Swisher International, Inc. v. United States Food and Drug Administration

• Court: Court of Appeals for the Eleventh Circuit
• Decided: February 3, 2022
• Docket: 21-13088
• Status: Unpublished

Opinion

USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 1 of 15

[DO NOT PUBLISH] In the United States Court of Appeals For the Eleventh Circuit

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No. 21-13088 Non-Argument Calendar ____________________

SWISHER INTERNATIONAL, INC., Plaintiff-Appellant, versus UNITED STATES FOOD AND DRUG ADMINISTRATION, ACTING COMMISSIONER OF FOOD AND DRUGS, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, SECRETARY OF HEALTH AND HUMAN SERVICES,

Defendants-Appellees. USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 2 of 15

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Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 3:21-cv-00764-BJD-JBT ____________________

Before JORDAN, ROSENBAUM, and NEWSOM, Circuit Judges. PER CURIAM: This appeal of the denial of preliminary injunctive relief arises out of the U.S. Food and Drug Administration’s (“FDA”) de- cision in 2016 to include cigars, pipe tobacco, and electronic nico- tine delivery systems (e-cigarettes) among the tobacco products subject to the regulatory framework of the Family Smoking Pre- vention and Tobacco Control Act, Pub. L. No. 111-31, 123 Stat. 1776 (2009). As a result of that decision, nearly all tobacco products must receive FDA approval before being marketed. The pre- market review requirements were deferred for a time for products that were already on the market at the time of the 2016 decision, but enforcement is now at the discretion of the FDA. Appellant Swisher International, Inc., which manufactures and sells cigar products, argues that it will suffer irreparable harm without an injunction preventing the FDA from pursuing enforce- ment against it pending the resolution of its lawsuit, which chal- lenges the validity of the 2016 decision and the FDA’s failure to act on its timely submitted applications for FDA approval. The district USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 3 of 15

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court denied a preliminary injunction, finding that the FDA was not likely to pursue enforcement related to Swisher’s existing prod- ucts while its applications remained pending. Because the district court did not abuse its discretion, we affirm. I. In 2009, Congress enacted the Tobacco Control Act, which established a comprehensive framework for the FDA to regulate “[t]obacco products.” 21 U.S.C. § 387a(a); see id. § 321(rr)(1) (de- fining “tobacco product”). The Act applied to “cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco and to any other tobacco products that the [FDA] by regulation deems to be subject to this subchapter.” Id. § 387a(b). In 2016, the FDA issued a rule deeming all products that meet the statutory definition of “tobacco product” (other than ac- cessories of such products), including cigars, pipe tobacco, and e- cigarettes, subject to the Tobacco Control Act. Food and Drug Ad- ministration, Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act, 81 Fed. Reg. 28,973, 28,975, 28,982 (May 10, 2016) (codified at 21 C.F.R. §§ 1100, 1140 & 1143). We refer to this decision as the Deeming Rule. As relevant here, the Tobacco Control Act requires manu- facturers to obtain FDA authorization before marketing “new to- bacco products,” which are products that were not already on the market as of February 2007 or that were modified after that date. 21 U.S.C. § 387j(a). New tobacco products without premarket USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 4 of 15

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authorization are deemed to be “adulterated” or “misbranded,” id. §§ 387b(6), 387c(a)(6), and subject to civil and criminal penalties, injunctive relief, and seizure. See id. § 331 (prohibited acts); id. § 332 (injunctive relief); id. § 333 (penalties), id. § 334 (seizure). A manufacturer can obtain premarket authorization by sub- mitting a report showing that a product is “substantially equiva- lent” either “to a tobacco product commercially marketed” as of February 2007 or to a tobacco product previously determined to meet that test. 1 21 U.S.C. § 387e(j)(1); Id. § 387j(a)(2)(i)(I). A new product is substantially equivalent if it “has the same characteris- tics” as the comparison or “predicate” product or if the “different characteristics” of the new product “do[] not raise different ques- tions of public health” as the comparison product raises. Id. § 387j(a)(3)(A). In issuing the Deeming Rule, the FDA stated it would defer enforcement of the premarket authorization requirements with re- spect to products that were on the market as of the effective date of the Deeming Rule. 81 Fed. Reg. at 29,010. As relevant here, the FDA stated that it did not intend to enforce those requirements for 18 months from the rule’s effective date while manufacturers sub- mitted the reports, and for up to an additional 12 months while the

1 Distinct premarket review processes apply to (1) new tobacco products with- out a substantially equivalent pre-2007 tobacco product, such as vaping prod- ucts, and (2) products considered “exempt” due to minor modifications of to- bacco additives. USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 5 of 15

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FDA processed them. Id. at 29,010–12. In August 2017, the FDA extended those periods until August 2021 for combustible products (like cigars), and until August 2022 for noncombustible products (like most e-cigarettes). Food and Drug Administration, Extension of Certain Tobacco Product Compliance Deadlines Related to the Final Deeming Rule, 82 Fed. Reg. 37,459 (Aug. 10, 2017). In a later lawsuit, however, a federal district court in Mary- land vacated the FDA’s August 2017 extension. Am. Acad. of Pedi- atrics v. Food & Drug Admin., 379 F.Supp.3d 461 (D. Maryland 2019). The court found that the FDA’s decision to extend the dead- lines across the board by up to five years was contrary to the To- bacco Control Act and violated the Administrative Procedure Act, because it was not an exercise of the FDA’s case-by-case discretion. See id. at 493–94, 497–98. The court eventually ordered the FDA to require that premarket applications be filed by September 9, 2020. The court stated that new tobacco products subject to timely premarket applications “may remain on the market without being subject to FDA enforcement actions” until September 9, 2021. In June 2021, the FDA held a public webinar related to deemed products in anticipation of the approaching deadline. FDA staff members acknowledged the substantial backlog of pending premarket review applications. Nevertheless, consistent with the Maryland district-court decision, they advised that new tobacco products “risk FDA enforcement” if not authorized by September 9, 2021, subject to the FDA’s “discretion to defer enforcement USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 6 of 15

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action against a particular product on a case by case basis” after that time. II. Swisher produces 173 different cigars, which make up nearly all its revenue. As a result of a Deeming Rule, it submitted 171 substantial-equivalence reports, covering most of its cigar portfo- lio, by the September 2020 deadline, investing thousands of hours and millions of dollars. Having received no response or guidance from the FDA re- garding its pending premarket review applications by August 2021, Swisher filed a lawsuit challenging the validity of the Deeming Rule and the FDA’s failure to act. Swisher alleged, among other things, that the Deeming Rule violated the non-delegation doctrine, ex- ceeded the FDA’s statutory authority, and was arbitrary and capri- cious, and that the FDA violated the Administrative Procedure Act by failing to timely act on its substantial-equivalence reports. Swisher also moved for emergency preliminary injunctive relief preventing the FDA from pursuing enforcement against its products pending the resolution of its claims. Swisher contended that, without an injunction, the FDA’s “explicit, threatened en- forcement,” coupled with its inaction on Swisher’s pending appli- cations, would force Swisher to pull its products and “shutter its cigar business to avoid civil and criminal penalties” once the defer- ment period ended on September 9, 2021. It reasoned that it should USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 7 of 15

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not be required to choose between pulling its products or risking FDA enforcement solely due to the FDA’s inaction. The record shows that, before filing suit, Swisher had writ- ten to the FDA making similar arguments and asking it to “exercise its case-by-case discretion to stay enforcement of the Tobacco Con- trol Act for all Swisher products for which applications for pre-mar- ket review are currently pending.” The FDA responded by letter dated August 12, 2021, stating that, “[a]t present, FDA has no in- tention of initiating an enforcement action against any of Swisher’s products” that are the subject of this dispute “on the ground that they are being marketed contrary to” the premarket review re- quirements. The letter continued, If FDA were to later seek to initiate an enforcement action regarding 21 U.S.C. § 387j as to any of those products, it would first send a warning letter to Swisher, consistent with the agency’s usual practice, and would afford Swisher 60 days to respond. The agency would then evaluate any arguments and evi- dence provided by Swisher in response to the warn- ing letter before informing Swisher of any decision to initiate an enforcement action. The district court held a hearing on Swisher’s motion for a preliminary injunction on September 1, 2021. At the hearing, the attorney for the FDA reiterated the FDA’s position from the Au- gust 12 letter, stating that the FDA had no present intent to bring an enforcement action against Swisher, but that Swisher would be USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 8 of 15

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given 60 days’ advance notice and an opportunity to respond if cir- cumstances changed. So in the FDA’s view, an injunction was not necessary to preserve the status quo. The attorney asserted that granting injunctive relief to Swisher could and likely would lead to a de facto reinstatement of the August 2017 guidance and an effec- tive overruling of the Maryland district-court decision. In response to the court’s questions, the attorney also explained that, if the FDA ultimately did send Swisher a warning letter, it would consider whether a substantial-equivalence report was pending, among other factors, and it would consider violations that occur after the date of the warning letter only, even if it had the authority to im- pose retroactive penalties. For its part, Swisher said that the FDA would not have op- posed its request for a preliminary injunction if the threat of en- forcement was not real, and that it did not need to wait for a warn- ing letter to obtain relief. And in addition to claiming that it would have to shutter its business without an injunction, Swisher asserted that it was being irreparably harmed by the “black cloud” hanging over its products. In support, Swisher pointed to evidence that one of its largest customers was considering no longer selling Swisher’s products if Swisher could not certify its compliance with governing regulations by September 1, 2021. The district court denied Swisher’s motion on September 7, 2021. In sum and substance, the court found that Swisher would not be irreparably harmed if an injunction did not issue because the risk of FDA enforcement was not sufficiently imminent. The court USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 9 of 15

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noted that the FDA’s statements at the webinar indicated that “the risk of enforcement would be accompanied by case-by-case review and companies could obtain continued deferment.” And given the FDA’s August 12 letter to Swisher and its past conduct, according to the court, there was no credible reason to believe that an en- forcement action was forthcoming, or, if one did come, that a court could not enjoin the FDA at that time. In particular, the court noted that the FDA was not required to take enforcement action or assess sanctions; that Swisher had not been “unambiguously” threatened and there was “no history of the FDA threatening Swisher for marketing products still under premarket review”; and that the FDA not only “indicated a willingness to delay any enforce- ment action, but it attempted to issue guidance affirmatively delay- ing such action.” Based on these observations, the district court concluded that the September 9, 2021, court-imposed deadline “exists merely as a possibility” and was “not sufficiently likely to be accompanied by imminent enforcement action, when considered along with the FDA’s letter and past actions, to justify injunctive relief.” The court was receptive to the gist of Swisher’s position, stating that FDA en- forcement against products subject to timely premarket review ap- plications “appears on its face, as unjust, contrary to princip[le]s of due process, and potentially ruinous to Swisher.” “But,” in the court’s view, the court continued, “that is not what is happening.” As for Swisher’s reliance on harm stemming from its cus- tomer’s concerns about the regulatory morass, the court found that USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 10 of 15

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the asserted injury was not traceable to the FDA and that “an in- junction would not preserve the status quo given the passage of the deadline given by the customer.” This appeal followed.2 III. We apply a “highly deferential” standard of review to a dis- trict court’s denial of a preliminary injunction, reversing “only if we find that the court clearly abused its discretion.” Siegel v. Le- Pore, 234 F.3d 1163, 1178 (11th Cir. 2000) (en banc). We review the district court’s findings of fact for clear error and its conclusions of law de novo. Forsyth Cnty. v. U.S. Army Corps of Eng’rs, 633 F.3d 1032, 1039 (11th Cir. 2011). IV. A district court may grant a preliminary injunction only if the movant shows that “(1) it has a substantial likelihood of success on the merits; (2) irreparable injury will be suffered unless the in- junction issues; (3) the threatened injury to the movant outweighs whatever damage the proposed injunction may cause the opposing party; and (4) if issued, the injunction would not be adverse to the public interest.” Siegel, 234 F.3d at 1176. “A preliminary injunction is an extraordinary and drastic remedy not to be granted unless the

2 In the same order, the district court also granted the FDA’s motion to trans- fer this case to the United States District Court for the District of Columbia for consolidation with a previously filed case involving similar claims brought by the Cigar Association of America. Swisher does not appeal the transfer deci- sion. USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 11 of 15

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movant clearly established the burden of persuasion as to each of the four prerequisites.” Id. (cleaned up). Indeed, “a preliminary injunction is ‘an extraordinary remedy never awarded as of right.’” Benisek v. Lamone, 138 S. Ct. 1942, 1943 (2018). We begin—and ultimately end—our discussion with irrepa- rable injury, which is “the sine qua non of injunctive relief.” Id. (quotation marks omitted). Even where a movant establishes a likelihood of success on the merits, the absence of a showing of irreparable injury “would, standing alone, make preliminary in- junctive relief improper.” Id. For an injunction to issue, “the asserted irreparable injury must be neither remote nor speculative, but actual and imminent.” Id. at 1176–77 (quotation marks omitted). In other words, irrepa- rable harm must be “likely in the absence of an injunction.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 21–22 (2008) (emphasis in original). “[A] possibility of irreparable harm” is not enough. Id. The district court did not abuse its discretion in denying pre- liminary injunctive relief on the ground that Swisher was not likely to suffer irreparable harm without an injunction. The court rea- sonably concluded that Swisher did not “clearly establish[]” its bur- den of persuasion as to that factor. See Siegel, 234 F.3d at 1176. At the outset, we acknowledge that FDA enforcement re- mains a possibility. According to the FDA, it retains case-by-case discretion to commence enforcement actions after September 9, 2021, even against products for which substantial-equivalence USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 12 of 15

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reports remain pending. Because (as far as we know) the FDA has yet to act on Swisher’s reports, there remains at least the possibility that Swisher will be subject to enforcement action for marketing products that have not passed the premarket review process. But “a possibility of irreparable harm” is not enough. Win- ter, 555 U.S. at 21–22. And here, the record amply supports the district court’s finding that FDA enforcement against Swisher’s products once the deferment period ended on September 9, 2021, was neither “likely,” id., nor “actual and imminent,” Siegel, 234 F.3d at 1176–77. In its August 12 letter to Swisher, FDA stated that it had “no intention of initiating an enforcement action against any of Swisher’s products” that are the subject of this dispute “on the ground that they are being marketed contrary to” the premarket review requirements. The FDA’s attorney reiterated that position at the hearing on the motion for a preliminary injunction. And that position is also consistent with the FDA’s August 2017 guidance— later vacated by court order—deferring enforcement of the pre- market review requirements. That no enforcement action against Swisher was intended or even contemplated by the FDA once the deferment period ended is further supported by the lack of enforcement to date. It appears that the FDA has taken no steps to warn Swisher about its products or to institute an enforcement action against Swisher USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 13 of 15

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since September 10. 3 Nor has Swisher suggested that it has re- moved any of its products from stores or taken other mitigatory measures in anticipation of such agency action. Moreover, the district court reasonably concluded that, even if circumstances changed and the FDA decided to enforce, Swisher was unlikely to suffer irreparable harm because it would have an opportunity to seek to enjoin the FDA before any harm was realized. At the hearing on the motion for preliminary injunc- tion, the FDA represented that, consistent with its general prac- tices, it would not bring an enforcement action without providing 60 days’ advance notice and considering Swisher’s response, and that it would seek penalties for only those violations occurring after the warning letter. Swisher’s objections that an FDA warning let- ter itself carries legal consequences, or that it would be too late to seek injunctive relief once a warning letter was issued, are not well taken. See Holistic Candlers & Consumers Ass’n v. Food & Drug Admin., 664 F.3d 940, 943 (D.C. Cir. 2012) (“FDA’s warning letters

3 On September 9, 2021, the FDA issued an update regarding its progress on reviewing applications for premarket approval. Consistent with its earlier statements, the FDA advised that new tobacco products without premarket authorization “are subject to enforcement action at FDA’s discretion,” but that the FDA’s highest enforcement priorities concerned “[p]roducts for which no application [for premarket review] is pending.” FDA, Perspective: FDA’s Pro- gress on Tobacco Product Application Review and Related Enforcement (Sept. 9, 2021), available at https://www.fda.gov/tobacco-products/ctp- newsroom/perspective-fdas-progress-tobacco-product-application-review- and-related-enforcement (last visited Jan. 26, 2019). USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 14 of 15

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. . . neither mark the consummation of the agency’s decisionmak- ing process nor determine the appellants’ legal rights or obliga- tions.”). 4 Nor are we persuaded on this record by Swisher’s claims that the legal uncertainty surrounding its products is causing it ir- reparable harm. Swisher claims that it is losing customers and goodwill by being stuck in legal limbo through no fault of its own. While the “loss of customers and goodwill is an irreparable injury,” BellSouth Telecomms., Inc. v. MCIMetro Access Transmissions Servs., LLC, 425 F.3d 964, 970 (11th Cir. 2005) (quotation marks omitted), Swisher’s evidence does not show that it has lost custom- ers or goodwill. Although a major customer had indicated that the legal uncertainty might lead it stop purchasing Swisher’s cigars, Swisher’s own briefing indicates that it “has been able to avoid that disaster as of now.” Swisher asserts that such a disaster “could well materialize” and that it “fully expects other distributors to have similar concerns,” but these claims are speculative and do not clearly show that injunctive relief is necessary. On the whole, we cannot say that the district court clearly abused its discretion by concluding that an injunction was not nec- essary to preserve the status quo pending the resolution of Swisher’s lawsuit. See Siegel, 234 F.3d at 1178. In our view, the

4 FDA, Regulatory Procedures Manual, ch.4, at 4 (Oct. 2021) (“A Warning Let-

ter is informal and advisory. It communicates the agency’s position on a mat- ter, but it does not commit FDA to taking enforcement action.”). USCA11 Case: 21-13088 Date Filed: 02/03/2022 Page: 15 of 15

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district court reasonably found, based on the current record, that the likelihood of irreparable harm was too remote to justify grant- ing preliminary injunctive relief. 5 We therefore affirm the denial of Swisher’s motion for a preliminary injunction. AFFIRMED.

5 The cases on which Swisher primarily relies do not require a different result. For the most part, these cases concern the requirements of Article III standing for pre-enforcement review where a plaintiff has expressed an intent to engage in proscribed conduct arguably protected by a constitutional inter- est, such as free speech. See, e.g., Wollschlaeger v. Governor, Fla., 848 F.3d 1293, 1303–06 (11th Cir. 2017) (en banc) (stating that a “credible threat of pros- ecution” is sufficient to confer standing in such a case); Robinson v. Att’y Gen., 957 F.3d 1171, 1177–78 (11th Cir. 2020); Socialist Workers Party v. Leahy, 145 F.3d 1240, 1244 (11th Cir. 1998). They do not directly speak to the require- ments for granting injunctive relief. Moreover, irreparable harm is not a legal determination like standing, but instead is an equitable one to be made based on the specific facts of the case. See, e.g., America’s Health Ins. Plans v. Hudg- ens, 742 F.3d 1319, 1334 (11th Cir. 2014) (describing irreparable harm as an “equitable factor[]”). And for the reasons we have explained, the district court did not abuse its discretion in finding, in the specific circumstances of this case, that Swisher would not be irreparably harmed without an injunction.