Legal Roundup: Marijuana Dispensaries Lace Product With Fungus, Wrongful Termination Determined After Injury and More

A look at recent court decisions and how their rulings have an impact on risk management and the insurance industry.
By: | May 9, 2019

Los Angeles Sues Dispensary for Pesticide-Laced Pot in Unlicensed Dispensary Crackdown

The Case: The City of Los Angeles has sued an unlicensed pot dispensary for allegedly selling marijuana contaminated with pesticides.

Kush Club 20 is being accused of lacing marijuana with a fungicide called paclobutrazol. 

The suit is part of a wider crackdown on illegal dispensaries in the city. The Los Angeles Times reports: “Only 181 dispensaries have temporary city approval to sell marijuana in Los Angeles, according to the Department of Cannabis Regulation. But hundreds of illegal dispensaries have popped up across the city as an attractive option for those looking to buy marijuana while skirting the state’s 15% tax on legal marijuana sales.”



The report continued: “Regulators, however, have warned that those shops might traffic in unsafe wares or counterfeit versions of popular marijuana brands and cultivators. ‘We apparently as a community care a lot about whether our romaine lettuce is contaminated, and we should. We care a lot about whether we can safely eat at Chipotle,’ [Los Angeles City Atty. Mike] Feuer said at a downtown news conference. ‘Marijuana buyers should at least exercise that same degree of caution.’ ”

Scorecard: It’s a brand-new case so there’s no telling how it’ll shake out …

Takeaway: … but it offers an insight into how these new dispensaries can and sometimes do bend the rules. It could set the precedent for how other states might handle the continued legalization and distribution of marijuana.

Wrongful Termination Over Medical Marijuana?

The Case: A New Jersey funeral director sued for wrongful termination after being fired for using medical marijuana to treat his cancer.

Justin Wild, 41, brought the case against his employer Feeney Funeral Home in Ridgewood, N.J. Medical marijuana is legal in the state and 45,000 patients are registered to use it, according to

The newspaper reported: “Wild did not tell his employer he was enrolled in the medicinal marijuana program until after he was injured in a car accident and was taken to a hospital, according to the court decision. The accident was not deemed to be Wild’s fault and he claimed he was not high at the time.

“Because Wild acknowledged he was a registered patient, the emergency room physician did not administer a drug test because ‘of course it will be in his system,’ according to a summary of the case in the court decision.”

“We apparently as a community care a lot about whether our romaine lettuce is contaminated, and we should. … Marijuana buyers should at least exercise that same degree of caution.” — Mike Feuer, Los Angeles City Attorney

WHYY added: “Although the state’s medical marijuana law doesn’t require employers to accommodate workers who use the prescribed drug, the appellate court found the state’s law against discrimination may still protect them. ‘Just as the Compassionate Use Act imposes no burden on defendants, it negates no rights or claims available to plaintiff that emanate from the [Law Against Discrimination],’ the opinion reads.”

Scorecard: Although the case is set to return to trial court, it could be a big win for job protections for medical marijuana patients in New Jersey.

Takeaway: As medical marijuana becomes increasingly legalized, employers will have to determine how to accommodate employees with medical needs who test positive.

Man Sues Costco After Ex-Wife Finds Out About Erectile Dysfunction Meds

The Case: An Arizona man has sued Costco after a pharmacist joked about his erectile dysfunction with his ex-wife.

The Associated Press reports that the man “received a sample for an erectile dysfunction drug in January 2016 and later got a call from Costco saying a full prescription was ready for pickup. The man canceled the prescription, and then canceled it a second time about a month later when he called to check on an unrelated prescription and was told it was still there. The court ruling says the man then authorized Costco to allow his ex-wife to pick up his regular prescription refill, and that’s when the pharmacist told her about the ED pills and they joked about them.”

The case had previously been dismissed by a trial-court judge, but the Arizona Court of Appeals ruled that the man can sue Costco for privacy violations. 

HIPAA concerns must be top-of-mind for businesses, and even something as seemingly innocent as a joke can derail it. The Associated Press said: “The Court of Appeals revived sections alleging negligence under federal health care privacy law commonly called HIPAA. The ruling potentially allows him to seek punitive damages.”

Scorecard: The Arizona man is able to take his claim to court.

TakeawayThe ruling is the first to say that negligence claims under HIPAA can be brought in Arizona courts. From a legal perspective, this ruling may be one of the first to bring HIPAA negligence claims to the state.

Judge Tacks on $1M in Railway Wrongful Termination Case

The Case: Zachary Wooten, a former conductor at BNSF Railway Co., sustained injuries to his right arm and wrist, and was promptly fired. He filed suit against his employer.

Wooten claims the injuries were sustained while working and that he was subsequently blacklisted by the company. BNSF claims his injury was pre-existing and that he didn’t report the injury in good faith.



A jury awarded Wooten $2.1 million last year, and this week Montana Federal District Court Judge Dana Christensen said BNSF Railway Co. was not entitled to a new trial. The judge also awarded Wooten an extra $1 million to cover attorney fees, interest and other expenses.

The Daily Inter Lake has more: “BNSF asked for a new trial on several fronts, but Christensen ruled against all of them. In fact, Christensen found the jury did a good job in its analysis and judgment in the case. ‘It hardly needs to be pointed out that the jury could have logically progressed to a finding of retaliation by finding that Wooten reported a work-related injury in good faith — that was Wooten’s theory of the case from beginning to end. The jury verdict is both internally consistent and consistent with the clear weight of the evidence,’ Christensen opined in a 68-page ruling.”

Scorecard:  Zachary Wooten has been awarded nearly $3.1 million in his wrongful termination claim.

Takeaway: Retaliation can be costly. Best practice is to review work incidents and accidents with a fine-toothed comb. &

Jared Shelly is a journalist based in Philadelphia. He can be reached at [email protected]

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