Supreme Court Rules Against Makers of Flavored Vapes Popular With Teens
In a unanimous decision written by Justice Samuel A. Alito Jr., the justices upheld an F.D.A. order that prohibited retailers from marketing flavored tobacco products. The court rejected claims that the agency had unfairly switched its requirements during the application process.
Justice Alito wrote that the agency's denials of the applications were 'sufficiently consistent' with agency guidance on tobacco regulations. The justices rejected a ruling by the U.S. Court of Appeals for the Fifth Circuit that the agency had acted arbitrarily and capriciously, finding that the F.D.A. had not tried to change the rules in the middle of the approval process.
A 2009 law, the Family Smoking Prevention and Tobacco Control Act, requires makers of new tobacco products to obtain authorization from the F.D.A. According to the law, the manufacturers' applications must demonstrate that their products are 'appropriate for the protection of the public health.'
The agency has denied many applications under the law, including the two at issue in the case before the justices, saying the flavored liquids presented a 'known and substantial risk to youth.'
The appeals court ruled last year that the agency had changed the rules in the middle of the application process, accusing it of 'regulatory switcheroos' that sent the companies 'on a wild-goose chase.' More formally, the court said the agency's actions had been arbitrary and capricious.
In asking the Supreme Court to hear the case, Food and Drug Administration v. Wages and White Lion Investments, No. 23-1038, the agency's lawyers cited another appeals court that had reached the opposite conclusion. The Fifth Circuit's decision 'has far-reaching consequences for public health and threatens to undermine the Tobacco Control Act's central objective of 'ensuring that another generation of Americans does not become addicted to nicotine and tobacco products,'' they wrote, quoting from the other appeals court's decision.
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And there were also some agreements that may be unfair, the Supreme Court said, where there were fixed commissions or non-discretionary commissions. So it's a wide range the market. Each firm will need to estimate for themselves what the impact will be, because they all have different practices here and some of them will have more agreements that were potentially breaking the law or breaking our rules and therefore will need to compensate as compared to others and practices change over time as well. In terms of breakdown, those lenders are a little bit further from, as you mentioned, over 25.6 million contracts. Walk us through how much of that in your perspective is non-bank institutions versus your traditional banks? So then have that data into hand. 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We'll talk to us about that compensation or those payouts as well. How many consumers are we talking about? What kind of timeline, what kind of payout can we expect? We're going to have to work through the numbers. I gave you the numbers of the overall agreements, but not all of those will qualify. We've also said we're going to consult on a de minimis threshold, which is where there's very small amounts of commission. They may not be included in our scheme. We would like industry to cooperate with us. Now the Supreme Court has ruled we'd like to work closely with industry so that we can get on and design the operation of the scheme promptly over the next few months so that payouts can start the next year. That gives consumers the certainty they want, but it also gives firms the certainty that they and their investors have been asking for. So my message to industry would be, Now work with us. Don't try and argue for every technical point because it will just slow things down. Let's get this up and running and operationalised and get the certainty we're all after.
