Ruling sets important precedent for both California’s legal cannabis market and legal cannabis industry in America
CALIFORNIA: Eaze Technologies, Inc. today announced that it obtained a complete dismissal of Williams v. Eaze, Inc., a putative nationwide class action lawsuit brought under the Telephone Consumer Protection Act (“TCPA”), by successfully enforcing the arbitration agreement in its Terms of Service.
In her lawsuit, Plaintiff Farrah Williams, attempted to circumvent the arbitration agreement in Eaze’s Terms of Service by arguing that cannabis contracts cannot be “formed” because cannabis is illegal under federal law. The court rejected this claim, thus preserving the ability of cannabis businesses, operating where cannabis is legal under state law, to enter into and enforce basic contracts with customers, individuals, and other businesses.
“This ruling is enormously important for the entire industry, as contracts across California and nationally could have been invalidated had the court found for the Plaintiff,” said Andrea Lobato, Chief Risk Officer at Eaze. “We are pleased to have successfully defended the basic right of legal cannabis companies to enter into contracts.”
After substantial briefing and argument led by Boies Schiller Flexner partners, Albert Giang and Michael Roth, the district court concluded that a proper contract had been formed, delegated other disputes to the arbitrator, and dismissed Plaintiff’s nationwide class action. Specifically, while noting that the case raises interesting issues about “ganjapreneurship,” the Court concluded that Eaze’s business “is legal under California state law” and arbitration was required under the Federal Arbitration Act (“FAA”).
“The court correctly found that cannabis companies are not barred from forming and enforcing basic contracts, and that Eaze’s business is legal under California state law,” said Giang. This ruling sets an important precedent for California’s legal cannabis market, and more broadly for the legal cannabis industry in America.