Litigation Update
Micah Berman, Assistant Professor, Ohio State University College
of Public Health and Moritz College of Law
FDA Regulation
of Tobacco
Kathleen Hoke, Law School Professor and Director, Legal Resource
Center for Public Health Policy, University of Maryland Francis
King Carey School of Law
Washington, DC
Duane Layton, Partner, Mayer Brown
October 21, 2015
Moderated by Jonathan A. Havens, Associate, Venable LLP
Litigation Update:
Tobacco Industry
Challenges to State and
Local Laws
Kathleen Hoke
Director,
Legal Resource Center for Public Health Policy
On behalf of:
Tobacco Control Legal Consortium
Tobacco Control Legal Consortium
The Tobacco Control Legal Consortium (TCLC),
a program of the Public Health Law Center,
supports tobacco control policy change and the
tobacco control movement throughout the United
States.
Presentation Overview
• Flavored Products:
– Focus on Chicago, flavored by NYC and Providence
• Pricing Controls:
– Dollars and cents from New York City to Providence
• Electronic Cigarettes and E-Liquid:
– Indiana e-liquid regulation and expansion of smokefree air laws
Chicago’s Flavored Tobacco Restrictions
a.k.a. “The Menthol Ban”
The Ordinance—Chi., Ill., Code §4-64-098
• Enacted in December 2013
• Prohibits the sale of flavored tobacco product within 500
feet of any school
• Flavored product is defined as imparting a “characterizing
flavor”
• Characterizing flavor is defined as a “distinguishable taste
or aroma . . . including . . . menthol”
Legal Challenge
Independents Gas and Service Stations Ass’n v.
Chicago, 2015WL4088743 (June 29, 2015)
Plaintiffs alleged:
• Preempted by FSPTCA
• Unconstitutionally vague (14th Amend.)
• Violation of vested rights/retroactive (state due process)
Federal District Court for the Northern District of
Illinois Decision
City’s Motion to Dismiss Granted
• Meaning no trial; decided on paper
No appeal filed
Most important claim for future regulation was FSPTCA
preemption
No Preemption by FSPTCA
The FSPTCA “provides that states and their political
subdivisions retain broad authority to regulate tobacco
products” but “preempts local laws that regulate tobacco
product standards” with the “exception . . . . for local laws
that are related to sales, distribution, possession, access,
advertising, or use of tobacco products.”
Heavy Reliance on NYC Flavored Case
(2nd Circuit 2013)
U.S. Smokeless Tobacco Mfg. Co. LLC v. City of New
York, 708 F.3d 428, 434 (2d Cir.2013): The FSPTCA
“distinguishes between manufacturing and the retail sale
of finished products.”
Quoted extensively in the Chicago decision
Take Away?
Courts have been consistent in finding no
FSPTCA preemption of restrictions on the
sale of flavored tobacco products, finding
these laws based on distribution and
sales and not manufacturing.
• Chicago (2015)
• New York City (2013)
• Providence (National Ass’n of Tobacco
Outlets v. City of Providence, 731 F.3d 71
(1st Cir. 2013)
New York City Pricing Controls
The Ordinance—NYC Admin. Code §17-176.1 (relevant
portions)
Prohibits a retailer from:
• Accepting a “price reduction instrument” (coupon) for
tobacco products;
• Providing multi-pack discounts;
• Giving promotional items with purchase;
• Selling for less than advertized price.
Legal Challenge
National Ass’n of Tobacco Outlets v. City of New York,
27 F.Supp.3d 415 (2014)
Plaintiffs alleged:
• Violation of First Amendment;
• Preempted by FCLAA;
• Preempted by NY state law.
Federal District Court for the Southern
District of New York
City’s Motion for Summary Judgment Granted
• Meaning no trial; decided on paper
No appeal filed
Most important claim was First Amendment challenge
No First Amendment Violation
“[P]rice regulations designed to discourage consumption of
a potentially harmful product do not violate the First
Amendment so long as they do not preclude the effected
retailers' ability to provide truthful, nonmisleading
information about the regulated product to consumers.”
Heavy Reliance on Providence Pricing
Case (1st Circuit 2013)
• “In National Association of Tobacco Outlets [Providence
case], the First Circuit applied this general principle to
tobacco regulation and found that the prohibition of
discounting practices, such as coupon redemption and
multi-pack discounts, did not violate the First
Amendment.”
• “This court agrees.”
Take Away on 1st Amendment
An ordinance perceived by the court as regulating an
economic transaction and not restricting communications
about price on packaging, shelving, advertisements, or
otherwise will survive scrutiny.
FCLAA Preemption Claim
Court explained that FCLAA preemption pertains only to
health warnings on cigarette packages.
States and localities are not preempted from time, place
and manner restrictions.
Take Away on FCLAA Preemption: Pricing restrictions do
not invoke FCLAA preemption.
Electronic Cigarettes
Several state and local jurisdictions have included the use
of electronic cigarettes in their clean indoor air laws.
Challenges have failed.
For example:
NYC C.L.A.S.H. v. City of New York, 14 N.Y.S.3d 616
(N.Y. Sup. Ct. 2015)(did not violate single subject rule)
E-Liquid
Indiana Enrolled Act 1432 (2015), which becomes
effective in 2016:
• Requires e-liquid manufacturers to obtain permit ($1,000
for 5 yrs; $500 renewal);
• Mandates 24-hour monitoring of storage rooms;
• Exempts first generation electronic cigarettes (selfcontained).
Legal Challenge
Legato Vapors LLC v. Indiana, Case No. 1:15-cv-761 in
the U.S. District Court for the Southern District of
Indiana (filed May 12, 2015)
Plaintiffs are liquid nicotine manufacturers with plants
outside of Indiana and an Indiana vape shop
Legal Challenge
Plaintiffs allege:
• Equal Protection Clause (14th Amend.) violation for
treating them differently than closed system
manufacturers/sellers;
• Commerce Clause violation because impacts out-of-state
manufacturers;
Legal Challenge
Plaintiffs allege:
• Due Process Clause violation (14th Amend.):
 Because no rational basis for including e-liquid in definition of
tobacco product;
 Because no rational basis for treating “open” e-liquid differently
than contained system e-liquid
Legal Challenge
Status of Case:
Preliminary stage
Discovery will proceed
Anticipate dispositive motions
Contact Us us
Kathleen Hoke
khoke@law.umaryland.edu
410-706-1294
Maggie Mahoney
Maggie.Mahoney@wmitchell.edu
(651) 290-7514
www.publichealthlawcenter.org
Federal Tobacco Litigation Update
Micah Berman, J.D.
Ohio State University
College of Public Health & Moritz College of Law
FDLI FDA Regulation of Tobacco
October 21, 2015
• Lorillard v. FDA
– TPSAC Challenge
• Philip Morris v. FDA
– Substantial Equivalence (SE) Guidance Challenge
GLOBAL SIGNIFICANCE, LOCAL IMPACT
Lawsuit #1:
Lorillard v. FDA: TPSAC Challenge
• Tobacco Products Scientific Advisory Committee
• 9 voting members
• 3 non-voting members (tobacco manufacturers, tobacco
growers, small manufacturers)
GLOBAL SIGNIFICANCE, LOCAL IMPACT
Lorillard v. FDA: TPSAC Challenge
GLOBAL SIGNIFICANCE, LOCAL IMPACT
• Filed Feb. 25, 2011 (DDC) by Lorillard and RJ Reynolds
• Claimed that 3 members of TPSAC had conflicts of interest in
violation of FACA, APA, FDCA
– Drs. Samet (chair), Benowitz & Henningfield
• Any TPSAC report “must be disregarded and not relied
upon for any purpose”
GLOBAL SIGNIFICANCE, LOCAL IMPACT
“Manufacturers of nicotinereplacement-therapy products and
other smoking- cessation products . . .
are in direct competition with tobaccoproduct manufacturers for the
purchasing choices of adult smokers.”
GLOBAL SIGNIFICANCE, LOCAL IMPACT
District Court Opinion: July 21, 2014 (Leon, J.)
• “[I]n the agency’s view, TPSAC members who performed
consulting work for such drug companies had no financial conflict
of interest. Please! This conclusions defies common sense.”
• Past expert witness testimony does not create conflict, but future
testimony does.
GLOBAL SIGNIFICANCE, LOCAL IMPACT
Appeal to D.C. Circuit
• Dr. Samet & 3 other members resigned
• Oral argument held on Oct. 7 (Millett, J.; Pillard, J.; Williams, S.J.)
• Court requested supplemental briefing on ripeness and standing
GLOBAL SIGNIFICANCE, LOCAL IMPACT
Lawsuit #2:
Substantial Equivalence (SE)
Guidance Litigation
Challenged “Guidance for Industry:
Demonstrating the Substantial Equivalence of
a New Tobacco Product: Responses to
Frequently Asked Questions” (March 4, 2015)
GLOBAL SIGNIFICANCE, LOCAL IMPACT
Tobacco Control Act, Sec. 910
Substantially Equivalent = Same characteristics or different
characteristics and applicant demonstrates that “product does not
raise different questions of public health.”
Characteristics = “materials, ingredients, design, composition,
heating source, or other features of a tobacco product.”
GLOBAL SIGNIFICANCE, LOCAL IMPACT
GLOBAL SIGNIFICANCE, LOCAL IMPACT
Current Status:
- June 2: Suit voluntarily dismissed by plaintiffs
- September 8: FDA issues new guidance document
- Clarifies when SE submission is required, but does not change basic
position
- September 30: Suit refiled (Mehta, J.)
GLOBAL SIGNIFICANCE, LOCAL IMPACT
Micah Berman, J.D.
• Berman.31@osu.edu
• 614-688-1438
• @MicahLBerman
GLOBAL SIGNIFICANCE, LOCAL IMPACT
Tobacco “Plain Packaging”:
A Legal Perspective
The Food and Drug Law Institute
Washington, D.C.
Duane W. Layton
Partner and Chair, Government &
Global Trade Group
Mayer Brown LLP
202-263-3811
dlayton@mayerbrown.com
21 October 2015
Australia Plain Packaging Tobacco
• Australia first country to adopt plain (or standardized)
packaging for a legal product
• Cigarettes, cigars, and other tobacco products
– Tobacco retail packaging
• Ban design and figurative elements of trademarks and Gis
• Uniform brown color
• Other requirements (e.g., size, location, font)
– Tobacco products
• Cigarettes: no markings at all
• Cigars: brand name, variant name, and country of origin in uniform style
on a uniform band
• Entry into force 1 December 2012
39
Australia Plain Packaging - Tobacco
40
Australia Plain Packaging - Tobacco
41
Australia Plain Packaging - Tobacco
• Australia’s objective is to reduce tobacco consumption
– By 2018
• Cut overall prevalence to 10 percent
• Cut prevalence among aboriginal and Torres Strait population in half
• Australia asserts that PP will achieve this objective by:
– Reducing the appeal of tobacco products
– Increasing the effectiveness of graphic health warnings
– Reducing the ability of packaging to deceive consumers about the harmful effects of
smoking
42
Reaction Within The WTO –
Discussions In WTO Committees
43
Reaction Within The WTO –
Discussions In WTO Committees
• TBT Committee Meeting 10-11 November 2011
44
Reaction Within The WTO – Dispute
Settlement Proceedings
• Ukraine, Honduras, the Dominican Republic, Cuba, and Indonesia initially
challenged Australia’s plain packaging requirements. Ukraine subsequently
suspended.
• One panel for all five challenges
• One-quarter of WTO membership is involved as complainants, respondent, or third
parties
• Final decision expected next year
• Pressure mounting in some countries to adopt plain packaging before WTO panel
rules (e.g., U.K., Ireland)
– What impact, if any, will this have on panel and the DS system?
45
Reaction Within The WTO – Dispute
Settlement Proceedings
• Two sets of claims against plain packaging
– Art. 20 TRIPS and Art. 2.2 TBT
• Does plain packaging “unjustifiably” encumber TMs?
• Is plain packaging “more trade restrictive than
necessary”?
– Panel will likely focus on, inter alia, efficacy of plain
packaging and reasonably available alternatives
– To what extent will panel weigh and consider expert
opinions?
– Art. 2.1, 15, 16, 22.2, and 24.3 TRIPS
• Apart from its efficacy and necessity, is plain
packaging consistent with Australia’s treaty
obligations under TRIPS?
– Panel will likely focus on, inter alia, right to use TMs and
impact of plain packaging on right to exclude confusing
uses
46
Reaction Within The WTO – Dispute
Settlement Proceedings
• WTO vs. WHO
– Australia claims its PP law implements “certain obligations [it] has
as a party to the Convention on Tobacco Control” (the FCTC).
See § 3(1)(b) of PP Act
– Yet in public statements Australia acknowledges that nothing in
the FCTC or the official “Guidelines” to the FCTC mandates plain
packaging – at least in the form embraced by Australia
– Rather, these instruments recommend that Parties “should
consider adopting measures” that restrict or prohibit the use of
logos, brand images, etc. (emphasis added)
– And even if this language was mandatory and not horatory, Article
11 of the FCTC actually provides that packaging and labeling is
permitted, and in fact may be used to “promote” a tobacco
product, as long as it is not “false, misleading, deceptive or likely
to create an erroneous impression”
47
Reaction Within the WTO – Dispute
Settlement Proceedings
• WTO vs. WHO
– The WTO agreements can and should be interpreted in a manner supportive of a Members’
right to protect public health (see, e.g., TBT 2.2 and TRIPS 8.1)
– However, Members must do so in a manner consistent with their WTO and other treaty
obligations
– Indeed, that is precisely what TRIPS 8.1 says
– The WTO panel and ultimately (I suspect) the Appellate Body will have to decide whether the
version of plain packaging adopted by Australia is consistent with the WTO agreements
48
Relevance Of WTO Dispute To Other
Countries And Products
• Australia WTO case is not just about Australia
– Other countries are introducing or contemplating the adoption of plain
packaging
• Australia WTO case is not just about tobacco
– Case could have broad impact on IP protections for other products
considered harmful
49
Is Tobacco Plain Packaging The “Slippery Slope”? What Next?
50
Is Tobacco Plain Packaging The “Slippery Slope”? What Next?
51
Is Tobacco Plain Packaging The “Slippery Slope”? What Next?
52
Is Tobacco Plain Packaging The “Slippery Slope”? What Next?
53
Questions?
Duane W. Layton
Partner and Chair, Government & Global Trade Group
Mayer Brown LLP
(202) 263-3811
dlayton@mayerbrown.com
54