Reefer Brief: Sixth Circuit Affirms Trial Court Finding that Hemp Intermediary Had Not Helped Its Counterparty Win a Contract with CVS

It’s been a long time since we’ve had a Reefer Brief. It’s not that I haven’t been looking. The problem is that the cases tend to settle without a written opinion. But this one resulted in not only a District Court opinion but a ruling from the Sixth Circuit in June.

The facts are confusing because there are a lot of entities involved. Simplifying somewhat, Teterboro Partners, LLC and related entities (collectively Teterboro), as the Sixth Circuit put it, “are businesses that have sought to capitalize on the legalization of hemp-based products in the United States.” Teterboro reached out to some US subsidiaries of an Australian hemp and biotechnology company to offer to find customers for the subsidiaries, referred to in the opinion as “Ananda.” There were some meetings in 2018 with representatives from CVS, but nothing came of it.

Two years later, working with a different intermediary, CVS selected Ananda as its supplier of various hemp-based products. Ananda moved for a declaratory judgment that its relationship with Teterboro was at an end. Teterboro counterclaimed, alleging breach. Unfortunately for Teterboro, the parties stipulated that “Teterboro was entitled to a commission only if its introduction directly resulted in Ananda’s sales to CVS.” Teterboro had not in fact contributed directly to Ananda’s sales, and so the District Court granted summary judgment to Ananda. Teterboro filed a Rule 59(e) motion to alter or amend the judgment, now arguing that it “only needed to introduce Ananda to someone who subsequently became a customer, even if a sale was not the direct result of the introduction.” The District Court was unmoved, as this contradicted Teterboro’s prior stipulation.

Peterboro appealed to the Sixth Circuit, and in Kentucky Industrial Hemp, LLC v. Teterboro Partners, LLC, the Sixth Circuit affirmed. The Court first introduced three possible legal theories, arrayed on a spectrum, that might apply to Teterboro’s positions in the litigation. It may have forfeited its argument, it might have committed “invited error,” or it might have waived the argument urged in its Rule 59(e) motion. An appellate court may entertain forfeited arguments only in exceptional circumstances. Under no circumstances should an appellate court entertain arguments that have been waived. Invited error is somewhere in between.

Here, the Court declined to determine whether Teterboro’s conduct was best understood as waiver or invited error. The Court’s prior decisions on the distinction between the two “are not a model of clarity.” In any case, under either doctrine, Teterboro must be barred from backing away from its position on summary judgment. Waiver, forfeiture, and invited error aside, Teterboro raised new arguments in its Rule 59(e) motion, which is impermissible. Teterboro’s attempts to argue that its efforts did in fact lead CVS to enter into a contractual relationship with Ananda were unavailing. 

The judgment below was affirmed. As is often the case with these Reefer Brief cases, the attorneys for the losing party did not cover themselves in glory. I have no theory as to why attorney missteps are so common in hemp industry litigation.