The CMP Plot Thickens: Solicitor General Letter Casts FDA’s Tobacco Civil Money Penalty Scheme into Further Doubt

For the first time, the Department of Justice has backed off its prior vigorous defense of FDA’s tobacco product administrative Civil Money Penalty (CMP) scheme as constitutional under the 7th Amendment and Jarkesy.

Earlier this week, the Solicitor General sent a letter to Congress saying that it will not seek cert to the Supreme Court from the 5th Circuit’s adverse Texas Tobacco Barn decision finding the CMP there (for sales of unauthorized e-cigarettes) unconstitutional. The big part is the why: because “the Fifth Circuit correctly rejected certain arguments emphasized by the government in this case,” namely, that “interstate commerce” and “public health” were sufficient justifications to overcome/exceptions around the 7th Amendment jury trial right recognized in Jarkesy.

By way of background, the letter is sent “consistent with 28 U.S.C. 530D.”  That statutory provision requires that the Attorney General submit a report to Congress in certain instances when the Attorney General has made a determination regarding the constitutionality of statutes, regulations, policies and programs.  Consistent with how these letters are typically drafted, it does not parse 530D’s contours, but it appears that the SG was providing notice that the government had determined “not to appeal or request review of any judicial, administrative, or other determination adversely affecting the constitutionality of any such provision.”

The SG qualifies that “the constitutionality of many FDA penalty adjudications can be defended on grounds apart from those discussed above,” but gives as the only example actions “against foreign companies that sell unauthorized products in the” U.S. (which must be a drop in the bucket of the CMPs FDA actually brings).  It adds that it is “exploring alternative,” more constitutional “mechanisms for FDA to pursue civil penalties.” With respect to other pending cases, it says only that DOJ also plans to dismiss the other 5th Circuit cases that were held off pending Texas Tobacco Barn’s resolution.

To us, this filing raises a host of questions and few answers. First, what happens in the similar D and A case currently pending in the D.C. Circuit, which the SG letter notably did not mention?  Just a month ago, a DOJ filing on behalf of FDA told the D.C. Circuit it thought the Texas Tobacco Barn decision “was wrong.” Indeed, an amicus quickly brought this letter to the Circuit’s attention, and it remains to be seen what position, if any, DOJ/FDA will take before the Circuit rules, as well as after.  But given the near-identity of the two cases on the Jarkesy issue, it is hard to see how DOJ would formally take any position with respect to D and A different from the seemingly broad about-face it just took on Texas Tobacco Barn.  And of course, how the Circuit resolves D and A also will have a large impact on whether and how one of these cases still could find its way to the Supreme Court, among other things.

Also remaining to be seen is how FDA will move forward with respect to its CMP program in light of this SG decision, in the near and longer term. It hasn’t made any statement of its own about this development yet, and as far as we can tell, it has brought new CMP cases (for underage tobacco sales) as recently as just a few days before the SG letter. There are a dizzying array of potential ways this could all shake out, and we’ll resist speculating too much until we see more. But at a minimum, this letter casts new doubt on the future of FDA’s CMP tobacco scheme as we know it, and raises new questions around FDA’s (less often-used) CMP authority outside tobacco world too.