Appeal Filed in FDA Premium Cigar Lawsuit

Today, the attorneys representing the U.S. Food & Drug Administration (FDA) submitted a brief in their appeal of the decision in Cigar Association of America et al. v. United States Food and Drug Administration et al., the federal lawsuit filed in 2016 by three cigar trade groups against FDA’s deeming regulations.

Last August, that lawsuit resulted in a major victory for the cigar industry when Judge Amit P. Mehta ruled in favor of the cigar groups, finding that FDA failed to properly evaluate comments submitted to the agency prior to the enacting of the deeming rule. This meant that cigars that meet the definition of “premium cigars,” large handmade cigars that are not flavored, were no longer subject to FDA’s deeming regulations, such as testing requirements, user fees and a ban on giving away those cigars for retail promotions or charitable donations.

His August ruling determined the form of remedy; the judge had already decided in July 2022 that the FDA erred when considering how to regulate premium cigars. Specifically, he found the agency ignored comments that showed that premium cigars—larger, unflavored cigars—were not used in the same way as their smaller and oftentimes flavored counterparts.

In a somewhat surprising move, the Department of Justice announced that it would appeal the decision, which brings us to today’s filing in the U.S. Court of Appeals for the District of Columbia, which is hearing the appeal.

There are two key arguments made in the brief in support of reversing Mehta’s decision:

1. FDA Reasonably Concluded that There Is No Public Health Justification for leaving Premium Cigars Entirely Unregulated
2. If the Court Were Nevertheless To Find the Deeming Decision Insufficiently Reasoned with Respect to Premium Cigars, the Proper Remedy Would Be Remand Without Vacatur

The arguments made today are largely a greatest hits album of previous FDA arguments: all cigars are bad, some youth use premium cigars, there is no evidence that premium cigars are safe, unregulated premium cigars could lead to youth usage and mislabeling, etc.

Despite the fact that the lawsuit’s thesis is that there is a difference between “cigars” and “premium cigars,” the brief regularly interchanges the terms “cigars” and “premium cigars.”

It does attempt to address some of the evidentiary issues. head on, including the descriptions of three studies that Mehta sharply criticized in both oral arguments and written rulings.

For example, Mehta was especially critical of FDA’s summation of a study led by Christine Delnevo—a noted tobacco researcher who is now the chair of FDA’s Tobacco Products Scientific Advisory Committee—that looked at data regarding tobacco use amongst youth.

It was originally presented that 3.8 percent of the 6,678 youth surveyed said they smoked a premium cigar brand in the last 30 days. As noted by the plaintiffs and Mehta, it was actually 3.8 percent of youth who had smoked any cigar in the last 30 days.

As Mehta found:

Nowhere did the agency say what it now admits: that only 3.8 percent of the only 3.3 percent of youth who reported smoking a cigar within the last 30 days, or 0.1 percent of all youth, identified a premium cigar as their preferred brand. And it never extrapolated these percentages to the entire U.S. youth population, as it does now in litigation.

Because Mehta found that the agency had erred in other parts of the process, he didn’t rule out whether the Delnevo study issues would also rise to the level of arbitrary and capricious.

In response to the math errors, the appeal argues:

But FDA’s discussion of the study results is clear in context. See 81 Fed. Reg. at 29,023. And the study fully supports FDA’s determination that “youth and young adults are using premium cigars.”

The second part of the appeal focuses on whether legal precedent supports Mehta’s decision to vacate. In July 2022, he found that the agency acted in error, but there were two pathways:

• Vacating the Rule — This would mean that the 2016 deeming regulations would not apply to “premium cigars.” Because the deeming regulations are the foundation of FDA’s regulations for cigars, this would mean that both current and future regulations would not apply to “premium cigars” until FDA corrected the issue. FDA would have the opportunity to regulate “premium cigars,” but it would need to start the process over—comment periods, etc.—from square one.
• Remanding Without Vacatur — This would mean that Mehta would instruct FDA to fix the error it made. It could mean the regulations would not apply to “premium cigars” while FDA fixes the issue though Mehta can choose how to apply those rules. If FDA fixed the issue(s) to Mehta’s liking, FDA could then move forward with enforcing the regulations for “premium cigars.”

Mehta chose the first one, which the appeal argues was improper. While the plaintiffs argued that vacating was the typical remedy, Mehta also indicated that the evidence produced as part of an FDA-commissioned study might complicate FDA’s ability to fix the errors cited in this lawsuit:

Nor is it certain, as the FDA suggests, that on remand it would again deem premium cigars. Relevant new evidence has emerged in the years since the agency’s action. Most notably, in 2021, the FDA contracted with the National Academies of Sciences, Engineering, and Medicine (NASEM) “to conduct a comprehensive and systematic assessment and review of the scientific literature and provide a final report of the study results” concerning the usage patterns and health effects of premium cigar smoking.5 In March 2022, the NASEM released its report, and it contains important findings that may bear on the deeming question. See, e.g., Pl.’s Supplemental Mem., ECF No. 265, Ex. A, ECF No. 265-1 (NASEM report), at 11–13, 15–18. On remand, the agency “may wish” to consider this and other new evidence and seek comment before acting. Union Elec. Co. v. FERC, 890 F.2d 1193, 1196 (D.C. Cir. 1989). The court will not hazard a guess at how the agency would come out if it were to consider new evidence.

The 2021 NASEM study referenced by Mehta is not mentioned in the appeal because the lawsuit dealt with the evidence that was available up to 2016.

There are some novel parts of the appeal such as a descriptions that premium cigar companies pay less than 1 cent per cigar—most say they have paid multiple cents per cigar—in user fees, that this ruling could upend the “comprehensive federal scheme of tobacco-product regulation,” and a very curious discussion about who came up with the definition of “premium cigar” used by Mehta.

At the very end of the appeal is this:

The Tobacco Control Act does not acknowledge any subclasses of cigars, and FDA has never adopted a definition of “premium cigar” for purposes of deeming. Accordingly, in order to create an exemption for such cigars, the district court had to define them.12 In doing so, the court adopted an eight-part definition that departed from the definition that FDA suggested in the proposed rule.

The lack of agreement on the definition of “premium cigars” and the absence of clear standards for identifying them underscores the error of the district court’s decision. At a minimum, the court should have remanded without vacatur to allow the agency to determine an appropriate definition of premium cigars.

It’s especially interesting because the definition was created by FDA in August 2020.

As for what happens next: the plaintiffs, now known as the appellees, will have approximately 30 days to respond to this brief.

Charlie Minato

I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I have written about the cigar industry for more than a decade, covering everything from product launches to regulation to M&A. In addition, I handle a lot of the behind-the-scenes stuff here at halfwheel. I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.