'Glad for the jury': Rutherford Sheriff Fitzhugh, chief face zero liability for faulty raid
NASHVILLE − A federal court jury cleared Rutherford County Sheriff Mike Fitzhugh and retired Smyrna Police Chief Kevin Arnold of liability Thursday for undue "Operation Candy Crush" raids in 2018.
Plaintiff James Swain Rieves had sought a $10 million award after two raids that caused a negative impact to his reputation and now closed Cloud 9 Hemp CBD online business in Smyrna. A disappointed Rieves embraced his wife, Leslie, after the verdict awarded him zero in damages.
Rieves, however, did accept a combined $525,000 settlement April 2022, court records show, from both Rutherford County prosecutors he sued: elected District Attorney General Jennings Jones and Assistant District Attorney John Zimmerman.
Fitzhugh and Arnold also hugged one another for a few seconds after the verdict at the federal court building in downtown Nashville.
"Just glad for the jury," Fitzhugh said after the jury decision.
"I'm just glad it's over," Arnold said.
The jury heard eight days of testimony spread over two weeks before deciding that Fitzhugh and Arnold, who's now a warrants officer for the sheriff, should face zero in damages from the plaintiff after possible millions hung in the balance.
Both defendants participated in a press conference Feb. 18, 2018, to tout an "Operation Candy Crush" raids against 23 stores selling CBD products, including Cloud 9 Hemp. Fitzhugh and Arnold had suggested the CBD gummie products in particular posed a threat to children.
The sheriff and retired police chief faced an angry public after the raids and local court decisions that reversed orders that permitted the searches and seizures. Former Circuit Court Judge Royce Taylor, who's now retired, ordered that padlocks be removed and dismissed all the charges against Rieves and the others for selling CBD products that could not be proven to be illegal schedule VI narcotics by Tennessee Bureau of Investigation lab tests.
The jury determined the defendants held no liability in violating the Fourth Amendment constitutional rights of Rieves and 22 other businesses selling CBD candy products. The raids included officers padlocking 23 business, executing illegal search and seizures, falsely arresting Rieves and the other business owners, and booking them at the Rutherford County Adult Detention Center.
Rieves paid $1,000, 10% of his $10,000 bond, to be released from jail.
'Operation Candy Crush': Plaintiff seeks $10 million on false arrest
Plaintiff faced two raids from Smyrna police
Unlike the other store owners who accepted portions of a $1.3 million settlement, Rieves chose to take his federal lawsuit against the sheriff and retired police chief before a jury at the federal court building in Nashville.
Rieves had faced two raids, including the one on Feb. 18, 2018. A father of four, Rieves learned from an employee his business was getting raided six years ago while he and his wife were at an OBGYN appointment to learn about their expected youngest child. His wife witnessed her husband being arrested, handcuffed and transported to the county jail in Murfreesboro.
The first raid occurred Sept. 26, 2017. Rieves was mowing a lawn of a home he was going to buy for his family and close the sale that same date when an employee told him Smyrna police officers arrived to search and seize products and proceeds. Rieves testified he cancelled the purchase of the home because he was worried he'd be sent to prison.
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The Cloud 9 Hemp products included oils, lotions and vape. The CBD products from the business touted that Hemp is legal in all 50 states. Rieves also had obtained three federal trademarks for three of his products, including Rad Dads, he told the jury.
The arrest of Rieves, and padlocking, search and seizure of his Cloud 9 Hemp shop stopped the internet business he started in 2014 from being profitable through selling products he manufactured using Hemp he obtained from a publicly traded corporation, Isodiol, he testified.
The jury also learned that Walmart responded to a subpoena for the case by acknowledging the international store sells around 100 CBD products. Rieves told the jury that Cloud 9 Hemp manufactured similar products customers could buy online.
Rieves testified he had hoped to offer his merchandise to Walmart and Amazon shoppers.
The jury also heard evidence that sheriff's narcotics detectives prior to the second raid expressed concerns to supervisors that CBD products were available at the larger retailers and questioned whether the products were illegal. The evidence included the sheriff expressing those concerns to Zimmerman, the assistant district attorney, prior to the raids.
Fitzhugh, however, testified he had no knowledge about the concerns of his deputies and showed up at the Feb. 12 press conference to read a script prepared for him by the sheriff's spokesperson.
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TBI unable to confirm CBD illegal
The jury heard TBI lab chemists testify that they could not prove that CBD products from the 23 stores were illegal.
"We wouldn’t know if it came from marijuana or hemp," TBI lab manager Glenn Everett testified.
Arnold, the retired Smyrna police chief, had learned prior to the first raid on Cloud 9 Hemp on Sept. 26, 2017, that the TBI was uncertain about CBD legality. He was at the TBI headquarters Sept. 13, 2017, when he asked former TBI attorney Jimmy Musice if CBD was legal.
"He said the TBI didn't know yet," said Arnold, who at the time was serving as the president of the Tennessee Association of Chiefs of Police.
The retired Smyrna police chief soon after the TBI meeting had directed Sgt. Eric Clete Elstran, a narcotics detective, to investigate if there were any stores within the town with CBD gummies on shelves because Arnold had concerns about these products being given to kids.
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Elstran after the first raid at Cloud 9 Hemp was present Jan. 11, 2018, when TBI staff attempted to tell Rutherford County and Smyrna law enforcement officers and prosecutors, including Zimmerman, that the state agency lab tests could not prove if CBD products came from legal hemp or illegal marijuana.
Among those meeting about the legality of the CBD products on Jan. 11, 2018 was Rebecca Hernandez, a TBI forensic scientist.
"We wouldn't be able to determine where its origin came from," Hernandez testified.
Part of the confusion was that TBI drug testing forms prior to the Operation Candy Crush raid had listed CBD products as illegal schedule VI narcotic just in case the merchandise came from marijuana, but not ensuring that it actually did. The form listing was a courtesy to law enforcement, which had the responsibility to investigate the origin of the products that couldn't be proved by lab testing, Everett, the TBI lab manager, told the jury.
Zimmerman, however, decided at the Jan. 11, 2018, meeting at the TBI headquarters that law enforcement should go by what the forms said in labeling CBD in question as a schedule VI narcotic.
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Raids cost Cloud 9 Hemp $2.2 million in gross profits over 3 years
The jury also heard testimony from Tom Price, a certified public accountant who served as an expert witness for the plaintiff.
The Cloud 9 Hemp business that started in 2014 under the original name Platinum Vape LLC in Woodbury before Rieves decided to focus on selling CBD products. His business had its best year in 2017 despite the first raid, and earned about $237,000 through manufacturing and marketing online products made with legal industrial hemp, he told the jury.
Price testified that Cloud Nine Hemp lost $2.2 million in gross profit from 2017 through 2019 as a result of the raids based on growth of the company's sales and growth of the CBD industry.
"The company never recovered," Price told the jury.
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While being cross examined by Smyrna contracted attorney Bob Burns, Price confirmed he was earning $525 per hour to serve as an expert for the plaintiff and estimated the expert witness final earnings in the case would be in the $35,000 to $40,000 range.
Rieves lost sales for many reasons, including having his inventory removed from his business after the raids, Price told the jury.
Price estimated that Cloud 9 Hemp lost about $100,000 from the value of the inventory because much of what was returned by law enforcement after the raids was no longer usable.
The first search and seizure cost Rieves an employee, who gave notice in an email to tell him she was quitting because of concerns about the legality of the business. He had counted on her to market the online Cloud 9 Hemp products.
The second raid also shut down the business for several weeks, and this meant a loss of sales, Price said.
Operation Candy Crush: Rutherford County looks to settle lawsuit from store owners
15 attorneys present for trial
Rieves has legal representation from four Nashville attorneys: Wesley Clark and Frank Brazil from Brazil Clark PLLC; and Nathan Cate and Jesse Lords from Cate Law.
Rutherford County Nick Christiansen and his Murfreesboro firm member Randy Mantooth represented the sheriff. Fitzhugh provided the following statement through email after the verdict:
“I want to thank the jury for their service and for the great work of the County Attorney, Nick Christiansen and his team.”
Arnold had representation from Smyrna Town Attorney Jeff Peach, who sat by the retired chief during the trial, and Burns, a Nashville attorney with Howell & Fisher to defend the retired police chief.
The courtroom had as many as 15 attorneys either representing parties in the case; presiding over the trial as U.S. District Court Judge Aleta Trauger did; or observing from audience seats, including Maj. Kyle Evans, who oversees internal affairs investigations for the sheriff.
Reach reporter Scott Broden with news tips or questions by emailing him at sbroden@dnj.com. Follow his tweets on the X social media platform that used to be known as Twitter @ScottBroden. To support his work with The Daily News Journal, sign up for a digital subscription.
This article originally appeared on Murfreesboro Daily News Journal: Rutherford sheriff, retired police chief, cleared of faulty raid liability
