Companies allege the MCR Labs complaint is based on a “speculative conclusion,” and attempts to “use the judicial system as a means of investigating the testing practices of its competitors”
In January, MCR Labs filed a lawsuit in Suffolk County Superior Court against eight other Independent Testing Labs (ITLs) in Massachusetts for alleged “violations” of the state’s cannabis law, “intentional interference with advantageous business relations,” and “unjust enrichment.” The complaint reads, in part:
Plaintiff and Defendants are competitor analytical laboratories that operate in Massachusetts’ multibillion dollar cannabis industry, offering testing services to companies that cultivate, market, and sell cannabis and cannabis products in Massachusetts. Plaintiff brings this action to redress Defendants’ unfair methods of competition and deceptive acts and practices, which have stripped Plaintiff of its hard-earned business in the cannabis testing market in Massachusetts.
Defendant Labs’ unfair, unlawful, and deceptive conduct is twofold. Defendants (1) artificially inflate Total THC Potency in tests of their customers’ cannabis products; and/or (2) ignore “safety fails” in test results—manipulating tests for product batches that contain contaminants such as yeast and mold, lead, and pesticides that are banned or restricted under Massachusetts law, so that the test results will not show the presence of these unlawful contaminants.
The news did not come as a total shock to industry observers. The owners of MCR Labs have been vocal for years about the industry’s testing problems, giving presentations and speaking with reporters from national and local outlets alike (including this one). But while their gripes were known, MCR’s scorched earth legal approach sent shockwaves through the market, spurring countless quiet conversations about how the saga might proceed.
Defendants file motion to dismiss
After nearly five months of relative quiet on this front and those being sued not commenting publicly about the matter, on June 18, the eight defendants filed a motion to dismiss, arguing that the initial “Complaint fails to state any claims for which relief can be granted, fails to state any claims with the requisite degree of particularity, and is brought in an improper venue.” Two days later, the parties individually submitted similar memoranda in support of the joint motion, with some addressing tangents that directly concern specific ITLs. One of the memos reads in part:
“MCR bases this wholly speculative conclusion on a handful of news articles published nationwide regarding the cannabis testing industry generally (none of which pertain to [the defendants]) and MCR’s self-serving assumptions drawn from publicly-available Massachusetts testing data. MCR’s lawsuit is a transparent and misguided attempt to usurp the role and jurisdiction of the Cannabis Control Commission (‘CCC’) and instead use the judicial system as a means of investigating the testing practices of its competitors.”
A memo filed to support another defendant’s motion alleges, among other things, that the “Plaintiff does not bring a claim for unfair competition, but proceeds solely upon an unfair or deceptive conduct theory.” It also states that “the Complaint does not allege any commercial transaction between the parties, as is required to state a claim under the statute.” Therefore, “Plaintiff’s tortious interference claim must be dismissed because the Complaint fails to plausibly allege that [the defendant] intentionally, and for an improper purpose or by improper means, interfered with Plaintiff’s business relationship with any third party.”
The legal response from MCR Labs
On June 20, the same day that most of the defendants submitted documents to support their motion to dismiss the suit, MCR Labs filed a blanket memorandum opposing the call for dismissal.
In a 35-page response bolstering the ITL’s initial complaint, the ITL argues: “The factual allegations supporting Plaintiff’s Chapter 93A claim are more than sufficient. What the Defendant Labs label ‘speculation’ and ‘conjecture’ are reasonable inferences to which Plaintiff is entitled.”
The MCR Labs memo challenges: “Should any of the Defendant Labs defend against Plaintiff’s Chapter 93A claim by proving that the inflated THC potency levels or ignored ‘safety fails’ were caused by anything other than the Defendant Labs’ misconduct, they are welcome to proffer that evidence and make those arguments at the appropriate juncture (most notably, trial).”
To be continued …
