Tobacco Companies Oppose Dismissal of Warnings Regulation Lawsuit

On July 17, R.J. Reynolds Tobacco Company and other plaintiffs responded to the Food and Drug Administration’s (FDA) motion to dismiss a suit challenging a graphic-warnings regulation for cigarette packages.  The graphic-warnings regulation would require images of smoking injuries and side effects to be included on packaging.

In 2009, Congress passed the Family Smoking Prevention and Tobacco Control Act, which would have required “massive ‘color graphics depicting the negative health consequences of smoking.’”  However, the D.C. Circuit held that it violated the First Amendment, but the FDA on March 18, 2020, issued another second graphic-warnings regulation that plaintiffs challenged in this suit.  The plaintiffs are R.J. Reynolds Tobacco Company, Santa Fe Natural Tobacco Company, Inc., ITG Brands, LLC, Liggett Group LLC, Neocom, Inc., Rangila Enterprises Inc., Rangila LLC, Sahil Ismail, Inc., and Is Like You Inc.  The complaint was filed on April 3, 2020. 

The defendants moved to dismiss this case on July 2.  The main arguments offered were that plaintiff Neocom, Inc., should be dismissed for lack of standing, and the suit itself should be dismissed for lack of venue.  Alternatively, defendants suggested the case should be transferred to the District of Columbia. 

In opposition, the plaintiffs addressed the argument that Necom should be dismissed.  First, plaintiffs asserted venue would remain proper even if Neocom were dismissed, because absent fraudulent joinder, “which Defendants do not and could not prove,” venue is not lost by dismissal of a party whose presence was necessary to establish venue.  Furthermore, plaintiffs argued that the venue would also remain proper if Neocom was dismissed, because the four of the plaintiffs manufacture and sell cigarettes “extensively” in the Eastern District of Texas where the case is filed. 

The plaintiffs countered the defendants’ argument that Neocom should be dismissed for lacking Article III standing, specifically the “injury-in-fact” requirement by providing four reasons Neocom can show injury.  First, being that Neocom has standing based on First Amendment harms, because Neocom has asserted “it disagrees” with being forced to express the graphic images that would display negative effects of smoking to its customers.  The FDA argued Neocom is only being forced not to alter the packaging that only affects the manufacturers, but plaintiffs countered that the defendants offer no case law in support of that argument.  Next, plaintiffs argued Neocom will suffer aesthetic harms because it will “[be] forced to display off-putting images in its stores.” 

The third alleged harm is that Neocom will suffer an increased regulatory burden, which can establish standing.  In support, the plaintiffs cite the Fifth Circuit, which has “made it clear that ‘[a]n increased regulatory burden typically satisfies the injury in fact requirement.’”  Finally, plaintiffs argued Neocom has standing because of the monetary harm it will suffer.  It is stated that Neocom has two options: either to continue to sell and advertise cigarettes or to stop.  It’s argued that this is a “Hobson’s choice,” because behind gasoline, cigarettes are the bulk of Neocom’s business, so they will not stop, but if it is forced to display these graphic images, it will bring negative financial costs to the company.  “It is hardly a surprise that large, shocking images—depicting, for example, a large tumor, bloody urine, or a pair of diseased feet with amputated toes—are not conducive to a thriving retail environment.”

Overall, the plaintiffs have sought the court to reject all of the defendants’ claims and allow the case to proceed.

R.J. Reynolds Tobacco Company, Santa Fe Natural Tobacco Company, Inc., Neocom, Inc., Rangila, Sahil Ismail, Inc., and Is Like You Inc., are being represented by Jones Day.  ITG Brands is being represented by Latham & Watkins, and Ligget Group is being represented by O’Melveny & Myers and Kasowitz Benson Torres.