First published on Law360.

A federal court last month dismissed a case challenging the U.S. Food and Drug Administration’s allowance of the word “natural” in the product packaging and labeling of Natural American Spirit cigarettes. The plaintiff lacked standing to sue under Article III, § 2, of the U.S. Constitution, which limits federal courts to deciding actual “cases” or “controversies.”

The case is Sproule v. U.S. Food & Drug Administration et al.,[1] and the standing decision is significant in outlining limits on the ability to litigate over regulatory inaction.

Background

The plaintiff in the case was a self-professed smoker of Natural American Spirit cigarettes. He challenged a memorandum of agreement between the FDA and Reynolds American Services Co./Santa Fe Natural Tobacco Co Inc., collectively, "Santa Fe," related to the uses of the words “natural” and “additive free” in Natural American Spirit labeling and advertising.

According to the plaintiff, the word “natural” rendered Natural American Spirit cigarettes modified risk tobacco products, or MRTPs, which, absent an appropriate marketing order, would be prohibited from sale under the Family Smoking Prevention and Tobacco Control Act.[2] Santa Fe had not sought, and the FDA had not granted, such a marketing order.

The memorandum of agreement had been reached in resolution of an FDA warning letter challenging Santa Fe’s uses of “natural” and “additive free” in connection with Natural American Spirit cigarettes. The warning letter asserted that the terms rendered the cigarettes MRTPs because they represented either or both of the following: “that the products or their smoke do not contain or are free of a substance” or “that the products present a lower risk of tobacco-related disease or are less harmful than one or more other commercially marketed tobacco products.”

Notably, the Tobacco Control Act has another provision stating that a tobacco product’s “label, labeling or advertising ... us[ing] the descriptors ‘light’, ‘mild’ or ‘low’ or similar descriptors” qualifies the product as an MRTP.[3] The FDA’s warning letter apparently represented the first time that the agency took the position that “natural” and “additive free” descriptors rendered products MRTPs.

Santa Fe disputed the warning letter, and the parties ultimately resolved the dispute in the memorandum of agreement. Under the memorandum, Santa Fe would phase out Natural American Spirit’s use of the phrase “additive free” and certain uses of the term “natural.” Santa Fe could, however, continue to use the word “natural” in Natural American Spirit brand names and trademarks.

On June 6, 2017, the plaintiff filed his complaint in the U.S. District Court for the Southern District of Florida. In short, he complained that the FDA’s entry into the memorandum of agreement constituted a departure from the required MRTP procedures and, therefore, violated the Tobacco Control Act and the Administrative Procedure Act.

Lack of Standing

The FDA promptly moved to dismiss the plaintiff’s complaint, and the court granted the motion on account of the plaintiff’s failure to establish standing.

As recognized by the court, “[t]o satisfy [the] case-or-controversy requirement and establish standing to sue, plaintiff must show: (1) [he] has suffered an injury in fact that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.”

Significant to the plaintiff’s theory of standing, the contents of an MRTP application are made available to the public.[4] Thus, the plaintiff asserted that Santa Fe’s failure to submit an MRTP application deprived him of Natural American Spirit information that he otherwise would have been able to access. This argument did not suffice, as the court held that the plaintiff’s alleged “informational injury” failed the second and third prongs of the standing inquiry: causation and redressability.

On the causation requirement, the court recognized that “[p]laintiffs cannot rely on speculation about the unfettered choices made by independent actors not before the court.”[5] The court held that the plaintiff’s argument did just that in speculating about what unfettered choices Santa Fe (an independent actor not before the court) might have made absent the memorandum of agreement. T

here were “any number of choices in response to the Warning Letter,” including “submit[ing] an application for a [MRTP order],” “chang[ing] [the] labeling and advertising to avoid the application process and to avoid penalties,” “tak[ing] no action at all, in response to which the FDA may or may not have initiated an enforcement action or pursued other penalties,” and, even if “the FDA initiated an enforcement action, Santa Fe may have chosen to contest such action rather than submit an application or change its labeling and advertising.”

For similar reasons, the plaintiff failed to establish sufficient redressability — which required “a substantial likelihood that the relief requested will redress the injury claimed.”[6] Given the range of options available to Santa Fe in response to the warning letter, there was insufficient likelihood that setting aside the memorandum of agreement would result in Santa Fe’s filing of an MRTP application.

The plaintiff’s failure to establish requisite causation and redressability ended the inquiry. The court avoided the issue of whether the alleged “informational injury” constituted a sufficient “injury in fact,” instead, assuming as much “for the sake of argument.”[7] And the court did not have occasion to consider the FDA’s alternative ground for dismissal — that the plaintiff had failed to state a claim.

The immediate significance of Sproule is that (barring an appeal) the attack on the memorandum of agreement is over. Relatedly, the plaintiff’s challenge to the memorandum of agreement also came up in other litigation (in which the plaintiff is one of multiple class representatives), and it remains to be seen how the standing decision might affect any aspect of that case.[8]

More broadly, it is important to recognize that Sproule involved a litigant’s attempt to use the courts to force regulatory action against another party not before the court. The court recognized this and quoted at length from an opinion of Justice Antonin Scalia, speaking to such a situation. In sum, “when the plaintiff is not himself the object of the government action or inaction he challenges, standing is not precluded, but it is ordinarily substantially more difficult to establish.”[9]