Synopsis

Cigar and pipe tobacco trade associations filed suit against the FDA, challenging the Deeming Rule as it applies to cigars and pipe tobacco. On July 5, 2022, the District Court for the District of Columbia ruled against the FDA with respect to its decision not to exempt premium cigars from the final Deeming Rule, considering this act to be arbitrary and capricious. The court ruled against the Cigar Association with respect to its claim that the FDA failed to consider reasonably the costs and benefits of regulating small businesses within the premium cigar industry.

Why It Matter for Public Health

This case has been ongoing for several years and has presented a number of challenges for the FDA in its assertion of regulatory authority over cigars. So far, cigar warning label requirements have been suspended, eliminating an important method for communicating about their health risks to users. At issue in the litigation is whether the FDA’s Deeming Rule would be applied to cigars in the same way that it is applied to other products, which is an important question with potentially negative implications for flavored products in particular.

Background

On May 5, 2016, the FDA issued the final rule deeming all existing and future tobacco products to be subject to the agency’s jurisdiction, including cigars and pipe tobacco. Among the requirements applicable to cigars and pipe tobacco under the Deeming Rule were required health warnings and the premarket review process.

Proceedings

District Court

On July 15, 2016, trade associations for retailers and manufacturers including the Cigar Association of America, the International Premium Cigar and Pipe Retailers Association, and Cigar Rights of America filed suit in the District Court of the District of Columbia. The plaintiffs requested that the court issue a preliminary injunction barring enforcement of the Deeming Rule while the litigation proceeded and asked the court to permanently strike down the rule. The case was consolidated with another case, En Fuego Tobacco Shop et al. v. FDA, which raised similar issues.

The cigar companies raised several allegations:

1. The enforcement of premarket review would be costly, making the FDA’s issuance of the deeming rule “arbitrary and capricious,” in violation of the Administrative Procedure Act (APA);
2. Requiring the industry to pay “user fees” is an illegal tax, also in violation of the APA;
3. The imposition of user fees on cigar manufacturers but not e-cigarette manufacturers is “contrary to [the former’s] constitutional right” to due process protected by the Fifth Amendment, a violation of the APA;
4. The FDA’s cost analysis did not properly quantify the rule’s costs or identify significantly less costly alternatives to the rule, a violation of the Regulatory Flexibility Act;
5. The FDA’s decision to regulate all cigars rather than exempting premium cigars is an action that is arbitrary and capricious, in violation of the APA;
6. The FDA’s requirement of warning labels without adequately explaining why it decided on the size and format of the labels is arbitrary and capricious, in violation of the APA;
7. The required warning labels impermissibly restrict speech, a violation of the First Amendment;
8. The FDA’s decision to treat retailers who blend or repackage pipe tobacco or cigars as manufacturers is arbitrary and capricious, in violation of the APA; and
9. The FDA’s decision to regulate pipes as components or parts of a tobacco product is arbitrary and capricious, in violation of the APA.

The FDA filed its answer to the complaint on October 26, 2016. The industry plaintiffs filed a motion for summary judgment on February 13, 2017. On July 24, the American Academy of Pediatrics, the American Lung Association, the American Heart Association, the American Cancer Society Cancer Action Network, the Campaign for Tobacco-Free Kids, and the Truth Initiative filed a motion to intervene as defendants to ensure that the Deeming Rule was adequately defended, after the government had filed several requests to delay motions (in this and other cases). On October 14, the court denied the public health groups’ motion to intervene.

Following the FDA’s July announcement of a new regulatory plan in July of 2017, the industry plaintiffs agreed to narrow the scope of their lawsuit and the court established a new briefing schedule. The plaintiffs filed a motion for summary judgment on October 3. The FDA filed its opposition to the plaintiffs’ motion and its own motion for summary judgment, and public health groups filed a supporting amicus curiae brief on October 31. Oral arguments on the cross motions were heard on December 14.

On May 15, 2018, the court partially granted and partially denied the plaintiffs’ motion for summary judgment. The court found that the required health warning labels did not violate the First Amendment or the Tobacco Control Act, that the FDA’s user fee rule was legal, and that the FDA’s decision to regulate pipes did not violate the APA. The court did find, however, that the FDA’s regulation of tobacco retailers who blend pipe tobacco as manufacturers was a violation of the APA and remanded the issue to the FDA. The plaintiffs filed an appeal of the health warning rulings to the D.C. Circuit.

Meanwhile, several issues remained unresolved at the district court level. On June 8, 2018, the plaintiffs filed a motion for an injunction of the enforcement of the warning label requirement for cigars and pipe tobacco pending the resolution of the plaintiffs’ appeal. On July 5, the court granted the injunction, staying enforcement of the warning label requirement for cigars and pipe tobacco until sixty days after the resolution of the plaintiffs’ appeal.

D.C. Circuit

As noted above, the industry appealed the district court’s ruling on the warning requirements as applied to cigars and pipe tobacco. The parties and amicus curiae submitted briefs in the spring of 2019, and oral arguments were held on October 29, 2019. On July 6, 2020, the three-judge panel issued its opinion, finding that the health warnings requirement was issued in violation of the Tobacco Control Act as applied to cigars and pipe tobacco. More specifically, the court found that because the FDA failed to consider whether the warnings would effectively reduce smoking rates by encouraging some smokers to quit or prevent others from starting—a required element under the Tobacco Control Act—the rule was issued in violation of the Tobacco Control Act and APA.

Additional District Court Proceedings

As the appeal was proceeding, the district court allowed plaintiffs in En Fuego (which had been consolidated with the Cigar Association case) to proceed with their own complaint. The court also allowed the En Fuego plaintiffs to amend their complaint and add three additional causes of action: another claim focused on the warning labels under the First Amendment, and two claims borrowing the Appointments Clause claims brought by the plaintiffs in Moose Jooce et al. v. FDA (2018). On March 15, 2019, the En Fuego plaintiffs filed a motion for summary judgment and a request for a permanent injunction. On April 26, the FDA filed its opposition to the plaintiffs’ motion for summary judgment and cross-motion for summary judgment. Oral arguments on these motions were held on September 10.

During the briefing on the summary judgment cross-motions, the district court also allowed the Cigar Association plaintiffs to amend their original complaint. On August 8, 2019, the Cigar Association plaintiffs amended their complaint to include a request for declaratory relief. This claim asked the court to declare the FDA’s 2017 guidance document, which effectively suspended premarket review enforcement for products subject to the Deeming Rule, invalid (this 2017 guidance document was later declared invalid by the District Court for the District of Maryland and upheld by the Fourth Circuit in American Academy of Pediatrics v. FDA (2018). Motions for leave to file the amended complaint, along with a motion for partial summary judgment, were filed on July 2. The FDA filed its answer on August 8, and an opposition to the motion for partial summary judgment on September 18. On September 26, the public health groups that had previously participated as amici filed a motion requesting to participate in oral arguments. The court granted the motion and oral arguments were held on October 1. On October 18, the court denied the plaintiffs’ motion for partial summary judgment.

On October 23, 2019, the plaintiffs amended their complaint again, adding five new causes of action. After several motions to delay the briefing schedule, the plaintiffs filed motions for summary judgment and a preliminary injunction on December 24. On January 8, 2020, the FDA filed a notice of its revised guidance document setting its enforcement priorities for electronic nicotine delivery devices (ENDs) and other deemed products. On February 2, the government filed its own cross-motion for summary judgment and opposition to the plaintiffs’ motion for summary judgment.

On February 3, the court granted the plaintiffs’ motion for summary judgment and denied the defendant’s cross-motion for partial summary judgment, vacating the warning requirement for premium cigars and finding that the FDA had failed to “explain … why health warnings for premium cigar packaging and advertising are appropriate” in light of the “demographic differences and usage patterns” specific to premium cigars (the D.C. Circuit later reversed and remanded the health warning labels as applied to all cigars and pipe tobacco, including premium cigars, in the Cigar Association appellants’ interlocutory appeal discussed above).

Public health groups filed a motion to file an amicus brief in the district court on February 10, 2020, and on February 24, plaintiffs filed their third amended complaint along with continued briefing on the ongoing summary judgment motions filed by the government. Meanwhile, the evolving COVID-19 pandemic resulted in industry requests to extend the deadline for filing premarket tobacco product applications. When the petitions were denied by the FDA, the plaintiffs filed a motion for a preliminary injunction with the court against enforcement of the deadline for premarket and substantial equivalence applications. Once the extension for the submission of premarket tobacco product applications was granted in AAP v. FDA, and the deadline extended to September 9, the motion was withdrawn.

On August 19, 2020, the district court issued its ruling on several outstanding issues. First, the court determined that the relevant date applicable to tobacco products applies once a product is deemed a tobacco product subject to FDA regulation, and the FDA has no authority to change it for specific products like cigar and pipe tobacco products. Second, the court found that the Deeming Rule’s August 2016 effective date was not based on legally incorrect assumptions about the FDA’s authority to set compliance periods. Third, the court determined that the FDA’s premarket review application deadline of September 9 was not arbitrarily and capriciously applied to substantial equivalence reports for cigar and pipe tobacco manufacturers. Fourth, the FDA’s cost-benefit analysis related to requiring substantial reports for cigars and pipe tobacco and for regulating cigars and pipe tobacco in general was not arbitrary and capricious.

The industry’s arguments as to the FDA’s regulation of premium cigars, however, fared better. The court held that the FDA had not adequately considered or responded to industry comments related to the possibility of creating a separate process applicable to premium cigars. The court remanded the issue to the FDA specifically to determine whether a streamlined substantial equivalence process is appropriate for premium cigars. The court therefore enjoined the enforcement of premarket review requirements as to premium cigars, leaving it to the FDA to specify when manufacturers will have to submit substantial equivalence reports once it determines the appropriate course (the industry has since asked for clarification as to whether this means that the Deeming Rule is vacated as to premium cigars, which would require a new notice and comment rulemaking).

The plaintiffs were allowed to file a fourth amendment complaint in November of 2020. The parties filed cross motions for summary judgment in the spring of 2021, and briefing on those motions concluded in June of 2021. Public health groups filed an amicus brief in support of the FDA on April 19, 2021.

Additional D.C. Circuit Proceedings

On August 31, 2020, the industry appealed the summary judgment to the D.C. Circuit. The issues on appeal include the 2007 date that applies to all new tobacco products, whether the application of the substantial equivalence process to cigars and pipe tobacco was arbitrary and capricious, and whether the FDA should include e-cigarette manufacturers in its assessment of “user fees” that help fund the FDA’s Center for Tobacco Products. The Cigar Association filed its brief in mid-December of 2020, and further briefing occurred through March 26, 2021. Public health groups, led by the American Academy of Pediatrics, filed an amicus brief in support of the FDA on February 19, 2021, arguing that the substantial equivalence process should apply to cigars, using the original date of February 15, 2007. Oral argument on this issue was held on May 7, 2021. On July 20, 2021, the D.C. Circuit issued a ruling upholding the district court’s ruling on these issues. It found that the FDA’s application of the premarket review requirements, including the FDA’s application of substantial equivalence and date requirements to cigars and pipe tobacco, was not arbitrary and capricious, and also found that the FDA did not erroneously exclude e-cigarette manufacturers from the application of user fees.

Litigation Status (OPEN)

On July 5, 2022, the court granted summary judgment for Cigar Association on the claim that FDA acted arbitrarily and capriciously in its decision to not exempt premium cigars from the final Deeming Rule. The court notec that FDA ignored an evidence base, rather than engage with it and any deficiencies therein, with respect to how premium cigars were consumed. On remand, the court instructed FDA to more thoroughly address the evidence base around cigar use and one study in particular. The Cigar Association requested that the court vacate the FDA’s deeming of premium cigars as within its regulatory scope; the FDA requested remand without vacatur. However, the court declined to grant a remedy to the parties and requested briefings.