The FDA Faces Challenges to its New Regulations for E-Cigarettes

We recently reported that the Food and Drug Administration (“FDA”) issued a final ruling regarding the regulation of electronic cigarettes (“e-cigarettes”) and other tobacco products, including hookah and pipe tobacco, and cigars. See “Deeming Tobacco Products to Be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products,” No. FDA-2014- N-0189, 81 Fed. Reg. 28, 973 (May 10, 2016) (“the Rule”). Most notably, these new and broad regulations prevent retailers from selling e-cigarettes, hookah and pipe tobacco, and cigars to customers under the age of 18.  In addition, the Rule requires that all newly-regulated products that were put on the market after February 15, 2007 must obtain FDA approval by showing “the products meet the applicable public health standard set forth in the law and receive marketing authorization from the FDA.”  Just as we anticipated when the Rule was first announced, the newly-issued regulations have indeed resulted in a variety of lawsuits and have been challenged by several parties involved in different capacities in the tobacco industry.

For instance, on May 10, 2016, Nicopure Labs LLC, an e-cigarette company that distributes battery powered vaping devices, commenced suit in D.C. federal court, requesting that the judge vacate the FDA rule based upon its claims that the FDA had unlawfully exceeded its authority. See Nicopure Labs, LLC v. Food and Drug Administration, et al., No: 1:16-cv-00878-ABJ (D.D.C. May 10, 2016). Specifically, Nicopure alleges that the FDA’s rulemaking process violates the Administrative Procedure Act, arguing that its determination that “tobacco products may not be sold without prior approval from FDA” is arbitrary and capricious. Id. at ¶38.  Nicopure further alleges that the Rule itself violates the First Amendment in that the FDA bars manufacturers, such as Nicopure, from making truthful and non-misleading statements about their e-cigarette devices. Id. at ¶54.

Nicopure, as with the other parties discussed below, claims that the newly imposed rule “dramatically” expands the FDA’s exercise of its regulatory authority pursuant to the Family Smoking Prevention and Tobacco Control Act of 2009 (“TCA”), which empowers the FDA to oversee the manufacturing standards of tobacco products. Id. at ¶15.  Thus, the company asserts that the requirement that manufacturers seek approval from the FDA by showing that the products comply with the public health standards set forth in the new regulations “severely burdens” the company and its operations. Id. at ¶27. Nicopure further claims that the Rule means that it “will be forced to redirect resources from day to day business operations and research and development to compliance with the [Rule’s] premarket approval, reporting, recordkeeping, inspection, labeling, manufacturing, and other requirements” causing it to suffer “irreparable harm…due to the immediate and irreparable consequences of being subject to unlawful regulation.” Id. at ¶29-30. The company claims that the FDA “discounts the safety benefits offered by vaping devices and e-liquids” by imposing an “extensive regulatory regime designed for cigarettes and smokeless tobacco” on e-cigarette products. Id. at ¶43.

Shortly thereafter, on June 20, 2016, the Right to be Smoke-Free Coalition, a trade association, along with numerous other trade associations, filed suit in the D.C. District Court against the FDA, alleging that the Rule “sets forth requirements that reach beyond any reasonable level of regulatory oversight and imposes unlawful obligations on vaping product manufacturers.”  See Right to Be Smoke-Free Coalition, et al. v. Food and Drug Association, No. 1:16-cv-01210 (D.D.C. June 20, 2016). The following day, June 21, 2016, D.C. Judge Amy Brown issued an order consolidating this action with the Nicopure case, ruling that “[w]hile Right to Be Smoke-Free brings some new claims,” both cases “allege that the [Rule] is arbitrary and capricious in violation of the Administrative Procedure Act….and both claim that the regulation unlawfully infringes upon plaintiffs’ First Amendment rights.” Nicopure Labs, LLC v. Food and Drug Administration, et al., No: 1:16-cv-00878-ABJ (D.D.C. July 21, 2016).  On July 8 and July 25, Nicopure and Right to Be Smoke Free Coalition, respectively, filed Summary Judgment motions, which are presently pending.

In a separate lawsuit, on July 12, 2016, three additional e-cigarette companies, Cyclops Vapor 2 LLC, Tiger Vapor LLC and Karma S Clouds LLC, filed suit in federal court in Alabama (“Alabama case”), also objecting to the Rule by claiming that it will “severely and unnecessarily burden [their] legitimate business operations and threaten to put [them] out of business” and will force them to “discontinue existing product lines.” See Cyclops Vapor 2, LLC, et al. v. United States Food and Drug Administration, et al., Co. 2:16-cv-556 (M.D. Ala. July 8, 2016). Like in the DC actions, the Alabama plaintiffs also argue that the FDA failed to acknowledge that e-cigarette and vaping devices offer a safer alternative to tobacco products and unfairly imposes the same regulatory requirements designed for cigarettes and smokeless tobacco onto e-cigarette companies. Id. at ¶64. Therefore, they argue, “the burdens imposed by [the Rule] appear to be nothing more than an arbitrary and capricious regulatory system designed to regulate the entire vaping industry out of existence.” Id. at ¶39.

Finally, on July 15, 2016, several more trade associations, including Cigar Association of America, International Premium Cigar and Pipe Retailers Association, and Cigar Rights of America, filed suit against the FDA in D.C. federal court. See Cigar Association of America, et al. v. United States Food and Drug Administration, et al., No. 1:16-cv-01460 (D.D.C. July 15, 2016).  They, too, asked the Court to vacate the Rule, claiming that it was inconsistent with the TCA, pursuant to which the FDA regulates tobacco products. The Complaint alleges that the Rule is “legally defective and contrary to the TCA” because it “effectively imposes a tax on cigars and pipe tobacco in the form of “user fees…imposed on only some of the [newly regulated products], contravening Congress’s intention that all regulated entities will bear their fair share of the costs associated with regulating tobacco products.” Id. at ¶4. The Complaint further alleges that the Rule “ignores Congressional intent that ‘appropriate’ regulations permit the continued sale of cigars and pipe tobacco to adults.” Id.

As previously reported, if upheld, the Rule, which is set to go into effect this month, is likely to have a significant impact on the e-cigarette and cigar industry, particularly on smaller business, such as the plaintiffs in these lawsuits, as compliance with the regulations could be costly. We will continue to monitor the developments and challenges in this area and will continue to report on the status of this wave of lawsuits concerning the FDA’s regulations.