Federal Appeals Court Sharply Rejects Cigar Industry’s Appeal in FDA Lawsuit

The three cigar industry trade groups have lost their most recent appeal in the ongoing lawsuit over FDA’s deeming regulations. The decision was unanimous and the rejection of the trade groups’ arguments was resounding.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia rejected the cigar industry’s challenges to the implementation of the deeming rule, whether FDA erred improperly when evaluating the economic impacts of the deeming rule, whether FDA has the authority to regulate pipes, and whether FDA has the authority to impose user fees on other products.

This is the result of an appeal filed in Cigar Association of America et al. v. United States Food and Drug Administration et al. Oral arguments for this appeal was heard in May and a decision has been expected to be delivered this month.

It didn’t go well.

Judge Judith W. Rogers wrote the opinion, which doesn’t shine too well on the cigar industry’s arguments, the most damning reject relates to whether FDA failed to meet a requirement that would have required it to provide information to companies submitting substantial equivalence reports.

Rogers writes:

The court need not decide whether § 387e(j)(1) required FDA to supply product-specific instructions before the due date for substantial equivalence reports. In the preamble to the Deeming Rule, FDA stated that it did not intend to enforce the Act’s premarket review requirements for 18 months from the Rule’s effective date while manufacturers submitted substantial equivalence reports. See 81 Fed. Reg. at 29,011. Appellants acknowledge that FDA did not need to include any form and manner instructions in the Deeming Rule itself and could have provided such instructions after the Rule’s promulgation. See Appellants Br. 18–19; Oral Arg. Rec. 2:02. Therefore, even assuming FDA’s failure to provide such instructions violated § 387e(j)(1), that failure is not an error stemming from the Deeming Rule.

If that wasn’t bad enough, Rogers then makes a point of criticizing the cigar industry’s legal strategy.

Furthermore, the court need not consider appellants’ contention that FDA acted arbitrarily and capriciously by inadequately considering “whether instructions needed to be in place before substantial equivalence reports were due,” Appellants Br. 20–21, because appellants “forfeited” it by failing to raise it before the district court, Cigar Ass’n of Am., 480 F. Supp. 3d at 274; see District of Columbia v. Air Florida, Inc., 750 F.2d 1077, 1084 (D.C. Cir. 1984).

She is referencing a separate federal lawsuit, one where a group of pediatricians and several anti-tobacco groups sued FDA in a different federal court, asking the court to make FDA speed up the implementation of the deeming regulations. The cigar industry stayed out of the lawsuit until the very end, a decision that was criticized by a different federal appeals court.

As to whether FDA has the authority to set deadlines for substantial equivalence reports and then change them, Rogers concludes that the plaintiffs have yet to show FDA acted improperly when setting the dates.

“Also meritless is appellants’ contention that FDA arbitrarily concluded” is how the next section starts, which isn’t great for the cigar industry. It’s in reference to whether FDA lacked the authority to set the grandfather date for deemed products to Feb. 15, 2007.

The plaintiffs were trying to argue that FDA has the ability to change the grandfather date, which was set by Congress; the court does not agree.

It also didn’t accept the arguments made as to whether FDA failed to properly analyze the economic impacts of the rules regarding its specific impacts on cigar and pipe companies. Notably, in oral arguments FDA didn’t rebut much of the claim itself, instead, the Department of Justice argued that the court didn’t have the authority to review the financial analysis.

Rogers writes that DOJ’s arguments were irrelevant because even if the court did have the authority to review the financial analysis, it wouldn’t rule for the plaintiffs:

But appellants cite no authority for the proposition that FDA needed to consider the benefits of premarket review specifically for each industry or product affected by the Deeming Rule. Nor, contrary to appellants’ suggestion, does the purpose of the Deeming Rule compel that FDA’s cost-benefit analysis take a particular form.

There was also a question about whether FDA can regulate a pipe itself as part of the “component or part” definition of the Tobacco Control Act. The court concludes that the plaintiffs fail to make a compelling argument during the second part of a Chevron test, which is where the court uses previously established legal doctrine to determine whether the government regulations are permissible.

In this particular instance, the court actually differs a bit in how they get there—Judge Justin R. Walker writes a concurring opinion about the pipe issue alone—but all three judges get to the same place: FDA has the authority to regulate pipes as a “component or part.”

Finally, the appeals court rejected yet another argument challenging FDA’s user fees system. This time, the cigar industry argued that FDA should be charging user fees to companies that make e-cigarettes and vaping products. FDA has stated numerous times that it does not believe it has the authority to do so because the user fee scheme was established by Congress and vaping products were not listed.

The Court agrees with DOJ’s argument that even if it had the authority to impose those user fees, it wouldn’t, instead, it would wait for Congress to modify the law. The judges also didn’t seem to buy the argument, “But appellants proffer no evidence in support of their bald assertion, much less a basis for connecting the increased e-cigarette use among high school students and the anticipated number of e-cigarette premarket review applications to FDA.”

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.