B & G Enterprises, Ltd. v. United States

48 Fed. Cl. 866, 2001 U.S. Claims LEXIS 41, 2001 WL 284946
CourtUnited States Court of Federal Claims
DecidedMarch 22, 2001
DocketNo. 98-598 C
StatusPublished
Cited by3 cases

This text of 48 Fed. Cl. 866 (B & G Enterprises, Ltd. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
B & G Enterprises, Ltd. v. United States, 48 Fed. Cl. 866, 2001 U.S. Claims LEXIS 41, 2001 WL 284946 (uscfc 2001).

Opinion

OPINION AND ORDER

HODGES, Judge.

Plaintiff alleges that the United States took its cigarette vending machine business and seeks compensation under the Fifth Amendment. FDA Regulations issued in August 1996 restricted the location of vending machines that sell cigarettes and smokeless tobacco. As a result of these regulations, plaintiff claims that it lost contracts with location owners for placement of the machines. Plaintiffs original complaint alleged that the United States also was responsible for a California statute related to the Substance Abuse Prevention and Treatment Block Grant Program. We dismissed that count. See B & G Enterprises, Ltd. v. United States, 43 Fed.Cl. 523 (1999), aff'd, 220 F.3d 1318 (Fed.Cir.2000).1

Defendant filed a motion to dismiss contending that plaintiff did not suffer a taking of its property, in part because the final vending machine regulation was never implemented. The final regulation restricting the placement of vending machines was not implemented or enforced. We grant defendant’s motion.2

BACKGROUND

The FDA published a proposed rule governing the sale of cigarettes and smokeless tobacco to children and adolescents on August 11, 1995. 60 Fed.Reg. 41314-41787. The purpose of this rule was to “reduce the availability and attractiveness of tobacco products to young people.” FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 127, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000) [867]*867(citing 60 Fed.Reg. 41314). The proposed rule would restrict the sale of cigarettes and smokeless tobacco products to individuals under 18 years of age. Retailers would be required to verify the age of individuals wishing to purchase such products. The proposed rule would “eliminate ‘impersonal’ methods of sale that do not readily allow age verification, such as mail orders, self-service displays and vending machines.” 60 Fed. Reg. at 41315; see also 60 Fed.Reg. at 41322-25. Only a direct, face to face exchange would be permitted under the regulations. 60 Fed.Reg. at 41374.

FDA published its final regulations restricting the sale, distribution, and use of cigarettes and smokeless tobacco on August 28, 1996. The regulations, which affected retailers of tobacco products, stated in part: § 897.14:

[E]ach retailer is responsible for ensuring that all sales of cigarettes or smokeless tobacco to any person comply with the following requirements:
(a) No retailer may sell cigarettes or smokeless tobacco to any person younger than 18 years of age;
(b) (1) [E]ach retailer shall verify by means of photographic identification containing the bearer’s date of birth that no person purchasing the product is younger than 18 years of age;
(2) No such verification is required for any person over the age of 26;
(c) Except as otherwise provided in § 897.16(c)(2)(ii), a retailer may sell cigarettes or smokeless tobacco only in a direct, face-to-face exchange without the assistance of any electronic or mechanical device (such as a vending machine);
§ 897.16:
# * >:< >¡5 *
(c) Vending machines, self-service displays, mail-order sales, and other “impersonal’’ modes of sale. (1) Except as otherwise provided under this section, a retailer may sell cigarettes and smokeless tobacco only in a direct, face-to-face exchange between the retailer and the consumer. Ex-ampies of methods of sale that are not permitted include vending machines and self-service displays.
(2) Exceptions. The following methods of sale are permitted:
(ii) Vending machines (including vending machines that sell packaged, single cigarettes) and self-service displays that are located in facilities where the retailer ensures that no person younger than 18 years of age is present, or permitted to enter, at any time.

The regulations at 21 C.F.R. § 897.14(a)-(b) were effective beginning on February 28, 1997. Under the final rules, retailers are not permitted to sell tobacco products to persons under age 18 and retailers must verify the purchaser’s age with photo identification. The restrictions in 21 C.F.R. 897.14(c) and 897.16(c), which limit sales from vending machines to locations in which only persons over 18 years of age may enter, were scheduled to become effective August 28,1997.

Several tobacco companies and advertising companies brought suit in district court challenging FDA’s authority under the Food, Drug, and Cosmetic Act to regulate tobacco in this manner. 21 U.S.C. § 301 et seq. The district court ruled on April 25, 1997 that FDA possessed authority to issue the regulations restricting the sale of these products, but ordered that the FDA “not implement any of the additional Regulations set for implementation on August 28, 1997, pending further orders by the court.” Coyne Beahm, Inc. v. FDA 966 F.Supp. 1374, 1400-01 (M.D.N.C.1997). The age and ID regulations that went into effect in February 1997 were not stayed. Id. at 1400.

The Fourth Circuit reversed Coyne Beahm on appeal in August 1998. Brown & Williamson Tobacco Corp. v. FDA 153 F.3d 155, 176 (4th Cir.1998). The circuit held that the FDA was not authorized to regulate tobacco and the stay continued. The Supreme Court affirmed the Fourth Circuit in March 2000. FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000). The Court stated, “Congress has directly spoken to the issue here and pre-[868]*868eluded the FDA’s jurisdiction to regulate tobacco products.” Id. at 133, 120 S.Ct. 1291.

DISCUSSION

Plaintiff alleges that a taking of its property began in August 1995 when the FDA issued proposed regulations. The taking ended when the Supreme Court ruled that the FDA did not possess jurisdiction to regulate tobacco products. Plaintiffs argument is that the FDA’s publication of its proposed regulations, coupled with the final regulations and a January 1997 letter sent to retailers informing them of the restrictions, constituted a taking of its placement contracts.

The January 1997 letter referenced by plaintiff was sent to retail establishments by the Department of Health and Human Services. It states in relevant part:

Beginning February 28, 1997, it is a Federal violation for any retailer to sell these products to anyone under 18 years old.... [T]o prevent sales to youngsters under 18 who look older than their age, retailers must verify the age of any buyer under 27 by checking a photo ID.... Additional measures will take effect on August 28, 1997....

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48 Fed. Cl. 866, 2001 U.S. Claims LEXIS 41, 2001 WL 284946, Counsel Stack Legal Research, https://law.counselstack.com/opinion/b-g-enterprises-ltd-v-united-states-uscfc-2001.