Faircloth v. Food and Drug Administration et al

Filing 12

MEMORANDUM OPINION AND ORDER directing that defendants' 5 MOTION to Dismiss is granted as to Counts I-III and V of the 1 Complaint; it is further ORDERED that the defendants' 5 Motion to Dismiss is denied as to Count IV of the 1 Complaint. Signed by Judge John T. Copenhaver, Jr. on 9/28/2017. (cc: counsel of record; any unrepresented parties) (mks)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
LARRY W. FAIRCLOTH,
Plaintiff,
v.

Civil Action No. 2:16-cv-5267

FOOD AND DRUG ADMINISTRATION,
SCOTT GOTTLIEB, M.D., Commissioner
of Food and Drugs, and
THOMAS PRICE, Secretary
of Health and Human Services
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is defendants’ motion to dismiss, filed on
October 28, 2016.
I. Introduction
On June 10, 2016, Larry W. Faircloth, a resident of
West Virginia, instituted this action against the United States
Food and Drug Administration (“FDA”), Dr. Scott Gottlieb in his
capacity as Commissioner of Food and Drugs, and Thomas Price in
his capacity as Secretary of Health and Human Services.1

1

At the outset of this case, Dr. Robert Califf was the
Commissioner of Food and Drugs and Sylvia Mathews Burwell was
the Secretary of Health and Human Services. Pursuant to Fed. R.
Civ. P. 25(d), their successors are automatically substituted as
defendants.

1

The complaint challenges the legality of the FDA’s
final rule, “Deeming Tobacco Products to Be Subject to the
Federal Food, Drug, and Cosmetic Act, as Amended by the Family
Smoking Prevention and Tobacco Control Act; Restrictions on the
Sale and Distribution of Tobacco Products and Required Warning
Statements for Tobacco Products” (“Rule” or “Deeming Rule”),
which regulates “vaping devices,” also known as “e-cigarettes,”
and “e-liquids.”
Dismiss at 4.

See Compl. at 1-2; Mem. in Supp. of Mot. to

Mr. Faircloth filed this action in this court,

invoking jurisdiction under 28 U.S.C. §§ 1331, 2201-02 and 5
U.S.C. § 701 providing for judicial review of final agency
actions.
On May 10, 2016, under the authority conferred upon it
by Congress in 21 U.S.C. § 387a(b), the FDA issued the final
Rule deeming several new products, including vaping devices, as
“tobacco products” subject to the Food, Drug, and Cosmetic Act,
21 U.S.C. § 301 et seq. (“FDCA”), as amended by the Family
Smoking Prevention & Tobacco Control Act, Pub. L. No. 111-31,
123 Stat. 1777 (2009) (“TCA”).

See Deeming Rule 81 FR 28974

(May 10, 2016) (to be codified at 21 C.F.R. pts. 1100, 1140, and
1143) (deeming electronic nicotine delivery systems, including
“e-cigarettes,” “e-liquids,” “vape pens,” and “advanced
refillable personal vaporizers” as included in “tobacco

2

products” under the TCA).

“Tobacco products” include “any

product made or derived from tobacco including any component,
part or accessory.”

21 U.S.C. § 321(rr)(1).

Vaping devices “use a heat source to convert e-liquid
into vapor.”

Compl. at ¶ 2.

E-liquids typically contain

propylene glycol, glycerol, flavors, and various concentrations
of nicotine, though some e-liquids contain zero nicotine.
Compl. at ¶ 3-4.

See

In 2010, the D.C. Circuit ruled that the FDA

had properly categorized vaping devices and e-liquids as
“tobacco products” because the nicotine contained in e-liquids
is derived from tobacco.

Sottera, Inc. v. Food & Drug Admin.,

627 F.3d 891, 897-99.
In deeming vaping devices to be “tobacco products,”
the FDA subjects manufacturers, retailers, importers, and
distributors of “tobacco products” to manufacturing, sale, and
marketing requirements designed to protect public health.

See,

e.g., 21 U.S.C. §§ 387d(a), 387a-1(a)(2)(G); Mem. in Supp. of
Mot. to Dismiss at 6; Compl. at ¶ 26.

These requirements

include, inter alia: (1) providing accurate information about
ingredients and additives to the FDA, 21 U.S.C § d(a)(1)-(2);
(2) labeling products with ingredients, id. at 387c; (3)
including necessary warnings, 15 U.S.C. § 4402(a)(1); (4)
undergoing premarket review of products claiming “modified

3

risks” when compared with traditional cigarettes, 21 U.S.C. §
387k; (5) registering as manufacturers with the FDA, id. at §
387e(b); (6) adhering to manufacturing requirements set by the
FDA, id. at § 387f(e); (7) abiding by regulations limiting the
concentration of ingredients, id. at § 387g(a)(3); (8)
undergoing premarket review of new “tobacco products” entering
the market after February 15, 2007, id. at § 387j; and (9)
discontinuing the distribution of products as free samples, 21
C.F.R. § 1140.16(d).
Mr. Faircloth is a consumer and user of vaping devices
and e-liquids.

See Compl. at ¶¶ 6, 9, 29.

As a former user of

tobacco cigarettes, he smoked approximately two packs per day.
Id. at ¶¶ 29-30.

He used vaping devices and e-liquids to quit

using traditional tobacco cigarettes. Id. at ¶ 29.

Mr.

Faircloth asserts that if he could no longer use vaping devices
and e-liquids, he would likely return to using traditional
tobacco cigarettes.

See Id. at ¶¶ 29-30.

Mr. Faircloth raises five claims for relief.

Count I

asserts that the FDA lacks the statutory authority to deem
vaping devices as “tobacco products” under the FDA.
¶¶ 37-8.

Compl. at

Count II claims the Rule is arbitrary and capricious

because the premarket approval process required for new “tobacco
products” imposes an “extraordinary burden” on manufacturers,

4

treats vaping devices the same as traditional tobacco cigarettes
in the face of “compelling safety data,” and imposes a de facto
moratorium on the introduction of new vaping devices pending
their premarket approval.

Id. at ¶¶ 39-41, 43-45.

Count III

alleges the FDA’s cost-benefit analysis “erroneously concludes
the Rule’s benefits outweigh its costs” and fails to recognize
the “severe regulatory burdens” placed on manufacturers.
¶¶ 49, 51.

Id. at

Count IV asserts that the Rule violates Mr.

Faircloth’s First Amendment rights by restricting his ability to
receive free samples, and “truthful and non-misleading
statements” about vaping devices from manufacturers.
55-56.

Id. at ¶¶

Finally, Count V alleges that the Rule violates the

Tenth Amendment by “co-opting [West Virginia]’s ability to
control its Medicaid budget” by compelling the state “to expend
money . . . on tobacco related healthcare costs.”

Id. at 58.

Defendants move to dismiss the entire action for lack of
jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1), alleging that
Mr. Faircloth lacks standing to challenge the Deeming Rule as a
consumer of vaping devices, and that his challenge is unripe.

5

II. Governing Standard
Federal district courts are courts of limited subject
matter jurisdiction, possessing “only the jurisdiction
authorized them by the United States Constitution and by federal
statute.”

United States ex. rel. Vuyyuru v. Jadhav, 555 F.3d

337, 347 (4th Cir. 2008).

As such, “there is no presumption

that the court has jurisdiction.”

Pinkley, Inc. v. City of

Frederick, 191 F.3d 394, 399 (4th Cir. 1999) (citing Lehigh
Mining & Mfg. Co. v. Kelly, 160 U.S. 327, 327 (1895)).

Indeed,

when the existence of subject matter jurisdiction is challenged
under Rule 12(b)(1), “[t]he plaintiff has the burden of proving
that subject matter jurisdiction exists.”

Evans v. B.F. Perkins

Co., 166 F.3d 642, 647 (4th Cir. 1999); see also Richmond,
Fredericksburg, & Potomac R .R. Co. v. United States, 945 F.2d
765, 768 (4th Cir. 1991).

If subject matter jurisdiction is

lacking, the claim must be dismissed.

See Arbaugh v. Y & H

Corp., 546 U.S. 500, 506 (2006).
Subject matter jurisdiction may be attacked by a
defendant with either a facial or a factual challenge.
United States, 585 F.3d 188, 192 (4th Cir. 2009).

Kerns v.

In a facial

challenge, the defendant is asserting that the allegations
contained in the complaint fail to sufficiently establish the
existence of subject matter jurisdiction.

6

Id.

In a facial

attack, the plaintiff is “afforded the same procedural
protection as she would receive under a Rule 12(b)(6)
consideration,” so that “facts alleged in the complaint are
taken as true,” and the defendant’s motion “must be denied if
the complaint alleges sufficient facts to invoke subject matter
jurisdiction.”

Id.

In a factual challenge, a defendant may

argue “that the jurisdictional allegations of the complaint
[are] not true.”

Id.

This permits a trial court to consider

extrinsic evidence or hold an evidentiary hearing to “determine
if there are facts to support the jurisdictional allegations.”
Id.
III. Standing
Defendants argue that Mr. Faircloth lacks standing to
challenge the Deeming Rule for three reasons.

First, they

contend that all of plaintiff’s alleged injuries are indirect
and conjectural because, as a consumer, Mr. Faircloth is not
regulated under the law, and his hypothetical injuries are the
result of downstream economic effects and individual choices to
return to traditional cigarettes.
Dismiss at 9-12.

Mem. in Supp. of Mot. to

Second, they assert that his alleged injuries,

were they cognizable, cannot be causally traced to the Deeming
Rule.

Id. at 12-13.

Finally, defendants point out that Mr.

Faircloth, as an individual, cannot properly bring a claim under
the Tenth Amendment for federal commandeering. Id. at 14-15.

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As these are facial and not factual challenges to Mr.
Faircloth’s standing, the court will accept all allegations in
the amended complaint as true and determine whether plaintiff
has sufficiently established a basis for subject matter
jurisdiction.
A.

See Kerns, 585 F.3d at 192.

Applicable Law.
Standing is generally addressed at the motion to

dismiss stage under Fed. R. Civ. P. 12(b)(1) because “Article
III gives federal courts jurisdiction only over cases and
controversies and standing is an integral component of the case
or controversy requirement.”

CGM, LLC v. BellSouth

Telecommunications, Inc., 664 F.3d 46, 52 (4th Cir. 2011)
(internal citations and quotations omitted).

“To satisfy the

constitutional standing requirement, a plaintiff must provide
evidence to support the conclusion that: (1) ‘the plaintiff ...
suffered an injury in fact — an invasion of a legally protected
interest which is (a) concrete and particularized, and (b)
actual or imminent, not conjectural or hypothetical’; (2) ‘there
[is] a causal connection between the injury and the conduct
complained of’; and (3) ‘it [is] likely, as opposed to merely
speculative, that the injury will be redressed by a favorable
decision.’”

White Tail Park, Inc. v. Stroube, 413 F.3d 451, 458

(4th Cir. 2005) (quoting Lujan v. Defenders of Wildlife, 504

8

U.S. 555, 560-62 (1992).
At the motion to dismiss stage, “general factual
allegations of injury resulting from the defendant’s conduct may
suffice, for on a motion to dismiss we presume that general
allegations embrace those specific facts that are necessary to
support the claim.”

Lujan, 504 U.S. at 561.

The court may

accept as true allegations that are supported by adequate
“‘factual matter’ to render them ‘plausible on [their] face.’”
Beck v. McDonald, 848 F.3d 262, 270 (4th Cir. 2017) (citing
Ashcroft, 556 U.S. 662, 678 (2009).

“The same presumption of

truth” does not apply to “conclusory statements and legal
conclusions” contained in the complaint.
B.

Id.

Counts I-III

i. Injury in Fact
Mr. Faircloth asserts that the Deeming Rule injures
him as a consumer of vaping products.

The implementation of the

Deeming Rule on August 8, 2016 subjects manufacturers of vaping
devices and e-liquids to “overly burdensome regulations” that
“will cause a severe reduction of the availability of the
products used by plaintiff.”

Compl. at ¶¶ 26-27.

Faced by the

economic burden of complying with the requirements of the TCA,
these manufacturers will “discontinue existing product lines”

9

and fail to introduce new products leading to an increase in
price for vaping products remaining in the market.

Id. at ¶ 28.

This increase in price and reduced availability will “likely”
cause Mr. Faircloth to “return to the unhealthy habit of using
[cigarettes],” resulting in an estimated increase to his
healthcare costs of $766,500 over the next thirty years.
29-30.

Id. at

Plaintiff asserts that these harms are “inevitable.”

Pl.’s Reply to Mot. to Dismiss at 3-4.
“[P]laintiffs have standing to sue to prevent
anticipated future conduct if they demonstrate a realistic
danger of sustaining direct injury as a result.”

Richmond

Tenants Org., Inc. v. Kemp, 956 F.2d 1300, 1305 (4th Cir. 1992)
(internal citations and quotations omitted).

However, “when, as

here, the plaintiff alleges only an injury at some indefinite
future time, and the acts necessary to make the injury happen
are at least partly within the plaintiff’s own control,” the
Supreme Court has “insisted that the injury proceed with a high
degree of immediacy, so as to reduce the possibility of deciding
a case in which no injury would have occurred at all.”
504 U.S. at 564 n.2.

Lujan,

Furthermore, when consumers are “paying

the end-line cost of an economic regulation” they are not
injured unless they are (1) “directly regulated by the law being
challenged,” or (2) “prevented outright from obtaining” the
regulated product.

Compare Lane v. Holder, 703 F. 3d 668 (4th

10

Cir. 2012), with Carey v. Pop. Servs. Int’l, 431 U.S. 678, 68283 (1977), Freeman v. Corzine, 629 F.3d 146, 154 (3d Cir. 2010),
and Bridenbaugh v. Freeman-Wilson, 227 F.3d 848, 849-50 (7th
Cir. 2000).
Mr. Faircloth is not directly regulated as a consumer
of vaping devices and e-liquids.

Similarly, he has not been

prohibited or otherwise outright prevented from obtaining his
vaping products.

Furthermore, his future harms are not

sufficiently imminent to have standing to bring Counts I-III
against defendants.

Mr. Faircloth theorizes that the costs

imposed upon the vaping industry will reduce product diversity
and increase prices to such an extent that he will inevitably
return to using tobacco cigarettes, resulting in increased
healthcare costs for the remainder of his life.

This injury is

squarely the type of “conjectural or hypothetical” future injury
that fails to give plaintiff standing as to Counts I-III of his
claims.

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ii.

Causation
Plaintiff must establish that his injury is “fairly .

. . trace[able] to the challenged action of the defendant, and
not . . . th[e] result [of] the independent action of some third
party not before the court.”

Lujan 504 U.S. at 560 (quoting

Simon v. Eastern Ky. Welfare Rights Organization, 426 U.S. 26,
41-42 (1976)).

This is “substantially more difficult” to show

when “plaintiff is not the direct subject of government action,
but rather the asserted injury arises from the government’s
allegedly unlawful regulation . . . of someone else.”

Frank

Krasner Enters., Ltd. V. Montgomery County, 401 F.3d 230, 234-35
(4th Cir. 2005) (quoting Lujan, 504 U.S. at 562) (internal
quotations omitted).

Where a plaintiff claims an injury based

on end-line costs and “[n]othing in the challenged . . .
regulations directs [regulated parties] to impose such charges,”
the regulated

parties’ independent decision to do so “breaks

the causal chain.”

Lane 703 F.3d at 674.

Mr. Faircloth’s alleged future injuries cannot be
properly traced to the Deeming Rule.

His injuries are premised

on the choice of manufacturers, retailers, importers, and
distributors of vaping products to leave the market, increase
prices, cease product innovation, and otherwise reduce the
availability of vaping devices in response to regulation.

12

Mr.

Faircloth asserts these decisions will then cause him to resume
smoking tobacco cigarettes because his vaping products will no
longer be “cost effective and readily availab[le],” and this
will result in increased healthcare costs over the remainder of
his life.

Compl. at ¶¶ 29-30.

If these alleged injuries ever

come to bear, the chain of causation is broken by the
independent actions and decisions of the manufacturers,
retailers, importers, and distributers to be traceable to the
Deeming Rule.
Mr. Faircloth does not have standing to challenge the
Deeming Rule as to Counts I-III of his complaint based on the
conjectural and attenuated injuries asserted in his complaint.
C.

Count V
“An individual has a direct interest in objecting to

laws that upset the constitutional balance between the National
Government and the States when the enforcement of those laws
causes injury that is concrete, particular, and redressable.”
Bond v. U.S., 564 U.S. 211, 222 (2011).

To assert a suit under

the Tenth Amendment, plaintiff must still meet the three
requirements for Article III.

See Lujan 504 U.S. at 560-62.

13

Mr. Faircloth seemingly asserts that he is injured as
an individual taxpayer on behalf of West Virginia under the
Tenth Amendment because the Deeming Rule “usurp[s] the power of
. . . West Virginia to shift residents from more dangerous
tobacco products to the healthier alternative” of vaping
products, “effectively forcing [the state] to expend state tax
dollars through Medicaid to pay the healthcare costs associated
with use of tobacco.”

Compl. at ¶¶ 31, 33.

Again, plaintiff

believes that the Rule’s impact on the vaping market will cause
vaping products to become less available and more expensive.
Id. at ¶ 28.

This will not only cause plaintiff to return to

using cigarettes, but also prevent other users of traditional
“tobacco products” from switching to vaping devices.
29-31.

Id. at ¶¶

Because “67% of West Virginia’s Medicaid population uses

tobacco products,” preventing users from switching to vaping
devices “effectively forc[es]” West Virginia to spend more tax
dollars on the healthcare costs associated with use of
traditional “tobacco products,” like cigarettes.

Id. at 33.

As with the personal injuries Mr. Faircloth alleges,
the hypothetical injuries to West Virginia and its taxpayers is
too speculative and attenuated to be properly traced to the
Deeming Rule.

Furthermore, there is no indication that these

conjectural injuries would personally harm plaintiff.

Any harm

that came to pass would impact him only as a taxpayer, and

14

“state taxpayers have no standing under Article III to challenge
state tax or spending decisions simply by virtue of their status
as taxpayers.”

DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 346

(2006).
For the foregoing reasons, Mr. Faircloth does not have
standing to challenge the Deeming Rule under the Tenth
Amendment.
IV.
A.

Count IV

Standing
A plaintiff may challenge an agency action when that

action runs contrary to the plaintiff’s constitutional right.
See 5 U.S.C. § 706(2)(B).

Mr. Faircloth asserts that the

Deeming Rule violates the First Amendment by prohibiting him “as
a consumer . . . from receiving truthful and non-misleading
statements regarding vaping devices, e-liquids, and related
products from manufacturers,” and “from receiving other forms of
protected expression, including free samples of vaping devices
or e-liquids from manufacturers.”

Compl. ¶¶ 55-56.

It is well established that where a willing speaker
exists, “the protection afforded is to the communication, to its
source and to its recipients both.”

Va. State Bd. of Pharmacy

v. Va. Citizens Consumer Council, Inc., 425 U.S. 748, 756

15

(1976).

In Va. State Bd. of Pharmacy the Court found that where

the First Amendment protection attached to the flow of
prescription drug price information, those rights were enjoyed
by both the advertisers seeking to distribute the information
and to the plaintiffs, who were recipients of this advertising.
“If there is a right to advertise, there is a reciprocal right
to receive the advertising.”

Id. at 757.

“Both the speaker and

the listener have the right to assert First Amendment rights.”
N.A.A.C.P., Los Angeles Branch v. Jones, 131 F.3d 1317, 1322
(9th Cir. 1997), see also Minarci v. Strongsville City School
Dist., 541 F.2d 577, 583 (6th Cir. 1976), Health Sys. Agency of
Northern Va. V. Va. State Bd. of Med., 424 F. Supp 267, 272
(E.D.V.A. 1976).
Mr. Faircloth asserts that he is a consumer of vaping
devices and a recipient of information from manufacturers,
retailers, and distributers regarding vaping products.
proper standing to assert his First Amendment claim.

16

He has

B.

Ripeness
As Mr. Faircloth only has standing to assert Count IV

of his complaint, defendants’ arguments regarding ripeness need
only be addressed as to this issue.
Defendants argue that Mr. Faircloth’s claims are
unripe for largely the same reasons they challenge his standing:
he is not directly regulated by the Deeming Rule, he does not
identify a particular vaping device or e-liquid that the Rule
does regulate, and his alleged injuries are speculative and
“dependent on future uncertainties.”

Doe v. Va. Dep’t of State

Police, 713 F.3d 745, 758 (4th Cir. 2013).
The ripeness doctrine “prevent[s] the courts, through
avoidance of premature adjudication, from entangling themselves
in abstract disagreements over administrative policies, and also
[protects] the agencies from judicial interference until an
administrative decision has been formalized and its effects felt
in a concrete way by the challenging parties.”

Pac. Gas and

Elec. Co. v. State Energy Res. Conservation and Dev. Comm'n, 461
U.S. 190, 200–01 (1983) (quoting Abbott Labs. v. Gardner, 387
U.S. 136, 148–49, (1967)).

“Determining whether administrative

action is ripe for judicial review requires [a court] to
evaluate (1) the fitness of the issues for judicial decision and
(2) the hardship to the parties of withholding court

17

consideration.”

Nat'l Park Hospitality Ass'n v. Dep't of

Interior, 538 U.S. 803, 808 (2003) (citing Abbott Laboratories,
387 U.S. at 149).

While a “regulation is not ordinarily

considered the type of agency action ripe for judicial review
under the [Administrative Procedure Act] . . . . a substantive
rule, which . . . requires the plaintiff to adjust his conduct
immediately . . . . is ripe for review at once.”

Lujan 497 U.S.

at 891 (citing Abbott Laboratories, 387 U.S. at 152-54).
The Deeming Rule is a final rule issued by the FDA on
May 10, 2016 after undergoing notice and comment rulemaking
pursuant to 5 U.S.C. § 553.
August 8, 2016.

The Rule went into effect as of

“Upon the effective date of this final rule . .

. the newly deemed products will be subject to the [same
provisions and regulatory requirements] to which cigarettes,
cigarette tobacco, roll-your-own tobacco, and smokeless tobacco
are subject.”

Deeming Rule 81 FR 28974, 28976.

At the time

that the Rule went into effect, Mr. Faircloth’s First Amendment
rights were potentially abrogated to the extent asserted in
Count IV of his complaint.

Accordingly, this claim is ripe for

review.

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supporting briefs, memoranda, affidavits, or other
such matter in support thereof. (All motions
unsupported by memoranda will be denied without
prejudice pursuant to L.R. Civ. P. 7.1 (a)).
02/08/2016

Last day for Rule 26(f) meeting.
V.
Conclusion

02/15/2016
Last day to file Report of Parties= is ORDERED
Based upon the foregoing discussion, it Planning
Meeting. See L.R. Civ. P. 16.1.
that the defendants’ motion to dismiss be, and hereby is,
02/22/2016
Scheduling conference at 4:30 p.m. at the Robert C.
Byrd United and V Courthouse in Charleston, before
granted as to Counts I-III States of the complaint. It is
the undersigned, unless canceled. Lead counsel
directed to appear.
further ORDERED that the defendants’ motion to dismiss be, and
02/29/2016
Entry to Count IV of the complaint.
hereby is, denied as of scheduling order.
03/08/2016

Last day to serve F.R. Civ. P 26(a)(1) disclosures.

The Clerk is directed to transmit copies of this order
The Clerk is requested to transmit this Order and
to counsel all record and any unrepresented parties.
Notice to of counsel of record and to any unrepresented

parties.
DATED: September 5, 2016
DATED: January 28, 2017

John T. Copenhaver, Jr.
United States District Judge

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