SAFE STREETS ALLIANCE; PHILLIS WINDY HOPE REILLY; MICHAEL P. REILLY, Plaintiffs - Appellants,
JOHN W. HICKENLOOPER, in his official capacity as Governor of Colorado; BARBARA J. BROHL, in her official capacity as Executive Director of the Colorado Department of Revenue; JAMES BURACK, in his official capacity as Director of the Colorado Marijuana Enforcement Division; THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF PUEBLO; PUEBLO COUNTY LIQUOR & MARIJUANA LICENSING BOARD, Defendants-Appellees, and ALTERNATIVE HOLISTIC HEALING, LLC, d/b/a Rocky Mountain Organic; JOSEPH R. LICATA; JASON M. LICATA; 6480 PICKNEY, LLC; PARKER WALTON; CAMP FEEL GOOD, LLC; ROGER GUZMAN; BLACKHAWK DEVELOPMENT CORPORATION; WASHINGTON INTERNATIONAL INSURANCE CO.; JOHN DOE 1, Defendants. STATE OF NEBRASKA; STATE OF OKLAHOMA, Intervenors. STATE OF WASHINGTON; STATE OF OREGON; ROBERT A. MIKOS; SAM KAMIN; DOUGLAS A. BERMAN; ROBERT J. WATKINS; ALEX KREIT, Amici Curiae. JUSTIN E. SMITH; CHAD DAY; SHAYNE HEAP; RONALD B. BRUCE; CASEY SHERIDAN; FREDERICK D. McKEE; JOHN D. JENSON; MARK L. OVERMAN; BURTON PIANALTO; CHARLES F. MOSER; PAUL B. SCHAUB; SCOTT DeCOSTE, Plaintiffs-Appellants,
JOHN W. HICKENLOOPER, Governor of the State of Colorado, Defendant-Appellee. STATE OF WASHINGTON; STATE OF OREGON; ROBERT A. MIKOS; SAM KAMIN; DOUGLAS A. BERMAN; ROBERT J. WATKINS; ALEX KREIT, Amici Curiae. SAFE STREETS ALLIANCE; PHILLIS WINDY HOPE REILLY; MICHAEL P. REILLY, Plaintiffs-Appellants,
ALTERNATIVE HOLISTIC HEALING, LLC, d/b/a Rocky Mountain Organic; JOSEPH R. LICATA; JASON M. LICATA; 6480 PICKNEY, LLC; PARKER WALTON; CAMP FEEL GOOD, LLC, Defendants-Appellees, and ROGER GUZMAN; BLACKHAWK DEVELOPMENT CORPORATION; WASHINGTON INTERNATIONAL INSURANCE CO.; THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF PUEBLO; PUEBLO COUNTY LIQUOR & MARIJUANA LICENSING BOARD; JOHN DOE 1, Defendants.
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
COLORADO (D.C. Nos. 1:15-CV-00349-REB-CBS and
W. Barnes and David H. Thompson (Charles J. Cooper, Howard C.
Nielson, Jr., and Peter A. Patterson, with them on the
briefs), of Cooper & Kirk, PLLC, Washington D.C., for
Plaintiffs-Appellants in Nos. 16-1048 and 16-1266.
Patrick R. Wyrick, Solicitor General of Oklahoma (E. Scott
Pruitt, Attorney General of Oklahoma, and Mithun Mansinghani,
Deputy Solicitor General, Office of the Oklahoma Attorney
General, Oklahoma City, Oklahoma, Douglas J. Peterson,
Attorney General of Nebraska, Ryan S. Post and David A.
Lopez, Assistant Attorneys General, Office of the Nebraska
Attorney General, Lincoln, Nebraska, with him on the briefs),
for Intervenors, State of Oklahoma and State of Nebraska.
Matthew D. Grove, Assistant Solicitor General of Colorado
(Cynthia H. Coffman, Attorney General, Claudia Brett Goldin,
First Assistant Attorney General, Scott R. Bauer, Senior
Assistant Attorney General, Sueanna P. Johnson, Assistant
Attorney General, and Frederick R. Yarger, Solicitor General,
with him on the brief), all of the Office of the Attorney
General, Denver, Colorado, for Defendants-Appellees, John W.
Hickenlooper, Barbara J. Brohl, and James Burack.
Matthew W. Buck, of The Cannabis Law Firm, Denver, Colorado,
for Alternative Holistic Healing, LLC, d/b/a Rocky Mountain
Organic, Joseph R. Licata, Jason M. Licata, 6480 Pickney,
LLC, Parker Walton, and Camp Feel Good, LLC,
Defendants-Appellees in No. 16-1266.
V. Kelly, John J. Commisso, and Anne E. Selinger, of Jackson
Lewis P.C., Boston, Massachusetts, filed a brief on behalf of
Plaintiffs-Appellants in No. 16-1095.
A. Marks and Melanie B. Lewis, of Berg Hill Greenleaf
Ruscitti LLP, Boulder, Colorado, and Gregory J. Styduhar,
Pueblo County Attorney, Pueblo, Colorado, filed a brief on
behalf of Defendants-Appellees, Pueblo County Liquor &
Marijuana Licensing Board and the Board of County
Commissioners of the County of Pueblo, Colorado.
W. Ferguson, Attorney General, Jeffrey T. Even, Deputy
Solicitor General, and Bruce L. Turcott, Assistant Attorney
General, State of Washington, Olympia, Washington, filed a
brief on behalf of Amici Curiae, State of Washington and
State of Oregon.
Michael Francisco, of MRDLaw, Denver, Colorado, and Robert A.
Mikos, Professor of Law, Vanderbilt University Law School,
Nashville, Tennessee, filed a brief on behalf of Amici
Curiae, Law Professors in Support of the Respondent State of
BRISCOE, HARTZ and HOLMES, Circuit Judges.
BRISCOE, Circuit Judge.
three appeals arise from two cases that concern the passage,
implementation, and alleged effects of Amendment 64 to the
Colorado Constitution, Colo. Const. art. XVIII, § 16.
Amendment 64 repealed many of the State's criminal and
civil proscriptions on "recreational marijuana,
" and created a regulatory regime designed
to ensure that marijuana is unadulterated and taxed, and that
those operating marijuana-related enterprises are, from the
State's perspective, licensed and qualified to do so. Of
course, what Amendment 64 did not and could not do was amend
the United States Constitution or the Controlled Substances
Act (CSA), 21 U.S.C. §§ 801-904, under which
manufacturing, distributing, selling, and possessing with
intent to distribute marijuana remains illegal in
Colorado. See U.S. Const. art. VI, cl. 2. The three
appeals at issue and two related motions to intervene raise
four principal disputes stemming from the alleged conflict
between the CSA and Colorado's new regime.
the appeals were brought in Safe Streets Alliance v.
Alternative Holistic Healing, LLC. First, in No.
16-1266, two Colorado landowners challenge the district
court's dismissal of their claims brought under the
citizen-suit provision of the Racketeer Influenced and
Corrupt Organizations Act (RICO), 18 U.S.C. § 1964(c),
against certain affiliates of a State- and county-licensed
marijuana manufactory that allegedly has injured the
landowners' adjacent property. We conclude that the
landowners have plausibly alleged at least one § 1964(c)
claim against each of those defendants. We therefore reverse,
in part, the dismissal of those claims and remand for further
in No. 16-1048, those landowners and an interest group to
which they belong appeal the district court's dismissal
of their purported causes of action "in equity"
against Colorado and one of its counties for ostensibly also
having injured the landowners' property by licensing that
manufactory. The landowners and the interest group allege
that Amendment 64's regime is preempted by the CSA,
pursuant to the Supremacy Clause, U.S. Const. art. VI, cl. 2,
and the CSA's preemption provision, 21 U.S.C. §
We conclude that neither the landowners nor the interest
group purport to have any federal substantive rights
that have been injured by Colorado or the county's
actions. And because they have no substantive rights in the
CSA to vindicate, it follows inexorably that they cannot
enforce § 903 "in equity" to remedy their
claimed injuries. We therefore affirm the dismissal of their
third appeal, No. 16-1095, was filed in Smith v.
Hickenlooper. In that case, a group of Colorado, Kansas,
and Nebraska sheriffs and county attorneys sued Colorado on
similar theories that Amendment 64's regime is preempted
by the CSA. The district court dismissed their claims, and we
consolidated the appeal with No. 16-1048. Because those
plaintiffs also do not claim injuries to their federal
substantive rights, we likewise affirm.
the States of Nebraska and Oklahoma moved to intervene in
Safe Streets Alliance and Smith while they
were pending on appeal. Those States claim that Amendment 64
injures their sovereign interests and those of their
citizens, and that its enforcement is preempted by the CSA.
We granted their motion in No. 16-1048 and heard their
arguments, which confirmed that their controversy is with
Colorado. Given that fact, we must confront 28 U.S.C. §
1251(a), which forbids us from exercising jurisdiction over
controversies between the States. We therefore cannot permit
Nebraska and Oklahoma to intervene, or even confirm that they
have a justiciable controversy that may be sufficient for
intervention. Consequently, we vacate the order granting
intervention in Safe Streets Alliance and deny the
States' motions in both cases.
Standards of Review
addressing each of those issues, we first discuss the
applicable standards of review. The district court dismissed
the claims before it on the basis of Federal Rules of Civil
Procedure 12(b)(1) and (6). Rule 12(b)(1) "allows a
court to dismiss a complaint for lack of subject matter
jurisdiction. If the district court did so without taking
evidence, as the court did here, our review is de novo."
Pueblo of Jemez v. United States, 790 F.3d 1143,
1151 (10th Cir. 2015) (citing Becker v. Ute Indian
Tribe, 770 F.3d 944, 946 (10th Cir. 2014)). Such a
"facial attack on the complaint's allegations as to
subject matter jurisdiction questions the sufficiency of the
complaint, " and the "district court must accept
the allegations in the complaint as true." Id.
at 1148 n.4 (citation omitted). We also accept those factual
allegations as true in conducting our de novo review.
courts are courts of limited jurisdiction, possessing only
that power authorized by Constitution and statute."
Id. at 1151 (quoting Gunn v. Minton, ___
U.S. ___, 133 S.Ct. 1059, 1064 (2013)). "[F]ederal
subject matter jurisdiction is elemental, " and
"must be established in every cause under review in the
federal courts." Id. (quoting Firstenberg
v. City of Santa Fe, 696 F.3d 1018, 1022 (10th Cir.
2012)). The "burden of establishing" a federal
court's subject matter jurisdiction "rests upon the
party asserting jurisdiction." Id. (citation
omitted). "A court lacking jurisdiction cannot render
judgment but must dismiss the cause at any stage of the
proceedings in which it becomes apparent that jurisdiction is
lacking." Id. (quoting Full Life Hospice,
LLC v. Sebelius, 709 F.3d 1012, 1016 (10th Cir. 2013)).
For that reason, "[w]e also review" a district
court's rulings on Article III "standing de
novo." Niemi v. Lasshofer, 770 F.3d 1331, 1344
(10th Cir. 2014) (citation omitted).
"[w]e review a Rule 12(b)(6) dismissal de novo."
George v. Urban Settlement Servs., 833 F.3d 1242,
1247 (10th Cir. 2016) (citation omitted). "A pleading is
required to contain 'a short and plain statement of the
claim showing that the pleader is entitled to
relief.'" SEC v. Shields, 744 F.3d 633, 640
(10th Cir. 2014) (quoting Fed.R.Civ.P. 8(a)(2)). "We
accept as true all well-pleaded factual allegations in the
complaint and view them in the light most favorable to
the" plaintiff. Id. (quoting Burnett v.
Mortg. Elec. Registration Sys., Inc., 706 F.3d
1231, 1235 (10th Cir. 2013)). We then "determine whether
the plaintiff has provided 'enough facts to state a claim
to relief that is plausible on its face.'"
George, 833 F.3d at 1247 (quoting Hogan v.
Winder, 762 F.3d 1096, 1104 (10th Cir. 2014)).
determining the plausibility of a claim, we look to the
elements of the particular cause of action, keeping in mind
that the Rule 12(b)(6) standard [does not] require a
plaintiff to 'set forth a prima facie case for each
element.'" Id. (quoting Khalik v.
United Air Lines, 671 F.3d 1188, 1192-93 (10th Cir.
2012)). "The nature and specificity of the allegations
required to state a plausible claim will vary based on
context." Kan. Penn Gaming, LLC v. Collins, 656
F.3d 1210, 1215 (10th Cir. 2011). But "mere 'labels
and conclusions' and 'a formulaic recitation of the
elements of a cause of action' will not suffice; a
plaintiff must offer specific factual allegations to support
each claim." Id. at 1214 (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Thus, a
"claim is facially plausible if the plaintiff has pled
'factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.'" George, 833 F.3d at
1247 (quoting Hogan, 762 F.3d at 1104, which in turn
quotes Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
"when legal conclusions are involved in the complaint[,
] 'the tenet that'" we accept the allegations as
true "is inapplicable to [those] conclusions."
Shields, 744 F.3d at 640 (second alteration in
original) (citation omitted). We likewise "review de
novo a district court's determination of state law."
Elwell v. Byers, 699 F.3d 1208, 1214 n.4 (10th Cir.
2012) (quoting Salve Regina Coll. v. Russell, 499
U.S. 225, 231 (1991)). Finally, in reviewing orders issued
under Rules 12(b)(1) and (6), as in other contexts, we of
course "can affirm a lower court's ruling on any
grounds adequately supported by the record, even grounds not
relied upon by the district court." Id. at 1213
Safe Streets Alliance
Safe Streets Alliance, the plaintiffs are Michael P.
Reilly, Phillis Windy Hope Reilly, and Safe Streets Alliance
("Safe Streets"). Safe Streets is a "nonprofit
organization devoted to reducing crime and illegal drug
dealing, " No. 16-1048, Aplt. App. at 51,  "whose
members are interested in law enforcement issues,
particularly the enforcement of federal law prohibiting the
cultivation, distribution, and possession of marijuana."
Id. at 52. The Reillys are the only identified
members of Safe Streets, and neither they nor their interest
group asserted class or other claims on behalf of any other
Coloradans. We address their RICO claims first and then turn
to their preemption claims.
Reillys own a parcel of land in Pueblo County, Colorado that
is part "of the Meadows at Legacy Ranch, a development
on the south side of Pickney Road." Id. at 80.
Safe Streets does not hold any property interest in that
land. According to the Reillys, their land is a
"beautiful rolling pasture with sweeping mountain vistas
that include views of Pike's Peak." Id. The
"Reillys do not live on their land, " and the only
known structures there are "two agricultural
buildings" of vague description. Id. However,
the Reillys "often visit" the property "on
weekends with their children to ride horses, hike, and visit
with friends in the closely-knit neighborhood."
"west and immediately adjacent to the Reillys'
property" is 6480 Pickney Road, id., the site
of a recreational "marijuana grow" operating out of
a newly constructed building located "just a few feet
from the Reillys' property line." No. 16-1266, Aplt.
App. at 129. The operation of the enterprise and the
resultant noxious odors emanating from it are alleged to have
caused harms of two general types.
the Reillys claim that the "publicly disclosed drug
conspiracy" itself has "injured the value of
[their] property." Id. at 131. "People buy
lots at the Meadows at Legacy Ranch because they want to keep
horses or build homes in a pleasant residential area, and the
Reillys' land" allegedly "is less suitable for
those uses due to the 6480 Pickney Road marijuana grow."
Id. For example, "the large quantity of drugs
at marijuana grows" purportedly "makes them targets
for theft, and a prospective buyer of the Reillys' land
would reasonably worry that the 6480 Pickney Road marijuana
grow increases crime in the area." Id.
the Reillys aver that "[s]ince construction of the
facility was completed, its operation has repeatedly caused a
distinctive and unpleasant marijuana smell to waft onto the
Reillys' property, with the smell strongest on the
portion of [their] property that is closest to [the]
marijuana cultivation facility." Id. at 130.
"This noxious odor" allegedly "makes the
Reillys' property less suitable for recreational and
residential purposes, interferes with the Reillys' use
and enjoyment of their property, and diminishes the
property's value." Id.
Reillys thus contend that the recreational marijuana facility
adjacent to their land has both interfered with
their present use and enjoyment of the land and caused a
diminution in its market value-e.g., by subjecting the land
to the operation's noxious emissions and by commencing
that criminal enterprise nearby.
Counts I through VI of their Second Amended Complaint, the
Reillys brought civil RICO claims under § 1964(c)
against a host of individuals and entities purportedly
affiliated with that neighboring marijuana enterprise. On
appeal, the remaining defendants to those claims are 6480
Pickney, LLC, Alternative Holistic Healing, LLC, Camp Feel
Good, LLC, Jason M. Licata, Joseph R. Licata, and Parker
Walton. We refer to them collectively as the "Marijuana
to the Reillys, the Marijuana Growers "all understood
and agreed that the property" adjacent to the
Reillys' land "would be used to grow recreational
marijuana for sale at Alternative Holistic Healing's
Black Hawk store, among other places." Id. at
119. The Reillys therefore claim that 6480 Pickney, LLC and
Alternative Holistic Healing, LLC are each unlawful
enterprises. In addition, the Reillys allege that the
Marijuana Growers "pooled their resources, knowledge,
skills, and labor to achieve through [an] enterprise
efficiencies in the cultivation and distribution of marijuana
that none of them could have achieved individually."
Id. at 126. On that basis, the Reillys claim that
the Marijuana Growers also formed a distinct
"association-in-fact enterprise for the purpose of
cultivating marijuana at 6480 Pickney Road."
the Reillys allege that the Marijuana Growers are each
subject to civil liability under § 1964(c) for the
injuries they have caused to the Reillys' property by
operating their association-in-fact enterprise, which by
definition flouts the CSA, and therefore violates RICO.
See 18 U.S.C. § 1962(c). The Reillys note, for
example, that "[l]easing or maintaining property for the
cultivation of marijuana is a crime under" the CSA
"and is racketeering activity" under RICO. No.
16-1266, Aplt. App. at 119. Likewise, "[d]ealing in
marijuana is racketeering activity under RICO, " as is
"conspir[ing] with racketeers by agreeing to assist
them" in their unlawful endeavors. Id. at 101.
"And because RICO defines most violations of the CSA as
'racketeering activity, '" the Reillys assert,
"any business engaged in the commercial cultivation and
sale of recreational marijuana is a criminal enterprise for
purposes of" RICO. Id. at 108 (citation
omitted). They therefore claim that all those who
"conduct or conspire to assist such enterprises"
are subject to "civil liability" under §
1964(c), such that the Marijuana Growers are liable for
harming the Reillys' property. Id.
moving to dismiss, the Marijuana Growers argued that the
"speculative injury to" the Reillys'
"property value" was no "proof of a concrete
financial loss, " and was therefore insufficient
"to allege an existing, concrete, financial injury,
" which, in their view, is an element of a §
1964(c) claim. Id. at 25. They also vaguely
suggested that the Reillys had not plausibly alleged that the
Marijuana Growers were engaged in a RICO enterprise. Yet the
Marijuana Growers also explicitly conceded that they each
"agreed to grow marijuana for sale" at 6480 Pickney
Road, adjacent to the Reillys' land. Id. at 28.
district court dismissed these RICO claims with prejudice,
concluding that the Reillys had not pled a plausible injury
to their property that was proximately caused by the
Marijuana Growers' activities in violation of the CSA.
The district court recognized that the Reillys alleged a
"noxious order [sic] emanat[es] from the" Marijuana
Growers' adjacent enterprise, which "permit[s] a
reasonable inference that the value of their property is
negatively impacted." Id. at 207. Yet the
district court rejected that argument on the basis that the
Reillys had "provide[d] no factual support to quantify
or otherwise substantiate their inchoate concerns as to the
diminution in value of their property." Id.
district court underscored the Reillys' purported failure
to plead that their "land has been appraised for"
less "than before the grow operation opened."
Id. And the district court remarked that the Reillys
had "point[ed] to no concrete evidence (as opposed to
mere inchoate fears) that potential purchasers have expressed
concern about living near such a facility, much less declined
to buy lots . . . nearby." Id. Continuing that
theme, the district court determined that the complaint was
deficient because the Reillys failed to "cite to any
study or statistics that might demonstrate a causal
relationship between the operation of such businesses and
decreased property values" nearby. Id.
According to the district court, the Reillys therefore failed
to make the "showing of damages that are clear and
definite" required for "RICO standing, "
counseling dismissal of their "wholly speculative"
claims. Id. at 207-08.
Reillys timely appealed, which is before us as No.
is to be read broadly." Sedima, S.P.R.L. v. Imrex
Co., 473 U.S. 479, 497 (1985). It "created a new
civil cause of action for '[a]ny person injured in his
business or property by reason of a violation of [its]
prohibitions.'" RJR Nabisco, Inc. v. European
Cmty., ___ U.S. ___, 136 S.Ct. 2090, 2096 (2016)
(alteration in original) (quoting 18 U.S.C. § 1964(c)).
That is, RICO vests a private citizen with substantive rights
to avoid "injur[ies]" to "his business or
property" caused by a pattern of racketeering activity,
and it explicitly creates a federal cause of action to
vindicate those federal rights. 18 U.S.C. § 1964(c). To
maintain a cause of action under § 1964(c), a plaintiff
must plead and ultimately prove: (1) that the defendant
violated § 1962; (2) that the plaintiff's business
or property was injured; and (3) that the defendant's
violation is the cause of that injury. Id.; see
RJR, 136 S.Ct. at 2096-97.
Reillys assert several theories under which the Marijuana
Growers individually and collectively have violated §
1962, to the injury of the Reillys' adjacent land. Here,
we need only address one. The Reillys allege that the
Marijuana Growers formed an association-in-fact enterprise
that has and will continue to engage in a pattern of
contravening the CSA through the manufacture of marijuana for
distribution, an organizational mission that is a flagrant
violation of § 1962(c). The Reillys also claim,
inter alia, that neighboring illegal enterprise
directly reduces the present value of their land by openly
operating a criminal initiative; directly causes noxious
odors to infiltrate their property, interfering with their
present use and enjoyment of the land; and directly reduces
the property's present value by burdening it with those
emissions. As we will explain, those alleged violations of
§ 1962(c) and direct injuries are sufficient for the
Reillys to proceed on their RICO claims.
Violation of § 1962(c)
has determined that "[i]t shall be unlawful for any
person employed by or associated with any enterprise engaged
in, or the activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or indirectly,
in the conduct of such enterprise's affairs through a
pattern of racketeering activity . . . ." 18 U.S.C.
§ 1962(c). Said more succinctly, § 1962(c)
"makes it unlawful for a person employed by or
associated with an enterprise to conduct the enterprise's
affairs through a pattern of racketeering activity."
RJR, 136 S.Ct. at 2097. We have held that a
plaintiff asserting a § 1964(c) claim for a violation of
§ 1962(c) "must plausibly allege that" the
defendants "each (1) conducted the affairs (2) of an
enterprise (3) through a pattern (4) of racketeering
activity." George, 833 F.3d at 1248 (citing 18
U.S.C. § 1962(c); Robbins v. Wilkie, 300 F.3d
1208, 1210 (10th Cir. 2002)).
Marijuana Growers forfeited any challenge to several of those
elements here by failing to raise and argue them in the
district court. See Richison v. Ernest Grp., Inc.,
634 F.3d 1123, 1127-30 (10th Cir. 2011). We nevertheless
address each element because the factual allegations
plausibly demonstrating them significantly overlap. See
Boyle v. United States, 556 U.S. 938, 947 (2009)
(explaining that "evidence used to prove" the
elements of a RICO claim may "coalesce" (citation
omitted)). We also address the elements out of order because
it better frames our discussion.
is founded on the concept of racketeering activity. The
statute defines 'racketeering activity' to encompass
dozens of state and federal offenses, known in RICO parlance
as predicates. These predicates include any act
'indictable' under specified federal statutes, "
and among them is "drug-related activity that is
'punishable' under federal law." RJR,
136 S.Ct. at 2096 (quoting 18 U.S.C. § 1961(1)(D)). As
relevant here, "racketeering activity" includes
"dealing in a controlled substance or listed chemical
as defined in" the CSA. 18 U.S.C. § 1961(1)(A).
Racketeering activity also includes "any offense
involving . . . the felonious manufacture, importation,
receiving, concealment, buying, selling, or otherwise dealing
in a controlled substance or listed chemical, " as
defined in the CSA, that is "punishable under any law of
the United States . . . ." Id. §
follows, therefore, that operating a marijuana cultivation
facility of the type the Reillys described in their Second
Amended Complaint necessarily would involve some
racketeering activity. As just one example, cultivating
marijuana for sale-which the Marijuana Growers admit they
agreed to do and they allegedly began and are continuing to
do-is by definition racketeering activity. See id.
We conclude the Reillys have adequately alleged that the
Marijuana Growers are each engaged in racketeering activity.
to the alleged affiliates of the facility at issue here,
"RICO broadly defines 'enterprise' as 'any
individual, partnership, corporation, association, or other
legal entity, and any union or group of individuals
associated in fact although not a legal entity.'"
George, 833 F.3d at 1248 (quoting 18 U.S.C. §
1961(4)). Among other theories, the Reillys relied on
"the latter part of this definition, alleging that"
the Marijuana Growers "formed an association-in-fact
enterprise." Id. (citation omitted). An
"association-in-fact enterprise is 'a group of
persons associated together for a common purpose of engaging
in a course of conduct.'" Boyle, 556 U.S.
at 946 (citation omitted). Such an entity "need not have
a hierarchical structure or a 'chain of command . . .
.'" Id. at 948. For it to exist requires
only "a purpose, relationships among those associated
with the enterprise, and longevity sufficient to permit these
associates to pursue the enterprise's purpose."
Id. at 946.
the Reillys alleged that for over a year the Marijuana
Growers formed "an association-in-fact enterprise for
the purpose of cultivating marijuana at 6480 Pickney Road and
selling it at Alternative Holistic Healing's Black Hawk
store, among other places." No. 16-1266, Aplt. App. at
126. To advance their aims, the Marijuana Growers purportedly
"pooled their resources, knowledge, skills, and labor to
achieve through th[at] enterprise efficiencies in the
cultivation and distribution of marijuana that none of them
could have achieved individually." Id. The
Reillys' allegations of purpose, relationship, and
longevity are sufficient for them to proceed on the basis
that the Marijuana Growers together created an
Marijuana Growers appear to suggest that these allegations
are insufficient because the Reillys also alleged that the
corporate defendants were separate, smaller RICO enterprises.
So far as it goes, they are correct that RICO "requires
that the 'person' conducting the enterprise's
affairs be distinct from the 'enterprise.'"
George, 833 F.3d at 1249 (citing Cedric Kushner
Promotions, Ltd. v. King, 533 U.S. 158, 160 (2001)).
That is, "a single person cannot be both the RICO
enterprise and the RICO defendant." RJR, 136
S.Ct. at 2104 (citing Cedric, 533 U.S. at 162). But
that is irrelevant in this instance.
the Reillys' alternative enterprise theories do not
undermine their well-supported allegations that the Marijuana
Growers are each participating in a distinct, larger,
association-in-fact enterprise. See Boyle, 556 U.S.
at 946; George, 833 F.3d at 1250. The Marijuana
Growers allegedly have long worked in concert to achieve
market efficiencies toward their common aim of cultivating,
distributing, and selling marijuana, which undisputedly
affects interstate commerce. See RJR, 136 S.Ct. at
2106 (explaining that the enterprise must affect interstate
commerce). The Reillys have adequately alleged that the
Marijuana Growers formed an association-in-fact enterprise.
Conducting the enterprise's affairs
turn to each of the Marijuana Growers' conduct in
furtherance of their common goals. To maintain a §
1964(c) claim against any particular defendant, the Reillys
need only to have alleged facts plausibly demonstrating that
the defendant "conduct[ed] or participate[d], directly
or indirectly, in the conduct of [the] enterprise's
affairs." 18 U.S.C. § 1962(c). "This, in turn,
requires a showing that the defendant 'participate[d] in
the operation or management of the enterprise
itself.'" George, 833 F.3d at 1251 (quoting
Reves v. Ernst & Young, 507 U.S. 170, 185
(1993)). "Under Reves' operation or
management test, the defendant must have 'some part in
directing' the enterprise's affairs."
Id. (quoting Reves, 507 U.S. at 179).
"the defendant need not have 'primary responsibility
for the enterprise's affairs, ' 'a formal
position in the enterprise, ' or 'significant control
over or within [the] enterprise'" to be liable under
RICO. Id. (citation omitted). The defendant's
actions also need not have advanced an "economic
motive." Nat'l Org. for Women, Inc. v.
Scheidler, 510 U.S. 249, 252 (1994). "Nevertheless,
a defendant must do more than simply provide, through its
regular course of business, goods and services that
ultimately benefit the enterprise." George, 833
F.3d at 1251 (citation omitted). For example, the Reillys at
one time alleged that a contractor violated § 1962 by
delivering water to the Marijuana Growers' operation.
Without more, that would be insufficient to establish that
the contractor was part of the enterprise. See id.
"a plaintiff can easily satisfy Reves'
operation and management test by showing that an enterprise
member played some part-even a bit part-in conducting the
enterprise's affairs." Id. at 1252. The
Marijuana Growers admit that they all "agreed to grow
marijuana for sale" at the facility adjacent to the
Reillys' property, a facility at which they allegedly
have been doing just that. No. 16-1266, Aplt. App. at 28.
This plausibly alleges that the Marijuana Growers each
conducted the enterprise's affairs.
first time on appeal, the Marijuana Growers suggest that the
Reillys failed to plead sufficient facts to demonstrate that
they engaged in a pattern of racketeering activity. "A
predicate offense implicates RICO when it is part of a
'pattern of racketeering activity'-a series of
related predicates that together demonstrate the existence or
threat of continued criminal activity." RJR,
136 S.Ct. at 2096-97 (quoting 18 U.S.C. § 1961(5), which
requires at least two predicate acts committed within ten
years of each other). However, "a RICO victim need not
have actual knowledge of exactly who committed the RICO
predicate act resulting in the injury for a civil RICO claim
to accrue." Robert L. Kroenlein Tr. ex rel. Alden v.
Kirchhefer, 764 F.3d 1268, 1278 (10th Cir. 2014).
"[T]he threat of continuity may be established by
showing that the predicate acts or offenses are part of an
ongoing entity's regular way of doing business."
H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 249
discussed, the Marijuana Growers admit that they all agreed
to work together to cultivate marijuana for distribution and
sale. The Reillys also allege that the Marijuana Growers
began cultivating marijuana at their neighboring facility.
Marijuana is a controlled substance under the CSA. 21 U.S.C.
§ 802(16). So the manufacture, distribution, and sale of
that substance is, by definition, racketeering activity under
RICO. 18 U.S.C. § 1961(1)(A), (D).
not decide whether the Marijuana Growers' admitted
agreement to take the related steps necessary to grow
marijuana for distribution and sale is itself sufficient to
establish a pattern of predicates that presents a threat of
continuing criminal activity. Rather, we note that the
Reillys alleged various actions each of the Marijuana Growers
took to establish and operate the enterprise, an entity that
is now purportedly pursuing those illegal ends. When coupled
with the Reillys' assertion that the Marijuana Growers
began cultivating marijuana at their facility, we conclude
these allegations plausibly state the requisite pattern of
predicate acts that present a threat of ongoing criminal
activity. As we will discuss, moreover, this pattern of
illegal acts is the direct cause of the Reillys'
plausibly alleged injuries to their property.
Reillys plausibly pled that the Marijuana Growers violated
conclude that the Reillys plausibly pled that the Marijuana
Growers violated § 1962(c). Having reached that
conclusion, we must now determine whether the Reillys have
plausibly alleged an injury to their property caused by that
violation, the issue that the district court thought was
dispositive. We therefore need not address the Reillys'
other theories regarding how the Marijuana Growers injured
their property by violating § 1962, theories the
district court also did not specifically discuss.
Consequently, the Reillys' § 1964(c) claims against
the Marijuana Growers premised on other purported violations
of § 1962 remain for adjudication by the district court
Proximately caused injuries to the Reillys'
light of our conclusion that the Reillys plausibly
established that the Marijuana Growers violated §
1962(c), we must now determine whether they plausibly pled
(1) injuries to their property (2) that were caused by those
violations. Id. § 1964(c); see RJR,
136 S.Ct. at 2096. The district court dismissed all of the
Reillys' RICO claims because, in its view, the Reillys
failed to plausibly plead either of these elements.
Specifically, relying on out-of-circuit authorities, the
district court determined that hidden within §
1964(c)'s text is a heightened pleading
requirement. According to the district court, a plaintiff
must submit evidence of a "concrete financial
loss" (e.g., an appraisal quantifying the diminution in
property value or comparator results of attempts to sell
predating and postdating a RICO violation) to plausibly
allege an injury to his property caused by a
defendant's § 1962 violation. No. 16-1266, Aplt.
App. at 206-07 (citation omitted).
conclude, however, that neither § 1964(c)'s text nor
any ruling by the Supreme Court or this court establishes the
novel statistical evidentiary pleading standard that the
district court applied. In fact, the statute and applicable
precedents compel the opposite conclusion with respect to the
Reillys' allegations that their property has been
directly injured by their neighbors' odorous and
publicly-operating criminal enterprise.
1964(c)'s "reference to injury to 'business or
property' . . . cabin[s] RICO's private cause of
action to particular kinds of injury-excluding, for example,
personal injuries-[by which] Congress signaled that the civil
remedy is not coextensive with § 1962's substantive
[criminal] prohibitions, " which do not require proof of
such injuries. RJR, 136 S.Ct. at 2108. The Reillys
do not claim to have any business-related rights at issue. So
we only need to determine whether the Reillys plausibly
alleged injuries to their property rights. The
district court thought not, describing their claims as based
on mere emotional or personal injuries. We disagree.
other things, the Reillys alleged that the noxious odors
emanating from the Marijuana Growers' criminal enterprise
presently interfere with the use and enjoyment of their land.
And they claimed that those odors are a direct result of the
Marijuana Growers' criminal cultivation of marijuana.
They also averred that this ongoing, direct interference with
their property diminishes its present market value-that
property that smells foul is worth less than property that
does not. The Reillys further claimed that their property has
declined in value due to the Marijuana Growers' publicly
disclosed operation-in short, that when a crime syndicate
openly sets up shop adjacent to one's land, it reduces
the value of that property. We address the alleged present
nuisance and alleged diminished property value separately,
though one stems in part from the other.
Odorous nuisance injury
little difficulty concluding that the Reillys plausibly pled
an injury to their property rights caused by the stench that
the enterprise's operations allegedly produce.
"Congress meant to incorporate common-law principles
when it adopted RICO." Beck v. Prupis, 529 U.S.
494, 504 (2000). In Colorado, "a property owner whose
land is diminished in value by the acquisition and use of
adjoining land by a private party" has a cause of action
"in the law of nuisance." Pub. Serv. Co. of
Colo. v. Van Wyk, 27 P.3d 377, 388 (Colo. 2001)
(citation omitted). But Colorado also has long recognized
that invasion of one's property by noxious odors itself
gives rise to a nuisance claim and is a direct injury to
property. See Hobbs v. Smith, 493 P.2d 1352, 1353-54
(Colo. 1972) (explaining that where the facts evidenced
"noxious odors" wafting onto the plaintiffs'
adjoining property, they had "suffered a substantial
interference with the use and enjoyment of their
property"); Webster v. Boone, 992 P.2d 1183,
1185-86 (Colo.App. 1999) (holding that "damages may be
recovered" for "nuisance and trespass" to
property, which "generally refers to distress arising
out of physical discomfort, irritation, [and] inconvenience
caused by odors, pests, noise, and the like"
Colorado law, "the elements of a claim of nuisance are
an intentional, negligent, or unreasonably dangerous activity
resulting in the unreasonable and substantial interference
with a plaintiff's use and enjoyment of her
property." Van Wyk, 27 P.3d at 391. Thus,
"a plaintiff must establish that the defendant has
unreasonably interfered with the use and enjoyment of her
property, " which is "an issue of fact"
determined by "weigh[ing] the gravity of the harm and
the utility of the conduct causing that harm."
Id. (citations omitted). "Generally, to be
unreasonable, an interference must be significant enough that
a normal person in the community would find it offensive,
annoying, or inconvenient." Id. (citations
Marijuana Growers have not pointed us to any authority
suggesting that a landowner's complaints about a
neighbor's recurrent emissions of foul odors are
conceptually unmoored from the owner's property rights.
Nor do they contend that Colorado's recognition of
odorous nuisances is any novel departure from the common law
of property rights, which Congress incorporated into §
1964(c). See Beck, 529 U.S. at 504. They instead
suggest that we ought to disbelieve the Reillys' claims
or recast them as mere emotional injuries, expressions of
frustration with either the odors or the enterprise's
district court adopted that approach. But that was error,
inter alia, because the Reillys' claims were
only at the pleading stage. See George, 833 F.3d at
1247 (requiring that courts accept all factual allegations as
true and draw reasonable inferences in a plaintiff's
favor at the pleading stage); Shields, 744 F.3d at
640 (same). We conclude that the Reillys have plausibly pled
an injury to their property in the form of a present
interference with their use and enjoyment of that land, an
interference that is caused by the enterprise's recurring
emissions of foul odors.
Diminished property value
turn to the Reillys' allegations that the market value of
their property has declined because the Marijuana Growers are
publicly operating a criminal enterprise adjacent to their
land, a venture that also emits noxious odors. In Gillmor
v. Thomas, 490 F.3d 791 (10th Cir. 2007), we held that
landowners could proceed on § 1964(c) claims against an
extortion racket because they had pled plausible injuries to
their property caused by that alleged racket, though we
subsequently affirmed summary judgment against the
landowners. Id. at 797-98. As relevant here, the
landowners pled that the racket's activities
"damaged them by reducing the development potential (and
thus the value) of their properties." Id. at
797. We held that the "allegations [we]re not
conclusory" and were "sufficient" to proceed
under § 1964(c). Id. (referring to "RICO
standing" and "jurisdiction").
course, what we once called "RICO standing" or
"statutory standing" we now properly characterize
as the usual pleading-stage inquiry: whether the plaintiff
has plausibly pled a cause of action under RICO. See
Lexmark Int'l, Inc. v. Static Control Components,
Inc., ___ U.S. ___, 134 S.Ct. 1377, 1394 n.4 (2014)
(clarifying that "statutory standing" and
"prudential standing" are "misleading"
terms because "the absence of a valid (as opposed to
arguable) cause of action does not implicate subject-matter
jurisdiction, i.e., the court's statutory or
constitutional power to adjudicate the case"
(citation omitted)). To answer that question, moreover, we
also now adhere to different rules than those in force when
we decided Gillmor. See Twombly, 550 U.S.
at 555. But neither of those sea changes even implicates, let
alone undermines, our relevant holding in Gillmor: a
plausibly alleged diminution in the present
development potential of land is a property injury under
§ 1964(c). 490 F.3d at 797. That is also true of our
underlying premise-i.e., that plausibly alleging a reduction
in land value is one method of pleading a property injury
under RICO. Id. Colorado's recognition of that
property interest fortifies our conclusion that RICO
incorporates this common view of property rights. See Van
Wyk, 27 P.3d at 388.
therefore puzzled by the district court's suggestion that
Gillmor's relevant holding is distinguishable.
That is, according to the district court, the
Gillmor developers' plans for their land were-in
some unspecified fashion-more concrete than are the
Reillys' allegations here. But the Reillys aver that
today their land is worth less than it was before,
and that this diminution in value occurred because their new
neighbors began their endeavors. Our holding in
Gillmor plainly applies here; in fact, it does
as we have discussed, the Reillys pled ample facts to
plausibly establish that the enterprise's foul emissions
interfere with the use and enjoyment of their property. We
need only draw an eminently reasonable inference to conclude
that it is plausible that activities that interfere with
one's use and enjoyment of property diminish the value of
that property. See George, 833 F.3d at 1247. For
example, it is reasonable to think that a potential buyer
would be less inclined to purchase land that is burdened by a
nuisance-such as recurrent foul odors-than she would be to
purchase the identical property if it were unencumbered.
See, e.g., Van Wyk, 27 P.3d at 388.
Contrary to the district court's suggestion, moreover,
the Reillys were not required to allege that they had
attempted to sell their land or had appraised it. It remains
a commonsense pleading-stage inference that nuisances
diminish the value of land, exactly as the Reillys alleged.
See George, 833 F.3d at 1247. Consequently, we
conclude that the Reillys plausibly pled that their property
has declined in value due to the recurrent noxious odors
emanating from the Marijuana Growers' facility. See
Gillmor, 490 F.3d at 797.
the Reillys claim that the open operation of the Marijuana
Growers' criminal enterprise has caused the value of
their land to decline, independent of the harms attending the
nuisance. Specifically, they allege that, because a crime
syndicate is publicly violating federal law adjacent to their
property, that land is now less valuable. They suggest, for
example, that if they were to attempt to sell their land
today, it would be less attractive to a potential buyer-and
is therefore presently worth less-because of the crimes being
openly committed on the adjoining parcel. We conclude this is
cannot countenance the district court's digression that
the Reillys' claim was "speculative" and based
on mere "inchoate fears" because they did not cite
statistics, appraisals, attempts to sell, or other
"concrete evidence" to "quantify" their
"concrete financial loss" with "actual
facts." No. 16-1266, Aplt. App. at 206-08 & n.3
(citation omitted). Nor are we at liberty to disbelieve the
Reillys by ratifying the Marijuana Growers' speculation
that the value of the Reillys' land has, perhaps,
increased because of the now-booming market in Colorado for
land on which to cultivate marijuana. See George,
833 F.3d at 1247.
the district court and the Marijuana Growers were mistaken to
rely on Oscar v. University Students Co-operative
Association and the cases citing it. 965 F.2d 783 (9th
Cir. 1992) (en banc), overruled in part by Diaz v.
Gates, 420 F.3d 897 (9th Cir. 2005) (en banc). Among the
many reasons we refuse to follow Oscar's
unsupported announcement that a plaintiff must plead a
"concrete financial loss" to maintain a RICO claim
for an injury to her property is that those words do not
appear in § 1964(c). Id. at 785. The Supreme
Court repeatedly has warned that courts "are not at
liberty to rewrite RICO to reflect their . . . views of good
policy." Bridge v. Phoenix Bond & Indem.
Co., 553 U.S. 639, 660 (2008); Sedima, 473 U.S.
at 499-500 ("It is not for the judiciary to eliminate
the private action in situations where Congress has provided
it."). We also easily distinguish Oscar from
the present case on its facts. The Oscar plaintiffs
were renters, whereas the Reillys are landowners, and
Oscar itself explicitly disclaims application to
property owners. 965 F.2d at 787 n.2.
stage in the litigation, we conclude that it is reasonable to
infer that a potential buyer would be less inclined to
purchase land abutting an openly operating criminal
enterprise than she would be if that adjacent land were empty
or occupied by a lawfully-operating retailer. Based on the
Reillys' assertion that the Marijuana Growers'
operation is anything but clandestine, the Reillys' land
plausibly is worth less now than it was before those
operations began. Therefore, we conclude that the Reillys
pled a ...