District Court in N.C. Dismisses Charges in Industrial Hemp Seizure Case, Allows Counterclaims to Proceed

The U.S. District Court for the Western District of North Carolina has granted a motion dismissing several claims by We CBD against shipping company Planet Nine Pirvate Air that arose from a CBP seizure of alleged industrial hemp that tested over the THC limit and was destroyed. The court allowed various counterclaims by Planet Nine to proceed and set a trial date in July (We CBD v. Planet Nine Private Air, W.D.N.C. # 21-00352).

Planet Nine's summary judgment request argued that all of We CBD's claims were barred from recovery based on the Convention for the Unification of Certain Rules for International Carriage by Air (Montreal Convention), as well as by public policy and the doctrine of collateral estoppel, the economic loss doctrine, the absence of both duty and causation, and the lack of a principal-agent relationship between Planet Nine and Ed Clark, an independent charter broker.

The Montreal Convention prevents parties from bringing actions under local law when they cannot establish air carrier liability under the treaty and preempts all state law claims that fall within its scope. Planet Nine argued that We CBD's claims are all preempted by the convention. Because We CBD denies the applicability of the convention, the case must be dismissed. Planet Nine said.

Judge Frank Whitney found that the Montreal Convention applied and preempted all claims by We CBD. "The only remaining claims in this matter are Defendant’s Counterclaims," Whitney said in his ruling. The court asked Planet Nine to provide a supplemental briefing on whether the court could retain jurisdiction over the remaining counterclaims under the Montreal Convention.

The case stems from We CBD's attempt to transport over 3,000 pounds of alleged industrial hemp on a Planet Nine aircraft from Oregon to Switzerland. Before the trip, Planet Nine said it needed, among other things, “documentation showing approval to depart the United States with the cargo,” After departing from Oregon, the aircraft stopped to refuel in Charlotte, North Carolina, where CBP officers conducted a border search and took a cargo sample to perform a field test. The sample tested positive for THC and CBP detained the rest of the cargo for further testing. After the majority of the samples tested were over the 0.3% THC content line, the cargo was seized and the 2,779.83 pounds that tested above that limit was destroyed.

We CBD sued the U.S. for tort and constitutional violations over the alleged improper seizure, but the court dismissed all claims for lack of jurisdiction. The government then filed a civil forfeiture action for the not yet destroyed cargo. The court entered judgment in favor of the government.

We CBP filed the action against Planet Nine alleging negligence, gross negligence, breach of fiduciary duty, negligent misrepresentation, and unfair and deceptive trade practices. Planet Nine responded by raising six counterclaims for breach of contract, contractual indemnification, fraud/fraudulent inducement, fraudulent concealment, negligent misrepresentation, and for declaratory judgment that the Montreal Convention governs We CBD's claims (see 2206300032). In response, the plaintiffs filed a motion to dismiss for failure to state a claim. The court largely denied the dismissal. In March, Planet Nine moved for summary judgment on all of Plaintiffs’ claims.