As expected, the cigar industry has filed an appeal in the central lawsuit over FDA’s regulation of premium cigars.
Earlier this week, attorneys for the Cigar Association of America (CAA), Cigar Rights of America (CRA) and the International Premium Cigar & Pipe Retailers’ Association (IPCPR) appealed a ruling from last May where the U.S. District Court for the District of Columbia declined to overturn part of the U.S. Food & Drug Administration’s (FDA) deeming regulations, despite the judge writing that the process “smacks of basic unfairness.”
Now the case moves to the U.S. Court of Appeals for the District of Columbia where a three-judge panel will evaluate new claims by the cigar industry as to whether the original ruling was legally correct. A source indicated that briefs are currently scheduled to be exchanged by mid-June, though it’s likely that the case won’t be heard by a panel until next year.
Last June, moments before a separate cigar-related lawsuit was set to begin oral arguments, the Supreme Court ruled on National Institute of Family and Life Advocates v. Becerra, which dramatically changed the playing field. The Becerra case dealt with a question of whether or not the state of California could require crisis pregnancy centers—oftentimes places whose mission is to persuade women not to have an abortion—to display messages explaining to potential clients that there were other options, including abortion.
Those centers sued, arguing the government hadn’t proven the harms being done by not displaying the signs that would justify those businesses having to display warnings, particularly those directly in conflict with their goals. The centers won and the court ruled that the First Amendment meant the government couldn’t require businesses to display warnings unless the harm was “potentially real not purely hypothetical” and that the warnings need to “extend ‘no broader than reasonably necessary.'”
Since then, Becerra was used to strike down a San Francisco law that would have required soda companies to place a warning label on 20 percent of advertisements.
When the original lawsuit was filed, the cigar industry argued that the warning labels and the process used to come up with said warnings were in violation of the First Amendment and the existing standards used to determine whether the government’s warning labels are justified, specifically Central Hudson and Zauderer. But Becerra changes things, particularly in a world where FDA cannot explain why the warning labels are needed and what they will do.
The warning labels that are to be required by FDA are three-fold. First, 30 percent of two principal panels of the box or bundle must be covered with a black and white warning label. Second, 20 percent of all advertising—a still undefined term—must carry a warning label. Third, retailers will be required to display signs at the register and in a humidor.
There are a number of issues the industry takes with this, but it basically comes down to three things.
FDA CAN’T PROVE WHY THE BIGGER WARNING LABELS ARE NEEDED
A handful of manufacturers are currently subject to an agreement with the Federal Trade Commission (FTC) that require a smaller warning label to be put on boxes, roughly 13-15 percent of a single panel and an even less—4-8 percent—of advertisements. The cigar trade groups argue that FDA never studied whether the planned larger warning labels would be more effective than the smaller—partially in effect—warning labels, an obvious oversight to the plaintiffs.
Furthermore, it argues that FDA didn’t study the comparison because it has previously researched warning labels and their effectiveness and found that new warning would only reduce (cigarette) smoking rates by .088 percent, a number that the agency deemed “not statistically distinguishable from zero.”
And that’s not the only data the cigar industry thinks the FDA doesn’t want to evaluate. The appeal argues that the agency data regarding health claims is now more than a decade old and more recent data, specifically a newer FDA study, indicates that the median premium cigar consumer only smokes 1.7 days per month, greatly reducing FDA’s potential health claims. Instead, many of the agency’s claims are based on decades-old studies with fewer participants and before the FTC warning labels went into effect.
MESSING WITH CIGAR COMPANIES COMMUNICATION
In the Texas case, the judge showed particular interest in the argument that premium cigars could be different than other tobacco products—both the products and the typical consumers—and that the luxury packaging of premium cigars was going to be uniquely affected by the larger warning labels. That comes back up in this appeal. Part of that argument is that the warning label permanently cheapens the product because it destroys the luxury aesthetic, which becomes particularly problematic if there isn’t definitive proof as to whether the warning labels are doing any good.
Then there’s also the question of what the label regulations will actually look like in practice.
While most have focused on the idea of just a singular box with the two warning messages, the appeal argues that the end result of the warning labels would be particularly burdensome because a consumer would see a warning label upon entering a humidor, warning labels on any advertising within the retailer, then two labels on every box and another separate warning label at the register. In short, a consumer could see hundrends—and in some cases, thousands—of warning labels within a matter of minutes, far beyond the required two warning messages the Supreme Court deemed too burdensome in Becerra.
12-MONTH WARNING PLANS ARE UNIQUELY BURDENSOME
And then there are the things that cannot be seen per se, specifically the warning plans.
Because there are up to a half dozen different messages that will be required to display on boxes and ads in equal rotations, FDA will require companies to submit plans 12-months prior to any advertisement being displayed. Those plans would require companies to detail which warning message was being displayed, on what box or advertisement, and for what period of time. All this would need to be submitted 12-months prior to the advertisement running.
That particular process is expected to be burdensome, particularly for certain advertising mediums—like radio, where a 30-second advertisement could easily end up being half an ad for FDA’s warnings—and for smaller retailers, who would be subject to the same advertising warning plans to promote things like events.
It’s also worth pointing out that FDA doesn’t have much to compare this scenario to because previous laws and legal agreements prevent cigarette manufacturers from advertising in many of these mediums, most notably the internet. Small things like a Facebook post for an upcoming event would all be subject to not only displaying the warning label but also submitting plans for the ad 12-months prior to the post being published.
There are a multitude of other arguments within the appeal ranging from which legal standard should be used in wake of Becerra to complaints about how FDA has oftentimes failed to provide guidelines before upcoming deadlines for the regulatory process.
These will continue to be fleshed out over the upcoming months as briefs on this appeal are filed, but it’s also not the only part of the court battle. Earlier this month, the cigar trade groups indicated that they would file a legal action to delay HPHC testing reports, currently due in November, as the agency has yet to provide its promised guidelines about how to actually conduct those test. That filing is expected by the end of next week and will need to be decided before any oral arguments about the appeal take place.
At the moment, the only thing that is known is that a July 2018 ruling means warning labels won’t be required until at least 60 days after the court battle over their legality is finished.
You can view the appeal here.