Fifth Circuit Court Accepts MDO Appeals from Across the Country

After using its ruling against the FDA in the Triton Distribution case as precedent to reject five more FDA marketing denial orders (MDOs) on July 31, the Fifth Circuit Court of Appeals has continued to aggravate FDA tobacco regulators this month.

Two recent actions by the court could open the floodgates for vaping manufacturers across the country to receive favorable rulings in the Fifth Circuit, based on the Triton decision:

• On Aug. 8, a three-judge panel of the Fifth Circuit granted a motion by Ohio-based e-liquid manufacturer NicQuid for a stay pending review of an MDO issued by the FDA in May. The NicQuid petition for review was filed with Texas-based vape shop Wood Creek Vapory as a co-petitioner.
• On Aug. 16, another Fifth Circuit panel ruled unanimously to grant a stay pending review to Washington State-based manufacturer Vertigo Vapor (doing business as Baton Vapor). The court rejected the FDA's argument that the Fifth Circuit was not a proper venue for appeal. The Vertigo/Baton appeal names Texas-based Max and Zach’s Vapor Shop as a co-petitioner.

Both companies that received stays are represented by Eric Gotting and Azim Chowdhury of Washington D.C.-based law firm Keller and Heckman LLP.

The Tobacco Control Act and proper venues for appeal

The court is essentially testing the FDA and the Tobacco Control Act itself, which sets the terms for legal challenges to FDA Center for Tobacco Products (CTP) marketing decisions. According to the Act, appeals of CTP marketing decisions should be filed within 30 days “with the United States Court of Appeals for the District of Columbia or for the circuit in which such person resides or has their principal place of business.” 

The Fifth Circuit covers federal appeals from the states of Louisiana, Mississippi and Texas—far from Ohio and Washington, where the manufacturers in question maintain their principal places of business. 

Under the rules spelled out in the Tobacco Control Act, NicQuid should have filed its MDO appeal in the Sixth Circuit Court, and Vertigo/Baton in the Ninth Circuit. But, according to the Fifth Circuit, attaching a partner that resides in the circuit to a petition for review makes the Fifth Circuit a proper venue for appeal—even if the partner is a retailer and not a manufacturer. 

That means that any e-liquid or disposable vape manufacturer from anywhere in the country could challenge its MDO in the sympathetic Fifth Circuit, as long as they’re able to recruit a retailer who sells the manufacturer's products in Louisiana, Mississippi or Texas.

FDA has asked the Supreme Court to rule on proper venue

This isn’t a new issue. The Fifth Circuit allowed North Carolina-based R.J. Reynolds to file three separate Vuse MDO appeals with local partner petitioners, and ruled against the FDA when it challenged the appeals based on improper venue.

As we reported in June, the FDA has asked the Supreme Court to decide if the Fifth Circuit is a proper venue for Reynolds’ MDO appeals.

“The Fifth Circuit’s decision permits retail sellers of a tobacco product who have no right of judicial review under the Act to nevertheless gain review; effectively nullifies the Act’s limits on venue; facilitates blatant forum shopping; and undermines the precedents of other circuits,” the government lawyers wrote in their Supreme Court petition. “This Court should grant review and reverse the Fifth Circuit’s order in Alto denying the motion to dismiss or transfer.”

The Supreme Court has scheduled a conference to discuss the FDA's petition on Sept. 30, but has not yet decided whether to hear the case. If it does not accept the case—or if it rules against the FDA—the Fifth Circuit could conceivably continue to accept MDO appeals from manufacturers across the country. 

Meanwhile, a Supreme Court ruling next year in the FDA’s challenge to the Triton decision could make the venue complaint a moot point. If the high court finds the FDA improperly denied hundreds of thousands of premarket tobacco applications (PMTAs), FDA regulation of vaping products might have to go back to square one—or even be completely revamped. And if the Supreme Court justices rule the FDA’s PMTA review practices were proper, finding a venue for appeal will be the least of the vaping industry’s problems.