Wages and White Lion Invst v. FDA, 16f4th1130

Background

Congress enacted the Tobacco Control Act (TCA) and delegated implementation to the FDA; in 2016 the FDA’s Deeming Rule treated e-cigarettes (ENDS) as "new tobacco products" requiring premarket tobacco applications (PMTAs).
The FDA set and repeatedly shifted PMTA deadlines and guidance; its earlier guidance said it generally did not expect long-term clinical studies would be needed for PMTAs.
Triton is a Texas ENDS manufacturer that timely submitted PMTAs for flavored, reusable products marketed since 2016; FDA issued a marketing denial order (MDO) denying Triton’s PMTA for lack of long-term-study evidence.
The FDA announced denials for tens of thousands of flavored ENDS PMTAs, explaining it likely needs randomized controlled trials or longitudinal studies to show adult benefit and youth-risk mitigation.
Triton sought a stay of the MDO pending judicial review; the Fifth Circuit granted a stay, finding Triton likely to succeed on APA arbitrary-and-capricious grounds and would suffer irreparable harm.

Issues

Issue	Triton’s Argument	FDA’s Argument	Held
Whether FDA’s MDO was arbitrary and capricious for ignoring Triton’s marketing plan	FDA ignored a "critical" marketing plan that would limit youth access; failure to evaluate was unlawful	FDA declined to evaluate plans at this stage for efficiency and based on experience that prior plans were insufficient	Court: FDA’s conclusory refusal to evaluate the plan was unreasonable and likely arbitrary and capricious
Whether FDA unlawfully changed course ("surprise switcheroo") by effectively requiring long-term studies after previously saying they were generally unnecessary	Triton reasonably relied on FDA guidance and meetings that long-term studies were not expected	FDA says statute requires adequate scientific evidence and agency could demand clinical investigations when appropriate	Court: FDA failed to address reliance interests and alternatives when changing position; likely arbitrary and capricious
Whether Triton will suffer irreparable harm absent a stay	Loss of 90% of revenue, imminent layoffs, and unrecoverable compliance costs threaten company’s existence	FDA largely did not contest irreparable-harm showing	Court: Irreparable harm shown; this and likelihood of success favor a stay
Whether the court has authority to grant a stay that preserves status quo pending review	Court can suspend agency action under APA §705 to preserve status quo pending review	FDA contended court lacked authority to permit continued marketing	Court: §705 authorizes postponing effective date; stay preserving status quo is proper

Key Cases Cited

Nken v. Holder, 556 U.S. 418 (2009) (stay factors and standard for stays pending review)
FCC v. Prometheus Radio Project, 141 S. Ct. 1150 (2021) (agencies must reasonably explain action under arbitrary-and-capricious standard)
Motor Vehicle Mfrs. Ass’n v. State Farm, 463 U.S. 29 (1983) (agency must examine relevant data and provide rational connection between facts and choice)
DHS v. Regents of the Univ. of Cal., 140 S. Ct. 1891 (2020) (agency changing course must consider reliance interests and explain change)
Michigan v. EPA, 576 U.S. 743 (2015) (agency action lawful only if it rests on consideration of relevant factors)
FCC v. Fox Television Stations, 556 U.S. 502 (2009) (more detailed justification required when new policy contradicts prior factual findings)
Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117 (2016) (agency must display awareness when changing position)
Judulang v. Holder, 565 U.S. 42 (2011) (agency cheapness or conclusory rationale cannot save arbitrary policy)
Alabama Ass’n of Realtors v. HHS, 141 S. Ct. 2485 (2021) (no public interest in perpetuating unlawful agency action)