E-Cigarettes Defeated by the Administrative State in Supreme Court Ruling

Justice Alito Cautions Judges Against Over-Interpreting Executive Decisions

This week, two Supreme Court rulings brought setbacks for both the e-cigarette industry and a medical marijuana company. However, the issues at play were distinct, with only the e-cigarette case focusing directly on the nature of the product. In Medical Marijuana, Inc. v. Horn, the Court revived a lawsuit from a truck driver who claimed his job loss resulted from a product's false advertising that led him to fail a drug test. This case involved a narrow question of what types of injuries can be compensated under the Racketeer Influenced and Corrupt Organizations Act (RICO). The Court clarified that RICO claims cannot address personal injuries, reinforcing that harm to business property is the only allowable basis for recovery. While the decision may not have major implications—Justice Amy Coney Barrett noted that "direct" causation of injury is required for a RICO claim—Justice Clarence Thomas argued that the complex and disputed causation chain should have led the Court to avoid the case.

The e-cigarette case, FDA v. Wages and White Lion Investments LLC, though unanimous, carries broader implications not just for the industry but also for how courts should approach executive agency decisions. In particular, Justice Samuel Alito's opinion serves as a reminder to lower courts to exercise restraint when reviewing agency actions and avoid excessive judicial interference in the policy decisions of the executive branch.

Who Gets to Decide?

The Administrative Procedure Act (APA) of 1946 provides the framework for judicial review of executive actions, specifying that courts must step in to invalidate agency actions if they are deemed "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." The APA allows courts to strike down agency actions, but it also sets boundaries—judges are not meant to act as super-regulators, substituting their own judgment for that of the agency, especially when an agency follows the guidelines set by Congress.

While the Court has ruled in recent years that judges should interpret the law in cases involving APA challenges, Justice Alito's opinion reminds us that agencies, not courts, are responsible for setting policy. Too often, judges have treated the "arbitrary and capricious" standard as a justification for overriding executive decisions that don't align with their own ideological views.

The E-Cigarette Case

In FDA v. Wages and White Lion, the FDA in 2021 rejected the petitions of 320 manufacturers seeking approval to market 1.2 million flavored e-cigarette products. The FDA’s decision stemmed from the 2009 statute limiting the FDA's authority over existing tobacco products but granting it the power to regulate new "tobacco products," including e-cigarettes. By 2016, the FDA had concluded that e-cigarettes should undergo pre-approval before reaching the market. However, following litigation delays, the FDA mass-denied the manufacturers' applications in 2021, frustrating many in the industry.

The FDA’s policy changes, including the shift in leadership from Trump’s FDA to Biden’s, were seen as arbitrary by some lower courts. The Fifth Circuit, for example, ruled that the FDA had acted in an arbitrary and capricious manner when changing its policy without sufficient explanation.

Deference to Executive Agencies

Justice Alito's opinion stressed that "arbitrary and capricious" review should not be a tool for courts to micromanage agency decisions. Alito noted that agencies have the freedom to change their policies, provided they offer a reasoned explanation for the shift, are aware of the change, and consider any serious reliance interests. He made it clear that judges should not substitute their judgment for that of the agency, nor should they impose stricter standards than what would apply to a brand-new policy.

The Court also rejected a theory suggesting that changes in policy by the FDA might violate due process or undermine legal fairness. Alito warned against delving too deeply into the motivations behind executive actions, a tactic often used against the Trump administration. "Judicial inquiry into executive motivation represents a substantial intrusion into the workings of another branch of government and should normally be avoided," he wrote.

The Road Ahead

The Court ultimately sided with the FDA on most issues, except for the FDA’s decision not to review every manufacturer’s marketing plan. This exception led to a "remand"—a return of the case to the lower court for further review. Alito's opinion suggests that while e-cigarette manufacturers may have a limited chance in the case, the broader implications are clear: the Court is cautioning against judicial overreach into executive policy decisions.

This ruling sends a strong message to district judges, particularly those scrutinizing changes in enforcement or agency policies, urging them to show deference to executive agencies and avoid overstepping their bounds in the guise of judicial review.