A legal challenge is coming from the premium cigar industry against the U.S. Food and Drug Administration (FDA)’s final regulations for premium cigars. Today, Global Premium Cigars CEO Enrique Sanchez Icaza announced that he has filed lawsuit in the Southern District of Florida court against the FDA on the Deeming Regulations.
In a press release announcing the lawsuit, Sanchez said:
When I joined this beautiful industry, I promised myself that I would do what ever was necessary to make the cigar industry better, and leave a legacy for my kids to carry on in life. Today, that dream is in jeopardy due to the FDA’s Deeming Regulations, and I feel I have the obligation to protect our industry, lifestyle, consumers, clients, friends, and our family from these terrible threats.
It’s time for action! Talking belongs in the past…
We need to take charge in what we believe, and make a change for the good of all. Let us continue to believe in the American Dream, and let us make sure that our kids can do the same without overreaching government regulation.
This will be a long and tough battle, but in the end we believe that the fight is important. I have faith in the US legal system, and in the American people, and I know that together we can make a difference.
In the few next days, we will be giving you more information in how you can support, and help us with the tools to fight with strength. We already have people like Leaf by Oscar and Luis Falto of Falto Cigars that have also taken the initiative to fight with us, and I hope that our path will be followed by many more friends that really love this industry, and are willing to fight with us, and for our future.
On the surface, the lawsuit appears to contradict the unified strategy laid out this past Friday by the Cigar Association of America (CAA), Cigar Rights of America (CRA), and International Premium Cigar and Pipe Retailers (IPCPR). As a part of that strategy, the trade associations requested members not to take independent action. There has been no announcement nor comment has been issued from any of these organizations on regarding the lawsuit.
In the lawsuit, the FDA is challenged in six areas:
1.Violation of the Regulatory Flexibility Act
According to the plaintiff, the Regulatory Flexibility Act (RFA), requires federal agencies to consider the impact of their regulatory proposals on small entities, and analyze effective alternatives that minimize small entity impacts. The plaintiff is claiming the FDA failed to properly fulfill this obligation. The lawsuit mentions how the Small Business Administration’s assessment of the economic impacts was not acted upon by the FDA
2.Violation of Administrative Procedure Act (APA)- Arbitrary and Capricious Agency Action
The Administrative Procedure Act (APA), 5 U.S.C. § 706 (2)(A), “provides that a reviewing court shall hold unlawful and set aside agency action that is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” The plaintiff claims the Deeming Rule issued by the FDA is unlawful when judged by that standard. The text of the lawsuit specifically mentions that it believes companies will need to submit a complex and costly PMTA (Pre-Market Tobacco Application). The lawsuit goes on to say these costs excessive and unreasonable.
3.Violation of Administrative Procedure Act (APA)- Unlawful Cost Benefit Analysis
The Plaintiff contends the Deeming Rule’s cost-benefit analysis also violates the Administrative Procedure Act (APA). The lawsuit claims that faulty reasoning and overestimating benefits of the rule were incorporated into the cost-benefit analysis done by the FDA.
4.Violation of the First Amendment
The plaintiff claims the Deeming Rule violates the First Amendment to the U.S. Constitution violating free speech. The lawsuit specifies the Tobacco Control Act imposes numerous limitations without exceptions on commercial and non-commercial speech. The lawsuit cites the regulations around Warning Label requirements being in violation of this.
5.Violation of the Fifth Amendment Takings Clause
The Takings Clause of the Fifth Amendment to the U.S. Constitution states “private property [shall not] be taken for public use, without just compensation.” The Plaintiff claims that “the Tobacco Control Act violates the Plaintiff’s Fifth Amendment rights by effectively seizing Plaintiffs’ packaging, advertising, and intellectual property for the sole purpose of furthering the Government’s message.” Restrictions around the Warning Labels are specifically called out as they are mentioned as the law recognizes that trademarked logos and copyrighted artwork are recognized as “commercially valuable property rights.”
6.Violation of the Fifth Amendment Substantive Due Process
The Fifth Amendment is also called into question by the plaintiff with the Substantive Due Process. This says that no one shall be “deprived of life, liberty or property without due process of law.” The plaintiff contends that “Substantive Due Process doctrine requires that legislation be fair and reasonable in content and to further a legitimate governmental objective.” The plaintiff goes on to explain that the arbitrary selection of the February 15, 2007 grandfather date is “unreasonable and unfair to cigar manufacturers as there is no way most cigar manufactures, like Plaintiffs could have been on notice of this date. The retroactive nature of this is excessive and unreasonable.”
The full text of the lawsuit can be found here.