436 F.Supp.3d 70
D.D.C.2020Background
- In 2014 FDA proposed a "Deeming Rule" to subject cigars and other products to the Tobacco Control Act, offering Option 1 (deem all cigars) and Option 2 (exclude defined "premium cigars").
- Commenters representing premium-cigar manufacturers and retailers argued premium cigars are used differently (older, infrequent users; little youth use) and thus warnings designed for mass-market tobacco are unwarranted.
- In 2016 FDA adopted Option 1 (Deeming Rule), requiring six rotating health warnings on all cigar packaging and ads; FDA said available evidence did not justify exempting premium cigars.
- En Fuego plaintiffs (premium-cigar retailer, manufacturer, and state association) sued asserting (inter alia) that the warnings as applied to premium cigars violate the APA, the First Amendment, and the Appointments Clause; the case was consolidated with related litigation.
- The district court held FDA’s imposition of the warnings on premium cigars was arbitrary and capricious because the agency failed to provide a reasoned explanation tailored to premium cigars (particularly whether consumers are uninformed such that warnings are necessary), and vacated that portion of the Rule; the court did not reach First Amendment or Appointments Clause claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Claim preclusion (res judicata) | Prior Cigar Association judgment bars this suit because issues and parties overlap | Plaintiffs not in privity with associations that litigated earlier; no evidence of participation | Denied — no privity or adequate-representation showing; claim preclusion fails |
| APA: health warnings for premium cigars arbitrary and capricious | FDA failed to analyze whether premium-cigar users are misinformed or whether warnings would address a cognizable information gap; agency relied on studies not specific to premium cigars | FDA contends studies about cigars generally apply to premium cigars and that all cigars pose health risks warranting warnings | Granted for Plaintiffs — FDA failed to provide reasoned, product-specific explanation; vacated warnings-as-applied to premium cigars and remanded |
| First Amendment challenge to warnings and preapproval requirement | Warnings and preapproval compel speech and are not narrowly tailored or justified as to premium cigars | FDA maintains warnings satisfy Zauderer/other standards and serve substantial public-health interests | Not reached — court resolved case on APA ground |
| Appointments Clause challenge | Rule promulgated by improperly appointed officer | Defendants defend validity of appointments/process | Not reached — court avoided constitutional question |
Key Cases Cited
- Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (administrative-action must not be arbitrary or capricious)
- Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (First Amendment disclosure doctrine)
- Taylor v. Sturgell, 553 U.S. 880 (limits on nonparty claim preclusion; adequate-representation exception)
- Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117 (agencies must give adequate reasons for rulemaking)
- Public Citizen v. FAA, 988 F.2d 186 (agency must adequately explain decisions in rulemaking)
- Allied-Signal, Inc. v. U.S. Nuclear Regulatory Comm'n, 988 F.2d 146 (vacatur/remand framework and disruptive-consequences inquiry)
- County of Los Angeles v. Shalala, 192 F.3d 1005 (court must undo agency action lacking reasoned explanation)
- Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 (scope of judicial review of agency records)