Docket No. 1:16-cv-1460 (D.D.C.)
Appeal #1: Docket No. 18-05195 (D.C. Cir. 2018)
Appeal #2: Docket No. 20-05266 (D.C. Cir. Aug 31, 2020)
Cigar and pipe tobacco trade associations filed suit against the FDA, challenging the deeming rule as it applies to cigars and pipe tobacco. The suit is ongoing, but has resulted in a suspension of warning labels for cigars and pipe tobacco and the premarket review process specifically for premium cigars.
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.
District Court Proceedings
On July 15, 2016, the Cigar Association of America, the International Premium Cigar and Pipe Retailers Association, and Cigar Rights of America, non-profit trade associations for retailers and manufacturers, 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’ lawsuit alleged that:
- the enforcement of premarket review would be costly, rendering the FDA’s issuance of the deeming rule “arbitrary and capricious” in violation of the Administrative Procedure Act (APA);
- requiring industry to pay “user fees” is an illegal tax, an action that is in excess of statutory authority and therefore a violation of the APA;
- the imposition of user fees on cigar manufacturers but not e-cigarette manufacturers is “contrary to [the] constitutional right” to due process protected by the Fifth Amendment, a violation of the APA;
- the FDA’s Final Regulatory Flexibility Analysis (RFA) did not properly quantify the costs of the rule or identify significantly less costly alternatives to the rule, a violation of the RFA;
- 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;
- 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;
- the required warning labels impermissibly restrict speech, a violation the First Amendment;
- 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;
- 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, 2017, 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, 2017, the court denied the public health groups’ motion to intervene.
Following the FDA’s July announcement of a new regulatory plan, 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, 2017. 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, 2017. Oral arguments on the cross-motions were heard on December 14, 2017.
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 Court of Appeals for 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, 2018, 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.
Proceedings in the Court of Appeals for the 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. 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 Administrative Procedure Act.
Ongoing District Court Proceedings
As the appeal was proceeding, the district court allowed plaintiffs in En Fuego Tobacco Shop et al. v. FDA (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. On March 15, 2019, the En Fuego plaintiffs filed a motion for summary judgment and a request for a permanent injunction. On April 26, 2019, 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, 2019.
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.(Note: this 2017 guidance document was later declared invalid by the District Court for the District of Maryland and upheld by the Fourth Circuit Court of Appeals in AAP v. FDA.) Motions for leave to file the amended complaint, along with a motion for partial summary judgment were filed on July 2, 2019. The FDA filed its answer on August 8, 2019 and an opposition to the motion for partial summary judgment on September 18, 2019. On September 26, 2019, the public health groups that had previously participated as amicus filed a motion requesting to participate in oral arguments. The court granted the motion and oral arguments were held on October 1, 2019. On October 18, 2019, 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, 2019. On January 8, 2020, the FDA filed a notice of its revised guidance document setting its enforcement priorities for electronic nicotine delivery (ENDS) and other deemed products. On February 2, 2020, the government filed its own cross-motion for summary judgment and opposition to the plaintiffs’ motion for summary judgment.
On February 3, 2020, 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. (Note the Court of Appeals 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, 2020, 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 FDA, the plaintiffs filed a motion for a preliminary injunction with the court against enforcement of premarket and substantial equivalence application. Once the extension for the submission of premarket tobacco product applications was granted in AAP v. FDA, and the deadline extended to September 9th, the motion was withdrawn.
On August 19, 2020, the district court issued its ruling on several outstanding issues. First, the court determined that the grandfathering date applicable to tobacco products applies once a product is deemed a tobacco product subject to FDA regulation, and 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 FDA’s authority to set compliance periods. Third, the court determined that the FDA’s premarket review application deadline of September 9th 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 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 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 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, 2020. Briefing on summary judgment motions related to additional claims are scheduled to occur from January through April of 2021.
Second Notice of Appeal to the Court of Appeals for the D.C. Circuit
On August 31, 2020, the industry appealed the summary judgment to the U.S. Court of Appeals for the D.C. Circuit. The issues on appeal include the 2007 “grandfathering” date that applies to all new tobacco products, and whether the application of the substantial equivalence process to cigars and pipe tobacco was arbitrary and capricious. The litigation is ongoing. The Cigar Association filed its brief in mid-December 2020, and further briefing will occur through March 26, 2021.
The case is ongoing at both the District Court and the Court of Appeals for the D.C. Circuit.