The Fight Over Flavored E-Cigarettes

Published Dec 6, 2024, 2:47 AM

Shawn Collins, a partner at Strading Yocca Carlson & Rauth, discusses Supreme Court arguments over the FDA’s denial of applications to sell flavored e-cigarettes. M.C. Sungaila, a partner at Complex Litigation Appellate Group, discusses Supreme Court arguments over property stolen from Holocaust survivors. June Grasso hosts. 

This is Bloomberg Law with June Brusso from Bloomberg Radio.

About one point six million school children currently use e cigarettes. Flavored vapes with colorful names that evoke candy and sweets are particularly appealing to young people, which has prompted the Food and Drug Administration to curb access to the products. The FDA turned down two companies' applications to market e cigarettes with names like Jimmy the Juiceman, Peachy Strawberry, and Suicide Bunny, Mother's Milk and Cookies. The agency's attorney, Curtis Gannin, defended its position at the Supreme Court.

Research has long shown that flavors increased youth appeal of tobacco products, and evidence accumulates further confirming that youth are particularly attracted to flavored ends products. The concern would be that their getting addicted to tobacco at a time when when tobacco to a nicotine, at a time when nicotine is dangerous to their developing brains, and may be, you know, sensing them to a long life of needing to satisfy that addiction.

The vaping companies say the FDA changed its standards with little warning as it blocked the sale of more than a million new flavored products. But just as Elena Kagan said that the FDA's position has been clear, do.

You know that FDA thinks that flavors? I mean, FDA has been completely upfront about this, and I think that the point you know that flavors you give people blueberry vapes. The difficulty with that, and FDA I think has tried to document this is that blueberry vapes are very appealing to sixteen year olds, not to forty year olds.

Aside from legalities, the practical question is what's the remedy even if the court rules for the vaping companies, because, as just as Brett Kavanaugh pointed out to the company's attorney, Eric Higher, the companies can always reapply to the FDA for sales authorization.

And while they won this case, they can reapply.

Yes, if they won this case or if they lose this case, they will be able to reapply.

That's my question about what the relief really accomplishes here that is being sought as a practical matter. I understand the legal point the FDA acted arbitraining capriciously, but either way, it's going to be that they can reapply and hope to succeed.

This case is an appeal from the conservative Fifth Circuit's decision finding that the agency unfairly shifted its standards for approving the vaping products while deciding on applications from the two companies. Joining me is Sean Collins, a partner at Straddling Yoguck, Carlson and Rauth give us some background on the FDA and these flavors eat cigarettes.

Let's start with what the FDA's mandate is. The FDA's mandate is to look out for the health and well being of the general American public, meaning they are supposed to certify all foods and drugs and certify that they are healthy and beneficial for the well being of the citizens of the United States of America. And so what we have going on between the FDA and the e cigarette companies right now, I call it a bit of the game of whack a mole. And so it's like anything. You know, if you regulate one product and you're successful in getting a certain product regulated, another product is going to pop up. And so you know, the FDA spent fifty years or more trying to get people to stop smoking cigarettes, right, and they were pretty successful at doing that. When you look at the statistics of how many people actually smoke cigarettes. You know, I remember growing up in the eighties and everybody smoked. You know, people smoked indoors, people smoked in offices, and everybody smoked. Nowadays, you know, I live in California, so it's probably more skew than anywhere else. But you can't smoke anywhere. I don't see anybody smoking. And you know, you look at the statistics, I think they say two percent of America smoke cigarettes now, which is negligible. That's pretty much nobody smokes cigarettes. So obviously the people that still do smoke cigarettes. You know, business and enterprise are always wanting to come up with an alternative, so they came up with the e cigarette. And so the e cigarette was designed as a mechanism to help wean adults who are otherwise addicted to cigarettes, that try to help them stop smoking cigarettes and smoke something that would be a better alternative for them. Now, like any business, e cigarette companies, they want to advertise and market their products and make it look cool. So think the Marlboro Man. You know, I used to always think when I would drive a billboard, look at their cowboy It looks really cool with the cigarette and mouth, and that attracts a lot of people that want to smoke cigarettes. So e cigarette companies obviously came up with creative ways to advertising market their e cigarette fronduct. Now that's all well and good, and the FDA probably wouldn't have cared if their marketing was being successful with adults. The problem is is e cigarettes became cool amongst younger demographics and particular teenagers, and so what you saw is a spike in teams using e cigarette. So it was one of those situations. The reason why I said whack the mo mole was because you whacked one problem and were able to successfully pretty much negate that problem, and then another problem popped up over on the right, which as teenagers are now really into e cigarette and explain.

The issue in the case the Supreme Court heard this week.

So the issue that you currently have before the Supreme Court, it's more of what is the authority of the FDA. That's the actual legal question the Supreme Court is looking at. But I will say that one of the balancing tests that the Supreme Court is having to deal with is well, okay, I understand that the FDA is trying to regulate, you know, the advertising and marketing of cigarettes. Two teams. But the question becomes, one, do they have the authority to do that? And whether or not they have the authority to do that is more of a great question, because I think the Supreme Court is looking at it as well. What they're doing is coming from a good place. They're trying to protect the help of the future generation. And so I think that's the particular that the Supreme Court is grappling with right now, which is why when you listen to the oral argument, the oral argument, even you know, everybody said, oh, it's the conservative court. They're probably going to side with big business. They're going to side with the e cigarette companies. And what you heard oral argument is it sounded like the Supreme Court was kind of deferring to the regulatory authority of the SPA.

Yeah, that was surprising. Just as Kagan said, I guess I'm not really seeing what the surprise is here or what the change is here, because basically everyone knew the FDA's position on e cigarettes. So the question that Ret. Kavanaugh brought up as well, what's the relief here? Even if you win the cigarette.

Companies exactly, And that's the big question, and that's usually the biggest problem. You know, It's funny everybody spends all their time in law school thinking about the big legal arguments of why I'm right on a particular issue, but nobody ever thinks, okay, well what if I win? What's the remedy? Which is why when I talked to the young law students, I always tell them, probably the most important class you will take while you're in law school is remedy. And they look at me confused, like nities, like what are you talking about? That's like what happens after the case is over? And it's like, yeah, I know, but think about it. You can spend ten million dollars arguing that you're right, and then the court days you're right, and then they ask you, well, what do you want? And so that's the issue here is you know, for the e cigarette companies, it's like, okay, well, even if you are correct in saying that the laws that the isn't imposing here are arbitrary and capricious, which is the core legal argument that the e cigarette companies are making, which is a good legal argument. They're basically saying you're making up rules and regulations that are effectively a moving target. So me as a company, I can't even craft policy to address your concerns because every month you're moving the goalpost on me. And so the Supreme Court has it technically said, Okay, let's say that we do tell the FDA that they need to be more definitive with their rule making and say these are the laws and regulations that governing the advertising and marketing and the regulation and e cigarettes. How does that help you?

Are the e cigarette companies just looking for more time to start the process over again or do they not want to start the process over again?

I think timing is definitely of concern because, if you think about it right now, one of the biggest things and nobody really talks about it when it comes to businesses and advertising and marketing. But they currently have has the attention of a generation, so they have captivated a particular generation. So when you look at cigarette companies, cigarette companies effectively capture the imagination of the baby boomers, and that's a very large demographic. So if you're selling a product and you have a captive audience and a whole generation of you know, so for e cigarette companies. I guess you would call it gen Z. The other day I heard that the granted the gen A.

Now I've lost track of the gen So gen Z.

I believe is effectively sixteen year old to young professionals. So let's go sixteen to thirty right now. That is the demographic that is very captivated by e cigarette And I think the sense of urgency from the e cigarette generation right now is that they are now being prohibited from advertising and marketing to gen Z, which could be a very lucrative demographic because the thing about especially products like this, if you develop brand loyalty right now, this is the type of product that they will use throughout their lives. It's not like a toy or a video game where a person may grow out of it or phase out of it. You know, if you're an e cigarette person, you may be using the e cigarettes for the next thirty forty fifty years.

Do vaping companies have problems getting regular e cigarettes approved or is it just about the flavored e cigarettes.

For this particular case, And that's a very important question. For this particular case, you're talking about the flavored e cigarette because that's what the FDA is saying. They're saying, the E cigarette companies with the flavored cigarette, you're no longer targeting the forty year old who is trying to win themselves off a cigarette. You were targeting the thirteen, fourteen to fifteen year old to try to entice them and to hook them on e cigarette so that you have them for a generation, so that you have them for the next forty to fifty years.

Now.

E cigarette company will probably deny that, but that's absolutely what they're trying to do, and I'm not saying that there's anything wrong with it. That's smart marketing and business strategy. The focus of this particular case that before Supreme Court is the flavored e cigarettes, and the reason why it's the focus of the court is because the FDA is arguing, you are advertising and marketing these flavored cigarettes in a manner whereby you are trying to make them incredibly attractive to gen Z thirteen, fourteen, fifteen, sixteen, seventeen, eighteen year old, and by doing that, you are compromising their health now and for a future generation. E cigarette companies are arguing, well, you can't create an arbitrary and capricious rule that says you as an e cigarette company can advertise and market your e cigarettes, you just can't do it in this manner. You can't have flavors.

Coming up next on the Bloomberg Law Show, I'll continue this conversation with Sean Collins. How the President elect's name came up in the oral arguments over flavored east cigarettes. This is Bloomberg. Supreme Court justices seemed skeptical that they could give any relief to companies whose applications to sell flavored e cigarettes were denied by the Food and Drug Administration. Several of the justices pointed out that even if the companies reapplied, the FDA would continue to deny the applications. Perhaps the vaping company's best hope is the incoming Trump administration. Here's the attorney for the vaping companies, Eric Higher.

And Frankly, we don't know what FD is, HOWFT is going to approach it on remand we have a new administration coming in. The President elect is on record saying I'm going to say flavored vapes. We don't know exactly what that's going to look like. It maybe that the approach the agency takes is much more aligned with the statute and looks at all the risks and benefits.

I've been talking to Sean Collins, a partner at Straddling. So this is an appeal from the ultra conservative Fifth Circuit. There is a circuit split. The second, third, fourth, fifth, sixth, seventh, ninth, tenth, and DC circuits have sided with the FDA and denied the petitions or requests to stay the agency's marketing denial orders for flavored e cigarettes. So the Supreme Court almost had to take this case to straighten it out, even though more than one of the justices said there was no real relief to be had here.

That sounds like what's happening here. I was surprised that the Fifth Circuit was the lone wolf here for lack of a better word. You know, it's not the type of ruling that I would have expected out of the Fifth Circuit. But yeah, now, I mean, that's that's what the Supreme Court is up against right now, the effectively overruling the Fifth Circuit.

Is it surprising that the justices seemed to be crediting the FDA's expertise here. I mean, this is a court that has been skeptical of the power of federal regulators, including by striking down the Chevron doctrine that had judges deferring to agencies and interpretations of the law.

I personally don't think this is kind of outside of what's to be expected from this particular court. I think that this court is very fixated on not necessarily tearing down the authority of a particular agency, but making sure, especially with this particular Supreme Court, they are very focused on making sure that a particular agency does not exceed the authority that was originally granted to it. And so, for instance, I use the FTC as an example. Obviously we're talking about the FDA with this particular case, but and you know those probably I think it was three or four years ago now, there was a ruling that effectively said, hey, the FTC has gone lead beyond the bounds of what the authority that was originally given to them by commas. You know, in the military, you called a mission increase and you set out for objective A, and then the next thing you know you're going after be F and it's like, you know, before you know it, everybody started asking the question of all, right, well, when did the FTC get into the business of going after these types of cases, and so with this particular issue, I think the Supreme Court is looking at it and saying, again, this is kind of how I started my comments was, well, at a very high level, why did we create the FDA? Well, the FDA was created because back in the eighteen hundred there was a severe problem with the quality of food and there were effectively snake oil salves and out there selling drugs that were doing series armed particulars. And so as a society, we decided we should probably have an agency that's responsible for regulating the food and the drugs that are sold and marketed in the United States of America. And when we cut to the red tape of that, what does that mean? How do we keep Americans safe? And so when you look at what the FDA is doing here, they're saying, we are creating these oles because when you're trying to keep teenagers safe, you know, we have eighty years worth of literature and research that pretty convincingly proved that smoking is bad for you. It's really bad for your lungs. It causes lung cancer. And I don't think there's anybody that disagrees with that. And these cigarettes, while they are a better alternative, it's still not great for your health. And the FDA has presented some pretty convincing evidence again that kind of goes beyond whatever your political views may be, and it's kind of unequivocal that e cigarettes are probably not good for the lungs of teenagers. And so the Supine Court is looking at this and saying, well, the FDA has been tasked with keeping teenagers safe, and they are now passing involves in regulations that are very focused on keeping teenagers safe. Kind of straightforward, you know, even in this concern, Supreme Court has to look at it and say, the job, FDA, you're doing.

Your job is Joining his campaign, Trump said that he was going to save vaping basically, and during the oral arguments, the attorney for the companies pointed to that, so, what's the effect of a new administration? Can the FDA just do a one to eighty on E flavored cigarettes?

Obviously, whenever there's a new administration, there's always every federal agency there's going to be a significant shift in policy. So whoever takes over the FDA is going to be a Donald Trump appoint to e and they are going to execute me. What the wishes of President Trump. Now, I will say that when President Trump says, you know, I'm going to support e cigarette, he can do that and still kind of ad yere to what the Supreme Court is talking about here, because keep in mind, thinking about who did he appoint as his head of Department of Health and Human Service Arekji, And they've already talked about saying, all right, we're going to, you know, use a lot of scrutiny with respect to the drugs that we are administering to the American public. So when you look at what's going on here, let me say this because I want to be quit. I am by no means beaten up on the e cigarette industry at all. What's that state here is the fact that the SBA believes that the e cigarette company are advertising and marketing their products to people who are not legally authorized to buy their products. I probably should have started with that. And so what the FDA is saying here is, hey, e cigarette companies, if you want to put billboards up on every single billboard along every major freeware in the United States to say, if you are eighteen and up, you should really buy my product, knock yourself out but the problem is is the data suggests that the flavored products that you are marketing, more fourteen, fifteen and sixteen year olds are buying your product than eighteen and ups. And we think that is very intentional on your part, and that you are aware of the fact that you're advertising in marketing is targeting and being more effective with people who are not even legally authorized to buy your product. That's what they're taking issues with. And I think that handedly when you look at who President Trump depicted for his Department of Health and Human Services are As K. Junior, and then his other mandate of I will support e cigarette companies, I don't really I think he can achieve both of those objectives. He's effectively saying, hey, e cigarette companies, if you want to increase your profits themselves to the eighteen and up, so be it. As long as you don't break any laws, go forward, but you can't market your products at thirteen, fourteen, fifteen year old.

Thanks so much, Sean. That's Sean Collins, a partner at Straddling Yoga, Carlson and Ralth And for those who are counting on President elect Trump to change the rules for flavored e cigarettes, so let's take a look at his various positions. During his first administration. In twenty nineteen, Trump threatened to ban most flavored East cigarettes from the market due to concerns over the appeal to children. He later backed off the ban after it was met with industry resistance. In twenty twenty, his ban on certain East cigarette pods made by companies like Jewel Labs prohibited flavored e liquids, but allowed menthol and tobacco products on the market. He also signed a law that raised the federal legal age for purchasing tobacco from eighteen to twenty one, which vaping proponents say lowered youth vaping numbers. So stay tuned. Coming up next on the Bloomberg Law Show, The Justice has once again faced a question over the role that US court should play in returning properties stolen from Holocaust survivors by foreign countries during World War II. I'm June Grosso and you're listening to Bloomberg. The Supreme Court once again struggle with the role that US courts should play in returning properties stolen by foreign countries during World War two to its original owners. In several cases brought by Holocaust survivors, against foreign nations. The justices have wrestled with how to balance the international friction that can result from hauling sovereign nations into US courts, while at the same time fulfilling Congress's intent to allow suits in some cases. In a case the Justice is heard on Tuesday, Holocaust survivors and their families say Hungary and its National Railroad stole property from Jews while transporting them to concentration camps. The question is whether the US is the proper place to resolve the legal dispute. Joining me is mc Sanaila, a partner at Complex Appellate Litigation Group. So MC, we have seen similar cases before. In fact, we've seen this case at the Supreme Court before.

You know, this isn't an art case. This is the really all kinds of property case. Most of these cases are involved in some kind of Holocaust art. But this is yes, we sent the people off to the camp, and we also took all of their property and transported that on the rail line. So they've been trying to, you know, make this claim and have been really, like many of these Holocaust claims, really bouncing back and forth between the Supreme Court, the Federal Court of appeal the district court on some very threshold issues which often come up in these cases involving sovereign immunity. You know, under the foreign Sovereign mediac can you do the Hungarian government or some other countries government for these activities.

We've talked about this so many times. I'm surprised this issue isn't more settled.

Yeah, I mean, I was just looking back at some of the sovereign immunity questions that have come up in the Holocaust context, and really one of the last, you know, ultimately successful ones was Altman back in two thousand and four, where the question there was just whether the Foreign Sovereign Immunity that applied retroactively or not and therefore allowed Maria Altman to bring her claim against Austria for her paintings that Austria had taken. And in that case, of course, yes, you know, Foreign Sovereignity Act applies retroactively and therefore property taken in violation of international law, which her case qualified for. Yes, Okay, that's the standards and it can you can see governments for that. But since then it's been this case and others have really dealt with Okay, now that we know that it applies retroactively. What are the you know, sort of exceptions within that statute that allow these kinds of claims to be brought? And how do all of those various exceptions you know, kind of worked out and end up applying. And so here this expropriation exception. And really it seems like the DC Circuit has been trying very hard to find a way to allow these clients to be brought. Right, it's all various aspects of expropriation that they've been hanging their hat on to say, no, no, no, you really need to look at this more carefully, just a court or there's a possibility here, you know that a claim could be brought. We need to we need to look at that again. And each time it's been sent back on the particular theory that the that the Circuit may have relied on. But the Spring Court has even opened up other avenues for consideration. And so that's why it keeps coming back, is you think we haven't solved these problems already, we haven't figured out the scope of sovereign immunity, and it seems like here is this effort to make sure we have turned over every rock, you know, to make sure that we have fully investigated every potential for acclaim against Hungary. It keeps coming back for that reason.

The cases we've discussed before involved artworks, particular artworks that were stolen. This case involves property. And it's unclear to me what kind of property that the Hungarian government stole and then liquidated and the money went into the national treasury and then that fund was used to issue bonds in the US. But how would they trace the stolen property to the bonds?

Well, that's the question, and I think that was the concern that really animated or argument really on both sides. Some of the justices suggested, well, this question of commingling and the proof of commingling and what percentage of the money here in the US needs to be either theoretically or you know, potentially traceable to this nationalized property that had been taken from Jewish families. And that was really kind of the rub right of the petition of what level of proof and who needs to prove it? And the justices were kind of scratching their heads saying, well, on the one hand, were concerned that you as a claimant could almost make any claim right, sure, there's still must be some trace element of co mingling, or there could be and as a result of there could be even a small amount that now you can make a claim against another country in US courts. That seemed concerning because this is an exception to the Sovereign Community Act, the General Provision saying you cannot do countries in US courts. And on the other hand, there were the concerns raised, well, if you don't have some kind of allow some kind of claims for co mingling and giving some kind of laxity for that definition, then any bad actor could just go, oh, well, I'm going to I'm going to take this property and then the next thing I'm going to do is I'm going to co mingle it with something. I'm going to put it somewhere else, and then that will immunize me from this exception to have clean spot against me. And so there's also that concern that, like, well, if you make it too easy for someone to kind of hide the ball and get themselves outside of this exception, then what's the point of having the exception. So those both of those concerns concerned about going too far and concerned about you know, letting letting folks who are violating international law off off the hook more easily. Those were the tensions. But the members of the Court identified.

I feel like I've heard these same concerns from the justices about, you know, the risk of reciprocal actions by other countries and it's a big deal to haul a foreign country into US court. I mean, those are the same things they've been saying for years.

Yeah, exactly, it's the same. It's the same because it's the same concerns and policies animating US foreign policy and the State Department's view on these things. And also they're looking at the Foreign Sovereign I Meanity Act and the various things that they congressated in enacting those. So yes, they come up with the same concerns because they're looking at various aspects of the same statues and so the same policy concerns.

Could you tell it all from the oral arguments which way it was going. It seemed to me like the justices were all over the place.

I mean, I think it's hard. I think it's harder to tell here. But if you look at their overarching concerns that you mentioned before, which is, we don't want to open the door to everyone to bring their concerns to US courts, and maybe somebody could do this to us, and we want to be careful about that too, of being called into other courts. That that is the general, you know, conservative sort of reaction to this is to say, we don't want to do anything that would make that easier. We want to be very cautious about that. And so you'd say, oh, well, if you want to go with where the court ends up going normally or typically in these cases, they typically end up being, you know, very narrowly construing the exceptions to the Foreign Common Community Act. But on the other hand, every once in a while you have a case like Altman where they said, okay, you know, we're opening this, we're opening this up, we're applying the Act retroactively and you know, allowing this claim to be brought. So it's possible, but those concerns are still animating the court, and so it's possible, but most likely that they will close the door to this one too.

And the Altman Court, I don't know what justices were on the court at that point, but most of them are certainly not on the court now.

A completely different court. I mean that's two thousand and four, so we're talking, you know, twenty years ago.

It doesn't seem like they're split ideologically.

No, No, that's a good point, June. You can't say, oh, well, you know, the conservatives are this way and the more liberal folks are spar to lean another way on these issues. That's really this larger concern about their role, the Court's role, the executive branch's role in sovereign immunity. So it's not an ideological question, but it is a question that across you know, multiple iterations of the Court that they've had this concern they want to make sure that they are executing on what Congress has legislated and that they're not going any further than that.

It seems like they might have taken the case to reverse the DC's circuit. Is that your conclusion that they're going to end up reversing the DC circuit in some way through some argument.

Yeah, it's possible. Although in the past they've opened up you know, they've closed one door and opened another one or for this case, which is why it keeps coming back too, so you know, perhaps that will happen again, that one door gets closed another door is you know, at least slightly a jar, and then the case continues. It's because the DC Circuit at least seems very interested in making sure that they have explored every potential avenue before they they say, absolutely, you should not be bringing your claims here, and before I let you.

Go, tell me about your big win yesterday at the Ninth Circuit.

So my case yesterday was another long running piece of litigation for the city of Costanisa, and I've worked on various appeals for them involving challenges to their sober living home ordinances. So they have they allow sober living homes in their city, but they have certain permitting requirements for them that are you know, allowing requiring certain distances. So in other words, you can't have a residential street with you know, multiple of these homes or sober living homes on them, because that would be a bad thing not only for the residential environment, but for the residents who are there, who are trying to be integrated back into a traditional living arrangements after they've been in recovery. So so this has been challenged as you know, violating various their housing federal and states, their housing laws and harming the disabled and to day or yesterday, the Ninth Circuit agreed with the City of Costa Mesa that just there was no discrimination. Oh various, whether it's spacially discriminatory, whether it's dispread treatment there, you know, there's just there was no discrimination. And in fact, these ordinances were designed to benefit uh, the residents, the disabled residents of these towns. It's a really wonderful result for a city that has been standing up, you know, for its ordinances for for many years, and helpful to other cities and counties and local governments who want to have similar kind of land use regulations that help all of their sort of balance the interests of all of their residents, including those who live in these homes.

It's great to talk to you as always.

MC.

That's MC san Gila, a partner at Complex Appellate Litigation Group. And that's it for this edition of the Bloomberg Law Show. Remember you can always get the latest legal news on our Bloomberg Law podcasts. You can find them on Apple Podcasts, Spotify and at www dot Bloomberg dot com, Slash podcast Slash Law. I'm June Grosso and you're listening to Bloomberg

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