Wages & White Lion Inv. v. Food & Drug Admin.

90 F.4th 357

WAGES AND WHITE LION INVESTMENTS, L.L.C., doing business as Triton Distribution, Petitioner, v. FOOD & DRUG ADMINISTRATION, Respondent, Wages and White Lion Investments, L.L.C., doing business as Triton Distribution; Vapetasia, L.L.C., Petitioners, v. Food & Drug Administration, Respondent.

No. 21-60766

consolidated with No. 21-60800

United States Court of Appeals, Fifth Circuit

FILED January 3, 2024

Appeal from the Food & Drug Administration, Agency Nos. 21 USC 3871, PM0003531

Eric Heyer, James Christopher Fraser, Joseph Andrew Smith, Thompson Hine, L.L.P., Washington, DC, Anthony J. Hornbach, Esq., Thompson Hine, L.L.P., Cincinnati, OH, for Petitioner.

Eric Heyer, Thompson Hine, L.L.P., Washington, DC, for Petitioner Vapetasia, L.L.C. in No. 21-60800.

Lindsey E. Powell, Esq., U.S. Department of Justice, Washington, DC, Noah T. Katzen, Hilary Keith Perkins, Esq., U.S. Department of Justice, Civil Division, Washington, DC, Alisa Beth Klein, Esq., U.S. Department of Justice, Civil Division, Appellate Section, Washington, DC, Mark Raza, Chief Counsel, Wendy S. Vicente, U.S. Food and Drug Administration, Food and Drug Division, OGC, Silver Spring, MD, for Respondent Food & Drug Administration in No. 21-60766.

Courtney Dixon, U.S. Department of Justice, Civil Division, Appellate Section, Washington, DC, Hilary Keith Perkins, Esq., U.S. Department of Justice, Civil Division, Washington, DC, Mark Raza, Chief Counsel, Wendy S. Vicente, U.S. Food and Drug Administration, Food and Drug Division, OGC, Silver Spring, MD, for Respondent Food & Drug Administration in No. 21-60800.

Leane K. Capps, Esq., Polsinelli, P.C., Dallas, TX, Scott P. Lewis, Austin Paganelli Anderson, Anderson & Kreiger, L.L.P., Boston, MA, for Amici Curiae American Academy of Pediatrics, American Cancer Society Cancer Action Network, American Heart Association, American Lung Association, Campaign for Tobacco-Free Kids, Parents Against Vaping e-cigarettes, Truth Initiative Foundation, doing business as Truth Initiative.

Noel John Francisco, Washington, DC, for Amicus Curiae R.J. Reynolds Vapor Company.

Scott P. Lewis, Austin Paganelli Anderson, Anderson & Kreiger, L.L.P., Boston, MA, for Amici Curiae American Academy of Family Physicians, American Medical Association, Louisiana State Medical Society.

J. Gregory Troutman, Trotuman Law Office, P.L.L.C., Louisville, KY, for Amici Curiae Americian Vaping Association, Incorporated, American Vapor Manufacturers Association, Incorporated, Consumer Advocates for Smoke-Free Alternatives Association, Incorporated, Smoke-Free Alternatives Trade Association, Incorporated, United Vapers Alliance, Incorporated, 38 National and State ENDS Product Advocacy Associations.

Mary G. Bielaska, Zanicorn Legal, P.L.L.C., New York, NY, Michael D. Matthews, Jr., McDowell Hetherington, L.L.P., Houston, TX, for Amici Curiae David B. Abrams, Clive D. Bates, David T. Sweanor, J.D.

Anthony Abboud, Northbrook, IL, for Amicus Curiae Vapor Technology Association.

Before Richman, Chief Judge, and Jones, Smith, Stewart, Elrod, Southwick, Haynes, Graves, Higginson, Willett, Ho, Duncan, Engelhardt, Oldham, Wilson, and Douglas, Circuit Judges.^*

Andrew S. Oldham, Circuit Judge, joined by Richman, Chief Judge, and Jones, Smith, Elrod, Willett, Ho, Duncan, Engelhardt, and Wilson, Circuit Judges:

Over several years, the Food and Drug Administration ("FDA") sent manufacturers of flavored e-cigarette products on a wild goose chase.

First, the agency gave manufacturers detailed instructions for what information federal regulators needed to approve e-cigarette products. Just as importantly, FDA gave manufacturers specific instructions on what regulators did not need. The agency said manufacturers' marketing plans would be "critical" to the success of their applications. And the agency promulgated hundreds of pages of guidance documents, hosted public meetings, and posted formal presentations to its website—all with the (false) promise that a flavored-product manufacturer could, at least in theory, satisfy FDA's instructions. The regulated manufacturers dutifully spent untold millions conforming their behavior and their applications to FDA's say-so.

Then, months after receiving hundreds of thousands of applications predicated on its instructions, FDA turned around, pretended it never gave anyone any instructions about anything, imposed new testing requirements without any notice, and denied all one million flavored e-cigarette applications for failing to predict the agency's volte face. Worse, after telling manufacturers that their marketing plans were "critical" to their applications, FDA candidly admitted that it did not read a single word of the one million plans. Then FDA denied that its voluminous guidance documents and years-long instructional processes meant anything. Why? Because, the agency said, it always reserved the implied power to ignore every instruction it ever gave and to require the very studies it said could be omitted, along with the secret power to not even read the marketing plans it previously said were "critical." It was the regulatory equivalent of Romeo sending Mercutio on a wild goose chase—and then admitting there never was a goose while denying he even suggested the chase. Cf. WILLIAM SHAKESPEARE, ROMEO AND JULIET act 2, sc. 4.

FDA justifies its behavior with two principal arguments. First, FDA argues that its years' worth of regulatory guidance was not worth the paper it was printed on because it was hedged with cautious qualifiers and never guaranteed that any particular submission would be granted. Second, and most disturbingly, FDA argues that its capriciousness should be forgiven as harmless because the agency promises to deny petitioners' applications even if we remand to make the agency follow the law.

Today we reject both propositions. As the Supreme Court recently reminded us: "If men must turn square corners when they deal with the government, it cannot be too much to expect the government to turn square corners when it deals with them." Niz-Chavez v. Garland, 593 U.S. 155, 172, 141 S.Ct. 1474, 209 L.Ed.2d 433 (2021). No principle is more important when considering how the unelected administrators of the Fourth Branch of Government treat the American people. And FDA's regulatory switcheroos in this case bear no resemblance to square corners. As for the agency's harmless-error argument, the Supreme Court recently, unanimously, and summarily rejected it. Calcutt v. FDIC, 598 U.S. 623, 143 S.Ct. 1317, 215 L.Ed.2d 557 (2023) (per curiam). We do the same here with the expectation that FDA will give petitioners the benefit of a full and fair regulatory proceeding on remand, notwithstanding its prior promises to reject their applications no matter what.

I.

A.

In 2009, Congress enacted the Family Smoking Prevention and Tobacco Control Act ("TCA") to regulate tobacco products. See 21 U.S.C. §§ 387 et seq. The TCA prohibits manufacturers from selling any "new tobacco product" without authorization from FDA. See id. § 387j(a); id. § 387a(b) (delegating to FDA the authority to determine what constitutes new tobacco products). In 2016, FDA deemed e-cigarettes and their component parts¹ to be "new tobacco products." Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act, 81 Fed. Reg. 28,973 (May 10, 2016) ("Deeming Rule"). The upshot: E-cigarette manufacturers had to submit premarket tobacco applications ("PMTAs") for FDA approval to sell their products. See id. at 28,977.

The TCA directs FDA to review the PMTAs to determine whether "permitting such tobacco product to be marketed would be appropriate for the protection of the public health." 21 U.S.C. § 387j(c)(2)(A). In making this determination, FDA must consider "the risks and benefits to the population as a whole." Id. § 387j(c)(4). This includes considering (1) the "increased or decreased likelihood that existing users of tobacco products will stop using such products" and (2) "the increased or decreased likelihood that those who do not use tobacco products will start using such products." Id. § 387j(c)(4)(A)-(B).

FDA then undertook to clarify these standards. The agency first announced that it would extend the PMTA compliance deadlines for several years so the agency could promulgate application instructions and the manufacturers could comply with them. See FDA, GUIDANCE FOR INDUSTRY, EXTENSION OF CERTAIN TOBACCO PRODUCT COMPLIANCE DEADLINES RELATED TO THE FINAL DEEMING RULE 5-11 (Aug. 10, 2017), https://perma.cc/WC42-ALYD ("Deadline Guidance").²

FDA provided its instructions on five relevant occasions. Warning: the detail that follows might be mind-numbing. But FDA's detailed instructions are important to explain what e-cigarette manufacturers understood FDA would require of them. These details are important to understand why every single e-cigarette manufacturer in the entire Nation behaved just as petitioners did. And these details are important to explain why FDA cannot now pretend that it gave the regulated community fair notice of the PMTA requirements.

1. First, at a public meeting in October 2018, FDA stated in a formal presentation still available for download on the agency's website: "No specific studies are required for a PMTA; it may be possible to support a marketing order for an ENDS product without conducting new nonclinical or clinical studies given other data sources can support the PMTA." FDA, PREMARKET TOBACCO PRODUCT APPLICATION CONTENT OVERVIEW 26 (Oct. 23, 2018), https://perma.cc/BV8D-HR7H ("October 2018 Guidance") (emphasis added). FDA recommended that applicants "[c]ompare the new tobacco product to a representative sample of tobacco products on the market (i.e., either grandfathered or with marketing authorization)" and "[i]nclude justification for why using evidence or data from other products is appropriate." Id. at 11. And regarding the question of youth use, FDA published this slide:

YOUTH

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