On June 20, the Supreme Court concluded that marketing denial orders (MDOs) issued by the Food and Drug Administration (FDA) can be challenged not only by the applicants (typically, the manufacturer or importer of the products), but also by retailers who would sell such products. As a result, more challenges to MDOs are likely to be brought before the U.S. Court of Appeals for the Fifth Circuit, where litigants have generally had greater success to date in challenging MDOs relative to other appellate courts.
The Federal Food, Drug, and Cosmetic Act, as amended by the Family Smoking Prevention and Tobacco Control Act (TCA), requires that new tobacco products, including electronic cigarettes, receive FDA marketing authorization before they can be marketed or sold. If the FDA denies such authorization, the TCA allows for “any person adversely affected” to seek judicial review of the MDO under the Administrative Procedure Act (APA) in either the D.C. Circuit or the circuit court where the person resides or has their principal place of business.
In this case, FDA issued MDOs to R.J. Reynolds Vapor Co. (RJR Vapor) for six flavored e-cigarette products under the Vuse Alto brand. The FDA found that “RJR Vapor had failed to demonstrate that marketing Vuse Alto products would be ‘appropriate for the protection of public health,'” as required by the TCA. RJR Vapor, joined by retailers located within the Fifth Circuit, filed a joint petition for review challenging the MDOs in the Fifth Circuit.
The FDA argued that the retailers were not “adversely affected” by the denial and thus had no right to appeal. The FDA requested the Fifth Circuit to dismiss the petition for lack of venue or transfer it to the D.C. Circuit or Fourth Circuit, where RJR Vapor could have filed if alone. The Fifth Circuit denied the FDA’s motion, however, concluding that “venue was proper over the joint petition to review the FDA’s denial order.”
The key question on appeal was who qualifies as a “person adversely affected” by an MDO, giving them the right to appeal. The FDA argued that only the applicant — the party “with the closest relationship to the application” — was adversely affected and that a person must be “‘actually’ — not ‘arguably'” — within a statute’s zone of interest to be “adversely affected.” See our prior post for additional discussion of the parties’ arguments.
Ultimately, the Supreme Court sided with RJR Vapor, stating that a person does not have to be “actually” within the zone of interests protected by the statute to be “adversely affected.” Instead, consistent with prior APA cases, the Court concluded that a petitioner “with an interest ‘arguably sought to be protected by the statute'” was sufficient. According to the Court, “retailers fit the bill” because, “[i]f the FDA denies an application, the retailers, like the manufacturer, lose the opportunity to profit from the sale of the new tobacco product – or, if they sell the product anyway, risk imprisonment and other sanctions.”
As a result, the Supreme Court held that the Fifth Circuit “correctly concluded that at least one proper petitioner had venue” because two of the retailers who joined in the petition had their principal places of business within the Fifth Circuit.
In a dissenting opinion, Justice Jackson, joined by Justice Sotomayor, argued that Congress intended the judicial review provision of the TCA to protect manufacturers, not retailers. The dissent emphasized that the TCA’s premarketing-approval scheme “involves an exchange between tobacco manufacturers and the FDA that occurs when said manufacturers wish to market a new tobacco product” and retailers “have no rights and play no role” in this FDA approval process.
Notably, many cases have been stayed pending a decision in this case, so we anticipate seeing movement and additional appeals affected by this decision. Additionally, this decision potentially broadens retailer involvement in appeals for denials of marketing applications for new tobacco products, possibly offering more venues for such appeals.
Lastly, the Court left open the question of whether “each petitioner in a joint petition for review must independently establish venue,” as FDA asserted, because no court, including the Fifth Circuit, had analyzed the question before. Therefore, it still remains to be seen whether manufacturers may ultimately join with retailers to review an MDO in the Fifth Circuit even if the retailers could separately bring a challenge in the Fifth Circuit. This issue will likely be addressed in future cases.
