1 Beavers, Esther
From: David G. Lim <[email protected]>
Sent: Monday, March 17, 2025 10:48 AM
To: Beavers, Esther; Rees, Karen; Ballard, Kelly
Cc: Gassaway, David
Subject: FW: Authentic - City of Fairfield Submission re Continued Public Hearing (3/18) Attachments: 2025-03-11_Submission re City of Fairfield Resolution re Authentic.pdf Follow Up Flag: Follow up
Flag Status: Flagged
Hi Esther,
Please add the email below and the aƩached document to the public comments folder for the AuthenƟc hearing. On Friday, the City Council conƟnued the hearing scheduled for tomorrow March 18 to a new date to be determined, but for organizaƟon’s sake, you can drop this email and document into the public folder for tomorrow’s City Council meeƟng.
Call me if any quesƟons. Thanks!
David G. Lim (He/Him/His)
Fairfield City Attorney
RICHARDS WATSON GERSHON
One Sansome Street, Suite 2850
San Francisco, California 94104
T: 415.421.8484
E: [email protected]
W: rwglaw.com
From: Phillis, Nicole <[email protected]>
Sent: Tuesday, March 11, 2025 3:07 PM
To: David G. Lim <[email protected]>
Subject: Authentic - City of Fairfield Submission re Continued Public Hearing (3/18)
Dear Mr. Lim,
Thank you for taking my call this morning. I know you’re very busy and I appreciate you making time to talk with me. Please find attached Authentic’s submission for the continued public hearing on the resolution considering revocation of Authentic’s preliminary approval.
2 Please let me know if you’d like to discuss any of the above. I appreciate your open communication and I look forward to seeing you on March 18.
Sincerely,
Nicole
Nicole Phillis
Partner | Davis Wright Tremaine LLP
P 213.633.8657 C 323.401.0474 E [email protected] A 350 South Grand Avenue, 27th Floor, Los Angeles, CA 90071 DWT.COM
27th Floor
350 South Grand Avenue
Los Angeles, CA 90071-3487
Nicole S. Phillis
213-633-8657 tel
4901-6991-3382v.3 0119025-000003
March 11, 2025
David G. Lim, Esq.
City Attorney, City of Fairfield
Richards Watson Gershon
One Sansome Street, Suite 2850
San Francisco, CA 94104
[email protected]
Hon. Mayor Catherine Moy
Hon. Vice Mayor Pam Bertani
Hon. Councilmember K. Patrice Williams
Hon. Councilmember Scott Tonnesen
Hon. Councilmember Doug Carr
Hon. Councilmember Doriss Panduro
Hon. Councilmember Manveer Sandhu
City of Fairfield
1000 Webster Street
Fairfield, CA 94533
Re: Continued Public Hearing re Proposed Resolution re
Rescission of Preliminary Approval to Authentic Fairfield, LLC Dear Honorable City Attorney Lim and Honorable City Councilmembers:
As you know, I represent Authentic Fairfield, LLC (“Authentic”) in connection with the continued public hearing on potential rescission of Authentic’s preliminary approval for a commercial cannabis retail permit within the City of Fairfield. I write to urge you to reject the proposed resolution to revoke Authentic’s preliminary approval because it lacks any basis in fact or in law under the Fairfield Municipal Code (“FMC”).
A. Sections 14(b), 15(b) and 15(c) of the Fairfield Municipal Code Apply only to “Permittees,” and Not “Preliminary Approval Holders”—and Cannot Be Applied Retroactively to Create Ex Post Facto Liability for 2022 Conduct.
The proposed resolution should be rejected because it aims to revoke Authentic’s preliminary approval for a commercial cannabis permit under newly amended Chapter 10E,
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Section 11(b) of the FMC1 and Exhibit A to Fairfield Resolution 2021-143 based on alleged violations of the FMC that do not apply to preliminary approval holders. The apparent basis for the City’s planned action is FMC 10E.11, which authorizes (but does not require) revocation of preliminary approval based on violation of state or local law, such as an alleged violations of Chapter 10E Sections 14(b), 15(a), and 15(b) of the FMC. (See Draft Res. 2025-37 at p. 2 [“The City Council revokes the preliminary approval of Resolution 2021-143 for a Commercial Cannabis Retail Permit granted to Fairfield Authentic, LLC due to the applicant’s failure to comply with FMC Chapter 10E Sections 14(b), 15(a), and 15(b).”]).
Under the plain language of those statutes and law, however, such a revocation is erroneous as a matter of law and violates Authentic’s due process rights for a variety of reasons detailed below. As an initial matter, Sections 14(b), 15(a), and 15(b) by their own terms only apply to “Permittees”—not a preliminary approval holder like Authentic. Moreover, those provisions cannot be applied retroactively and ex post facto to create liability for 2022 conduct, which long pre-dated the October 2024 amendments to Section 10E.11. Additionally, it is clear that even if the law does apply to Authentic (it does not), Authentic was in full compliance with its requirements—unlike a plethora of other businesses who have not been subject to such targeted adverse attention. As such, we urge you to reject any resolution that would violate Authentic’s rights, violate the law, and be subject to an immediate injunction.
First, the plain language of Section 10E.14 and 10E.15 confirms that the requirements regarding disclosure and a renewed application apply only to “permittees” and not preliminary approval holders. The FMC expressly defines a preliminary approval holder as “an entity that has an approved application for a Commercial cannabis permit but has not yet completed all the requirements to receive the regulatory permit (Commercial Cannabis Business Permit) issued by the City[.]” (FMC 10E.5(aa) [emphasis added].) This definition makes clear that a holding “Preliminary Approval” is mutually exclusive to being a “Permittee” because, by definition, a preliminary approval holder “has not yet completed all the requirements to receive the regulatory permit.”
The plain language of Sections 14(b), 15(a), and 15(b) confirm that those sections only apply—and have only ever applied to “Permittees”—not preliminary approval holders like Authentic:
10E.14 Changes in Business Location or Permit Information.
A commercial cannabis business permit is nontransferable to another location and may not otherwise be modified, except in accordance with this section. Failure to comply with this section is grounds for permit revocation.
1 These amendments were passed pursuant to Fairfield Ordinance No. 2024-08, §§ 5, 6 in October 2024.
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(a) At least 60 calendar days prior to an anticipated change to the location of the cannabis business, the permittee shall file a new application form with the City Manager, including a Zoning Verification Letter for the new location. The City Manager will hold an administrative public hearing to determine whether to approve or deny the change in location.
(b) The permittee shall file an updated application form with the City Manager at least 30 calendar days prior to an anticipated change to any other information listed in the permit application, including but not limited to a change in contact information, change in trade name, or change in the security plan; provided, however, that a change in ownership shall comply with Section 10E.15.
…
10E.15 Transfer of a Preliminary Approval or a Cannabis Business Permit.
A commercial cannabis business permit is nontransferable to any other person except in accordance with this section. Any attempt to transfer a commercial cannabis business permit without complying with this section shall be deemed void and is grounds for permit revocation.
(a) Prior to any transfer or change in ownership of a commercial cannabis business permit, the permittee shall file a new application with the City Manager. The application shall be accompanied by a transfer fee in an amount set by resolution of the City Council (or if not set, shall be the same amount as an application fee). (b) The City Manager shall review the application to determine whether the new owner(s) meet the minimum permit eligibility criteria. If the transfer involves a substantial change in ownership, the City Council shall hold a public hearing and approve or deny the transfer pursuant to the procedures for approval of a new permit application. A "substantial change in ownership" shall mean any change in the permittee’s business structure or ownership of the business entity that results in a change of more than 51% of the original ownership. A transferred permit shall be valid for a period of one year from the date of the City Council’s approval.
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(c) Notwithstanding the above, a permittee may change the form of business entity without applying for a permit transfer in either of the following scenarios; provided, that the permittee notifies the City Manager in writing of the change within 10 days of the date the change takes effect:
(1) The ownership of the new business entity is substantially similar to original permittee business entity (at least 51% of the ownership is identical); or
(2) If the original permittee is an unincorporated association, mutual or public benefit corporation, agricultural or consumer cooperative corporation and subsequently transitions to or forms a new business entity as allowed under MAUCRSA; provided, that the Board of Directors (or in the case of an unincorporated association, the individual(s) listed on the City permit application) of the original permittee entity are the same as the new business entity.
(FMC 10E.14; 10E.15.)
Additionally, it is undisputed that Authentic does not have its cannabis permit and has not yet completed all the requirements to receive the regulatory permit (e.g., it does not have its certificate of occupancy or business license yet), squarely placing Authentic within the definition of preliminary approval holder.
Second, even if Authentic was deemed a permittee (which it is not), Authentic also cannot have its approval revoked through the retroactive application of the recently amended sections Chapter 10E to create ex post facto authority, based on conduct that occurred over two years ago (in 2022). The amendments to Chapter 10E were adopted by City Council in October 2024, nearly three years after preliminary approval was awarded to Authentic in 2021 and nearly two years after Albert Mitchell passed away (on February 10, 2022) and John Avidor terminated his employment with the company (May 2022)—the events that purportedly triggered the requirement to update Authentic’s records. There is no language contained in these amendments to indicate that they are to be applied retroactively, nor was any notice given to Authentic of their potential retroactive application.
Retroactive application of the amendments to Chapter 10E.11 and the application of Chapter 10E.14, and 15 to revoke Authentic’s vested rights in its preliminary approval deprives Authentic of its due process rights and violates blackletter U.S. and California law . (See, e.g., People v. Burgos (2024) 16 Cal.5th 1, 11 [“‘a statute that is ambiguous with respect to retroactive application is construed ... to be unambiguously prospective.’’] [quoting People v.
Buycks (2018) 5 Cal.5th 857, 880 and citing People v. Brown (2012) 54 Cal.4th 314, 324;
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People v. Floyd (2003) 31 Cal.4th 179, 184 [recognizing general rule of statutory construction that ‘when there is nothing to indicate a contrary intent in a statute it will be presumed that the Legislature intended the statute to operate prospectively and not retroactively’”]; Tapia v.
Superior Court (1991) 53 Cal.3d 282, 287 [“It is well settled that a new statute is presumed to operate prospectively absent an express declaration of retrospectivity or a clear indication that the electorate, or the Legislature, intended otherwise”]; People v. Hayes (1989) 49 Cal.3d 1260, 1274 [same]; cf. Aetna Cas. & Surety Co. v. Ind. Acc. Com. (1947) 30 Cal.2d 388, 393 [“It is an established canon of interpretation that statutes are not to be given a retrospective operation unless it is clearly made to appear that such was the legislative intent”]]; People v. Arata (2007) 151 Cal.App.4th 778, 784 [retroactive effect of law to “impair rights a party possessed when he acted, increase a party’s liability for past conduct, or impose new duties with respect to transactions already competed” would not govern absent clear congressional statement of intent] [citing INS v. St. Cyr (2001) 533 U.S. 289, 293-93].) Here, the October 2024 amendments should not apply at all to Authentic as a “preliminary approval” holder, let alone to conduct that happened years prior to the amendments.
Indeed, it is concerning to Authentic that the amendments were undertaken between August and October 2024—when Authentic was the only preliminary approval holder remaining in Fairfield. The public record at the time confirms that the primary advocates for those amendments were not community members, but rather other current commercial cannabis permit holders in the City of Fairfield. Furthermore, further elimination of competition in the Fairfield cannabis market does not serve the interests of the community, who gain access to better quality products at cheaper prices and significantly more tax revenue with Authentic’s presence. Such an improper revocation of Authentic’s approval does, however, serve the private interest and market share of Authentic’s competitors.
Third, there is no discrepancy between Authentic’s ownership based on the updated DCC website. The proposed resolution also claims that “State of California Department of Cannabis Control Records for Authentic Fairfield, LLC ownership do not match the ownership record provided as part of the application for a Commercial Cannabis Retail Business Permit provided to the City of Fairfield.” As an initial matter, the records published on the DCC’s website do not reflect any factual findings of violations of local or state law. Moreover, there is no discrepancy with the current ownership of Authentic Fairfield LLC on the DCC website because as of February 28, 2025, the DCC corrected the website to reflect the same ownership now disclosed to the City Council in connection with these proceedings: Brian Mitchell, James, Kim and Tony Huang.
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B. Authentic Has Not Committed Any Violation of Local or State Law.
Even if Sections 14(b), 15(b), and 15(c) did apply to Authentic as a preliminary approval holder (which they do not) and could apply retroactively (which they cannot), City Council should reject the proposed resolution because it has identified no violation of Sections 14(b), 15(b), and 15(c) of the FMC. Because proposed resolution bases its grounds for revocation of Authentic’s preliminary approval on the fact that there was no underlying violation of state or local law, and the City has proven no underlying violation of either local or state law, the resolution must be rejected.
Section 11(b) provides:
The City Council may revoke a preliminary approval or a commercial cannabis business permit for a violation of any State or local law, including, but not limited to, this Chapter; a violation of any condition or term of the commercial cannabis business permit; and/or a violation of any condition or term made a part of any other permit or entitlement granted to the commercial cannabis business or its owner…
While the City points to Authentic’s alleged violation of Fairfield Municipal Code 10E.15 in their November 14, 2024 letter as the reason for considering revocation of its preliminary permit, Authentic has not violated these rules on ownership changes.
FMC 10E.14(b) states in relevant part:
The permittee shall file an updated application form with the City Manager at least 30 calendar days prior to an anticipated change to
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any other information listed in the permit application, including but not limited to a change in contact information, change in trade name, or change in the security plan; provided, however, that a change in ownership shall comply with Section 10E.15.
(FMC 10E.14(b) [emphasis added].)
In turn, FMC 10E.15 states in relevant part: “A commercial cannabis business permit is nontransferable to any other person except in accordance with this section.” Subsection (a) further states: “Prior to any transfer or change in ownership of a commercial cannabis business permit, the permittee shall file a new application with the City Manager.” Then, subsection (b) goes on to provide:
The City Manager shall review the application to determine whether the new owner(s) meet the minimum permit eligibility criteria. If the transfer involves a substantial change in ownership, the City Council shall hold a public hearing and approve or deny the transfer pursuant to the procedures for approval of a new permit application. A "substantial change in ownership" shall mean any change in the permittee’s business structure or ownership of the business entity that results in a change of more than 51% of the original ownership.
(FMC 10E.15(b) [emphasis added].) Lastly, subsection(c) provides: “Notwithstanding the above, a permittee may change the form of business entity without applying for a permit transfer in either of the following scenarios; provided, that the permittee notifies the City Manager in writing of the change within 10 days of the date the change takes effect…”2 (FMC 10E.15(c).)
Here, as noted above, both FMC 10E subsections 14 and 15 apply to “permittees,” not preliminary approval holders, and cannot be applied to have impermissible retroactive effect to impair insubstantial changes in ownership during the preliminary approval phase that long pre- dated the passage of the amendments in October 2024. But even if they did apply (retroactively), the plain language of FMC Sections 14 and 15 confirms there has been no change in ownership, let alone a “substantial one.” Authentic does not have any new owners, or owners beyond the ones listed in its original application. There also has not been any substantial change in ownership that necessitates a public hearing in front of City Council. Authentic’s 2020 cannabis application listed the following as owners and their ownership:
2 There is no evidence that Authentic has ever tried to change the “form of the business.” Authentic has and always has remained the same business form, a California Limited Liability Company. Thus, Section 10E.15(c) has no application here.
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1. Brian Mitchell – 30%
2. Albert Mitchell – 30%
3. James Kim – 11.5%
4. Tony Huang – 27%
5. Jon Avidor – 1.5%
As previously explained, one of the original owners, Albert Mitchell, passed away on February 10, 2022 and his 30% equity was returned to the company. In May 2022, Jon Avidor’s employment with the company was terminated and returned his equity to the company. The remaining owners of Authentic had their equity increased proportionately by the equity returned to Authentic by Albert Mitchell’s death and Jon Avidor’s termination of employment, such that the resulting ownership became:
1. Brian Mitchell - 40%
2. James Kim - 20%
3. Tony Huang - 20%
As these facts show, no new owner has been added to Authentic. There has also not been a “substantial change” in equity ownership, so no further action was required by action under the FMC.
C. Even If Authentic Had Committed a Violation, the City Is Not Required to Revoke Authentic’s Preliminary Approval under FMC 10E.11—and Has Declined to Revoke Other Licenses Despite Violations of State and Local Law.
Contrary to the representations made in the letters sent on behalf of competing operators within Fairfield, City Council is not required to automatically revoke Authentic’s license, even if it had violated some state or local law (which it has not). To the contrary, FMC 10E.11(b) provides:
(b) The City Council may revoke a preliminary approval or a commercial cannabis business permit for a violation of any State or local law, including, but not limited to, this Chapter; a violation of any condition or term of the commercial cannabis business permit; and/or a violation of any condition or term made a part of any other permit or entitlement granted to the commercial cannabis business or its owner. (Ord. No. 2020-07, § 1; Ord. No. 2024-08, §§ 5, 6.
(FMC 10E.11, subd. (b) [emphasis added].) The use of the word “may” reflects permissive authority, not mandatory (e.g., “shall”). (Cf., Judith P. v. Superior Court (2002) 102
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Cal.App.4th 535, 551 [the word “’shall,’ when used in a statute, is ordinarily construed as mandatory or directory, as opposed to permissive, particularly when, as here, the Legislature has used both the terms “shall” and “may” in the same statute.”].) Thus, even if the City finds a violation of state or local law (of which there is no evidence, let alone a legal determination here, here), the City still need not revoke preliminary approval or a commercial cannabis business permit under the plain language of FMC 10E.11.
Notably, the City has already exercised that discretion to the benefit of all of the other permittees in the City. For example, The Showcase is currently operating out of compliance with California Corporations Code, having not filed its “Statement of Information” with the Secretary of State, despite the fact that it was due on October 31, 2024. (Cal. Corp. Code, § 1502, subd. (a) [requiring that every corporation file annual statement of information].)
Moreover, The Showcase does not have any registered agent for service of process, as it is separately required under Corporations Code section 1502(b) (requiring corporation to designate “agent of the corporation for the purpose of service of process, a natural person residing in this state or a corporation that has complied with Section 1505 and whose capacity to act as an agent has not terminated…”).
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Similarly, email correspondence obtained through a pending public records act requests indicates that J.J.V.I. Enterprises, Inc. (the “Bright Spot”) acknowledged its own non-compliance with certain local laws as recently as August 2024, stating: “we need a renewal of our license and…we are out of compliance.” FMC 10E.6 expressly provides: “No person may engage in any commercial cannabis business or in any commercial cannabis activity within the City, including cultivation, manufacture, processing, laboratory testing, distributing, dispensing, or sale of cannabis or a cannabis product, unless the person (1) has a valid commercial cannabis business permit from the City; (2) has a valid State license; and (3) is currently in compliance with all applicable State and local laws and regulations pertaining to the commercial cannabis business and the commercial cannabis activities.” By August 2024, The Bright Spot’s license had expired in June 2024 and The Bright Spot had ostensibly operated without a licensed for at least two months—but the City took no adverse action against The Bright Spot:
Given the excused violations of other operators, it would be deeply unfair, unjust, and arbitrary and capricious for the City Council to exercise its authority under FMC 10E.11 against Authentic, when it has declined to hold the other operators within the City to similar standards.
D. Authentic Has Vested Rights in Its Preliminary Approval, Having Expended substantial resources to develop its property and Due Process Precludes Revocation On These Facts.
It is blackletter California law that “[a] permit may not be revoked arbitrarily ‘without cause.’” (Trans-Oceanic Oil Corp. v. City of Santa Barbara (1948) 85 Cal.App.2d 776, 795.) “In revoking a permit lawfully granted, due process requires that it act only upon notice to the permittee, upon a hearing, and upon evidence substantially supporting a finding of revocation.” (Id.) “If a permittee has acquired a vested property right under a permit, the permit cannot be revoked.” (Id. at p. 784 [citing 9 American Jurisprudence § 8, p. 204].) To that end, a permit or license
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may not arbitrarily be revoked by municipal authorities, particularly where, on the faith of it, the owner has incurred material expense. Such a permit has been declared to be more than a mere license revocable at the will of the licensor. When, in reliance thereon, work upon the building is actually commenced and liabilities are incurred for work and material, the owner acquires a vested property right to the protection of which he is entitled.’
(Id.) When a permittee has acquired such a vested right it may be revoked only if the permittee fails to comply with reasonable terms or conditions expressed in the permit granted or if there is a compelling public necessity. (O’Hagen v. Board of Zoning Adjustment (1971) 19 Cal.App.3d 151, 158 [internal citations omitted].)
Here, Authentic has satisfied each and every requirement of the terms and conditions of its preliminary approval as originally granted and is entitled to basic due process in the continued pursuit of its license on those terms. Indeed, in reliance on the grant of preliminary approval, Authentic has invested over $1,100,000 to develop its property at 2470 Martin Road, Fairfield, CA in reliance upon the City’s grant of preliminary approval. As a result, it has acquired a vested right in its preliminary approval, to which it is entitled to fundamental due process, and which cannot be revoked absent a violation of the applicable terms and conditions or without a public necessity.
Nor is there any basis to find a “compelling public necessity” for revocation. To the contrary, allowing Authentic to keep its preliminary approval will only increase safe adult and medicinal access to cannabis in Fairfield and promote healthy competition on affordable prices and offerings. Indeed, for a City of Fairfield’s size (120,000), industry leading experts have recommended a market saturation of one retail operation for every 10,000 citizens. Revoking Authentic’s preliminary approval would further reduce the number of licensed retailers to only three within the City, putting market saturation at nearly four times less than what is recommended for healthy competition and safe access within the industry. This serves only to benefit the three current operators, who will protect their disproportionately large market share without real competition, and the illicit market, which continues to threaten safe, lawful access throughout the state— all at the cost of both significant tax revenue (at least $800,000 per annum) for the City of Fairfield and at least 45 well-paying jobs for the Fairfield community.
E. Authentic Is Committed To Opening By December 1, 2025.
Authentic understands City Council’s concerns about making sure permittees open promptly, which is important to generating tax revenue and providing good jobs within the City.
As a demonstration of Authentic’s good faith, Authentic reiterates that is committed to opening the store in the next 6-9 months and is willing to commit to a hard deadline, in writing with the City. Authentic is also willing to demonstrate its commitment to the Fairfield community with
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enhanced community benefits and engagement. In fact, Authentic Fairfield has already been involved in the Fairfield community.
Since 2021, Authentic Fairfield has been an active partner to several local community organizations including Fairfield Community Services Foundation, Change and New Beginnings Solano, the Food Bank of Contra Costa and Solano County, Solano Napa Firefighters Foundation and the Nelda Mundy Elementary School. To date, Authentic has contributed over $80,000 and provided numerous volunteers to support these organizations to make a local impact here in Fairfield. Early this month, Authentic organized a Winter Wear Drive in partnership with the Fairfield Community Services Foundation and organized a beautification and clean up event with the Suisun City Beautification Community Committee. Authentic is committed to continuing this track record of local community engagement and community benefits.
Because increased access to safe, affordable cannabis will only be improved by Authentic’s operation in this City, which will also substantially increase tax revenue and create good, union jobs, Authentic respectfully requests that the resolution be rejected.
F. The March 4, 2025 Embarc Letter Is Meritless and Misinformed.
Authentic is also in receipt of the March 4, 2025 letter from Lawrence J. Conlan on behalf of Embarc, urging Council to revoke Authentic’s preliminary approval. Embarc’s letter confirms why City Council cannot, as a matter of law, adopt the proposed resolution based on a purportedly retroactive application of October 2024 amendments to the FMC to 2022 events.
The March 4, 2025 Embarc letter leaves no doubt that the real reason why the other operators are advocating so fiercely to revoke Authentic’s permit is because they seek to protect their own private interests and market share, and guard against competition. This is not the interest of the Fairfield community.
First, the March 4, 2025 Embarc letter fails to address, let alone at all rebut Authentic’s arguments about the inapplicability of Sections 10E.14 and 10E.15 to Authentic as a preliminary approval holder (not “permittee”), or about the prohibition on retroactive and/or ex post facto application of law to create liability based on past conduct. This alone disposes of all of Embarc’s anti-competitive arguments.
Second, even if those October 2024 amended laws could apply to Authentic (they do not and cannot), Embarc’s letter fails to explain how a change to 31.5% of ownership interests (with Dr. Albert Mitchell [30%] and Jon Avidor [1.5%]) constitutes a “substantial change” in ownership. Indeed, that Exhibit A showed that Mr. Mitchell signed the application and “Owner Information” in September 2020 under penalty of perjury (which was true when signed). Mr.
Mitchell’s father, Albert Mitchell, unexpectedly passed away in February 2022, and Mr. Avidor left the company in May 2022. Even Embarc’s basic math is incorrect, because even if there was a change of Albert Mitchell’s 30% and Jon Avidor’s 1.5%, such a change only affects 31.5% of
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the ownership interests (i.e., less than the 51% required to show a “substantial change”).
Embarc’s claim that “[t]he 2024 operating agreement definitively proves that a transfer of ownership of greater than 51% occurred without the City’s approval…” is disproven by basic arithmetic. (30% + 1.5% = 31.5%.)
Third , Embarc fails to explain how its vague references to hearsay statements by Tak Sato—the president of STIIIZY, Inc., the parent company of Authentic Fairfield, LLC (and a separate legal entity)—somehow prove unlawful action, let alone any action at all by Authentic Fairfield, LLC. The vague and amorphous claims about journalist reports and references to separate companies hardly prove a violation of local or state law (nor does Embarc cite any in its letter). Indeed, such evidence appears to be included for no other purpose than to incite and prejudice the Council against a competitor.
Fourth, Embarc is sorely mistaken that revocation of Authentic’s license does not give rise to a “legitimate legal claim[s]” against the City. If the City ultimately revokes Authentic’s preliminary approval, Authentic will be forced to file a petition for writ of mandamus pursuant to Code of Civil Procedure section 1094.5 and 1085, both to compel the City to follow the law as to reinstating Authentic’s preliminary approval (and vested rights therein) and to enforce the law with equal force as to each of the Permittees. It is notable that for all of its rhetoric, Embarc cites no law or statutes in support of its claim that Authentic has no legitimate claim against the City.
And Embarc does not dispute that Authentic has a vested right—having invested over $1,100,000—in reliance on the City’s grant of preliminary approval. Such an action, when successful, would give rise to Authentic’s own a claim for costs against Respondents, including the City, pursuant to Code of Civil Procedure section 1095.
Authentic is so confident in its legal position that it would commit to indemnifying the City for any subsequent litigation brought by Embarc or any other operator to enforce the 2024 FMC amendments against Authentic in this context. To the contrary, Authentic reserves its rights to assert its own claims and/or seek fees against Embarc or any other operator who initiates litigation for such an anti-competitive and/or otherwise improper purpose. (Code Civ. Proc., §§ 128.5; 128.7.)
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* * *
For all of the foregoing reasons, Authentic respectfully requests that the Council reject the proposed resolution to rescind Authentic’s preliminary approval and to allow Authentic to proceed with developing its property and license pursuant to the preliminary approval granted in Resolution 2021-143.
Sincerely,
Davis Wright Tremaine LLP
Nicole S. Phillis