Global Premium Cigars, LLC—the company behind the 1502 Cigars brand—has filed what is the first known instance of a premium cigar company suing the U.S. Food & Drug Administration over its new deeming regulations.
The lawsuit, filed yesterday in the U.S. District Court in Miami, argues amongst other things that new regulations by FDA regarding cigars and other tobacco products violate the First and Fifth Amendment rights of Global Premium Cigars and its owner Enrique Sánchez.
Sánchez, who is represented by Frank Herrera, is asking the court to strike down the Deeming Rule as well as rule that the Feb. 15 2007 grandfather date is unlawful and should be changed to Aug. 8, 2016.
In addition, the lawsuit asks for a preliminary injunction from the Deeming Rule, a move that if granted could see the court temporarily prevent FDA from enacting regulations.
“This will be a long and tough battle, but in the end we believe that the fight is important,” said Sánchez in a statement announcing the lawsuit. “I have faith in the US legal system, and in the American people, and I know that together we can make a difference.”
Multiple vapor companies have filed lawsuits against FDA and many expect more to come. Altria, the world’s largest tobacco company, filed a lawsuit last week over whether FDA had the authority to force the company to change the name of Black & Mild little cigars because the agency’s new rules would prohibit the use of “mild” statements by companies.
Prior to any lawsuit being filed, FDA stated that it will enforce all parts of the rule, regardless of lawsuit(s), unless a court prevents the agency from doing so. If that happens, FDA has indicated it will enforce all parts of the rule it legally can, this could include a scenario where a court grants injunctive relief to a lawsuit regarding one part of the regulations, temporarily suspending that part of the rule, while the agency enforces all other parts of the rule.
Editor’s Note: The following describes the lawsuit in more detail. If you are not familiar with the FDA regulations it’s unlikely much of this will make sense. If you’d like to learn more about the rule and its effect, you can do so by visiting halfwheel.com/fda.
In the lawsuit, Global Premium Cigars claims that its First Amendment rights have been violated because the company is being forced to place warning labels—two labels that are at least 30 percent of primary parts of the box—on its product. It specifically argues that FDA failed to provide any evidence that placing warning labels on cigar boxes are effective at protecting public health or preventing youth access of tobacco, and as such, the FDA has created an unnecessary restriction that doesn’t serve the two main goals of the regulations.
“By requiring that excessive space be devoted to Government messages, the Act, violates Plaintiffs’ First Amendment by effectively hindering Plaintiffs’ ability to communicate with the public through packaging, advertising, and intellectual property.”
It argues the FDA also violates the First Amendment by creating prior restraints, limits on speech before it happens. Because FDA approval would be required before a new product could be marketed or sold after Aug. 8, 2016—the effective date of the regulations—the lawsuit argues that the agency is “holding the speech captive” until it approves the product.
As for the Fifth Amendment, the suit argues the Takings Clause—popularly known for its use in eminent domain—is violated. The Takings Clause prevents the government from seizing property without just compensation. The lawsuit argues the space on boxes and advertisements that would be subjected to warning labels has been unlawfully seized by the government without compensation.
It also claims the Due Process standard of the Fifth Amendment has been violated because of the arbitrariness of the Tobacco Control Act’s grandfather date of Feb. 15, 2007.
The lawsuit argues that a cigar maker who introduced new products after Feb. 15, 2007 could not have know that they were introducing products that would potentially be subject to regulation, while other products that were introduced—in some cases weeks earlier—would be grandfathered and not subject to the same set of regulations.
Grandfathered products will have to submit evidence to FDA that the products were on the market as of Feb. 15, 2007 and have actively been sold since. If FDA accepts the evidence, the products will not be subject to approval and can remain on the market. Any product introduced after Feb. 15, 2007 but before Aug. 8, 2016 will have up to two years—and in some cases three—to remain on the market before the manufacturer will have have to submit for approval or be removed from market.
The suit claims that FDA has violated the Administrative Procedure Act’s arbitrary and capricious and unlawful cost benefit analysis standards because it believes that most cigars introduced after the grandfather date of Feb. 15, 2007 will have to apply not for substantial equivalence, but for the much costlier premarket tobacco application (PMTA). FDA has stated that it believes no cigar manufacturer will use the PMTA pathway because manufacturers will apply under the substantial equivalence provision where a manufacturer argues that there product is substantially equivalent in terms of health risks to a grandfathered or already approved product.
The central question to this part of the lawsuit is whether newer cigar companies will have access to substantial equivalence.
According to FDA’s own estimates, a substantial equivalence filing would likely cost around $20,000 for one product, whereas the PMTA pathway is estimated to be over $1 million.
Because the lawsuit believes that “a majority of cigar manufacturers” will be forced to use the PMTA pathway, FDA’s estimates regarding the cost cigar companies will incur applying for and receiving approval were greatly understated and as such the agency’s belief that the benefit (for public health) outweighed the costs incurred by businesses is flawed.
The suit also alleges FDA violated the Regulatory Flexibility Act, which requires by law the agency to provide analysis on how alternatives regulations would affect small businesses compared to the proposed rules. The lawsuit quotes concerns from the Small Business Administration over the impact of the proposed regulations, as well as FDA’s comment on those concerns, specifically that it believed it did not need to provide any additional economic impact analysis.