Cayuga Nation v. Parker et al

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
CAYUGA NATION, by and through its lawful governing
body, the CAYUGA NATION COUNCIL,
Plaintiffs,
v.
DUSTIN PARKER, NORA WEBER, PAUL MEYER,
JUSTICE FOR NATIVE FIRST PEOPLE, LLC, and C.B.
BROOKS LLC,
Defendants.
5:22-cv-00128 (BKS/TWD)
Appearances:
For Plaintiff:
Michael E. Nicholson
David G. Burch, Jr.
Barclay Damon LLP
Barclay Damon Tower
125 East Jefferson Street
Syracuse, New York 13202
For Defendants Dustin Parker and Nora Weber:
Daniel J. Hurteau
Kasey Kaspar Hildonen
Robert McManigal
Nixon Peabody LLP
677 Broadway, 10th Floor
Albany, New York 12207
For Defendants Paul Meyer, Justice for Native First People, LLC, and C.B. Brooks, LLC:
Joseph A. Camardo
Camardo Law Firm, PC
127 Genesee Street
Auburn, New York 13021
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Hon. Brenda K. Sannes, Chief United States District Judge:
MEMORANDUM-DECISION AND ORDER
I. 	INTRODUCTION
Plaintiff Cayuga Nation, by and through its governing body, the Cayuga Nation Council,
claims that Defendants Dustin Parker and Nora Weber (the “Parker Defendants”) and Defendants
Paul Meyer, Justice for Native First People, LLC, and C.B. Brooks, LLC (the “Meyer
Defendants”), have used or invested racketeering income in an enterprise, in violation of the
Racketeer Income and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(a). (See generally
Dkt. No. 1). The Nation alleges that Defendants illegally sold untaxed tobacco and cannabis
products at a smokeshop on the Cayuga Reservation and used the profits (racketeering proceeds)
to open a second smokeshop on the Reservation, causing injury to the Nation’s own tobacco and
cannabis businesses. At the summary judgment stage, the Court noted that although New York
has legalized the sale of cannabis, the federal Controlled Substances Act (“CSA”) still classifies
marijuana as a schedule I substance and prohibits its sale, (Dkt. No. 226, at 10 (citing 21 U.S.C.
§§ 802(6), 812(c)(10), 841(a))), and that in Shulman v. Kaplan, 58 F.4th 404 (2d Cir. 2023), the
Ninth Circuit had found that RICO’s “business or property” civil remedies provision, 18 U.S.C.
§ 1964(c), did not encompass a property interest in cannabis and that “[b]ecause RICO’s
definition of racketeering activity necessarily encompasses dealing in cannabis, it would be
inconsistent to allow a business that is actively engaged in . . . commerce in cannabis to recover
damages under RICO for injury to that business,” (id. at 10–11 (quoting Shulman, 58 F.4th at
411)). The Court therefore directed further briefing as to whether lost profits for cannabis sales
were recoverable under RICO. (Id. at 11). Briefing is complete. (Dkt. Nos. 241, 246, 247, 250,
256, 271). For the reasons that follow, the Court finds that lost profits for cannabis sales are not
recoverable under RICO.
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II. 	BACKGROUND
The facts and history of this case are set forth at length in this Court’s November 3, 2025
Order denying Defendants’ motions for summary judgment and judgment on the pleadings. (Dkt.
No. 226). The Court assumes familiarity with these facts and does not summarize them here.
III. 	DISCUSSION
The Nation argues that Shulman’s “purpose-based approach” to defining “business or
property” was cast into doubt by the Supreme Court’s subsequent decision in Medical Marijuana
v. Horn, 604 U.S. 593, 601 (2025), and that a cannabis business easily falls within the Supreme
Court’s “broad interpretation of the phrase ‘business or property.’” (Dkt. No. 241, at 35).
Defendants argue that the illegality of cannabis under the CSA, despite its lawfulness under state
law, “forecloses the Nation’s claimed lost profits” for “cannabis activity.” (Dkt. No. 256, at 12;
Dkt. No. 246, at 7–8). The Court agrees.
RICO’s civil remedies provision allows “[a]ny person injured in his business or property
by reason of a violation of section 1962 . . . [to] sue.” 18 U.S.C. § 1964(c). In Medical
Marijuana, which arose out of the Second Circuit, the Supreme Court explained that the meaning
of RICO’s civil remedies provision was “straightforward: A plaintiff has been ‘injured in his
business or property’ if his business or property has been harmed or damaged. Section 1964(c)
requires nothing more.” 604 U.S. at 6001 (quoting 18 U.S.C. § 1964(c)). Although the Supreme
Court acknowledged that “‘injury’ can mean ‘invasion of a legal right’” it declined to so restrict
the definition and instead applied the “ordinary meaning,” concluding “the most natural
interpretation of the text” is “that ‘injured’ means ‘harmed.’” Id. at 602, 612. Thus, if “injured”
may be defined simply as “harmed,” without reference to whether a “legal right” (in tort or
otherwise) was violated, the allegation that Defendants’ second smokeshop caused the Nation’s
businesses to lose profits, even if derived from cannabis sales, falls within definition of “injured”
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under RICO. However, the Court must still consider whether the Nation’s cannabis business is a
“business” for purposes of RICO’s civil remedies provision. Because the Supreme Court’s focus
in Medical Marijuana, was on the meaning of “injured,” and it emphasized that the question of
the Second Circuit’s interpretation of “business” was not before it, id. at 600, the Court looks to
the Second Circuit’s underlying decision in Horn v. Medical Marijuana, Inc., 80 F.4th 130 (2d
Cir. 2023), which remains binding precedent, for guidance.
In Horn, the Second Circuit gave “business” and “property” their “independent and
ordinary significance.” Id. at 136 (quoting Reiter v. Sonotone Corp., 442 U.S. 330, 338–39
(1979)). Citing Black’s Law Dictionary 248 (Rev. 4th ed. 1968), the Circuit explained that “[a]t
the time of § 1964(c)’s codification, the term ‘business’ did not ‘embrace’ a single ‘legal
meaning,’” and instead “embraced concepts like ‘employment, occupation, or profession
engaged in for gain or livelihood,’ and ‘commercial or industrial establishment or enterprise.’”
Id. at 136 (quoting Black’s Law Dictionary 248 (Rev. 4th ed. 1968)); see also id. (noting that
“[n]on-legal dictionaries of the time reflect similar understandings” (citing Webster’s Third New
International Dictionary 302 (1971))). The Circuit therefore concluded the plaintiff’s allegation
that he was terminated from his employment was “sufficient to state a ‘business’ injury under the
RICO statute.” Id. It explained this conclusion was not only consistent with the Supreme Court’s
instruction that “RICO is to be read broadly,” but with “Congress’ [use of] self-consciously
expansive language and overall approach” and “express admonition that RICO is to be liberally
construed to effectuate its remedial purposes.” Id. (quoting Sedima, S.P.R.L. v. Imrex Co., 473
U.S. 479, 497–98 (1985)).
Applying the broad and ordinary meanings of “injured” and “business,” without
considering whether “invasion of a legal right” has been alleged, the Court has no difficulty
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concluding that the Nation’s allegation that Defendants’ smokeshop caused the Nation’s
cannabis businesses to lose profits is sufficient to allege it was “injured” in its “business” under
RICO. But even assuming these straightforward definitions enable the Court to side-step the
question of whether Congress intended “business or property” to cover cannabis-related
commerce, there is still the question of remedy.
Here, the Nation cites no case law that would suggest a federal court could order—or ask
a federal jury to consider—damages for the loss of what are illegal proceeds under the CSA, the
payment of which would, in all likelihood, come from the proceeds of illegal marijuana sales.
See United States v. Canori, 737 F.3d 181, 184 (2d Cir. 2013) (“Marijuana remains illegal under
federal law, even in those states in which medical marijuana has been legalized.” (citing 21
U.S.C. § 903 (providing for preemption where “there is a positive conflict between [a provision
of the CSA] and that State law such that the two cannot consistently stand together”)). In the
context of contract law, courts within the Second Circuit, and around the country, have
consistently found that even in states where cannabis is legal, when awarding damages would
require an act that violates the CSA, such as awarding damages from a cannabis asset stream or
proceeds, federal courts may not award such damages. See also Kornea v. Miller, No. 22-cv-
04454, 2025 WL 2306962, at *4, 2025 U.S. Dist. LEXIS 154796, at *9–10 (S.D.N.Y. Aug. 11,
2025) (finding that because the contract “has as its object the sale and distribution of marijuana,
acts which are illegal under federal law,” “the Court cannot enforce its terms,” explaining that
“‘[e]ven where conduct may be legal under state law and enforceable by a state court, federal
courts sitting in diversity have held that contracts that violate the federal marijuana laws are not
enforceable by a federal court’” (quoting 1240 S. Bannock, LLC v. Siem, No. 2:21-cv-00183,
2022 WL 2161386, at *5, 2022 U.S. Dist. LEXIS 107018, at *13 (W.D. Mich. May 27, 2022),
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report and recommendation adopted, 2022 WL 2158384, 2022 U.S. Dist. LEXIS 106959 (W.D.
Mich. June 15, 2022))); Ricatto v. M3 Innovations Unltd., Inc., No. 18-cv-8404, 2019 WL
6681558, at *5 n.4, 2019 U.S. Dist. LEXIS 210777, at *12 n.4 (S.D.N.Y. Dec. 6, 2019) (“Had
the [contract] obligated Defendants to develop land for the cultivation of marijuana, enforcement
of the contract might well put the Court in the position of directing Defendants to violate federal
law . . . . If enforcement of the contract would require an illegal action, the contract would be
unenforceable.”); Sensoria, LLC v. Kaweske, 581 F. Supp. 3d 1243, 1260 (D. Colo. 2022)
(“Relief may not be in a form that endorses violating the CSA. It can neither require an act that
would violate the CSA nor award monetary damages paid from a marijuana asset or income
stream.”); J. Lilly, LLC v. Clearspan Fabric Structures Int’l, Inc., No. 18-cv-01104, 2020 WL
1855190, at *12, 2020 U.S. Dist. LEXIS 64340, at *36–37 (D. Or. Apr. 13, 2020) (finding that
the CSA precluded the court from awarding the plaintiff lost profits as damages for the breach of
a contract to build a growhouse). The Court therefore concludes that awarding lost profits for
cannabis sales as RICO damages would violate federal law.
Finally, and perhaps this should have been the lead, the Court notes that the only viable
basis for the Nation’s cannabis-related lost profits claim is the fact of the legality of such a
business under state law. As the CSA preempts any conflict with state law, 21 U.S.C. § 903
(providing for preemption where “there is a positive conflict between [a provision of the CSA]
and that State law such that the two cannot consistently stand together”)), and as the Court is
obligated, if feasible, to regard both RICO and the CSA as effective, and because the Court
cannot construe Plaintiff’s cannabis-related RICO claim in a way that would not also violate the
CSA, rendering it impliedly repealed, see Traynor v. Turnage, 485 U.S. 535, 547–48 (1988)
(observing the “cardinal rule . . . that repeals by implication are not favored,’” and that “courts
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are not at liberty to pick and choose among congressional enactments, and when two statutes are
capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional
intention to the contrary, to regard each as effective”), the Court finds the Nation is not entitled
to recover lost profits in connection with the sale of cannabis products and all evidence related to
the Nation’s alleged lost profits for the sale of cannabis products will be precluded at trial.
IV. 	CONCLUSION
For these reasons, it is hereby
ORDERED that evidence that the Nation lost profits in connection with the sale of
cannabis products is precluded as irrelevant.
IT IS SO ORDERED.
Dated: December 1, 2025
Syracuse, New York
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