The First “Grass Action” Lawsuit

Contributed by Robert Brown

Recently, the marijuana industry reached a new milestone (a milestoner, if you will) in its long journey to legitimacy—its first class action lawsuit.  It seems like just yesterday marijuana users were avoiding the judicial system at all cost.  Now they are turning to courts to resolve disputes with their dealers.  ’Merica!

Flores v. LivWell, Inc. was filed in Colorado state court by two marijuana users—one representing a class of medical users, and one representing a class of recreational users—against LivWell, Inc., a grower and dispenser of marijuana with outposts in various locations across the state.  The plaintiffs contend that LivWell sprayed thousands of its plants with a dangerous fungicide known as Eagle 20 throughout the first three months of 2015 and possibly earlier.  During that time period, the plaintiffs purchased marijuana from LivWell which they proceeded to inhale.  They claim that had they known the marijuana had been treated with Eagle 20, they would have paid less for it and would not have inhaled it.  The complaint alleges ten different causes of action, including breach of contract, breach of the implied covenant of good faith and fair dealing, and breach of warranties.

Eagle 20 is a fungicide commonly used to treat hops, fruit trees, and other crops.  When burned, however, Eagle 20 releases poisonous hydrogen cyanide, and for that reason, it is not approved for use on tobacco plants.  But the rules governing pesticide use on marijuana plants are a bit hazy.  Because marijuana remains illegal under federal law, the EPA has yet to provide clear guidance on which pesticides are safe for use.  In an attempt to bring clarity to the matter, the Colorado Department of Agriculture (the “CDA”) maintains two lists on its website:  one that includes pesticides the CDA has reviewed and deemed safe for use on marijuana plants; and one that includes examples of pesticides that cannot be used.  As of September 15, 2015, Eagle 20 does not appear on either list.

Amidst concern over the use of potentially dangerous pesticides such as Eagle 20, the Denver Department of Environmental Health quarantined thousands of marijuana plants this past spring, including roughly 60,000 plants produced by LivWell.  Officials ultimately lifted the hold on LivWell’s plants after they passed a residue test, but the plaintiffs claim “the plants tested for residue within limits generally acceptable for vegetation, not for tobacco or other plants that are likely to be inhaled through heating and combustion.”  The plaintiffs further argue that the absence of pesticide residue does not mean plants are safe for inhalation, as the active ingredient in Eagle 20, myclobutanil, is absorbed into the circulatory system of the plants.

Perhaps surprisingly, the plaintiffs do not claim any physical injury resulted from their alleged inhalation of hydrogen cyanide.  Rather, they simply claim they would have paid less for the marijuana had they known it had been treated with Eagle 20 and was not safe for inhalation (though still safe for other forms of consumption).  The plaintiffs seek actual damages in the amount they overpaid for marijuana that was allegedly not safe for inhalation as well as an injunction requiring LivWell to cease all use of Eagle 20 and sales of marijuana products that were exposed to Eagle 20.

This case raises several novel questions about the duty of marijuana growers to warn customers about potential harms.  The court will first have to decide whether the exclusion of Eagle 20 from the CDA’s list of pesticides that are safe for use on marijuana plants amounts to an outright prohibition.  The CDA’s own characterization of its list suggests that it does not—its website describes it simply as a list of pesticides “we believe could be used on marijuana” without violating the Colorado Pesticide Applicator Act.  The court will also have to consider whether LivWell had a duty to disclose its use of Eagle 20 and its exclusion from the CDA’s list to its customers.  The plaintiffs indicate that myclobutanil was “listed” but claim “nothing was indicated regarding its effects or its absence from the CDA’s approved list of pesticides/fungicides.”

The plaintiffs might ultimately have to confront a subtle contradiction in their complaint.  While on the one hand, they seek an injunction requiring LivWell to “cease all use of Eagle 20 and sales of marijuana products where Eagle 20 was used in the production process,” on the other hand, they implicitly acknowledge there is a safe use for marijuana that has been treated with Eagle 20.  Indeed, they do not claim they would not have purchased the marijuana had they known it was treated with Eagle 20, they simply claim it was worth less than what they paid for it because it was unfit to be inhaled.