney." Again, ?opa's indistinguishable from respondeat superior liability."). plea agreements were constrained by policies not of Nothing in Okuda suggests that a county prosecutor her making, and her significant plea agreements were necessarily delegates final policymaking authority to subject to review by the municipality's authorized deputy prosecutors; at most, Okuda holds that a policymakers. That being so, she lacked final county prosecutor can delegate that authority. policymaking authority over plea agreements. However, the record reveals that the County Prosecutor did not choose to make such a delegation In summary, the district court did no[ err by holding m Iopa here. that Iopa lacked final policymaking authority to decide whom to prosecute and whether to approve plea The County Prosecutor, not Iopa, created "general agreements. policies" for determining when to charge a defendant. More significantly, lopa's immediate supervisor, B. Ratification Ashida, adopted policies for the initiation of felony prosecutions, including the creation of a screening A municipality also can be liable for an isolated process that he used to decide whom to prosecute. As constitutional violation if the final policymaker part of [hat process, Ashida made sure that all "ratified" a subordinate's actions. See Prapromik, 485 necessary information was in a defendant's file. Based U.S. at 127, 108 S.C[. 915. Ordinarily, ratification is a on that information, Ashida then determined whether *1239 question for the jury. See Fuller v. City of there was admissible evidence that proved beyond a Oakland, 47 F.3d 1522, 1534 (9th Cir.1995). reasonable doubt that a defendant had committed the However, as with any jury question, a plaintiff must crime alleged. If there was such evidence, Ashida establish that [here is a genuine issue of material fact prepared a subpoena request form, listed all the regarding whether a ratification occurred. See, e.g., necessary grand jury witnesses, and drafted a proposed Covey v. Hollydale Mobilehome Estates, 116 F.3d indictment. He [hen assigned the case [o a deputy 830, 834 (9th Cir.), as amended, 125 F.3d 1281 (9th prosecutor to present the case to the grand jury. Cir.1997). The district court held that Plaintiffs could no[ satisfy that requirement. Ashida applied that procedure in Plaintiffs' case. He, rather than Iopa, made the initial decision to prosecute I. Christie Plaintiffs. Under the screening process, deputy prosecutor Iopa then had [he authority to "review [the] [13][14] The district court correctly concluded that proposed indictment, make any changes, or contact plaintiff Christie cannot establish ratification. To [Ashida] if she had any concerns." If Iopa disagreed show ratification, a plaintiff must prove that the with Ashida's decision to prosecute Plaintitfs, she had "authorized policymakers approve a subordinate's to contact Ashida; she could not decide unilaterally to decision and the basis for it." Prapromik, 485 U.S. at drop the case. 127, 108 S.Ct. 915; see Gillette, 979 F.2d at 1348 Copr. ©West 2000 No Claim to Orig. U.S. Govt. Works 176 F.3d 1231 Page 8 (Cite as: 176 F.3d 1231, *1239) (refusing to find ratification, because "[t]here is no attorney.") (citation and in[emal quotation marks evidence [hat the City manager made a deliberate omitted); Henry v. County of Shasta, 132 Fad 512, choice to endorse the Fire Chiefs decision and the 518 (9th Cir.1997) ("It is a reasonable inference-- basis for it"). Accordingly, ratification requires, indeed, the only reasonable inference--that after Henry among other things, knowledge of the alleged filed suit and successfully served process against the constitutional violation. See Garrison v. Burke, 165 county, it knew about the alleged malfeasance of its F.3d 565, 572 n. 6 (7th Cir.1999) (holding that the employees at the jail."), as amended, 137 F.3d 1372 municipality was not liable under § 1983, because it (9th Cir.), cert. denied, U.S. 119 S.Ct. 59, 142 had no knowledge of the alleged constitutional L.Ed.2d 46 (1998). violations); Gattis v. Brice, 136 F.3d 724, 727 (11th Cir.1998) (stating a similar proposition). [16] A policymaker's knowledge of an unconstitutional act does not, by itself, constitute [IS] Christie provided no evidence, in conjunction ratification. Instead, a plaintiff must prove that the with his summary judgment motion, that Kimura knew policymaker approved of the subordinate's act. For of Iopa's actions before the criminal case against him example, it is well-settled that a policymaker's mere was dismissed (i.e., before the alleged constitutional refusal to overrule a subordinate's completed act does violations ceased). [FNS] That being so, Christie has no[ constitute approval. See Weisbuch v. County of not established a genuine issue of material fact as to Los Angeles, 119 F.3d 778, 781 (9th Cic1997) ("To the question whether Kimura ratified [opa's actions. hold cities liable under section 1983 whenever policymakers fail to overrule the unconstim[ional FNS. In his motion for reconsideration, discretionary acts of subordinates * 1240 would simply Christie produced, for the firs[ time, smuggle respondeat superior liability into section newspaper articles that suggested that 1983.") (citation and internal quotation marks Kimura knew of Iopa's alleged constitutional omitted); Gillette, 979 F.2d at 1348 (stating the same violations. However, we do no[ consider principle). evidence or arguments presented for [he first time in a motion for reconsideration. See Fed.R.Civ.P. 56(c) (party opposing summary [17] Here, however, there is more. A rational trier of judgment may serve opposing affidavits fact could conclude that Kimura affirmatively "prior to the day of hearing"); Self- approved of Iopa's alleged ongoing constitutional Realization Fellowship Church v. Ananda violations. Church of Self-Realization, 59 F.3d 902, 912 (9th Cir.1995) ("A party does not properly First, Kimura took part in some of the plea preserve an issue for appeal by raising it for negotiations with Anderson. According to Anderson's the firs[ time in a motion for reconsideration."); Bally Export Corp. v. evidence, Kimura indicated during the negotiations Balicar, Ltd., 804 f.2d 398, 404 (7th that he would not prosecute anyone else in the future Cir.1986) ("Although the defendants for possession of commercial sterilized hemp seeds. attempted to raise the argument in their Kimura's statement, if proved at trial, permits an motion for reconsideration, a motion for inference that he approved of lopa's selective reconsideration is an improper vehicle to prosecution of Anderson. introduce evidence previously available or to tender new legal theories."). Second, around that same time, Anderson's private investigator purchased commercial sterilized hemp 2. Anderson seeds from Walmart and Miranda Country Stores, for use in Anderson's defense (to show that commercial After Christie's case was dismissed, but while sterilized hemp seeds are readily available in Hawaii). Anderson's case was still pending both Plaintiffs filed Kimura notified the police of the investigator's this action against Kimura. Anderson alleged that possession of hemp seeds; he did not, however, notify lopa had violated, and was continuing to violate, his [he police of Walmart's or Miranda's sale of hemp constitutional rights. Filing the action thus provided seeds. Again, Kimura's actions permit an inference Kimura with notice of Iopa's alleged ongoing that he approved of lopa's selective prosecution of constitutional violations. See Link v. Wabash R.R. Anderson. Co., 370 U.S. 626, 634, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962) ("[E]ach party is considered to have notice [18] Although Kimura's actions may have an innocent of all facts, notice of which can be charged upon the explanation, on summary judgment the only question Copr. ©West 2000 No Claim to Orig. U.S. Govt. Works 176 F.3d 1231 Page 9 (Cite as: 176 F.3d 1231, *1240) is whether a rational juror could infer a noninnocent I. Christie explanation. A rational juror could infer that Kimura's acts showed affirmative agreement with lopa's actions. [19][20] "[D]eliberate indifference is a stringent In the circumstances, the district court erred by standard of fault, requiring proof that a municipal granting summary judgment to Defendants on actor disregarded a known or obvious consequence of Anderson's claim that Kimura ratified [opa's alleged his action." Brown, 520 U.S. at 410, 117 S.Ct. 1382 constitutional violations. (emphasis added) (internal quotation *1241 marks omitted); see Jensen v. City of Oxnard, 145 F.3d C. Deliberate Indifference 1078, 1082 (9th Cir.) (stating the same principle), cert. denied, U.S. 119 S.Ct. 540, 142 L.Ed.2d 449 The Supreme Court did not mention deliberate (1998). There is no evidence that Kimtua knew indifference as an exception to the single-incident rule anything of Iopa's actions before the criminal case in Praprotnik. After the Supreme Court decided against Christie was dismissed. Prapro[nik, however, the Court adopted "deliberate indifference" liability and suggested that it can apply In the circumstances, Christie is left to argue that [o single-incident cases. See City of Canton v. Hartis, Kimura's general policy of delegating discretion to 489 U.S. 378, 390, 109 S.Ct. 1197, 103 L.Ed.2d 412 deputy prosecutors obviously would result in [opa's (1989) ("But it may happen that in light of the duties alleged constitutional violations. The Supreme Court assigned to specific officers or employees the need for has emphasized the danger of permitting liability for more or different training is so obvious, and the such a facially valid policy: inadequacy so likely to result in the violation of Where a claim of municipal liability rests on a constitutional rights, that the policymakers of the city single decision, not itself representing a violation can reasonably be said to have been deliberately of federal law and not directing such a violation, indifferent to the need."). [FN6] This court has the danger that a municipality will be held liable applied this form of liability to single-incident cases. without fault is high. Because the decision See Fuller, 47 F.3d at 1535; Hammond v. County of necessarily governs a single case, there can be no Madera, 859 F.2d 797, 803 (9th Cv.1988). [FN7] notice to the municipal decisiottmaker, based on previous violations of federally protected rights, FN6. T'he Supreme Court in Brown assumed that his approach is inadequate. Nor will it be without deciding that single- incident readily apparent that the municipality's action liability applied to the policy at issue there. caused the injury in question, because the plaintiff See Brown, 520 U. S. at 412, 117 S.Ct. 1382. can point to no other incident tending to make it more likely that the plaintiffs own injury flows FN7. In Fuller and Hammond, this court from the municipality's action, rather than from suggested that the appropriate standard for some other intervening cause. liability was either gross negligence or grown, 520 U.S. a[ 408, 117 S.Ct. 1382. reckless indiBerence. However, after those decisions, this court has made clear that a In [his action, holding [he municipality liable for plaintiff must prove deliberate indifference. See L.W. v. Grubbs, 92 F.3d 894, 900 (9th Kimura's general policy of delegating discretion to Cir.1996) ("We conclude that the plaintiff deputy prosecutors would be tantamount to adopting must show that the state official participated respondeat superior liability. That result is in creating a dangerous condition, and acted impermissible. See, e.g., Monell, 436 U.S. at 691, 98 with deliberate indifference to the known or S.Ct. 2018 ("[A] municipality cannot be held liable obvious danger in subjecting the plaintiff to under § 1983 on a respondeat superior theory."). The it."). district court correctly held that, as a matter of law, Christie cannot demonstrate deliberate indifference. As with ratification, a plaintiff must establish a genuine issue of material fact as to the question 2. Anderson whether the final policymaker acted with deliberate indifference to the subordinates constitutional Kimura obtained notice of lopa's alleged violations. See Fuller, 47 F.3d at 1534-35. The constitutional violations when Anderson filed this district court held that Plaintiffs could not satisfy that action. The evidence that Anderson presented in requirement. opposition to the motion for summary judgment would permit a rational trier of fact to find that Kimura then Copr. ©West 2000 No Claim to Orig. U.S. Gov[. Works 176 F.3d 1231 Page ]0 (Cite as: 176 F.3d 1231, *1241) deliberately chose to allow lopa's constitutional permitting a rational trier of fact to find that Kimura, a violations to continue. Thus, the district court eyed person with final policymaking authority, knew of by holding that, as a matter of law, Anderson could not lopa's alleged ongoing constitutional violations and (1) prove deliberate indifference. approved of those violations or (2) was deliberately indifferent to them. We therefore reverse the district D. Conclusion court's grant of summary judgment as to Anderson. We emphasize first what we do not hold: The County AFFIRMED IN PART, REVERSED IN PART, AND is not potentially liable because [opa was one of its REMANDED FOR FURTHER PROCEEDINGS. employees or because Kimura delegated discretion to Each party is to bear its own costs on appeal. her. We hold only that Anderson has created a triable issue of fact on liability. He produced evidence END OF DOCUMENT Copr. ©West 2000 No Claim to Orig. U.S. Govt. Works Jan-31-00 03:61P THE ECONOMIC LOSS OF AARON ANDERSON Matthew R. Marlin, Ph.D. Professor of Economics The A.J. Palumbo School of Business Duquesne University Pittsburgh, PA 7 5282 1472) 396-6250 Marlin@duq.edu Jon Gettman P.O 8ox 11312 Washington, D.C. 20041 (540) 822-9002 Gettman JCg~rnediasoft.net January 2000 Jan-31-00 03=61P r.um THE ECONOMIC LOSS OF AARON ANDERSON I. INTRODUCTIQN A. Background This report estimates that the economic loss suffered by Aaron Anderson as a consequence of his indictment and subsequent inability to maintain his retail business selling hemp products is equal to 5369,700. The following facts are used as a basis for making the estimate: Date of Birth: June 1 5, 1937 Date of Indictment: January 9, 1992 Age at Time of Indictment: 55.5 years Time Since Indictment: 8 years Current Age: 62.5 years Life Expectancy (From Presentl~ 18,1 years' Worklife Expectancy 8.5 years2 {From Time of Indictment) Anderson, R.N. United States abridged life tables, 1996. National vital statistics reports; vol 47 no. 13. Hyattsville, Maryland: National Center for Health Statistics, 1998. z Source: U.S. Department of Labor, Bureau of Labor Statistics. Worklife Estimates: Effects of Race and Education.. Bulletin 2254, February ' 986. According to the DOL a 55 year old white male currently active in the labor force will have a work life expectancy of about 8.5 years years. This would result in a retirement age of 63.5 64 years, a figure consistent with estimates published by the U.S. Department of Labor which indicate a projected retirement age of 62.9 years {The Monthly Labor Review, April, 1 983, p.30). 1 Jan-31 -U1J U3:blY ~ B. Work History At the time of his indictment in 1992, Mr. Anderson was the owner- operator of Origin Foods, a business involved in the selling of retail products made of hemp. These prpdtlets included items such as clothes, bags, headwear, footwear, etc. In addition, Mr. Anderson was in [he process of developing ahemp-based line of health foods including bagels, confections, and health bars. At the time of his indictment, two investors were prepared to invest a total of S250,000 in Origin Foods in return for a tv~io-thirds interest in the business. Mr. Anderson would have remained as a salaried employee of the business, In addition, he would own the remaining one-third interest in the business. After his indictment, his investors withdrew their capital and retail customer interest waned due to the prospect of potential criminal liability. He was unable to maintain this business and consequently closed it. Since the time of the indictment, Mr. Anderson has essentially been unemployed with limited earnings. II. HYPOTHETICAL OPERATION OF THE BUSINESS At the time of his indictment, Mr. Andersen had two invesCOrs prepared to invest a total 5250,000 in his business. We will assume that the investors were to receive simple interest equal to 10% annually (prune plus 3.5%} on this amount plus 2/3 of the business's profits and equity. In return for his labor services and entrepreneurial talent, Mr. Anderson was to receive a salary for his labor as a full-time employee plus 1 /3 of the firm's profits and equity. A. Assumptions Estimating the potential earnings that Mr. Anderson would have received in the absence of the indictment is an admittedly difficult task. Many assumptions must be made about projected sales, costs, growth rates, etc. Many of the assumptions used here are based on the 1996 and 1998 Hemp Business Surveys (HBS}' conducted by Jon ' Gettman, Jon. "Hemp Entrepreneurs and U.S. Public Policy -The 1 996 Hemp Business Survey." (New York: Hemp Company of Ameriea, 1996) and Gettman, Jon. "The 7998 Hemp Industries Association Survey." (Occidental, CA: Hemp Industries Association, 1999). 2 Jan-31-00 03 cfi2P P.Ub Gettrnan, a former successful small business owner and currently a doctoral candidate in economics at George Mason University. The following assumptions are made about the operation of the business: (1) It is assumed that 5200,000 of the initial investment was used to purchase inventory that was priced to sell at twice its cost. In each Year, one halt the inventory does not sell at the retail price, it is discounted and then sold at cost. Gross revenues are reinvested in new inventory. As a result, revenues are 5100,000 and S100,OOp is spent on new inventory. One quarter of the inventory is sold at twice its cost, and the inventory is replaced: revenue is 5100,000 and 550,000 is put into new inventory. The remaining quarter of the inventory is sold at twice its cost, the inventory is replaced, it sells again for twice its cost, and the inventory is again replaced. Revenue is 5200,000 and inventory replacement is 5100,000. As shown in Appendix Table 1, the net result in 1992 is that Sales Revenue is 5400,000 and Inventory Replacement Cost is S250,000, leaving Gross Revenue of $150,000. This sales pattern is assumed to continue through the end of 1999, (2) The remaining $50,000 of the investors' capital was used for start up costs such as new shelving, display cases, cash register, etc. It is assumed that the value of this capital is fully depreciated after 8 years. (3) Costs, excluding interest, are 5102,500 in 1992 and increase at 4°~ per year each year through 1999. A detailed list of the costs is included in the Appendix. {4) Interest payments are assumed to be $25,000 per year, equal to the prime rate of 6.5°,6 that existed in January 1992 plus 3.5°%. interest payment do not vary from one year to the next. S5) Beginning in 1992, 510,000 of the total profit (Gross Revenue - Costs -Interest) is reinvested in new inventory. This amount increases by 4% per year and the increased value of the inventory from one year to the next represents an increase in owners' equity. 3 Jan-31-VV V3:b2Y (6) The remaining profit after all costs and inventory accumulation Dave been paid reverts to Mr. Anderson and the two investors, each of whom gets Gone-third share. B. Comments on the Assumptions According to the 1998 HBS, the average store selling hemp products grossed S430,906 in 1997 and sales were projected to be 5524,256 in 1998. The estimated presented in the Appendix are slightly higher due to the assumption of the 5250,000 available from outside investors. The 1998 HBS showed an annual growth rate in retail sales of 9.75% from 1996 to 1997. The 4% growth rate assumed in this study is significantly lower, and roughly reflects the average growth rate throughout the U. S. economy during the time period in question. III. ESTIMATES OF LOST EARNINGS A. Introduction Mr. Anderson's loss of earnings are equal to the amount of income that he would have received had he been able to operate Origin Foods without being indicted. Estimating the amount of this loss requires estimating: 1. How many years he would have remained in this business, 2. How much he would have earned each year, and 3. The value of his share of the business at the time of his retirement. 1. Estimating the Time in 6uslness At the time of his indictment in January 1992, Mr. Anderson was 55.5 years old. The Department of Labor statistics cited above imply that a white male of that age who is active in the labor force can be expected to retire when he is about 63 years old. In this case retirement would be estimated to occur in June 2000. The Department of Labor's Worklife Estimates cited above indicate that people who are currently active in the work force have significantly longer worklives than those who are not. 4 Jan-31-00 03:62P r.ui _ Mr. Anderson exited the labor force and began receiving Social Security retirement benefits in June of 1999 at the age of 62 after a long period of inactivity in the labor force. It conservatively assumed that had he been working in his business, Mr. Anderson would have delayed his retirement at least for another 6 months until December 1999 at the age of 62.5. It is therefore assumed that Mr. Anderson would have maintained his business through December 1 999, a total of 8.0 years after the indictment 2. Estimated Earnings Salary. It is assumed that as a business owner/operator, Mr, Anderson would be expected to work at least 60 hours per week or 3,120 hours per year, An estimated salary of 530,000 per year, or a little less than S10 per hour, is assumed as an average over the eight year period. Mr. Anderson's lost salary is therefore estimated to equal $30,000 per year far 8 years, or 5240,000. Profits, A business has essentially two choices as to what to do will, a businesses profits: reinvest them in the business or disperse them to the owners. As noted above, it is assumed that after the first year of operation, 910,000 of profits were invested in an expanded inventory. This amount increased by 4% per year. The remainder is assumed to have been divided among the three principles in the business. The last column of Table 1 in the Appendix shows the amount of estimated profits distributed each year. The total for the eight year period is 9191 ,136. Mr. Anderson's share of these profits is estimated to equal 563,712, or more simply, 563,700. 3. The Value of the Business The value of the business at the time Mr. Anderson wished to sell his interest is comprised of the equity in the business and the capitalized value of future earnings. Equity. According to the scenario created, the equity in Origin Foods, es measured by the value of its inventory, increased from 9200,000 in 1992 to 5278,983 in 1999, an increase of 978,983. Mr. Anderson's 5 Jan-3l-vu ~,o zocr one-third share of this equity would equal an estimated 526,328, or Wrote simply, 826,300. Capitalized Value. The capitalized Ior present) value of an investment is equal to the annual income stream that the investment generates divided by an appropriate rate of interest which is also known as the drscvurrt rate. In December 1999, the prime rate was equal to 8.5°.'0. Consistent with the estimate of the interest rate earned by the investors in 1992 (page 2), the discount rate is assumed to equal the prime rate plus 3.5%, or 12.0%. At the close of 1999, annual profits, after investment in inventory, wore equal to 536,195. Mr. Anderson's one-third share o1 these profits equaled about $1 2,000 per year. Capitalized at a 12.0°,6 discount rate, the capitalized value of the profit stream is 1512,000 + 0.121 = S 100,000. G. Mitigating Gains I have been informed that Mr. Anderson suffers front a back injury and psychological stress, both which have contributed to difficulty in his being able to obtain alternative employment. I have also been informed, that since the time of I,is indictment, Mr. Anderson's earnings leave never been in excess of $7,000 per year. It is assumed that he was provided with no employer-paid benefits other than government mandated contributions to Social Security and Medicare which equal 7.66% of his wages, Based on the above, it is estimated that Mr. Anderson's mitigating gains during the period in question equaled 57,000 per year for 8 years, or 556,000. He would also have received benefits equal to about 54,300 (0.0765 x 556,0001, for a total of $60,300. D. Estimated Economic Loss Mr, Anderson' total economic loss as a consequence of the indictment which prohibited him from operating his business is equal to the sum of lost salary, lost profits, lost equity, and lost capitalized value of the business. Offsetting these losses are the mitigating income and benefits which he received during this period. As shown in the Table on the following page, tfre estimate of the loss is 5369,700. fi Jan-31-00 03:63P r-~+~ The Net Economic Losses of Aaron Anderson Nature of Loss or Gain__ Amount Economic Losses Salary $ 240,000 Profits 83, 700 Equity 26,300 Capitalized Value + 1 p0,000 Total 5430,000 Mitigating Gains Earnings Plus Benefits -$80,300 Net Economic Losses 9369,700 Matthew Marlin, Ph.D. ~ Jon Gettman 7 Jan-31-00 03:63P r. lv Appendix Explanation of Appendix Table 1 Column (21: The company starts with a S250,000 investment. $200,000 is put into inventory. After one year $10,000 in profits is put back into inventory. The amount put back grows by 4°/u par year. The remaining 550,000 is put into start-up costs such as shelving to house the expanding inventory, a cash register, etc. After 8 years it will be assumed that the value has been fully depreciated. Column (31: Saes Revenue figures are based on the following assumptions: 50% of the inventory (S100,000) does not sell at the retail price, it is marked down to cost and sold, and then the inventory is replaced. [Revenue = S10D,000] 25°k of the inventory ($52,0001 is sold at a retail price equal to twice its cost, and then the inventory is replaced (Revenue = 12 x 350.0001 = 5100,000] 25% of the inventory (S50,000) is sold at a retail price equal to twice its cost, it is replaced, Sold again, and then replaced again, [Revenue - 2(2 x $50,000) = 5200,000] The figure for 1992 (S400,000) is the sum of the three revenue estimates indicated above. Later values can be calculated in a like manner, or more as simply twice the value of inventory. Column (4): /nventory Rep/acement Cost is based on the inventory replaced in the calculations for Column {2} above. S 100,000 of inventory was sold at cost -replacement cost is therefore equal to 3100,000. The inventory that was sold at the full retail price was replaced at a cost of S50,000. The inventory that was sold twice during the year was replaced at a cost of S 100,000. The sum of these three amounts is 53250,000. Column (51: Gross Revenue is the difference between Sales Revenue and Inventory Replacement Cost. 8 Jan-31-00 03:63P r•ii Column (6): Costs Fxcludbtg Interest include the following and grow at 4"/° per year: Rent S 18,000 Telephone and Utilities S 2,500 Advertising $12,000 Travel S 10,000 Salaries and Withholding (2 employees) S6D,000 $ 702,500 Note: Mr. Anderson ;s assumed to be one of the two employees. Column (7): /merest is assumed to be paid annually at a rate of 10% (pnme plus 3 1/2"/o in January 1992) without compounding. This represents a debt owed by the company to the two investors. It does not change over the course of the business. Column Totes/ Non-Inventory Costs is the sum of Columns (51 and (B)• Because interest in Column 16) does not grow, Total Non- Inventory Costs grow at less than 4% per year. Column 191: New Inventory Investment represents net additions to inventory made by the business each year. It is assumed the funds are deducted from earnings prior to oalculating net profits and that they are initially 510,000 and grow at 4% per year. The total amount put into inventory investment becomes equity owned by Mr. Anderson and the two investors. Column (10): Net Profit is the difference between Gross Revenue (51 and the sum of Total Non-Inventory Costs (8i and New Inventory investment (9). 9 Jan-31-00 03:b3P `~'1° m ~ Oy OONC~~dmm ~ a ~ to ~ tL m N h r _ N l1] CO In 00 N W m ~ ~ r N N N ('J f7 r K L_ ~ O4t0m WhMQ7 N Y H C O~ r a Ql tD In LL7 tl O~ y c d y 0 IXf N ~O ~ tp ' Z> C E I 0 0 0 ~ ~ N N M N G ~-r r~ r~- m N N 9cU OOdm.-h inc'~ Z ~ oO~rm.-o moo ~ ~~aaoNOircoao p m c ~ ~`~~rioaaiaoi LL c~ N M M tl a d 1f7 ttf r, C r ~ r f ~ ~ H C do$ooooo O b y ~ O O O O d 0 0 ~ t" In u7 In lfi ~ IC1 ~fi U': r ~ N N N N N N N r d ~ N C w ~OttlDNrOmC0 ~ 1 ~ N~j ~LnNmrfp OD F ~ C ppOLf)O1NNM x io w - H'-r r.-.-~ .r C,V a~'i c COO~~N~t7 O. N M a EO cD h N ~ ~ItJ O ? ~ h ll1 M r p m Q G (7~ ~~f0~ m~CS1N 61 7 41 m p O O O tl M m 'O Q c~ N u~uO~,OO~mr. -r d a b O N lI7 m M h N CO r 7 m V ~ O h W O r M '7 C~ ~ N N N M (7 f~ M O LLI b c OOo~amr~~m 1+7 N m O N Ch fD o0 V M In o~ ,;;a~ra~a~~n~n > ~oOco incnor~ N C ~O~N ~cOr>m d ~QO.-NV tD ep C ~ N N N N N N N N M d I!] CD t~ O m r m mmmmmmmo~ i armmmmmm m o r r r V- ERNEST AARON ANDERSON v. COUNTY OF HAWAII, CASE NO. 95-01026 (DAE) Trial Date: June 6, 2000 Federal Court, Honolulu This statement is provided pursuant to Rule 408, Federal Rules of Evidence In an attempt to compromise a disputed claim. Settlement Offers Party Date Amount Status County 02/23/96 $ 500.00 rejected Aazon Anderson 10/07/96 $ 250,000.00 no response from County, lapsed Aazon Anderson 12/27/99 $ 500,000.00 no response from County, lapsed Case status •Aazon's federal civil rights claims aze scheduled for trial June 6, 2000 before a federal court jury in Honolulu. •The Court of Appeals for the Ninth Circuit has twice ruled in favor of Aazon and against the County on the County's theoretical defenses to liability. Aazon is entitled to prove County liability by showing Prosecutor Jay Kimura was deliberately indifferent to or ratified the illegal prosecution. In January, 2000, trial judge David A. Ezra rejected the County's argument that all hemp products are illegal. • Aaron's state claims must be filed by February 9, 2000 in Third Circuit Court. Summary of claims Aazon purchased hemp seeds from a licensed seed broker. This is not a crime. Even if it were a crime, under United States law, persons accused of crimes cannot lawfully be singled out for prosecution based on their race, religious beliefs, or political expression. Aazon claims that County prosecutors chazged and tried him for commercial promotion of mazijuana, a B felony (up to 10 years prison) because of his exercise of political speech. STLMTCHR2.DOC 1 Such prosecution violates the First Amendment and Fourteenth Amendments, United States Constitution. If Aazon prevails at trial, in addition to damages, the County must pay Aaron's attorney's fees and costs estimated at $ 250,000.00. County Prosecutors are sworn to uphold the Constitution and seek justice, not just convictions.z Prosecutor Kimura makes policy for the County. Christie v. Iopa, 176 F.3d 1231, 1235 (9th Cir. 1999). To date, the County has tried to distance itself from the conduct of former Deputy Prosecutor G. Kay Iopa, claiming before Judge Ezra that she acted in an "aberrant" manner. Last yeaz, however, the Ninth Circuit ruled that Aazon can prove County liability by showing either that Prosecutor Kimura ratified Iopa's conduct or was deliberately indifferent to it. Aazon can show both. Evidence 1. Hemp seeds aze readily available for purchase at retail stores throughout Hawaii County, yet no other importers nor sellers nor buyers of hemp seed were prosecuted. 2. Deputy Iopa explained the reason for selection of Aaron for prosecution to now- retired Judge Shunichi Kimura in 1991: As a practical matter, no, we're not going to go out, bust the little old lady that's got a bag of bird seeds just because there is one marijuana seed in there. Um, when you get twenty-five pounds within an order for five hundred pounds or more, going to, um, a hemp grower, that is very vocally. very outwardly advocatine the le¢alization of marijuana. 3. Iopa repeatedly misrepresented evidence, falsely claiming test results showing zero germination as proof of germination. 4. In June, 1994, Judge Nakamura required the Prosecutor's office and Aazon to try to reach a plea agreement. Aaron offered to waive his civil claims against the County in exchange for immediate dismissal of the felony charge against him. Iopa rejected Aaron's offer, requiring as a condition of any agreement that Aazon write no more letters to the newspapers. For yeazs, Aazon has written numerous letters to the newspapers about the human costs of the so-called war on drugs, medical marijuana, and other hemp and marijuana issues. 5. Jay Kimura was served with a copy of Aaron's federal complaint alleging unlawful selective prosecution in 1995, yet did not stop the case against Anderson. STLMTCHR2.DOC 2 6. Jay Kimura's conduct was consistent with County policy, which sought hundreds of thousands of federal dollazs each yeaz to eradicate marijuana. In 1994-95, the County Police Department federal grant application identified problems it faced in its drug war. One of these named problems was the activities of hemp advocates in Hawaii County. 7. Both Jay Kimura and Iopa threatened Aaron's defense witnesses with prosecution if they testified about their purchase of hemp seeds and products containing hemp seeds from Hawaii County retail stores. Witnesses declined to testify. 8. Instead of working for justice, County prosecutors forced Aaron to stand trial in 1997. After the prosecution's case fell apart, the jury deadlocked 9 to 3 in favor of acquittal and a mistrial was declared. County prosecutors sought to force Aaron to stand trial a second time before Judge Nakamura finally said no. 9. During the trial, Jay Kimura offered to reduce the B felony chazge against Aazon to a petty misdemeanor with no fine. He also offered to publish a written statement that the Prosecutor's Office would never again prosecute anyone for possession of sterilized hemp seeds. Aaron declined. 10. In its procedural manual, the Hawaii County Prosecutor lists several factors which must be considered before beginning a criminal prosecution. The manual does not mention fair, equal or constitutional treatment of accused persons as a factor. Discovery Aazon has scheduled depositions for Jay Kimura, Chazlene Iboshi, Lincoln Ashida and G. Kay Iopa and may schedule others. The Court rejected the County's late discovery objections, requiring the County to turn over all prosecutor files, including claimed work product. The County has conducted no discovery and its deadline has passed. Experts For Aaron: Matthew Mazlin, Ph.D., Professor of Economics, Duquesne University Dr. Mazlin's report is attached: Aazon's business economic loss equals $ 369,000.00 Leonard Licht, Ph.D., Psychology, Clinical Practice Dr. Licht will testify concerning the impacts of the illegal prosecution on Aazon's emotional health. Dr. Licht's report is attached. STLMTCHR2.DOC 3 Experts For the County: The County has identified no experts and its deadline has passed. Damaees • Business losses, impairment of emotional health, damage to reputation • Punitive damages aze unavailable in the federal case • Attorney's fees, expert witness fees and costs ' 42 U.S.C. § 1988 e Preamble, Hawaii County Prosecutor's Manual STLMTCHR2.DOC 4