Absolute Essence LLC v. Public Consulting Group LLC

United States Court of Appeals
For the Eighth Circuit
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No. 23-1642
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Absolute Essence LLC
Plaintiff - Appellant
v.
Public Consulting Group LLC; Public Consulting Group Inc.; Public Consulting
Holdings Group Inc.; Veracious Investigative and Compliance Int’l LLC, doing
business as Veracious Solutions LLC, doing business as Veracious Compliance
Solutions LLC; Chad W. Westom; Samaara Yael Robbins; Does, Jane and John 1–
10
Defendants - Appellees
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Appeal from United States District Court
for the Eastern District of Arkansas - Central
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Submitted: January 11, 2024
Filed: September 20, 2024
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Before LOKEN, KELLY, and STRAS, Circuit Judges.
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STRAS, Circuit Judge.
Absolute Essence LLC tried to get into the medical-marijuana business, but it
could not get a license. Convinced that the process was rigged, it brought tort and

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discrimination claims against the outside contractors who reviewed and scored the
applications. We affirm the district court’s1 decision to dismiss.
I.
When Arkansas legalized medical marijuana, see Ark. Const. amend. 98, § 3,
Absolute Essence wanted to open a dispensary. Between the application process,
finding a location, and working out the zoning issues, the company spent over a
million dollars. The large upfront investment was worth it, in the company’s view,
because of the potential size of the new market and how profitable the business could
be.
Unfortunately, the bet did not pay off. The first sign of trouble was the
Arkansas Medical Marijuana Commission’s decision to outsource the review
process, see id. § 8(a), to a third party, Public Consulting Group, Inc., which had bid
less than a third as much as the only “established and experienced” competitor. It
then reviewed and scored 197 applications, each hundreds of pages long, in just two
weeks. Absolute Essence received a “mediocre” score.
At that point, what happened during the review process became Absolute
Essence’s focus. It allegedly discovered that the scorers failed to use standardized
forms, made up criteria, and changed numbers to manipulate the results. Not to
mention that two of the scorers had a conflict of interest. One worked for a company
that prepared some of the applications. And the other was the managing partner of
a company with ties to “major players throughout the cannabis industry.”
These irregularities purportedly favored “heavy-hitter organizations” and led
to a racial imbalance among the licensees. Not a single “100% black-owned”
1 The Honorable James M. Moody Jr., United States District Judge for the
Eastern District of Arkansas.

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business received one. And of the three “nominally black-owned” licensees, two
were allegedly fronts for out-of-state white-owned businesses.
These facts were the foundation of Absolute Essence’s state-court lawsuit,2
which contained four counts: tortious interference with a business expectancy, fraud,
racial discrimination, and civil conspiracy. After the defendants removed the case,
the district court dismissed for failure to state a claim. See Fed. R. Civ. P. 12(b)(6).
The question for us is whether Absolute Essence pleaded enough for any of its claims
to survive.
II.
We review the dismissal de novo, accepting the allegations in the complaint
as true and drawing all reasonable inferences in Absolute Essence’s favor. See FCS
Advisors, LLC v. Missouri, 929 F.3d 618, 620 (8th Cir. 2019). “To survive a motion
to dismiss, the complaint had to contain ‘sufficient factual matter’ to state a facially
plausible claim for relief.” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
A.
The tortious-interference claim lacks allegations establishing a key element:
a “precise business expectancy with a specific third party.” Apprentice Info. Sys.,
Inc. v. DataScout, LLC, 544 S.W.3d 39, 44 (Ark. 2018) (emphasis added). The key
to the tort, as Arkansas has defined it, is to protect against “wrongful . . .
intermeddling” with the business expectations of others. Stewart Title Guar. Co. v.
2 In a still-pending parallel case, an Arkansas trial court granted a temporary
injunction stopping the Commission from issuing additional licenses. See Amended
Order Denying Motions to Dismiss and Extending Temporary Restraining Order,
Absolute Essence, LLC v. Ark. Dep’t of Fin. Admin., No. 60CV-22-684 (Ark. Cir.
Ct. Apr. 21, 2022).

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Am. Abstract & Title Co., 215 S.W.3d 596, 601 (Ark. 2005) (citation omitted). Yet
the only expectancy the complaint specifically identifies is Absolute Essence’s
interest in having its application “fairly and thoroughly scored and ranked by [the]
[d]efendants” (emphasis added). The defendants, however, are not third parties and
could not have interfered with themselves. See Apprentice Info. Sys., 544 S.W.3d at
43.
Gap-filling allegations in the briefs are of no help for a couple of reasons. The
first is procedural: “an[y] attempt to amend one’s pleading in an appellate brief
comes too late.” Dorothy J. v. Little Rock Sch. Dist., 7 F.3d 729, 734 (8th Cir. 1993)
(citation omitted); see Morgan Distrib. Co. v. Unidynamic Corp., 868 F.2d 992, 995
(8th Cir. 1989) (making clear that a plaintiff cannot allege new facts in district-court
briefing either).
The second is that to the extent the complaint, and not just the briefing,
identifies retail customers as potential third parties, any expectancy with them was
“subject to a contingency.” Windsong Enters., Inc. v. Upton, 233 S.W.3d 145, 150
(Ark. 2006). The contingency was the license: selling to the public depended on
getting one. See id. (explaining that an expectancy includes terms that a party “knew
or should have known” about). Absolute Essence missed out, meaning the scorers
“brought about the contingency” and no expectancy ever arose. Id. at 152; accord
Donathan v. McDill, 800 S.W.2d 433, 434 (Ark. 1990) (rejecting a tortious-
interference claim based on “causing . . . a contingency”).
B.
Absolute Essence’s fraud claim is also missing an element: “justifiable
reliance.” SEECO, Inc. v. Hales, 22 S.W.3d 157, 172 (Ark. 2000). The company
turned in its application about a year before the outside scorers came on board.
Given the timing, there is no way they could have induced it “to act or not to act.”
MFA Mut. Ins. Co. v. Keller, 623 S.W.2d 841, 843 (Ark. 1981). They were simply

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not part of the equation when the company spent its money locating a site, dealing
with zoning issues, and preparing its application. See id. (explaining that the
problem “is a lack of causal relation in its simplest form”).
Nor can the company plausibly claim that it would have challenged the
decision to bring in outside scorers. Even if the defendants duped the Commission,
Absolute Essence cannot recover unless it was harmed by any misrepresentations
too. See id. (“The maker of a fraudulent misrepresentation is not liable to one who
does not rely on that misrepresentation.”). Here, without allegations that it had a say
over who scored the applications, it cannot link its injuries to anything the defendants
said during the bidding process. Cf. Tyson Foods, Inc. v. Davis, 66 S.W.3d 568, 577
(Ark. 2002) (explaining that a plaintiff “would have suffered a dismissal” if he had
sued after being lied to but before suffering an injury).
C.
The race-discrimination claims reflect an either/or approach. Either the
defendants were private actors who violated the Arkansas Civil Rights Act, see Ark.
Code Ann. § 16-123-107(a)(3)–(4) (prohibiting discrimination in “property” and
“other contractual transactions”); or they were state actors who ran afoul of the Equal
Protection Clause and federal civil-rights laws, see 42 U.S.C. §§ 1981, 1983.3 A
critical element is missing either way: intentional discrimination. See Ark. Code
Ann. § 16-123-107(b) (creating a cause of action for “intentional act[s] of
discrimination”); Village of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S.
252, 265 (1977) (“Proof of racially discriminatory intent or purpose is required to
show a violation of the Equal Protection Clause.” (emphasis added)); Gregory v.
Dillard’s, Inc., 565 F.3d 464, 469 (8th Cir. 2009) (en banc) (explaining that § 1981
3 Absolute Essence ignores the handful of state constitutional provisions cited
in its complaint, so we need not address them on appeal. See Chay-Velasquez v.
Ashcroft, 367 F.3d 751, 756 (8th Cir. 2004).

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claims require “discriminatory intent” (emphasis added)); see also Davis v. Jefferson
Hosp. Ass’n, 685 F.3d 675, 681 (8th Cir. 2012) (noting that “[w]e analyze § 1981
claims and ACRA claims in the same manner” (citation and ellipses omitted)).
The complaint alleged, at most, that score-rigging had a racially disparate
impact. It said that the number of licenses granted to “minorities” was “far fewer
than their representation in the population (and the applicant pool)” and that
“similarly situated white-owned applicants” were “not penalize[d]” as much as
Absolute Essence. It is totally silent, however, about the number of licenses granted,
the racial makeup of the applicant pool, whether the successful applicants were
similarly situated, and how the scorers treated the applications differently. See FCS
Advisors, 929 F.3d at 620 (emphasizing that pleadings need “sufficient factual
matter” (quoting Iqbal, 556 U.S. at 678)). In short, the complaint is “flush with legal
conclusions but short on facts.” DeCastro v. Hot Springs Neurology Clinic, P.A.,
107 F.4th 813, 816 (8th Cir. 2024).
Even if the conclusory allegations were entitled to some weight, they still do
not establish “a discriminatory purpose.” Gallagher v. Magner, 619 F.3d 823, 833
(8th Cir. 2010). Although a single line accuses the defendants of “intend[ing] [the]
racially discriminatory effect,” the supporting facts point elsewhere. See Iqbal, 556
U.S. at 686. Their objective, according to the complaint, was financial in nature:
“curry[ing] favor” by “steer[ing] licenses to larger industry players.” Tying the
injury to the “result of [the] [d]efendants’ . . . scheme” (emphasis added), rather than
its purpose, further suggests an alternative motive and makes a race-discrimination
claim less “plausible on its face.” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)); see FCS Advisors, 929 F.3d at 622 (holding
that a § 1981 claim was “implausible” because the “complaint identifie[d]
independent non-discriminatory reasons for [the defendant’s] actions”).

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D.
Finally, with its other claims dismissed, Absolute Essence’s civil-conspiracy
claim cannot stand on its own. See Varner v. Peterson Farms, 371 F.3d 1011, 1016
(8th Cir. 2004) (noting that “civil conspiracy . . . is not a separate tort and must be
based on . . . underlying tort[i]ous activity”). Without an underlying tort, there can
be no conspiracy. KBX, Inc. v. Zero Grade Farms, 639 S.W.3d 352, 364 (Ark.
2022).
III.
We accordingly affirm the judgment of the district court.
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