Barn-Burned: Fifth Circuit Finds FDA Tobacco Civil Monetary Penalty Unconstitutional
July 8, 2026Last week, FDA’s Civil Money Penalty (CMP) authority suffered its most severe blow to date: the U.S. Court of Appeals for the Fifth Circuit vacated FDA’s imposition of a CMP, against a retailer for selling unauthorized tobacco products, as unconstitutional under the Seventh Amendment and SEC v. Jarkesy, 603 U.S. 109 (2024). Texas Tobacco Barn, LLC v. HHS (5th Cir. June 30, 2026). If you’ve been following our multiple prior posts on this subject (here, here, and here), you know this is something we’ve been keeping keen eyes on. Let’s recap where things stood before this decision, break down the (2-1) panel decision itself and its notable dissent, and consider what may come next.
First, to recap: two lower courts in Texas had found FDA’s tobacco CMP provisions unconstitutional, but the damage to FDA was limited because they only ordered party-specific relief, and were not more broadly binding. But we observed that this case was pending before the 5th Circuit, and if FDA lost it, “even if such a ruling only purports to offer party-specific relief . . . FDA would be much harder-pressed to continue business as usual given the broader precedent set by such a decision.” Well, now it has.
The Decision – Majority and Dissent
Texas Tobacco Barn challenged a CMP imposed through an administrative proceeding for selling e-cigarette/vape products that had not first obtained FDA’s premarket authorization. The panel majority held that the CMP violated the petitioner’s 7th Amendment right to a jury trial.
Central to that ruling was the finding that the “public rights exception” to the jury requirement, i.e., for rights that “historically could have been determined exclusively by the executive and legislative branches,” did not apply. Maj. Op. (quoting Jarkesy). It found no broad “public health” category fitting into the public rights exception, and dismissed the prior Supreme Court “public rights” cases on which FDA relied. It also considered the “substance” of the action, which it had discussed in an earlier part of the opinion. Asking whether the type of claim FDA brought bore a “close relationship” to a historical “common law cause of action,” the court answered yes. It reasoned that FDA’s CMP action, which sought to enforce sales of tobacco products without FDA’s premarket authorization and thus rendered them “adulterated” and “misbranded” tobacco products under its statute (see 21 U.S.C. §§ 387b(6)(A), 387c(a)(6)), was “analogous” to historical private common law actions for the sales of “unwholesome” food and drink, and a “cheat action” for such products sold with false representations. In short, “[w]hile these common law actions are not ‘identical’ to the FDCA, they confronted the ‘same basic conduct’ as the modern statute: selling adulterated or misbranded consumables.” In sum, since the majority found no public rights exception, Jarkesy and the 7th Amendment require a jury trial. Because this case came from a single petition from a CMP, the court simply ordered the vacatur of FDA’s imposition of that CMP (and nothing more).
Not so fast, said the dissent. In its view, HHS had never advanced the broad “public health” exception the majority criticized, so that piece was largely a straw man; and it more favorably looked on the “public rights” cases FDA cited. As for the “common law cause of action” piece, the dissent focused on a part of Jarkesy the majority did not: “the Seventh Amendment does apply to novel statutory regimes, so long as the claims are akin to common law claims.” Dissent Op. (quoting 603 U.S. at 139). On that relationship, the dissent accused the majority of drawing too large a circle to find its fit. The conduct for which FDA brought the action, the dissent pointed out, was the sale of tobacco products that did not go through FDA’s “novel premarket authorization process.” That fundamentally distinguished it from the common law actions the majority had identified: “The problem with the majority’s analysis is that TTB was not accused of selling an unwholesome product or misrepresenting anything about the product.” Yes, the statute uses the terms “adulterated” and “misbranded” in categorizing such a violation, but that shouldn’t make a difference: regardless of the legal label, there was “nothing akin to a pre-sale authorization regime at common law, nor any authority for [the] leap from targeting unwholesome food products and deceit in food sales to targeting a failure to pre-authorize.” In the dissent’s view, since that important nexus was not met, the public rights exception was satisfied, and there should be no constitutional problem with the jury-less CMP here.
Our Take
At bottom, the main difference between the majority and the dissent — and in the debate around the “public rights exception” more broadly — boils down to the “level of generality” (Dissent Op. at 22) with which common-law analogues should be viewed to determine whether they are closely enough related. In the majority’s view, “adulterated and misbranded” is the right level, because FDA’s scheme here still ultimately is one that seeks to protect public health (from the dangers of selling unauthorized and therefore potentially harmful tobacco products). In the dissent’s, that’s not good enough: after all, “all statutes target harms in some sense, and ultimate harms of the kind the majority alludes to—harms to the public health from food, cheating—are perennial. At this level of generality, it is no surprise that the majority can identify ‘various’ common law actions that are ‘analogous’ to the one at issue here.” Like many legal questions, how thinly the analytical salami is sliced can make all the difference; and in our prediction, the Supreme Court is still likely to be the ultimate salami-cutter here.
(That said, there may be still other arguments on either side that could ultimately carry the day: for example, if a court only focuses on specific categories of “public rights” with a “serious and unbroken historical pedigree” (Maj. Op., quoting Justice Gorsuch’s Jarkesy concurrence), then FDA may fare poorly; but if instead it focuses on the fact that premarket authorization operates more like a ‘licensing scheme’ for conduct Congress could outlaw entirely, then FDA may fare better (see Dissent Op. at 26-27 n.11.))
This discussion raises another interesting question. While FDA has brought many tobacco CMP actions for sales of unauthorized (historically almost always e-cigarette/vape) products, FDA brings far more for underage buyer purchases, sometimes colloquially called a “sale and fail”: the sale of tobacco products to buyers under 21 years old, and the failure to verify their age with ID before doing so — violations which also render tobacco products “misbranded.” See 21 U.S.C. §§ 387f(d), 387c(a)(7)(B); 21 C.F.R. § 1140.14. All the tobacco CMP litigation challenges we’re aware of have involved unauthorized products; it is interesting to consider how the analysis might shake out for the sale and fail. That is, would a common-law analogue for an action involving sales to a certain type of purchaser be more or less similar than those involving premarket authorizations? Would it matter, under either the majority’s or the dissent’s method of analysis? Or to keep the analogy going, if we’re talking about cutting salami here, what happens when you bring the cutter over to your pepperoni?
As we’ve written before, FDA has used tobacco CMPs as a powerful tool to obtain compliance, as it works both to combat the rash of unauthorized tobacco products in the U.S. market, and tries to keep tobacco products out of the hands of children and young adults. We’ll leave those questions for another day while we go grab a snack, but we’d be loathe to miss the hoagie for the fillings here.
What’s Next
After this first Circuit Court loss, FDA has two big decisions to make: whether to seek rehearing and/or certiorari to the U.S. Supreme Court from the decision, and whether and how to go forward with tobacco CMPs. If past is prologue, FDA will likely continue to zealously defend its CMP scheme in court, especially with a thoughtful dissenting opinion to bolster it. Assuming FDA does not get this case reheard and overturned by the 5th Circuit, and the mandate issues, that court could issue rulings in the currently-stayed Wulferic and Vaping Dragon cases further piling on the precedent now set. The D.C. Circuit’s decision in D and A is still looming too, and the presence of a circuit split (or not) always affects the cert calculus.
In terms of FDA’s pursuit of CMPs going forward, we wrote back in early December that FDA’s pursuit of tobacco CMPs, even after one court loss, appeared to proceed apace. In our research for this blog, however, we observed a potential shift: while FDA continues to pursue new enforcement (in the form of Warning Letters and CMP Complaints) for underage buyer sales of various tobacco products including e-cigarettes, and existing CMP proceedings of all types appear to be moving apace, we could not find evidence on its website of any new such enforcement of unauthorized tobacco sales since mid-December 2025. (We note though that FDA has not updated its website since May 31, 2026). Whether this shift (assuming it is a real one) might derive from an assessment of litigation risk from these Jarkesy cases, or from a change in policy or enforcement priorities, we do not know. But whatever the reason, that potential shift may blunt the immediate effects of this decision on FDA’s day-to-day workings in the realm of unapproved e-cigarettes, with its effects on FDA’s future tobacco CMP enforcement otherwise (for underage sales, and outside the 5th Circuit’s jurisdiction, perhaps) remaining to be seen — though we already see some new underage sale CMP Complaints being filed even after the decision.
As always, we’re keepin.g our eyes peeled