The U.S. Court of Appeals for the D.C. Circuit will hear another challenge to the FDA’s rule Deeming Tobacco Products to Be Subject to the Federal Food, Drug, & Cosmetic Act, 81 Fed. Reg. 28,973 (May 10, 2016) (the “Deeming Rule”). The challenges are based on the Constitution’s Appointments Clause and First Amendment. The cases are Moose Jooce, et al. v. FDA, et al., Nos. 20‑5048, -5049, & -5050 (D.C. Cir.).
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Do you have a business that sells across State lines? Do you have a substantial number of transactions, or substantial gross receipts from such transactions, across State lines? Are you paying tax to the States and localities where your purchasers reside? These are among the questions businesses should be asking themselves after the Supreme Court’s 2018 decision in South Dakota v. Wayfair, Inc.

Wayfair increases State and local power to tax remote sellers.

In Wayfair, the Court overturned prior holdings that prohibited States from collecting sales tax from sellers lacking a physical presence in the State. After Wayfair, the question is not whether the seller has a physical presence in the State but whether it has a “substantial nexus” with the State. A “substantial nexus” can exist when a remote seller has substantial numbers of transactions with purchasers in a State or substantial receipts from such transactions. After Wayfair, many States have set transaction and/or gross-receipts thresholds to determine which out-of-State sellers must collect and remit sales and use tax.
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Following its appeal to the U.S. Court of Appeals for the Sixth Circuit, Vapor Stockroom LLC (the “Appellant”) has filed a motion for injunction pending the decision on the merits or, alternatively, for the expedition of briefing, oral argument, and decision of its appeal.

In the Appellant’s words, “The impetus for the present motion . . . is that if this Court fails to grant injunctive relief . . . by May 12, 2020, FDA has threatened industry-wide enforcement action after that date that would require [Appellant] to shutter its business.”
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On February 15, 2020, Plaintiff Vapor Stockroom LLC filed a notice of appeal in Vapor Technology Association v. FDA, No. 5:19-cv-00330-KKC (E.D. Ky.). Vapor Stockroom is appealing the district court’s order granting the FDA’s motion to dismiss and denying their motion for preliminary injunction. The Plaintiffs alleged that, in requiring the submission of premarket tobacco applications by May 12, 2020, the FDA violated the Administrative Procedure Act, 5 U.S.C. § 500, et seq., and the Due Process Clause of the Fifth Amendment to the Constitution.  
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Earlier last week, a US District Court ruled that the Food and Drug Administration’s subjecting of premium cigars to warnings requirements was arbitrary and capricious in violation of the Administrative Procedure Act (“APA”), insofar as the agency failed to provide a reasoned explanation for this action. The court thus declared unlawful (and vacated) the portion of the FDA’s so-called “Deeming Rule” mandating that premium cigars display designated public health warnings on packaging and advertisements.
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The question has been raised in a complaint filed on September 24, 2019, by Swisher International, Cheyanne International, and the Cigar Association of America (“Plaintiffs”) for declaratory and injunctive relief against Nebraska’s Attorney General, Department of Revenue, and Tax Commissioner (the “State”).

The case arises over a Department of Revenue notice declaring that “certain little cigars, certain filtered and non-filtered little cigars, and certain flavored little cigars may be reclassified as cigarettes effective September 1, 2019.”
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On January 21, 2020, the U.S. Court of Appeals for the Fourth Circuit issued an order disposing of several motions before it in American Academy of Pediatrics, et al. v. U.S. Food & Drug Administration, et al., Nos. 19-2130, -2132, -2198, -2242. This is an appeal from the U.S. District Court for the District of Maryland, which:

  1. held that the FDA’s August 2017 guidance did not lawfully extend tobacco product compliance deadlines; and
  2. ordered new deadlines of May 12, 2020, for filing applications, and one year after application for approval.

The district court’s rulings amounted to a roughly two-year acceleration of the FDA’s deadlines.
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On October 16, the Montgomery County Council publicly authorized its lawsuit filed in federal court on October 11, against Juul Labs and Altria Group for alleged violations of Maryland and federal law based on claims of aggressive marketing of e-cigarette products to minors.

Council President Nancy Navarro remarked, “The Council authorizes taking legal action against Juul Labs and Altria Group. This lawsuit supports our ongoing efforts to protect our community members from the public health impacts associated with e-cigarette products and vaping.
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On October 21, 2019, the Massachusetts Superior Court for Suffolk County preliminarily enjoined the State – from and after October 28, 2019 – from implementing and enforcing the ban as to “nicotine-vaping products” unless and until the executive branch promulgated the regulation in accordance with Massachusetts due process requirements.  The court allowed the ban to continue with respect to “products containing tetrahydrocannabinol (THC) and any other cannabinoid or to black market products.” 
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