Second Circuit Court Rejects Magellan MDO Appeal

Today, the Second Circuit Court of Appeals rejected vape manufacturer and distributor Magellan Technology’s appeal of an FDA marketing denial order (MDO) for Juno-brand refill pods. All 12 of the denied products contained non-tobacco flavors.

Magellan could now seek an en banc review of the case (a rehearing by the full Second Circuit), or could appeal to the Supreme Court. Following the appeals court decision, the Juno products cannot be sold without risking FDA enforcement.

Second Circuit says the FDA acted appropriately

The three-judge panel decided unanimously against Magellan’s claim that the MDO was “arbitrary and capricious,” and said the FDA followed the Administrative Procedure Act despite changing its standards for authorization after premarket tobacco applications (PMTAs) had already been submitted.

The court also found that requiring manufacturers to compare their flavored vape products against tobacco-flavored products for the purpose of promoting smoking cessation is proper under the Tobacco Control Act, and that the FDA acted appropriately by not reviewing Magellan’s marketing plan, since the agency had already found the company’s scientific evidence lacking.

Magellan received the Juno MDO Sept. 8, 2021, and filed its petition for review in the Second Circuit Court that same month. Oral arguments in the case were held in February 2023.

Magellan is the parent company of major vape product distributor Demand Vape, and also owns the Hyde disposable brand, among others. Several Hyde retailers received FDA warning letters last month, citing them for selling unauthorized products. Last October, the FDA issued MDOs for some Hyde products—without notifying Magellan first—on the same day it announced Hyde was named as a favorite product by a large number of National Youth Tobacco Survey participants.

All eyes are on the Fifth Circuit

The Second Circuit ruling did not veer significantly from previous decisions in favor of the FDA in the Third, Fourth, Seventh and District of Columbia circuits. The Eleventh Circuit Court, on the other hand, disagreed with the other circuits and ruled last August that the agency had acted arbitrarily and capriciously in refusing to consider six small manufacturer’s marketing plans before denying their applications.

All eyes are currently on the Fifth Circuit Court, which is considering its decision in the rehearing of the MDO appeal from Triton Distribution and Vapetasia. After one Fifth Circuit panel issued Triton a stay of enforcement—admonishing the FDA for pulling a regulatory “surprise switcheroo”—a second three-judge panel from the same court ruled 2-1 against Triton last July.

In January, the Fifth Circuit granted Triton a rare en banc review (a rehearing of the case by the full court), which nullified the previous decision. Oral arguments were heard last month in the rehearing, and a decision could come at any time.

Yesterday, the court granted a motion by R.J. Reynolds to stay the merits briefing in Reynolds' appeal of MDOs issued for menthol-flavored Vuse products until the Triton case is decided. The decision to postpone the Reynolds vs. FDA briefings is seen by some as a signal that the Fifth Circuit will decide against the FDA in the Triton case.

Will the Supreme Court step in soon?

The possibility of a second federal appeals court ruling against the FDA strengthens the likelihood that the Supreme Court could step in to settle the “circuit court split.”

The high court will also soon decide whether to consider AVAIL Vapor’s petition to appeal its MDO appeal loss in the Fourth Circuit. The AVAIL Supreme Court petition has recently been bolstered by amicus briefs from the Washington Legal Foundation and a group of pro-vaping experts that includes David Abrams, Clive Bates, David Sweanor, and former Iowa attorney general (and Truth Initiative board president) Tom Miller.

More than 30 companies havechallenged FDA marketing denials in federal court. Many cases are still in progress.