Cigar Association of America v. United States Food and Drug AdministrationCigar Association of America v. United States Food and Drug Administration
MEMORANDUM OPINION
I. INTRODUCTION
On April 25, 2014, the U.S. Food and Drug Administration (“FDA“) issued a proposed rule announcing its intent to “deem” cigars and certain other tobacco products subject to the federal Food, Drug, and Cosmetic Act,
Industry groups representing premium cigar retailers and manufacturers submitted comments expressing concerns about the proposed rule. These commenters objected to the regulation of premium cigars and asserted, among other things, that premium cigars do not pose the same public health concerns as mass-market cigars and other tobacco products because premium cigar consumers are only occasional users of the product and use the product differently. The public health effects of this difference in use, the commenters argued, are borne out by studies showing that premium cigar users have far lower disease and mortality rates than consumers of cigarettes and other tobacco products. And because of these differences in use, the commenters maintained, the same health warnings regime proposed for mass-market cigars and other tobacco products was not warranted for premium cigars.
The FDA rejected these arguments, concluding in its final rule that no evidence put forward during the notice-and-comment period supported exempting premium cigars from regulation. Accordingly, the FDA‘s final rule, known as the “Deeming Rule,” selected Option 1: “deeming” all cigars, including premium cigars, to be subject to the TCA, and imposing health warnings requirements on all cigar products.
Plaintiffs in this case—a premium cigar retailer, a premium cigar manufacturer, and a non-profit association that represents premium cigar retailers and manufacturers—brought this action in January 2018 against the FDA and its Commissioner, and the U.S. Department of Health and Human Services (“HHS“) and its Secretary (collectively, “Defendants“), challenging the Deeming Rule‘s warnings label regime for premium cigars on three primary bases: (1) the warnings label regime infringes on Plaintiffs’ First Amendment rights; (2) the FDA imposed the new warnings label regime in violation of the Administrative Procedure Act (“APA“);
For the reasons set forth below, the court finds that the FDA‘s subjecting of premium cigars to warnings requirements to be arbitrary and caрricious in violation of the APA, insofar as the agency failed to provide a reasoned explanation for this action. The court thus declares unlawful and vacates that portion of the Deeming Rule that mandates premium cigars display designated public health warnings on packaging and advertisements. The court does not reach Plaintiffs’ First Amendment and Appointments Clause challenges.
II. BACKGROUND
A. Statutory and Regulatory Background
The court starts with a brief overview of the relevant statutory and regulatory backdrop for this case.
In 2009, Congress enacted the TCA to empower the FDA to regulate and set national standards regarding the manufacturing, marketing, and distribution of tobacco products.
In light of these findings, the TCA authorized the Secretary of HHS to regulate the manufacture, distribution, and marketing of tobacco products.
B. Regulatory Background
1. The Proposed Deeming Rule
In the years following Congress‘s enactment of the TCA, cigar products were largely free from FDA regulation because cigars were not expressly listed in the Act‘s definition of “tobacco product.” That unregulated status would soon change. On April 25, 2014, the FDA issued a proposed rule that would make, or “deem,” cigars, pipe tobacco, and e-cigarettes subject to the TCA. See
The FDA did not, however, immediately announce an intention to deem all cigar products. Rather, in the Proposed Deeming Rule, the FDA offered “two alternatives for the scope of the deeming provisions and, consequently, the application of the additional specific provisions.”
[A]ny cigar as defined in this part, except a cigar that: (1) is wrapped in whole tobacco leaf; (2) contains a 100 percent leaf tobacco binder; (3) contains primarily long filler tobacco; (4) is made by combining manually the wrapper, filler, and binder; (5) has no filter, tip, or non-tobacco mouthpiece and is capped by hand; (6) has a retail price (after any discounts or coupons) of no less than $10 per cigar (adjusted, as necessary, every 2 years, effective July 1st, to account for any increases in the price of tobacco products since the last price adjustment); (7) does not have a chаracterizing flavor other than tobacco; and (8) weighs more than 6 pounds per 1000 units.
The FDA also sought comment on the “relative merits of Option 1 versus Option 2.”
2. Comments on the Proposed Deeming Rule
Numerous members of the public submitted comments on the Proposed Deeming Rule. Among them was Cigar Rights of America (“CRA“), a non-profit association that represents consumers and manufacturers of premium cigars.1 See Joint Appendix Vol. 3, ECF No. 81-2 [hereinafter
premium cigar use. Id. at 307. CRA cited a number of studies supporting its claims and concluded that “the proposed warnings lack a sound evidentiary basis.” Id. at 322.
Other cigar retailers and manufacturers, as well as advocacy groups representing premium cigar consumers, echoed CRA‘s arguments in their own comments on the Proposed Deeming Rule. Because “premium cigar consumers are much older than other tobacco consumers,” one commenter opined, “there is simply no basis for any conclusion that regulating premium cigars will meaningfully impact youth access to, or use of, tobacco products.” Id. at 254 (comment from Holt‘s Cigar Holdings, Inc.). Others contested the statistics regarding youth use cited in the Proposed Deeming Rule and cited contrary studies showing that underage premium cigar use is minimal, thereby warranting “a more measured degree of regulation.” Id. at 350 (comment from International Premium Cigar & Pipe Retailers Association (“IPCPR“)). Commenters also pointed out that “usage data show that premium cigars products are consumed infrequently,” at a “much lower rate” than other tobacco products, and are consumed “often in a celebratory nature, by adults.” Id. at 348 (same). In light of these usage patterns, commenters insisted, “FDA‘s final regulations should not take a one-size-fits-all approach to the regulation of a diverse suite of tobacco products, and should instead impose regulatory requirements for premium cigars consistent with recognized public health differences.” Id. at 349 (same).
3. The Final Deeming Rule
On May 10, 2016, the FDA promulgated the final Deeming Rule. It adopted Option 1, deeming all categories of cigars, including premium cigars, to be subject to the TCA. See
The Deeming Rule sets out, among other things, comprehensive warnings requirements for cigar product packaging and advertisements. All cigar product packages must display one of the following six health warnings statements:
(i) WARNING: Cigar smoking can cause cancers of the mouth and throat, even if you do not inhale.
(ii) WARNING: Cigar smoking can cause lung cancer аnd heart disease.
(iii) WARNING: Cigars are not a safe alternative to cigarettes.
(iv) WARNING: Tobacco smoke increases the risk of lung cancer and heart disease, even in nonsmokers.
(v)(A) WARNING: Cigar use while pregnant can harm you and your
baby.3... (vi) WARNING: This product contains nicotine. Nicotine is an addictive chemical.
rotating warnings twelve months before advertising or commercially marketing a cigar product.
The Deeming Rule also specifies the placement and size of the required health warnings. With respect to packaging, each warning statement must “appeаr directly on the package” and must be “located in a conspicuous and prominent place on the two principal display panels of the package,” comprising “at least 30 percent of each of the principal display panels.”
The final Deeming Rule addressed those comments that advocated for excluding premium cigars from the Rule‘s requirements. The FDA stated that it “concluded that deeming all cigars, rather than a subset, more completely protects the public health.”
The FDA dismissed commenters’ contentions that different patterns of use for premium cigar users support exempting the product from regulation altogether. “The fact that some premium cigar smokers might smoke such products infrequently or report that they do not inhale,” the FDA stated, “does not negate the adverse health effects of tobacco smoke or demonstrate that cigars do not cause secondhand smoke-related disease in others.”
Specifically in response to commenters’ argument that the proposed warning labels for premium cigars “lack a sound scientific basis” because of different consumption rates, inhalation patterns, and demographics of premium cigar users, the FDA merely remarked that it “finds there is a strong scientific basis to require health warnings on cigar packages and in cigar advertisements (as well as on signs for unpackaged cigars), which was extensively discussed in the [Proposed Deeming Rule].”
4. The Premium Cigar Rulemaking
Just over a year later, the FDA re-opened the door it seemed to have shut on proponents of not regulating premium cigars. In July 2017, the FDA announced a new comprehensive plan for tobacco regulation. Press Release, FDA announces comprehensive regulatory plan to shift trajectory of tobacco-related disease, death, at 1 (July 27, 2017) (hereinafter “July 2017 Press Release“).4 As part of that announcеment, the FDA said it intended to issue an advanced notice of proposed rulemaking (“ANPRM“) seeking additional information concerning how “premium”
cigars might be defined and how the patterns of use may impact public health. Id. At the same time, the Agency delayed many of the compliance deadlines of the Deeming Rule‘s premarket approval and substantial equivalence requirements, but it did not stay imposition of the health warnings requirements. Id.
The FDA issued the ANPRM regarding premium cigars the following year. The FDA‘s new premium cigar rulemaking sought “new and different information, data, and analysis not submitted in response to FDA‘s proposed deeming rule . . . that could inform FDA‘s regulation of premium cigars.” See
B. The Cigar Association Litigation
On July 15, 2016, a group of plaintiffs, led by the Cigar Association of America, filed suit in this District against the FDA, HHS, and others. See Compl., Cigar Ass‘n of Am. v. FDA, No. 16-cv-01460 (D.D.C.), ECF No. 1. Plaintiffs in Cigar Association are three non-profit associations that represent cigar manufacturers, importers, distributors, suppliers, and consumers, as
After the Plaintiffs filed their opening brief for summary judgment, the FDA announced, as discussed above, its intention to issue an ANPRM concerning premium cigars. See July 2017 Press Release; see also Cigar Ass‘n, 315 F. Supp. 3d 143, 156–57 (D.D.C. 2018). Partly in response to that intended rulemaking, the Plaintiffs thereafter opted to defer litigating their premium cigar-specific claim, i.e., the claim that the agency‘s selection of Option 1 over Option 2 was an arbitrary and capricious agency action. See Joint Report Regarding Briefing Schedule, ECF No. 53; Cigar Ass‘n, 315 F. Supp. 3d at 157–58. Briefing proceeded on Plaintiffs’ other claims, including the claims asserting that the warnings regime as to all cigars violated the First Amendment and the APA. See ECF Nos. 120, 124, 125, 128, 129, 132.
On May 15, 2018, the court granted in part and denied in part the Cigar Association Plaintiffs’ cross-motions for partial summary judgment. See Cigar Ass‘n, 315 F. Supp. 3d at 189. As relevant here, the court ruled that the heаlth warnings requirement was lawful as to all cigar products under both the First Amendment and the APA. See id. at 159–75. Specifically, as to the First Amendment claim, applying the test set forth in Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 U.S. 626 (1985), the court held that the health warnings requirement was reasonably related to a substantial government interest and not unduly burdensome. See Cigar Ass‘n, 315 F. Supp. 3d at 163–74. The court also held that the decision to impose warnings as to all cigars was not arbitrary and capricious. See id. at 159–63. Finally, because the Cigar Association plaintiffs had opted to defer litigating the Option 1 versus Option 2 issue, the court did not address the question whether the agency‘s recent announcement that it was seeking additional information about regulating premium cigars rendered the FDA‘s decision to regulate premium cigars arbitrary and capricious. Id. at 175–77.
Thereafter, to enable an immediate appeal, the court entered judgment in favor of Defendants as to those claims challenging the warnings requirement. The court, however, enjoined enforcement of the warnings regime pending the outcome of appeal. See Cigar Ass‘n of Am. v. U.S. Food & Drug Admin., 317 F. Supp. 3d 555, 563–64 (D.D.C. 2018). The Cigar Association matter remains under review before the D.C. Circuit. See Cigar Ass‘n of Am. v. FDA, 18-5195 (D.C. Cir.).
C. The En Fuego Litigation
Plaintiffs in the instant case are three entities: (1) En Fuego Tobacco Shop LLC, “a premium cigar retailer and lounge with locations” around Texas; (2) Cuba Libre Enterprises LLC (doing business as El Cubano Cigars), “a manufacturer of handmade premium cigars” based in Texas; and (3) the Texas Cigar Merchants Association, “a Texas-incorporated not-for-profit association representing premium cigar manufacturers and retailers in the State of Texas.” Am. Compl., Case No. 18-cv-1797, ECF No. 20 [hereinafter Am. Compl.], ¶¶ 20–22 (collectively, “Plaintiffs“). These Plaintiffs originally brought this action in January 2018 in the District Court for the Eastern District of Texas against the FDA and its Commissioner, and HHS and its Secretary, challenging the Deeming Rule on various grounds as it applies only to premium cigars. See generally Compl., ECF No. 1; see also Am. Compl. The court in Texas transferred the case here based on the Fifth Circuit‘s “first-to-file rule” in March 2018, see Mot. to Transfer, ECF No. 18, and after some litigation on the transfer, this court consolidated the En Fuego case with the Cigar Association litigation, see Mem. Op. and Order of January 11, 2019, Case No. 18-cv-1797, ECF No. 78.
The En Fuego Plaintiffs’ Amended Cоmplaint contains eight counts. Taken together, those counts challenge (1) the Deeming Rule‘s health warnings mandate as its relates to premium cigars under the First Amendment (Counts I–III), the TCA (Count V), and the APA (Count VI); (2) the Deeming Rule‘s warnings plan pre-approval requirement under the First Amendment (Count IV); and (3) the manner of the Deeming Rule‘s promulgation under the Appointments Clause (Counts VII and VIII). Am. Compl. ¶¶ 64–149. Plaintiffs moved for summary judgment and a permanent injunction, see Pls.’ Mot. for Summ. J., ECF No. 120 (hereinafter “Pls.’ Mot.“), and Defendants filed a cross-motion for summary judgment, see Defs.’ Cross Mot. for Summ. J., ECF. No. 124 (hereinafter “Defs.’ Mot.“). These motions are now ripe for review.
III. LEGAL STANDARD
When reviewing agency action under the APA, “summary judgment is the mechanism for deciding whether as a matter of law an agency action is supported by the administrative record and is otherwise consistent with the APA standard of review.” Louisiana v. Salazar, 170 F. Supp. 3d 75, 83 (D.D.C. 2016) (citing Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415 (1971)). The district court “sits as an appellate tribunal,” reviewing the entire case as a question of law. Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001) (collecting cases). Accordingly, the court need not engage in lengthy factfinding and as a general rule, judicial review is limited to the administrative record. “It is black-letter administrative law that in an [Administrative Procedure Act] casе, a reviewing court should have before it neither more nor less information than did the agency when it made its decision.” CTS Corp. v. EPA, 759 F.3d 52, 64 (D.C. Cir. 2014) (internal quotation marks omitted; alteration in original); see also
The APA “sets forth the full extent of judicial authority to review executive agency action for procedural correctness.” FCC v. Fox Television Stations, Inc., 556 U.S. 502, 513 (2009). It requires courts to “hold unlawful and set aside agency action, findings, and conclusions” that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
IV. DISCUSSION
A. Claim Preclusion
Before turning to the merits of Plaintiffs’ claims, the court starts with a threshold issue: claim preclusion.6 Defendants argue the court‘s ruling in Cigar Association bars the En Fuego Plaintiffs’ claims. Defs.’ Mot. at 11. Under the doctrine of claim preclusion, “a final, valid judgment on the merits precludes any further litigation between the same parties on the same cause of actiоn.” Stanton v. D.C. Court of Appeals, 127 F.3d 72, 78 (D.C. Cir. 1997). To determine when claim preclusion applies, courts look to see if the suit‘s prior litigation “(1) involv[ed] the same claims or cause of action, (2) between the same parties or their privies, and (3) there has been
a final, valid judgment on the merits, (4) by a court of competent jurisdiction.” Smalls v. United States, 471 F.3d 186, 192 (D.C. Cir. 2006). In this case, Defendants assert that the first claim preclusion prong is satisfied because, “[a]t their core, both [Cigar Association and En Fuego] involve constitutional and administrative
Defendants’ claim preclusion defense founders on the second prong: they have not established privity between the En Fuego Plaintiffs and the Cigar Association Plaintiffs based on the former‘s membership in the latter. Although the D.C. Circuit appears not to have grappled with this issue, commentators have warned that “great care should be taken before binding all members to an association loss.” 18A Charles Alan Wright et al., Federal Practice & Procedure § 4456 (2d ed. 2017). An association “may choose to conduct a particular suit with an eye to its interests in other suits and other questions,” making it unfair to bind a member to the association‘s litigation result. Id. Mindful of this concern, some commentators and courts have distinguished between a member who “actively participates” in the association‘s litigation and one who does not. “Any member who actively participated in the first action shоuld [ ] be barred, without insisting on the same degree of involvement that is required by ordinary standards of participation and control. Other members, however, should not be precluded . . . .” Id. (footnote omitted); see also Cal. Cosmetology Coal. v. Riley, 871 F. Supp. 1263, 1267 (C.D. Cal. 1994) (“Under federal law, mere membership in a trade association alone does not create the privity necessary to bind the member to a judgment against an organization.“), aff‘d 110 F.3d 1454 (9th Cir. 1997). The court adopts that approach here. Defendants bear the burden of establishing claim preclusion, see Taylor v. Sturgell, 553 U.S. 880, 907 (2008), but have offered no evidence of litigation-related activity by any En Fuego Plaintiff in the Cigar Association matter. Their mere membership in or affiliation with the Cigar Association Plaintiffs IPCPR and CRA therefore does not foreclose their present claims.
Citing the Supreme Court‘s decision in Taylor, Defendants argue that “[e]ven if Plaintiffs were not members or affiliates of those associations, their claims would still be barred, because in Cigar Association they were ‘adequately represented by someone with the same interests who [was] a party,‘” and a “party bound by a judgment may not avoid its preclusive force by relitigating through a proxy.” Dеfs.’ Reply in Further Supp. of Defs.’ Mot., ECF No. 132, at 5 (quoting Taylor, 553 U.S. at 894–95) (internal quotation marks and citation omitted). But neither of these circumstances apply here. The Supreme Court has found that a nonparty‘s claims are precluded based on
B. Challenge to the Health Warnings Requirement
The court now turns to the merits. Plaintiffs challenge the Deeming Rule‘s health warnings requirement for premium cigar packaging and advertisements on three primary grounds. First, Plaintiffs argue that the warnings label regime, including the mandated agency preapproval of a label-rotation plan, as applied to premium cigars violates the First Amendment. Pls.’ Mot. at 14–33. Second, Plaintiffs contend that the FDA‘s adoption of the warnings requirement for premium cigars was not the product of reasoned decisionmaking and thus is arbitrary and capricious and violates the APA. Id. at 33–42. Third, Plaintiffs indirectly challenge the warnings mandаte by asserting that the Deeming Rule, in its entirety, was unconstitutionally issued by the FDA‘s Associate Commissioner for Policy in violation of the Appointments Clause. Id. at 42–44. Because the court agrees with Plaintiffs that the FDA‘s rulemaking was not the product of reasoned decisionmaking and therefore violates the APA, the court does not reach Plaintiffs’ First Amendment and Appointments Clause arguments. See Nw. Austin Mun. Util. Dist. No. One v. Holder, 557 U.S. 193, 197 (2009) (“Our usual practice is to avoid the unnecessary resolution of constitutional questions.“); see also Qassim v. Trump, 927 F.3d 522, 530 (D.C. Cir. 2019) (stating that “courts must ‘avoid the premature adjudication of constitutional questions’ and ‘not . . . pass on questions of constitutionality . . . unless such adjudication is unavoidable‘” (emphasis added) (quoting Matal v. Tam, 137 S. Ct. 1744, 1755 (2017))).7 In light of this ruling, the court also need not reach the First Amendment challenge to
1. Reasoned Decisionmaking
“One of the basic procedural requirements of administrative rulemaking is that an agency must give adequate reasons for its decisions.” Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2125 (2018). An agency therefore “must examine the relevant data and articulate a satisfactory explanation for its action including a ‘rational сonnection between the facts found and the choice made.‘” State Farm, 463 U.S. at 43 (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962)). Although an agency “need not address every comment” made during the notice and comment period, “it must respond in a reasoned manner to those that raise significant problems.” City of Waukesha v. EPA, 320 F.3d 228, 257 (D.C. Cir. 2003) (quoting Reytblatt v. Nuclear Regulatory Comm‘n, 105 F.3d 715, 722 (D.C. Cir. 1997)). And while the
agency action under review is “entitled to a presumption of regularity[,] . . . that presumption is not to shield [an] action from a thorough, probing, in-depth review.” Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415 (1971), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99 (1977). “Where the agency has failed to provide a reasoned explanation, or where the record belies the agency‘s conclusion, [the court] must undo its action.” County of Los Angeles, 192 F.3d at 1021 (internal quotation marks and citation omitted).
Plaintiffs maintain that the FDA‘s extension of warning labels to premium cigars was insufficiently explained in light of comments arguing that the labels are “particularly ill-suited” to premium cigars. Pls.’ Mot. at 38; Pls.’ Reply in Further Supp. of Pls.’ Mot. and Opp‘n to Defs.’ Mot., ECF No. 128 [hereinafter Pls.’ Reply], at 28. As the court sees it, Plaintiffs’ argument is essentially two-fold. First, the agency failed to supply a reasoned explanation to substantiate applying health warnings to premium cigar products because the warnings themselves are factually unfounded for such products. Second, the agency did not adequаtely justify the need for health warnings for premium cigars because premium cigar consumers already appreciate the risks of regular use. In support of both arguments, commenters to the Proposed Rule presented evidence supporting that premium cigars have different usage patterns than other cigar and tobacco products, they are almost never used by youth, and they are instead used by older, higher income, and better educated consumers. See, e.g., J.A. Vol. 3 at 307, 310 (CRA comment citing evidence indicating that the premium cigar consumer is “different from the typical tobacco consumer,” including studies showing that premium cigar users tend to be far older than users of other tobacco products, and studies showing that youth overwhelmingly prefer machine-made or filtered cigars over premium cigars). In Plaintiffs’ view, these demographic differences and usage patterns establish that (1) premium cigars present insufficient public health concerns and thus render the warnings inaccurate as to premium cigars, and (2) consumers would not benefit from warnings because they already use the product “in a manner showing [] consumеrs understand the risks of excessive use,” Pls.’ Mot. at 28; see also Pls.’ Reply at 15. The FDA grappled with the first of these arguments but not the second.
The Final Deeming Rule rejected commenters’ arguments that the patterns of
The same cannot be said, however, of the agency‘s response to commenters’ assertions that, in light of usage patterns and user demographics, warnings are unnecessary to inform premium cigar users about health risks. Critical to understanding the court‘s different conclusion is the manner in which FDA framed the issue of regulating cigar products. At the outset, the Proposed Deeming Rule submitted that differences between premium cigars and other types of cigars might warrant a different approach with respect to each category of product. “[I]t has been suggested that different kinds of cigars may have the potential for varying effects on public health,” the agency wrote, “based on possible differences in their effects on dual use, youth initiation and frequency of use by youth and young adults.”
In response to comments questioning the need for warning labels for premium cigars, the agency in the final Deeming
[I]t has been suggested that different kinds of cigars (e.g., small cigars, cigarillos, large cigars, premium cigars) may have the potential for varying effects on public health, if there are differences in their effects on youth initiation, the frequency of their use by youth and young adults, and other factors. In addition, the proportion of cigar smokers showing clear signs of dependence remains unknown, and usage patterns indicate that cigar only use beginning in adulthood is less likely to produce addiction than the use of cigarettes.
This finding is underscored by an inspeсtion of the actual pages of the Proposed Deeming Rule on which the FDA relied in the final Deeming Rule when explaining the rationale for warning labels for premium cigars. As noted, the agency answered commenters by saying that there “is strong scientific basis to require health warnings on cigar packages and in cigar advertisements,” and it cited back to the Proposed Deeming Rule at ”
The most that can be said about this portion of the Proposed Deeming Rule is that it relies upon evidence to justify the warnings regime that does not apply to premium cigars and their users. The FDA touted the importance of warning labels to: (1) “help consumers better understand and appreciate the risks and characteristics of tobacco products“; and (2) “help correct current misperceptions about newly deemed products.” Hr‘g Tr., ECF No. 151, at 61; see also
For example, in support of the proposition that “youth perceive cigars in a more positive light than cigarettes and believe they are less harmful,” the Proposed Deeming Rule offers two different studies. See
Other studies cited within these pages of the Proposed Deeming Rule do not help the FDA‘s cause. For instance, in support of the finding that “some cigar smokers believe that cigars are a safe alternative to cigarettes,” see
The only study cited in the Proposed Deeming Rule that arguably supports the FDA‘s position is a qualitative study conducted by Health Canada that assessed the impact of cigar, pipe, and smokeless tobacco health warnings on consumers. See
In summary, the FDA failed to articulate a reasoned basis for requiring warning labels for premium cigars. Despite its professed interest in “help[ing] correct current misperceptions about newly deemed products,” Hr‘g Tr. at 61, the agency did not separately consider whether users or prospective users of premium cigars in fact harbor misconceptions about the product or otherwise remain in the dark about the health risks attendant to premium cigar use. Instead, the agency focused only on the general “health risks of premium cigars,”
In reaching this conclusion, the court is mindful of what it has already held. In Cigar Association, this court determined that the Deeming Rule‘s warnings requirements survived First Amendment and
C. Remedy
The only remaining question then is the appropriate remedy. When a court concludes that agency action is unlawful, “the practice of the court is ordinarily to vacate the rule.” Ill. Pub. Telecomms. Assʼn v. FCC, 123 F.3d 693, 693 (D.C. Cir. 1997); Sierra Club v. Van Antwerp, 719 F. Supp. 2d 77, 78 (D.D.C. 2010) (“[B]oth the Supreme Court and the D.C. Circuit Court have held that remand, along with vacatur, is the presumptively appropriate remedy for a violation of the APA.“). “[A]lthough vacatur is the normal remedy, [courts] sometimes decline to vacate an agency‘s action.” Allina Health Servs. v. Sebelius, 746 F.3d 1102, 1110 (D.C. Cir. 2014). That decision depends on the “seriousness of the [rule]‘s deficiencies (and thus the extent of doubt whether the agency chose correctly) and the disruptive consequences of an interim change that may itself be changed.” Allied-Signal, Inc. v. U.S. Nuclear Regulatory Comm‘n, 988 F.2d 146, 150–51 (D.C. Cir. 1993) (internal quotation marks and citation omitted); see also Standing Rock Sioux Tribe v. U.S. Army Corps of Eng’rs, 282 F. Supp. 3d 91, 103–04 (D.D.C. 2017) (declining to vacate when agency “largely complied” with statute and could likely substantiate prior conclusions on remand).
Neither of these factors warrant deviating from the ordinary remedy of vacatur in this case. The D.C. Circuit has said that the “fail[ure] to address” an important aspect of the problem is a “major shortcoming[].” Humane Soc‘y of United States v. Zinke, 865 F.3d 585, 614 (D.C. Cir. 2017). It has repeatedly vacated agency actions with that flaw. See, e.g., id. at 615; SecurityPoint Holdings, Inc. v. TSA, 867 F.3d 180, 185 (D.C. Cir. 2017) (“[T]he court must vacate a decision that ‘entirely failed to consider an important aspect of the problem.‘“) (quoting State Farm, 463 U.S. at 43); Wedgewood Village Pharmacy v. DEA, 509 F.3d 541, 552–53 (D.C. Cir. 2007) (vacating after failure to consider an important aspect of the problem). Here, vacatur is appropriate because FDA did not supply a reasoned explanation for imposing the very requirement—health warnings for premium cigars—that commenters challenged. See Fox Television Stations, Inc. v. FCC, 280 F.3d 1027, 1052–53 (D.C. Cir. 2002).
Nor would vacatur be particularly disruptive. This is not a case in which “[t]he egg has been scrambled and there is no apparent way to restore the status quo ante.” Sugar Cane Growers Co-op. of Fla. v. Veneman, 289 F.3d 89, 97 (D.C. Cir. 2002). Indeed, the warnings requirements for premium cigars have not yet gone into effect. Allowing these requirements to take effect during remand, on the other hand,
V. CONCLUSION
For the reasons set forth above, Plaintiffs’ Motion for Summary Judgment, ECF No. 120, is granted and Defendants’ Cross-Motion for Partial Summary Judgment, ECF No. 124, is denied. The Deeming Rule‘s warnings requirement for premium cigars is hereby vacated, and this portion of the Rule is remanded to the agency for further proceedings consistent with this Memorandum Opinion. A separate final, appealable order accompanies this Memorandum Opinion.
Dated: February 3, 2020
Amit P. Mehta
United States District Court Judge