Icaza et al. v. Food & Drug Administration et al., 1:16-cv-21967 (S.D. Fla. June 1, 2016)
A Florida cigar manufacturer and distributor challenged the Food & Drug Administration’s (FDA) new Deeming Rule, which extends FDA regulatory authority to all tobacco products, including cigars, hookah and e-cigarettes, as violating federal law and the U.S. Constitution. Specifically, Enrique Fernando Sanchez Icaza and his company Global Premium Cigars, LLC allege that the new rule violates their right to free speech, unlawfully takes their property without just compensation, and is arbitrary and not supported by research. Additionally, the plaintiffs allege that the FDA violated the Regulatory Flexibility Act and the Administrative Procedure Act during its rulemaking process.
Regulatory Flexibility Act (RFA)
The RFA is a federal law that requires federal agencies to consider the specific impact of regulatory proposals on small entities and consider effective alternatives to minimize those impacts. Plaintiffs claim the Deeming Rules are overly burdensome and FDA failed to effectively conduct an analysis to determine a less burdensome alternative for small businesses.
Administrative Procedures Act (APA)
The APA is a federal law that governs the process through which federal agencies develop rules to carry out their statutory authority, among other things. Relevant to plaintiffs’ claim, the APA prohibits agencies from acting in an “arbitrary and capricious” manner. Put another way, a court can find an agency acted arbitrarily if it failed to base its decisions on relevant factors or if it made a clear error in judgment when it made that decision.
In their complaint, plaintiffs allege that the premarket review process and warning label requirements are arbitrary and capricious because they are onerous and not shown to be effective by scientific evidence. They claim the FDA relied on evidence that the process and warning labels would work to reduce public health risks posed by other tobacco products, but did not have evidence that the same would be true for cigars.
Plaintiffs also claim the FDA’s cost-benefit analysis, conducted during the rulemaking process, was faulty. Specifically, plaintiffs claim the agency overstated the benefits of the rule as compared to its costs to small businesses, which include the premarket review process itself (e.g., time to gather information and obtain an agency decision, filing fees, time to design and obtain approval for rotating warning labels), and the rule’s impact on limited release or “seasonal” products, which they allege will now not be feasible to bring to market (given the time and expense to get prior approval).
Fifth Amendment claims
The Fifth Amendment of the U.S. Constitution prohibits the taking of private property for public use without just compensation and ensures substantive due process (i.e., that government rules are fair and reasonable and in furtherance of a legitimate governmental interest). In their complaint, the plaintiffs claim that the Deeming Rule’s requirement that warning labels cover 30 percent of primary packaging space effectively “seizes” plaintiffs’ property—including its packaging, advertising, and intellectual property (trademarks and copyrighted artwork that typically distinguishes their products) to further the government’s message. Moreover, plaintiffs claim, prohibiting the sale of their products (because they were not available on the market prior to the predicate date of February 15, 2007 as restricted by the Family Smoking Prevention and Tobacco Control Act (TCA)), is unfair because it is retroactive and fails to further a legitimate government interest.
First Amendment claims
The First Amendment of the U.S. Constitution prohibits the government’s restraint of certain speech. In the context of commercial speech (or speech for economic purposes, rather than political purposes), the First Amendment generally protects the rights of businesses to communicate truthful information about their products to consumers. In this instance, plaintiffs allege that the Deeming Rule’s health warning and ingredient disclosure requirements for cigar packaging is a restraint on their speech because they are required to occupy a large amount of space on the primary faces of the packaging. This requirement, they argue, hinders plaintiffs’ ability to communicate with their consumers about their products which they typically do through trademarks and copyrighted artwork that distinguishes plaintiffs’ products from those of other manufacturers.
The First Amendment also protects one’s right not to speak; however, it permits the government to compel the disclosure of certain truthful and uncontroversial information in order to further a relevant government interest so long as it is not unduly burdensome. This could include disclosure of information to ensure consumers have what they need to make an informed decision (even if the compelled speaker may not want to disclose such information). In this case, plaintiffs argue that the required warning labels are a form of “compelled disclosure” not reasonably related to a legitimate government interest; specifically, they claim that the size and content are not supported by scientific evidence to further the government’s interest in reducing youth tobacco use.
Finally, plaintiffs argue that the premarket review requirement for any product not marketed in the U.S. prior to February 15, 2007 serves not as an economic restraint, but rather a “prior restraint” on their speech; that is, a suppression of protected speech prior to the speech actually taking place. Such a restraint is typically not permitted under the First Amendment except in very limited circumstances.
Plaintiffs have requested the court declare the FDA’s rule invalid and immediately and permanently enjoin (or prohibit) the FDA from implementing or enforcing the rule. This summary will be updated as the case progresses.