1 Main

Case 4:18-cv-00028-ALM-KPJ Document 1 Filed 01/11/18 Page 1 of 29 PageID #: 1
IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
EN FUEGO TOBACCO SHOP LLC, doing §

business as En Fuego Tobacco Shop; CUBA §
LIBRE ENTERPRISES LLC, doing §
business as El Cubano Cigars; TEXAS §
CIGAR MERCHANTS ASSOCIATION, §
§
Plaintiffs, §
§
v. §
§
UNITED STATES FOOD AND DRUG § Civil Action No. _____________________
ADMINISTRATION; UNITED STATES §
DEPARTMENT OF HEALTH AND §
HUMAN SERVICES; ERIC D. HARGAN, §
in his official capacity as Acting Secretary §
of Health and Human Services; and SCOTT §
GOTTLIEB, M.D., in his official capacity as §
Commissioner of Food and Drugs, §
§
Defendants. §
§
COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

INTRODUCTION
1. The U.S. Food and Drug Administration (“FDA”) has issued a regulation imposing
massive health warnings on every cigar and pipe tobacco box and every communication about a
cigar or pipe tobacco product from manufacturers, distributors, and retailers to consumers. See
Final Rule, Deeming Tobacco Products to Be Subject to the Federal Food, Drug, and Cosmetic
Act, 81 Fed. Reg. 28,974, 29,104–06 (May 10, 2016) (codified in relevant part at 21 C.F.R. §§
1143.1–1143.13) (the “Final Rule” or the “Rule”).
2. The warnings must be placed on boxes by August 10, 2018.
3. The warnings on cigar and pipe tobacco packages must cover 30 percent of the two
principal display panels of each box. 21 C.F.R. §§ 1143.3(a)(2)(i), 1143.5(a)(2)(i). These new
required warnings will cover up space where manufacturers and retailers speak to consumers.
Premium cigar boxes include ornate designs and images that communicate the qualities of the cigar
product. They show the care with which the cigar was made. They show the heritage of the
business making the cigar. They often show the handmade processes by which the cigars are
made, with pictures of workers in the field and artisans rolling the cigars. They communicate
important information to consumers.
4. The sheer size and stark format of the warnings ensures that the Government’s
message—its health warning—will become the dominant message on the box. The below images
show a cigar box before and after the warnings are affixed.
-1-
5. The FDA also has required that its message cover up 20 percent of all cigar and
pipe tobacco advertisements. 21 C.F.R. §§ 1143.3(b)(2), 1143.5(b)(2). The FDA declined to
define “advertisement,” insisting instead that “for purposes of this rule, the term ‘advertisement’
should be interpreted broadly and should be interpreted to include statements regarding the
availability of tobacco products.” 81 Fed. Reg. at 29,062. This interpretation reaches nearly every
communication about a cigar or pipe tobacco product that a manufacturer or retailer could make.
Any communication regarding the qualities of a cigar or pipe tobacco product and stating that it is
available for sale is covered. Every medium is covered: Communications must bear the warnings
if they are on signs, flyers, e-mails, radio and television advertisements, websites, social media,
and even in-store placards describing the products for sale.
-2-
6. Again, the large size and stark format of the warnings—black text on a white
background—make the Government’s mandated warning the dominant message on the
advertisement. It overwhelms the other visual components of the advertisement.
7. The FDA’s rule requiring manufacturers and retailers to blare the Government’s
message on their own packages and advertisements plainly violates the First Amendment. The
First Amendment prohibits government restrictions of speech, as well as mandates compelling a
person to speak as the Government wishes, except under limited circumstances. The Rule fails
the standards applicable to both restrictions on speech and compulsions of speech.
8. The Rule clearly restricts the speech of cigar and pipe tobacco manufacturers and
retailers. The Rule takes space that manufacturers and retailers use to communicate with their
customers. That the Rule restricts speech is especially clear when measured against the long-
standing warnings on cigar packages mandated by the Federal Trade Commission. Those
warnings, which are affixed to the packages of the majority of cigars sold in the United States,
cover on average 13–15 percent of one panel of the package. See, e.g., Decision and Order at 3–
6, In the Matter of Consol. Cigar Corp., Docket No. C-3966 (F.T.C. Aug. 25, 2000), 2000 WL
1207441. By seizing 30 percent of each of the two principal panels of a package, the Rule takes
up to 475 percent more of the surface area of the package than the FTC warnings do. The FTC-
mandated warnings scheme also requires warnings on the advertising of cigars issued by certain
cigar manufacturers. Id. at 6–10. These warnings cover on average 7–16 percent of an
advertisement. The FDA Rule requires the Government’s message to cover 20 percent of each
advertisement, up to nearly 300 percent more than the FTC warnings.
9. The Rule fails the standard established by the Supreme Court for evaluating a
restriction on speech. The Rule does not serve a substantial government interest, as required under
-3-
Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557
(1980). That is because the FDA has disclaimed that the Rule is designed to reduce cigar and pipe
tobacco use, but rather exclusively asserts that it serves the purpose of more effectively
communicating health information. See, e.g., 81 Fed. Reg. at 28,981. The Rule does not materially
advance any Government interest because, among other reasons, the agency has admitted there is
no reliable evidence that the speech restrictions effected by the warnings will reduce the use of
cigars or pipe tobacco. See Dep’t of Health & Human Servs., Food & Drug Admin., Deeming
Tobacco Products to Be Subject to the Food, Drug, and Cosmetic Act: Final Regulatory Impact
Analysis (“FRIA”) 62 (2016). And the Rule is not narrowly tailored. The warnings are larger and
more stark than necessary to serve any Government interest.
10. The Rule also compels manufacturers and retailers to blare the Government’s anti-
tobacco message, in a manner that is both unjustified and unduly burdensome, and thus in violation
of the First Amendment. The Government offered no evidence that warnings of this size would
reduce the use of cigars or pipe tobacco. Moreover, the warnings are far too big and are presented
in a glaring format that overtakes the other visual elements of both cigar and pipe tobacco boxes
and advertisements. Virtually every compelled warning of this size—taking 20 percent or more
of a communication—has been struck down as unduly burdensome and violating the First
Amendment when challenged in federal court. See, e.g., Am. Beverage Ass’n v. City & Cty. of
S.F., 871 F.3d 884, 894, 897 (9th Cir. 2017) (invalidating a warnings mandate confiscating 20
percent of advertisements and listing federal cases in accord).
11. The Rule also subjects what remains of a cigar manufacturer or retailer’s
commercial message to an indefinite government gag order. Purportedly to ensure that the six
cigar-specific warnings are rotated with the mathematical precision the agency desires, the FDA
-4-
has directed cigar manufacturers and retailers to submit written plans, detailing the warning
rotation schedule for each cigar brand they wish to offer for sale, no less than twelve months in
advance. 21 C.F.R. § 1143.5(c). Until the agency approves those plans—an action unconstrained
by any deadline—a cigar manufacturer or retailer cannot speak about its products. This is an
unprecedented incursion on First Amendment liberties. The harm to freedom of speech is
especially severe for retailers: If a neighborhood tobacconist wants to announce a sale, or even
just to tell its customers about a new cigar on offer, it must ask the FDA’s permission with at least
one year of lead time. The FDA requires this process before speaking despite the fact that the
products themselves will bear two additional, manufacturer-supplied warnings.
12. The FDA’s new cigar and pipe tobacco warnings regime violates the First
Amendment, the Administrative Procedure Act (the “APA”), and the Family Smoking Prevention
and Tobacco Control Act (the “FSPTCA”). The underlying regulations must be enjoined, vacated
in full, and remanded to the agency.
JURISDICTION AND VENUE
13. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331, as Plaintiffs’
claims arise under federal law and the U.S. Constitution. Specifically, Plaintiffs’ claims arise under
the Administrative Procedure Act, 5 U.S.C. §§ 701–706; the FSPTCA, 21 U.S.C. §§ 387–387u; and
the First Amendment to the Constitution.
14. Venue is proper in this district pursuant to 28 U.S.C. § 1391(e), as Plaintiff En
Fuego Tobacco Shop LLC, doing business as En Fuego Tobacco Shop (hereinafter “En Fuego”),
resides and conducts substantial business activities in this district. En Fuego operates cigar stores
at 6190 Frisco Square Boulevard, Frisco, Texas 75034; 205 East FM 544, Murphy, Texas 75094;
and 2083 Summer Lee Drive, Rockwall, Texas 75032. The Frisco and Murphy stores are both
located in this district and together account for a majority of En Fuego’s business. Venue is also
-5-
proper because Plaintiff Texas Cigar Merchants Association (hereinafter “TCMA”) has members
that are incorporated, do business, and/or reside in this district, and the Rule will adversely affect
those members. Further, a substantial part of the events or omissions giving rise to Plaintiffs’
claims have occurred and are occurring in this district.
15. An actual controversy exists between the parties under 28 U.S.C. § 2201, and this
Court has authority to grant declaratory and injunctive relief and to set aside the Rule pursuant to
28 U.S.C. §§ 2201 and 2202 and 5 U.S.C. §§ 705 and 706.
PARTIES
16. Plaintiff En Fuego is a premium cigar retailer and lounge with locations in Frisco,
Murphy, and Rockwall, Texas. En Fuego carries handmade premium cigars and pipe tobacco
products. En Fuego is a family-owned and -operated business that employs roughly 15 individuals
total across all three stores.
17. Plaintiff Texas Cigar Merchants Association is a Texas-incorporated not-for-profit
association representing premium cigar manufacturers and retailers in the State of Texas. Many
of TCMA’s members are small businesses, often family-owned and -operated. TCMA’s
membership consists of 30 delegates representing the interests of 43 members who operate
premium cigar retail and manufacturing establishments throughout the State of Texas. That
includes 7 delegates representing 7 retailers and 3 sales representatives for manufacturers in this
district. TCMA and its members have a strong interest in protecting premium cigar manufacturers
and retailers from arbitrary, capricious, and unduly burdensome regulation, and in ensuring that
any regulation of premium cigars is consistent with statutory and constitutional requirements.
TCMA has standing to bring this suit because its members would have standing to sue in their own
right, the interests TCMA seeks to protect are germane to its purposes, and neither the claims
asserted nor the relief requested requires the participation of individual members in the suit. See,
-6-
e.g., United Food & Commercial Workers Union Local 751 v. Brown Grp., Inc., 517 U.S. 544,
552–53 (1996).
18. Plaintiff Cuba Libre Enterprises LLC, doing business as El Cubano Cigars
(hereinafter “El Cubano”), is a manufacturer of handmade premium cigars. El Cubano is a small,
family-owned business that traces its roots to a family tobacco farm in Cuba in the early 20th
Century. El Cubano’s master tobacconists make cigars by hand, in the Cuban tradition, in a factory
and retail store-and-lounge in Texas City, Texas, and in a retail store-and-lounge in League City,
Texas. El Cubano also offers its cigars for sale at retail tobacco stores in Galveston and Houston,
Texas. Between its Texas City and League City locations, El Cubano employs a total of
approximately 8 individuals.
19. Defendant U.S. Department of Health and Human Services (“HHS”) is an executive
department of the U.S. Government.
20. Defendant FDA is an administrative agency within HHS. The FDA is responsible
for regulating tobacco products under the Federal Food, Drug, and Cosmetic Act (“FD&C Act”).
21. Defendant Eric. D. Hargan is the Acting Secretary of HHS and is sued in his official
capacity. The Secretary oversees the FDA’s implementation of the FD&C Act.
22. Defendant Scott Gottlieb, M.D., is the Commissioner of Food and Drugs and is
sued in his official capacity. The Commissioner is responsible for the FDA’s administration of
the FD&C Act.
BACKGROUND
A. The Handmade Premium Cigar Market
23. Plaintiff El Cubano manufactures exclusively handmade premium cigars. Premium
cigars have long been regarded as a separate segment of the broader cigar market. Handmade
premium cigars are composed entirely of natural, air-cured tobacco leaf, water, and a small amount
-7-
of vegetable-based adhesive. They are crafted through a painstaking artisanal process that involves
as many as 300 separate manual steps and takes three to five years or more.
24. Handmade premium cigars are different than mass-produced cigars, both in their
physical qualities and their patterns of use, and these differences are highly relevant to whether
they must bear large warnings covering 30 percent of both principal panels of each package and
20 percent of all advertisements.
25. Handmade premium cigars simply are not used in any material numbers by persons
under the age of 18. The Rule itself contains references to a study showing that less than 0.1
percent of youth had used a premium cigar. 81 Fed. Reg. at 29,023 (citing Cristine D. Delnevo et
al., Preference for Flavoured Cigar Brands Among Youth, Young Adults and Adults in the USA,
24 Tobacco Control 389 (2015) (Ref. 59)). Those data have been reinforced by a recent study
commissioned by the FDA and published in the New England Journal of Medicine showing that
the use of “traditional cigars”—those containing “tightly rolled tobacco that is wrapped in a
tobacco leaf”—by underaged persons on a “daily” or “frequent” basis was so small or infrequent
that it could not be reliably measured, and that only 2.3% of youths had ever used a traditional
cigar. See Karin A. Kasza et al., Tobacco-Product Use by Adults and Youths in the United States
in 2013 and 2014, 376 N. Eng. J. Med. 342 supp. app. at 3, 11 tbl.S3, 14 tbl.S4 (2017), available
at http://www.nejm.org/doi/full/10.1056/NEJMsa1607538#t=article.
26. Rather, premium cigars tend to be used by older adults. Premium cigars are
generally expensive, making them further inaccessible to youth. Those adults who do use premium
cigars generally use them less frequently than smokers of cigarettes or smaller cigars tend to use
those products.
-8-
27. The FDA itself has recognized premium cigars as a distinct class of tobacco
products. In its Proposed Rule, the FDA defined a category of premium cigars as those with a 100
percent tobacco leaf wrapper and binder, made by hand, lacking characterizing flavors, and costing
more than $10. Proposed Rule, Deeming Tobacco Products to Be Subject to the Federal Food,
Drug, and Cosmetic Act, 79 Fed. Reg. 23,142, 23,150 (Apr. 25, 2014) (the “Proposed Rule”). The
agency asked whether premium cigars should be entirely exempt from any regulation. Id. at
23,150. Many public comments supported an exemption, albeit with a more accurate and
administrable definition of “premium cigar.” The FDA ultimately determined in its Final Rule,
with little explanation, to lump in premium cigars with all other types of cigars and subject them
to the full array of regulation embodied in the Rule, including a crushing premarket review process
akin to that used for drugs and medical devices, other debilitating regulatory burdens, and the
warnings scheme described herein. 81 Fed. Reg. at 29,020–27.
28. On July 28, 2017, the agency changed course on its decision to subject premium
cigars to the regulatory scheme originally designed by Congress for cigarettes. Press Release, U.S.
Food & Drug Admin., FDA Announces Comprehensive Regulatory Plan to Shift Trajectory of
Tobacco-Related Disease, Death (July 28, 2017) (“FDA Press Release”), available at
https://www.fda.gov/newsevents/newsroom/pressannouncements/ucm568923.htm. It delayed
implementation of most aspects of the Rule for up to three-and-a-half years, including the
requirement of premarket review and the mandatory testing and reporting of harmful and
potentially harmful constituents in cigars. See id. The agency also announced that it would open
a new rulemaking docket to study whether premium cigars should be regulated at all. Id. The
announced rulemaking docket is an admission that the FDA has not adequately studied whether
and how premium cigars should be regulated. Neither the First Amendment nor the Administrative
-9-
Procedure Act allows an agency to impose an immense regulatory framework, with staggering
associated costs, on premium cigars prior to exploring the need for it.
29. The FDA also has presented no meaningful evidence that users of premium cigars
underestimate the health risks of smoking those products, such that large warnings covering 30
percent of two package panels and 20 percent of advertisements are warranted.
B. The Family Smoking Prevention and Tobacco Control Act
30. Congress passed the FSPTCA in 2009. The Act established an elaborate regulatory
scheme for cigarettes, roll-your-own tobacco (the ingredients for customers to make their own
cigarettes), and smokeless tobacco. The Act’s legislative findings were directed at the
demonstrated problem of youth cigarette and smokeless tobacco use. See generally Family
Smoking Prevention and Tobacco Control Act, Pub. L. No. 111–31, 123 Stat. 1776 (2009).
31. Importantly, Congress through the Act did not require the FDA to regulate any or
all cigars, much less premium cigars, or pipe tobacco, and took no position on whether those
products should be regulated. Instead, the Act authorized the FDA, after gathering evidence and
conducting reasoned rulemaking on the record, to regulate tobacco products other than cigarettes,
smokeless tobacco, and roll-your-own tobacco. See FD&C Act § 901(b), 21 U.S.C. § 387a(b).
32. For imposing health warnings on cigars and pipe tobacco, the Act places special
restrictions on the agency’s discretion. First, any such regulation must be “consistent with” the
First Amendment and must not exceed constitutional bounds. FD&C Act § 906(d)(1), 21 U.S.C.
§ 387f(d)(1). Second, the Secretary must make an express finding that “such regulation would be
appropriate for the protection of the public health.” Id. Congress provided specific criteria for
this determination:
- 10 -
The finding as to whether such regulation would be appropriate for the protection
of the public health shall be determined with respect to the risks and benefits to the
population as a whole, including users and nonusers of the tobacco product, and
taking into account—
(A) the increased or decreased likelihood that existing users of tobacco

products will stop using such products; and
(B) the increased or decreased likelihood that those who do not use tobacco
products will start using such products.
Id.
C. The FDA’s Rule Regulating Cigars and Pipe Tobacco
33. On April 25, 2014, the FDA published a Proposed Rule regarding the regulation of
cigars, pipe tobacco, and several other tobacco products. See 79 Fed. Reg. at 23,142–23,207.
34. Recognizing that premium cigars have different attributes and should not
necessarily be treated the same as mass-produced and smaller cigars, the agency sought comments
on two proposals: So-called “Option 1” would have created a consolidated and undifferentiated
regulatory scheme for all cigars, including with regard to the warnings scheme. Id. at 23,150.
“Option 2” would have exempted handmade premium cigars from regulation. Id.
35. The Final Rule lumped all cigars into a unified, undifferentiated regulatory scheme.
See 81 Fed. Reg. at 29,020–27. The Rule only cursorily explained why the FDA had chosen to
subject premium cigars to such a burdensome regulatory scheme, asserting little more than
“premium cigars are not healthy either.” See id. at 29,026 (“The Agency has determined that cigar
use presents health risks and that all cigars should be brought under its regulatory authority.”).
The agency never seriously addressed the voluminous data showing that youth usage is not a
statistically significant problem for premium cigars. With regard to cigar and pipe tobacco health
warnings more generally, the agency conceded that there is no “[r]eliable evidence” that the large
and burdensome health warnings would reduce cigar or pipe tobacco use. FRIA at 62; see also 81
- 11 -
Fed. Reg. at 28,981, 29,075 (acknowledging that the agency was unable to quantify any benefits
flowing from the Rule).
D. The Warning Label Regime
36. The Final Rule requires cigar packages to display one of six warning statements:
(1) WARNING: Cigar smoking can cause cancers of the mouth and throat, even if
you do not inhale;
(2) WARNING: Cigar smoking can cause lung cancer and heart disease;
(3) WARNING: Cigar use while pregnant can harm you and your baby;
Or SURGEON GENERAL WARNING: Tobacco Use Increases the Risk
of Infertility, Stillbirth, and Low Birth Weight;
(4) WARNING: Cigars are not a safe alternative to cigarettes;
(5) WARNING: Tobacco smoke increases the risk of lung cancer and heart disease,
even in nonsmokers; and
(6) WARNING: This product contains nicotine. Nicotine is an addictive chemical.
21 C.F.R. § 1143.5(a)(1). The package warnings must occupy at least 30 percent of the two
principal display panels—those “most likely to be displayed, presented, shown, or examined by
the consumer”—and must be printed in at least 12-point font. Id. §§ 1143.1, 1143.5(a)(2). In
addition, each of the six warning statements “must be randomly displayed in each 12-month
period, in as equal number of times as is possible on each brand of cigar sold in product packaging
and be randomly distributed in all areas of the United States in which the product is marketed.”
Id. § 1143.5(c)(1).
37. Warnings are also required for cigar advertisements and at the point of sale for
cigars sold individually. Id. § 1143.5(a)(3), (b). Cigar advertisements must display one of the
same six warning statements as cigar packages, and the warning must occupy at least 20 percent
of the area of the advertisement, be printed in at least 12-point font, and be surrounded by a
rectangular border between 3 mm and 4 mm wide. Id. § 1143.5(b)(2). The warning statements
likewise “must be rotated quarterly in alternating sequence in each advertisement for each brand
of cigar.” Id. § 1143.5(c)(2). These requirements apply to any visual medium—newspaper ads,
- 12 -
websites, social media, e-mails, billboards, pamphlets, catalogs, direct mailings, etc.—as well as
to radio and television advertising. See 81 Fed. Reg. at 29,062. And the warnings extend to
tobacco retailers, the small businesses that sell premium cigars in local communities. See 21
C.F.R. § 1143.5(a)–(b).
38. The types of “advertisements” subject to the warnings include in-store fixtures like
shelf-talkers, the small placards that describe the products for sale. For retail locations where
cigars are sold individually, all six of the warning statements must be printed in at least 17-point
font on a sign no smaller than 8.5 x 11 inches that is posted on or within 3 inches of each cash
register. Id. § 1143.5(a)(3). In a typical retail store, the FDA’s anti-smoking message will be
repeated hundreds of times—on cigar boxes, on store signage, and in every check-out aisle—in a
glaring black-and-white format. Each iteration will occupy valuable space that manufacturers and
retailers previously used to communicate with consumers, overwhelming what little of the
retailers’ own commercial expression survives.
39. The same formatting requirements apply to the warnings on pipe tobacco packages
and advertisements. See id. § 1143.3(a)–(b). Pipe tobacco products must bear only one warning,
however: “WARNING: This product contains nicotine. Nicotine is an addictive chemical.” Id.
§ 1143.3(a)(1).
40. The Rule’s new warnings are significantly larger than the warnings long required
by the Federal Trade Commission on the packages and manufacturer advertising of most cigars
sold in the United States. The FTC warnings must appear on the sole principal display panel of
each package and must be printed in one of six sizes, depending on the size of the package. See,
e.g., Decision and Order at 3–6, Consol. Cigar Corp., 2000 WL 1207441. On average, the FTC
warnings cover approximately 13–15 percent of one package panel. These new warnings are
- 13 -
roughly two times larger than their FTC counterparts, and cover two principal product panels rather
than one. Altogether, the FDA warnings confiscate up to nearly five times more package space
than the FTC warnings.
41. Manufacturers subject to the FTC decree also must post warnings on their
advertisements. Like the package warnings, the advertisement warnings must take one of several
sizes based on the display area of the advertisement. See, e.g., id. at 6–10. The FDA’s new
warnings are up to almost three times larger than those required by the FTC.
42. Astonishingly, the FDA made no effort to study the efficacy of the FTC warnings
before issuing the Final Rule. In fact, the agency admitted that, to its knowledge, “[r]eliable
evidence” on the impact of warning labels on users of cigars “does not . . . exist.” FRIA at 62.
Instead, it simply claimed that larger warnings are a more effective means of communication,
without credibly identifying any evidence showing an existing deficiency in consumer knowledge
or articulating any explanation of how its larger warnings would correct that supposed problem. See,
e.g., 81 Fed. Reg. at 29,064. And it made no findings about the increased or decreased likelihood
of cessation or initiation of tobacco use—a statutory prerequisite to the regulation of tobacco
marketing and advertising. That is, the FDA presented no evidence of a public health problem that
the new, larger warnings would redress, much less evidence that the warnings would have any
discernible effect on tobacco use.
43. Under the Final Rule, a cigar manufacturer or retailer cannot simply design the new
warnings and rotate the required statements on its packaging and advertisements according to the
precise instructions laid out in the Code of Federal Regulations. Rather, each manufacturer or
retailer must submit a “warning plan” to the FDA, outlining its means of complying with the Rule
for each cigar brand it intends to sell, twelve months before advertising or commercially marketing
- 14 -
that brand. 21 C.F.R. § 1143.5(c)(3). Until the agency approves that warning plan, a manufacturer
or retailer cannot sell or advertise its products. See id. § 1143.5(c); 81 Fed. Reg. at 29,072–73.
The Rule contains no final deadline for agency action on warning plans. See 21 C.F.R. § 1143.5(c).
44. Plaintiff En Fuego and many of Plaintiff TCMA’s retailer members regularly
advertise cigar brands that are new to their stores, cigar brands that are on sale, and cigar brands
that are subject to limited-time promotions. Plaintiff El Cubano also regularly advertises its cigars
and its retail stores-and-lounges. Plaintiffs intend to continue this practice. En Fuego advertises
in a number of media—it maintains active Facebook, Instagram, and Twitter accounts, in which it
announces cigar brands on sale and informs its customers of special offers, and it runs other
advertisements as well. El Cubano similarly advertises in a number of media, including social
media (e.g., Facebook, Instagram, and Twitter), print, and radio. Each advertisement in each
medium will be required to bear the FDA’s overwhelming new warnings, and will be held up for
twelve months or more pending FDA approval. The same is true of the advertisements run by
each of TCMA’s retailer members. As a result, En Fuego, El Cubano, and TCMA’s retailer
members will be unable to run any advertisement for any brand of cigar unless a warning plan
specific to that brand has been submitted to the FDA no less than twelve months in advance and
has been approved by the agency. Even the simplest form of customer communication—“New in
the humidor: Flor de las Antillas”—will be frozen.
E. The FDA Recognizes That It Has Not Completed Its Study of How Premium
Cigars Should Be Regulated
45. On July 28, 2017, the FDA announced “a new comprehensive plan for tobacco and
nicotine regulation that will serve as a multi-year roadmap to better protect kids and significantly
reduce tobacco-related disease and health.” FDA Press Release. The agency recognized that there
is a continuum of tobacco products, with cigarettes being the most dangerous. Id. The agency
- 15 -
delayed many parts of the Rule governing cigars, pipe tobacco, and electronic cigarettes, including
the premarket review process. Id.
46. Further implementing its view as to a continuum of tobacco products, the agency
announced its intention to reopen the question of whether handmade premium cigars should be
subject to the FDA’s regulatory scheme. Id. To this end, the agency said it will issue an Advance
Notice of Proposed Rulemaking that will seek data and information regarding the patterns of use
and resulting public health impacts of premium cigars. Id.
47. Since that announcement, the agency has affirmed its intention to reconsider the
regulation of premium cigars. In the Trump Administration’s Fall 2017 Unified Agenda of
Regulatory and Deregulatory Actions, released in December 2017, the FDA listed a new regulation
in the “Prerule Stage” titled “Premium Cigars; Request for Scientific Information.” Current
Regulatory Plan and the Unified Agenda of Regulatory and Deregulatory Actions, Office of Info.
& Regulatory Affairs, https://www.reginfo.gov/public/do/eAgendaMain. The abstract of the new
regulation states:
In the proposed deeming rule, FDA had requested scientific information that would
support consideration of exempting premium cigars from regulation. FDA received
comments claiming that the health risks associated with cigar use generally, or with
the use of premium cigars in particular, are not significant because of the way these
products are used. Specifically, commenters claimed that these products are not used
by youth and young adults, they are not used frequently, and they are not always
inhaled. However, the information in the comments did not provide an adequate
scientific basis or public health rationale to support excluding these products from
regulation. FDA is aware that there is still interest in exempting these products
from regulation or regulating them in a different manner from other cigars and,
therefore, intends to issue an advance notice of proposed rulemaking requesting
scientific information that might support such an action. The notice would request
information on how premium cigars should be defined, the health effects of these
products, and their patterns of use.
- 16 -
View Rule: Premium Cigars; Request for Scientific Information (RIN 0910-AH88), Office of Info.
& Regulatory Affairs, https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=2017
10&RIN=0910-AH88 (emphasis added).
48. In a blog post accompanying the publication of the Unified Agenda, Commissioner
Gottlieb touted the reconsideration of the deeming rule as one of the FDA’s “major policy goals
for 2018”: “FDA will be issuing an Advanced Notice of Proposed Rulemaking to solicit
information that may inform regulatory actions FDA might take with respect to premium cigars,
asking certain questions related to how we might define and regulate ‘premium cigars,’ taking into
consideration the health effects of these products and their patterns of use.” Scott Gottlieb, M.D.,
Looking Ahead: Some of FDA’s Major Policy Goals for 2018, FDA Voice (Dec. 14, 2017),
https://blogs.fda.gov/fdavoice/index.php/tag/unified-agenda-of-federal-regulatory-and-
deregulatory-actions-unified-agenda/.
49. The agency’s regulatory actions, however, leave in place the application of the
warning label requirements to premium cigars, despite the agency’s acknowledgment that it has
not finished its review of whether and how premium cigars should be regulated. The First
Amendment forbids the Government from restricting or compelling speech with regard to a class
of products before it has completed its study of the need for the regulation.
CLAIMS FOR RELIEF
COUNT I
Violation of the First Amendment to the U.S. Constitution: The Final Rule
Unconstitutionally Restricts the Speech of Plaintiff Cigar and Pipe Tobacco Manufacturers
and Retailers
50. Plaintiffs incorporate the preceding paragraphs as if fully set forth herein.
51. The Rule requires manufacturers to cover 30 percent of the two principal display
panels of any cigar or pipe tobacco package with the FDA’s public health message. The Rule also
- 17 -
requires manufacturers and retailers to cover 20 percent of any advertisement for a cigar or pipe
tobacco product with the FDA’s public health message. The message must appear in large black
letters against a white background, a format that (when combined with its mandated size) overtakes
all other visual elements on the package or advertisement. Plaintiffs use the space that would be
covered by the Government’s message to communicate with their customers through text, art, and
imagery on packages and advertisements.
52. A company’s communications with consumers, including information on product
labels and in advertisements, constitute commercial speech protected by the First Amendment.
See, e.g., 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 504–08 (1996) (an advertising ban
“prohibit[ing] truthful, nonmisleading speech about a lawful product” is subject to First
Amendment scrutiny); Rubin v. Coors Brewing Co., 514 U.S. 476, 481 (1995) (information on a
product’s label represents commercial speech).
53. Because the Rule bars Plaintiffs from communicating with customers in the space
on packages and advertisements confiscated by the Government’s message, it restricts Plaintiffs’
speech with consumers and must satisfy the test established by the Supreme Court in Central
Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980).
54. Under the First Amendment, the FDA has the burden of justifying a regulation
restricting the space and prominence of a company’s communications with consumers. Edenfield
v. Fane, 507 U.S. 761, 770 (1993). To sustain such a restriction, the FDA must prove that: (1) the
asserted governmental interest is substantial; (2) the regulation directly advances the governmental
interest asserted; and (3) the regulation is not more extensive than necessary to serve that interest.
Central Hudson, 447 U.S. at 566.
- 18 -
55. The Rule fails the Central Hudson test. First, the agency has failed to prove that
the Rule serves a substantial government interest. The agency has disclaimed that the Rule is
designed to reduce the use of cigars and pipe tobacco, asserting instead that the sole purpose of the
Rule is to increase the effectiveness of communicating health information. See, e.g., 81 Fed. Reg.
at 28,981. The agency’s asserted interest in more effective communication of its own message
does not qualify as a substantial government interest. See, e.g., R.J. Reynolds Tobacco Co. v. FDA,
696 F.3d 1205, 1221 (D.C. Cir. 2012) (holding that “an interest in ‘effective’ communication” of
the health risks of tobacco smoking “is too vague to stand on its own” and is “not an independent
interest capable of sustaining” a commercial speech restriction under Central Hudson).
56. Second, the agency failed to show that the Rule directly advances any substantial
government interest. Among other reasons, the agency itself found that there is no “[r]eliable
evidence” that the Rule would reduce the use of cigars or pipe tobacco. FRIA at 62. Even if more
effective communication of health information to fill some gap in consumer knowledge about the
health risks of cigars or pipe tobacco were a substantial interest, the agency assembled no current
or relevant evidence showing that consumers misunderstand the health risks of cigar or pipe
tobacco use and that the large and glaring warnings would solve any such misunderstanding.
57. Third, the agency failed to prove that the Rule was no more extensive than
necessary to achieve the Government’s interest. Among other reasons, the agency engaged in no
analysis of the obvious alternative of the longstanding Federal Trade Commission cigar warnings.
The agency assembled no evidence that the size or format of those warnings was not effective.
Nonetheless, the agency increased the size of the FTC warnings by up to roughly 230 percent on
each package panel (taking approximately 475 percent more total surface area) and nearly 300
percent on advertising. The agency’s failure to consider this “obvious less-burdensome alternative”
- 19 -
violates Central Hudson. Am. Acad. of Implant Dentistry v. Parker, 860 F.3d 300, 311–12 (5th Cir.
2017).
58. Courts have long recognized an implied right of action under the Constitution to
enjoin constitutional violations by the federal government, federal agencies, and federal officials,
and have consistently held that the APA waives sovereign immunity as to such actions. See, e.g.,
Bell v. Hood, 327 U.S. 678, 684 (1946) (holding that federal courts have “jurisdiction . . . to issue
injunctions to protect rights safeguarded by the Constitution”); Ala.-Coushatta Tribe of Tex. v.
United States, 757 F.3d 484, 488–89 (5th Cir. 2014) (noting agreement among the circuits that
“Congress intended [in the APA] to waive immunity for non-statutory causes of action against
federal agencies”); Trudeau v. FTC, 456 F.3d 178, 187, 190 & n.22 (D.C. Cir. 2006) (same, and
recognizing a direct cause of action under the First Amendment).
59. Plaintiffs have no adequate or available administrative remedy or, in the alternative,
any effort to obtain an administrative remedy would be futile.
60. Plaintiffs have no adequate remedy at law.
61. The warning label requirements have caused ongoing harm to Plaintiffs.
62. Therefore, this Court should set aside, declare unlawful, and enjoin the FDA from
enforcing the warning label requirements for cigars and pipe tobacco in the Final Rule.
COUNT II
Violation of the First Amendment to the U.S. Constitution: The Final Rule
Unconstitutionally Compels the Speech of Plaintiff Cigar and Pipe Tobacco Manufacturers
and Retailers
- 20 -
64. The Rule also unconstitutionally compels Plaintiffs to carry the Government’s
message. “[T]he right of freedom of thought protected by the First Amendment against state action
includes both the right to speak freely and the right to refrain from speaking at all.” Wooley v.
Maynard, 430 U.S. 705, 714 (1977). The Government may compel a disclosure of purely factual
and uncontroversial information in commercial communications, but only if the disclosure is (1)
necessary to prevent consumer deception, (2) justified, and (3) not unduly burdensome. Zauderer
v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 U.S. 626, 651 (1985); Pub.
Citizen, Inc. v. La. Attorney Disciplinary Bd., 632 F.3d 212, 227 (5th Cir. 2011) (describing
Zauderer’s roots in disclosures intended to combat consumer deception).
65. The Rule fails the test for compelled commercial disclosures. First, the Rule is not
designed to prevent consumer deception. The FDA did not demonstrate any consumer deception
by cigar or pipe tobacco manufacturers or retailers.
66. Second, the Rule is unjustified. The agency did not demonstrate any gap in
consumer understanding of the health risks of cigar or pipe tobacco use that the warnings would
address. Nor did the agency show that the large size and glaring format of the warnings was
needed to advance any substantial government purpose. See, e.g., Pub. Citizen, 632 F.3d at 228–
29 (striking disclosure mandate for want of evidence that larger warnings would have any effect).
67. Third, the Rule is unduly burdensome. The warnings are so large and glaring that
they overwhelm all other visual elements of cigar and pipe tobacco packages and advertisements.
See Am. Beverage Ass’n, 871 F.3d at 897 (striking down a compelled disclosure taking 20 percent
of advertisements as unduly burdensome).
68. Plaintiffs have an implied right of action directly under the Constitution to enjoin
the Rule for violating the First Amendment, as explained in Paragraph 58.
- 21 -
COUNT III
Violation of the First Amendment to the U.S. Constitution: The Final Rule’s Cigar
Warning Plan Requirement Is an Unconstitutional Prior Restraint and Otherwise
Unconstitutionally Restricts Speech
74. The Final Rule forbids cigar manufacturers and retailers from making any
communication to consumers about cigars products without FDA preapproval. It does so by
requiring submission of a warning plan showing how Plaintiffs intend to rotate the six cigar
warnings on any communication regarding a cigar brand before making the communication. 21
C.F.R. § 1143.5(c)(3). The Rule says the plans must be submitted at least 12 months before
communicating, but the Rule forbids any communication before the agency approves the plan. Id.;
see also 81 Fed. Reg. at 29,072–73. The Rule contains no deadline for final agency action. See
21 C.F.R. § 1143.5(c).
75. The practical effect of the Rule is that, if a Plaintiff were to decide one day to
communicate about a cigar product, it would need to wait until the FDA approved its warning
rotation plan about that communication. That approval could take a year or more.
76. By requiring cigar manufacturers and retailers to submit warning plans to the FDA,
and to refrain from marketing their products indefinitely pending agency approval, the warning
plan regime operates as an unconstitutional prior restraint. See FW/PBS, Inc. v. City of Dall., 493
- 22 -
U.S. 215, 226 (1990) (“[A] prior restraint that fails to place limits on the time within which the
decisionmaker must [act] is impermissible.”); U.S. Postal Serv. v. Athena Prods., Ltd., 654 F.2d
362, 367 (5th Cir. Unit B 1981) (“[T]he first amendment protects against erroneously imposed
prior restraints of excessive duration even in the area of commercial speech.”).
77. The warning plan regime also fails the general constitutional standards for
commercial speech restrictions. For a law suppressing commercial speech to survive constitutional
scrutiny, the FDA must prove that: (1) the asserted governmental interest is substantial; (2) the
regulation directly advances the governmental interest asserted; and (3) the regulation is not more
extensive than necessary to serve that interest. Central Hudson, 447 U.S. at 566.
78. The FDA did not prove that its asserted interest in helping current and potential
tobacco users understand and appreciate the risks of tobacco use was substantial, that the warning
plan pre-approval requirement would advance that interest, or that the warning plan regime—with
its brand-by-brand application, its twelve-month lead time, and its indefinite waiting period—is
not more extensive than necessary to serve that interest.
79. Plaintiffs have an implied right of action directly under the Constitution to enjoin
the Rule for violating the First Amendment, as explained in Paragraph 58.
82. The warning plan requirement has caused ongoing harm to Plaintiffs.
enforcing the warning plan requirement for cigars in the Final Rule.
- 23 -
COUNT IV
Violation of the Family Smoking Prevention and Tobacco Control Act: The FDA Imposed
the New Warning Requirements Without First Making the Findings Required by the Act
85. The FDA’s authority to require health warnings is conditioned on the Secretary of
HHS making express findings enumerated in the FSPTCA, including a finding regarding the
likelihood that the warnings will influence the initiation and cessation of tobacco product use.
FD&C Act § 906(d)(1)–(2), 21 U.S.C. § 387f(d)(1)–(2).
86. The agency did not make the findings required by the FSPTCA before issuing the
new warnings mandate. Instead, the agency openly admitted that it knew of no reliable evidence
on the effect of the warnings on cigar or pipe tobacco use, and that it could not quantify any benefits
attributable to the Final Rule.
89. The warning plan requirement has caused ongoing harm to Plaintiffs.
COUNT V
Violation of the Administrative Procedure Act: The FDA’s Warning Label Requirements
Are Arbitrary, Capricious, an Abuse of Discretion, and Not in Accordance with Law, and
Exceed the FDA’s Regulatory Authority
92. The Final Rule is “final agency action for which there is no adequate remedy.”
5 U.S.C. § 704.
- 24 -
93. The APA bars agency action that is “arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law”; “contrary to constitutional right, power, privilege, or
immunity”; or “in excess of statutory jurisdiction, authority, or limitations, or short of statutory
right.” Id. § 706(2)(A)–(C).
94. Agency action is arbitrary and capricious when the agency fails to adequately
explain its decision, to consider reasonable and reasonably obvious regulatory alternatives, to
explain its rejection of any such regulatory alternatives, or to consider an important aspect of the
regulatory problem before it. E.g., Del. Dep’t of Nat’l Res. & Envtl. Control v. EPA, 785 F.3d 1,
16–18 (D.C. Cir. 2015).
95. The Final Rule imposes onerous and exorbitantly expensive warning label
requirements on cigar and pipe tobacco packages and advertisements.
96. As set out in Paragraphs 85–86, the FDA did not make the dual findings required
by the FSPTCA before imposing restrictions on sale such as the warnings requirement, namely,
“the increased or decreased likelihood” of initiation and cessation of cigar and pipe tobacco use.
FD&C Act § 906(d)(1)–(2), 21 U.S.C. § 387f(d)(1)–(2). The agency’s failure to make mandatory
findings before imposing the warnings requirements renders the Rule contrary to law in violation
of the APA. See Pub. Citizen v. FMCSA, 374 F.3d 1209, 1216 (D.C. Cir. 2004) (agency’s failure
to discuss a statutorily mandated factor renders its reasoning arbitrary and capricious per se under
the APA).
97. Further, the FDA did not study the efficacy of the existing FTC cigar warnings
before issuing the Final Rule. To the contrary, it conceded that it knew of no reliable evidence on
the impact of warning labels on users of cigars or pipe tobacco. While the agency claimed that the
new warnings would foster greater public understanding of the health risks of cigars and pipe
- 25 -
tobacco, it failed to show either that the public was materially unaware of those risks or that the
new, larger warnings would have any effect on public knowledge or behavior.
98. At the same time, the FDA acknowledged that the new warning labels would
impose tremendous costs on the manufacturers and retailers of premium cigars and pipe tobacco,
which are principally small businesses, and that certain regulatory alternatives would alleviate
those burdens while advancing the FDA’s public health goals. Nevertheless, the agency refused
to give serious consideration to those alternatives. Most importantly, it failed to consider, or
explain its reasons for implicitly rejecting, the expansion of the FTC warnings to the rest of the
cigar market.
99. The Final Rule’s warning label requirements are arbitrary, capricious, an abuse of
discretion, and not in accordance with law, and they exceed the agency’s authority. 5 U.S.C.
§ 706(2)(A), (C).
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs request that the Court enter judgment in its favor and:
a. Vacate and set aside the Final Rule for violating the First Amendment;
b. Vacate and set aside the Final Rule for violating the Family Smoking Prevention
and Tobacco Control Act;
- 26 -
c. Vacate and set aside the Final Rule under 5 U.S.C. § 706 as arbitrary, capricious,
an abuse of discretion, not in accordance with law, and in excess of the FDA’s
regulatory authority;
d. Declare that the Final Rule’s warning label and warning plan requirements violate
the First Amendment, the FSPTCA, and/or the APA;
e. Enter a preliminary injunction restraining the FDA from implementing or enforcing
the Final Rule prior to a final order on the merits from this Court;
f. Enter a permanent injunction restraining the FDA from implementing or enforcing
the Final Rule;
g. Award Plaintiffs their litigation costs and attorneys’ fees; and
h. Order such other and further relief as the Court deems just and proper.
- 27 -
Dated: January 11, 2018 Respectfully submitted,
/s/ Clyde M. Siebman

SIEBMAN, BURG, PHILLIPS & SMITH,
L.L.P.
Clyde M. Siebman
Texas Bar No. 18341600
clydesiebman@siebman.com
Elizabeth S. Forrest
elizabethforrest@siebman.com
Federal Courthouse Square
300 N. Travis Street
Sherman, TX 75090
Telephone: (903) 870-0070
Facsimile: (903) 870-0066
NORTON ROSE FULBRIGHT US LLP

Michael J. Edney
D.C. Bar No. 492024 (pro hac
forthcoming)
michael.edney@nortonrosefulbright.com
Caroline M. Mew
D.C. Bar No. 467354 (pro hac
forthcoming)
caroline.mew@nortonrosefulbright.com
799 9th Street NW
Suite 1000
Washington, DC 20001-4501
Telephone: (202) 662-0200
Facsimile: (202) 662-4643
Ryan Meltzer
ryan.meltzer@nortonrosefulbright.com
98 San Jacinto Blvd., Suite 1100
Austin, TX 78701-4255
Telephone: (512) 536-5234
Facsimile: (512) 536-4598
Counsel for Plaintiffs En Fuego Tobacco

Shop LLC, Cuba Libre Enterprises LLC, and
Texas Cigar Merchants Association
- 28 -

1 Main

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

1 Main

Uploaded by

Copyright:

Available Formats

Case 4:18-cv-00028-ALM-KPJ Document 1 Filed 01/11/18 Page 1 of 29 PageID #: 1

IN THE UNITED STATES DISTRICT COURT

EN FUEGO TOBACCO SHOP LLC, doing §

COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

1143.1–1143.13) (the “Final Rule” or the “Rule”).

2. The warnings must be placed on boxes by August 10, 2018.

important information to consumers.

pipe tobacco advertisements. 21 C.F.R. §§ 1143.3(b)(2), 1143.5(b)(2). The FDA declined to

and even in-store placards describing the products for sale.

background—make the Government’s mandated warning the dominant message on the

advertisement. It overwhelms the other visual components of the advertisement.

First Amendment prohibits government restrictions of speech, as well as mandates compelling a

the standards applicable to both restrictions on speech and compulsions of speech.

advertisement, up to nearly 300 percent more than the FTC warnings.

more stark than necessary to serve any Government interest.

percent of advertisements and listing federal cases in accord).

unprecedented incursion on First Amendment liberties. The harm to freedom of speech is

products themselves will bear two additional, manufacturer-supplied warnings.

in full, and remanded to the agency.

JURISDICTION AND VENUE

the First Amendment to the Constitution.

14. Venue is proper in this district pursuant to 28 U.S.C. § 1391(e), as Plaintiff En

claims have occurred and are occurring in this district.

28 U.S.C. §§ 2201 and 2202 and 5 U.S.C. §§ 705 and 706.

total across all three stores.

17. Plaintiff Texas Cigar Merchants Association is a Texas-incorporated not-for-profit

membership consists of 30 delegates representing the interests of 43 members who operate

(hereinafter “El Cubano”), is a manufacturer of handmade premium cigars. El Cubano is a small,

department of the U.S. Government.

the FD&C Act.

A. The Handmade Premium Cigar Market

23. Plaintiff El Cubano manufactures exclusively handmade premium cigars. Premium

20 percent of all advertisements.

warnings scheme described herein. 81 Fed. Reg. at 29,020–27.

percent of two package panels and 20 percent of advertisements are warranted.

B. The Family Smoking Prevention and Tobacco Control Act

(A) the increased or decreased likelihood that existing users of tobacco

C. The FDA’s Rule Regulating Cigars and Pipe Tobacco

flowing from the Rule).

D. The Warning Label Regime

principal display panels—those “most likely to be displayed, presented, shown, or examined by

retailers’ own commercial expression survives.

than the FTC warnings.

of cessation or initiation of tobacco use—a statutory prerequisite to the regulation of tobacco

discernible effect on tobacco use.

advertisements as well. El Cubano similarly advertises in a number of media, including social

the humidor: Flor de las Antillas”—will be frozen.

the premarket review process. Id.

and resulting public health impacts of premium cigars. Id.

& Regulatory Affairs, https://www.reginfo.gov/public/do/eAgendaMain. The abstract of the new

& Regulatory Affairs, https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=2017

10&RIN=0910-AH88 (emphasis added).

CLAIMS FOR RELIEF

imagery on packages and advertisements.

52. A company’s communications with consumers, including information on product

“prohibit[ing] truthful, nonmisleading speech about a lawful product” is subject to First

product’s label represents commercial speech).

on packages and advertisements confiscated by the Government’s message, it restricts Plaintiffs’

Central Hudson, 447 U.S. at 566.

interest capable of sustaining” a commercial speech restriction under Central Hudson).

injunctions to protect rights safeguarded by the Constitution”); Ala.-Coushatta Tribe of Tex. v.

recognizing a direct cause of action under the First Amendment).

any effort to obtain an administrative remedy would be futile.