The Supreme Court sided with the vaping industry on Friday by rejecting the Food and Drug Administration’s (FDA) bid to limit where companies can challenge product marketing denials.
The 7-2 decision authored by Justice Amy Coney Barrett enables R.J. Reynolds Vapor Company to proceed in the 5th U.S. Circuit Court of Appeals, regarded as the nation’s most conservative appeals court, in the company’s bid to market its “Vuse Alto” flavored e-cigarette products by suing alongside retailers.
The 5th Circuit has been more friendly to the industry, but the company still may face a tough road ahead, as the justices earlier this term rebuked the 5th Circuit’s approach in a similar case.
Two of the court’s liberal justices, Ketanji Brown Jackson and Sonia Sotomayor, dissented from Friday’s decision.
Under federal law, “any person adversely affected” by the FDA denying a tobacco or e-cigarette marketing application can petition the federal appeals court in Washington, D.C., or where they have their principal place of business.
R.J. Reynolds is based in North Carolina, which is covered by the 4th U.S. Circuit Court of Appeals. But both that court and the one in D.C. have rejected the company’s legal theory that the FDA acted arbitrarily and capriciously in denying the authorization because it changed the evidentiary standard.
The 5th Circuit, however, which covers Louisiana, Mississippi and Texas, has been more friendly to the industry.
So the company sought review there, joined by a Texas retail store that sells Vuse Alto products and a Mississippi trade association of gas stations and convenience stores. The Supreme Court agreed to hear the federal government’s appeal after the 5th Circuit refused to transfer the case.
“Because Avail Vapor and the trade association have their principal places of business in Texas and Mississippi, respectively, they could both file in the Fifth Circuit. So when it denied the FDA’s motion to dismiss or transfer, the Fifth Circuit correctly concluded that at least one proper petitioner had venue,” Barrett wrote.
In dissent, Jackson said the statute does not allow retailers to sue.
“And, here, all the usual tools of statutory interpretation point in the same direction: Congress established a detailed scheme for manufacturers to obtain authorization to market new tobacco products—a scheme within which retailers have no rights and play no role—and, in the context of that scheme, Congress provided a cause of action for the protection of the manufacturers’ statutorily created interests,” Jackson wrote.
The case now returns to the lower courts, but the companies may still face a steep path to getting their product approved. In another case decided earlier this term, the Supreme Court found the FDA acted lawfully in rejecting two other vaping companies’ applications, reversing the 5th Circuit’s contrary decision.
“In today’s decision, the Supreme Court recognized that federal agency action can have downstream effects that can be devastating for parties that are not the most direct target of the agency’s action. The Court’s decision ensures that the courthouse doors are not closed for those adversely affected parties,” Ryan Watson, a partner at Jones Day who argued the case on behalf of the companies, said in a statement.
Updated 11:50 a.m. ET
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