Case 4:18-cv-00028-ALM-KPJ Document 23 Filed 04/02/18 Page 1 of 26 PageID #: 1018

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. 4:18-cv-00028-ALM-KPJ
ADMINISTRATION; UNITED STATES )
DEPARTMENT OF HEALTH AND )
HUMAN SERVICES; ALEX AZAR II, in )
his official capacity as Secretary of Health )
and Human Services; and SCOTT )
GOTTLIEB, M.D., in his official capacity as )
Commissioner of Food and Drugs, )
)
Defendants. )
)

PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO TRANSFER AND

SUPPORTING MEMORANDUM
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Plaintiffs En Fuego Tobacco Shop LLC, Cuba Libre Enterprises LLC, and Texas Cigar

Merchants Association (together, “Plaintiffs”) file this opposition to Defendants’ Motion to

Transfer and Supporting Memorandum (Dkt. #18).

INTRODUCTION

In this case, two Texas small businesses and a Texas not-for-profit association seek to

vindicate their First Amendment rights in a Texas federal court, claiming that an FDA-mandated

health warnings requirement is unconstitutional as applied to premium cigars and pipe tobacco.

The United States Government wants all challenges to its regulations to be tried in Washington,

D.C. To that end, the Government seeks to transfer this case to the federal court in Washington,

D.C., on the grounds that a different group of Washington-based plaintiffs representing

materially different interests have challenged aspects of the same federal regulation.

Defendants’ only legal authority, the discretionary “first-to-file” principle, does not

support the transfer of this lawsuit to Washington, D.C. The case in Washington, D.C. is

effectively focused on the mass-produced cigar industry, where one of the plaintiff trade

associations advocates for the interests of the largest manufacturers of mass-produced cigars.

This theme was plastered all over the Government’s papers in that case, railing against the

flavored and small cigars that are sold at the local 7-11 and allegedly used by youth. See

Addendum (excerpts from the Government’s cross-motion for summary judgment in Cigar

Association of America v. FDA, No. 16-1460 (D.D.C.)). The Government could barely talk

about anything else.

This case stands in stark contrast. This lawsuit is brought by a Frisco, Texas, tobacconist

and a Texas City, Texas, manufacturer of premium cigars. These businesses have absolutely

nothing to do with mass-marketed cigars; they sell only high-end, premium cigars and pipe

tobacco. Their products are expensive, and their customers are adults, who studies have shown
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use their products only a couple days a month. It is not surprising that the FDA would view a

lawsuit focused on the premium cigar industry to be the same as any other cigar lawsuit, as the

agency has lumped premium cigars in with all the rest in its rule. But it is precisely that error

this case is seeking to challenge. Plaintiffs claim that, when it came to the health warnings, the

FDA invalidly treated the premium cigars they make and sell like all other cigars, and that the

content of the warnings when applied to premium cigars is misleading. That is a claim the

Washington plaintiffs have not made.

The Government makes much of the fact that En Fuego Tobacco Shop (“En Fuego”) and

the retail arm of El Cubano Cigars (“El Cubano”) were members of the International Premium

Cigar and Pipe Retailers Association (“IPCPR”), an organization that is based in Washington,

D.C., and is a plaintiff in the Washington case. As an initial matter, the Government is wrong, as

En Fuego and El Cubano’s memberships lapsed in 2017. But it is also irrelevant. En Fuego and

El Cubano had no role in conceiving of or controlling the course of the litigation in Washington,

D.C. They were two of the thousands of passive IPCPR members nationwide who occasionally

paid dues to attend the organization’s annual trade show in Las Vegas. The Government’s

proposition of law is breathtaking: If the leadership of a national trade association files a lawsuit

against a regulation in one district, then none of its members, even those who had nothing to do

with that lawsuit, may strike out and pursue their own theories and seek their own relief in their

local courts. That is not the law. The Court should deny the motion.

BACKGROUND

A. Texas Small Businesses Sue in this Court to Challenge the Application of the
FDA’s Warnings Mandate to Premium Cigars and Pipe Tobacco

Plaintiffs are two Texas-based, family-owned-and-operated small businesses that make

and sell premium cigars and pipe tobacco in Texas, and a Texas not-for-profit association that

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addresses public affairs issues affecting Texas premium cigar retailers and manufacturers. En

Fuego operates three premium cigar stores, two of which—in Frisco and Murphy—are in this

district. El Cubano makes its own brand of premium cigars in Texas City, Texas, and has two

retail stores in Texas City and nearby League City.

Plaintiffs filed this suit to challenge the application of new FDA health warnings to the

premium cigar and pipe tobacco products they make and sell. The warnings are one part of a large

FDA rule imposing all manner of restrictions and regulations on all cigars. See Final Rule,

Deeming Tobacco Products to Be Subject to the Federal Food, Drug, and Cosmetic Act, 81 Fed.

Reg. 28,974–29,106 (May 10, 2016) (the “Rule”). The warnings mandate, in Plaintiffs’ view,

threatens to change their businesses forever. It is scheduled to take effect on August 10, 2018, and

will put the Government’s message on 30 percent of every box of cigars Plaintiffs manufacture and

sell and on 20 percent of just about anything they say to consumers. Plaintiffs are bothered not

only by the intrusion of such large warnings, but also by their content. They understand that seven

of the largest manufacturers of cigars agreed years ago to include similar, albeit smaller, warnings

on their packages and advertisements. Plaintiffs here did not; they believe the scientific evidence

available today shows that the warnings are misleading as applied to premium cigars.

Plaintiffs take issue with the FDA lumping premium cigars into the warnings

requirements, along with all other cigars. They claim this uncritical, broad-brush decision-

making violates the First Amendment and the Administrative Procedure Act (the “APA”). From

the beginning of the rulemaking process at issue here, the FDA recognized that premium cigars

were a separate category of cigars, different from the mass-produced cigars that came rolling off

the assembly line and that were allegedly used by the underaged. The FDA ultimately did not

carve out premium cigars from the warnings requirement, but it has opened a new rulemaking

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docket to reexamine specifically whether the warning statements make any sense when applied

to premium cigars. See Regulation of Premium Cigars, 83 Fed. Reg. 12,901–04 (Mar. 26, 2018)

(Dkt. #20-1). The Plaintiffs question mandating controversial and intrusive warnings on August

10, 2018, while the FDA is still studying whether premium cigars scientifically merit the

warnings. See Dkt. #20 ¶¶ 64–96; Dkt. #22 pp. 13–33.

An amended complaint filed the day after this new rulemaking docket was opened

addresses the implications of the FDA shooting at premium cigars first and asking questions

later. See Dkt. #20. The amended complaint also asserts claims that the issuance of the Rule by

a career employee of the FDA, rather than an Officer of the United States, violates the

Appointments Clause of the Constitution and the APA. Id. ¶¶ 40–43, 130–49. That same day,

Plaintiffs filed a motion for partial summary judgment or, in the alternative, for a preliminary

injunction. See Dkt. 22.

B. National Trade Associations Sue the FDA in Washington, D.C., Contesting

Whether Its Entire Regulatory Scheme Should Be Applied to Any Cigar

In July 2016, a group of national trade associations filed suit in the District of

Washington, D.C., to challenge the FDA’s very authority to regulate or assess user fees upon

cigars of any kind. See Complaint, Cigar Ass’n of Am. v. FDA, No. 16-1460 (D.D.C. July 15,

2016) (Dkt. #18-1). One of the plaintiffs in the Washington case, the Cigar Association of

America (“CAA”), counts among its members some of the largest cigar manufacturers in the

country that make mass-marketed and flavored cigars and cigarillos. See Our Members, Cigar

Ass’n of Am., http://cigarassociation.org/about/our-members. Some of those members are

subject to a consent decree with the Federal Trade Commission (“FTC”) that has required them

to display health warnings with nearly identical content to those required by the FDA since 2001,

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albeit in a smaller size. See Dkt. #18-5 pp. 263–65. The plaintiffs in Washington, D.C. did not

challenge the accuracy of the warnings.

The Washington case, instead, focuses on the effect of the whole regulatory scheme on all

cigars and seeks to invalidate the selection of a grandfather date exempting any cigar on the market

from the FDA’s new premarket review process, the assessment of fees on cigars to fund the FDA’s

regulation of tobacco products, its failure to balance costs and benefits in deciding to run all cigars

through a process designed for prescription drugs, its decision to require local tobacco stores to

register as manufacturers if they repackage pipe tobacco or cigars, and its effort to regulate wooden

pipes. See Dkt. #18-1 ¶¶ 82–160.

Only two claims in Washington—challenging the size of the warnings and challenging

the decision not to define and exempt from all regulation a category of premium cigars—relate to

claims in this case. And even those claims are plainly distinct, as the Washington plaintiffs

contest only the format of the warnings, not their content, and challenge their application to any

type of cigar, as well as the FDA’s decision to subject premium cigars to regulation of any kind.

See id. And the Washington plaintiffs raise no claims under the Appointments Clause. See id.

In October 2017, the Washington plaintiffs moved for summary judgment against

enforcement of the warnings requirements on all cigars, the collection of user fees, the blending

of pipe tobacco, and the regulation of tobacco pipes, and maintained all other claims for future

adjudication. Cigar Ass’n of Am., No. 16-1460 (D.D.C.) (Dkt. #61–62, 68). Oral argument was

held on December 14, 2017, and a district court decision remains pending. See id. (Dkt. #85).

C. The Parties in Texas and the Parties in Washington, D.C.

Contrary to the Government’s claims, Plaintiffs El Cubano and En Fuego are not, and

were not when this suit was filed, members of IPCPR. Defendants cite printouts from IPCPR’s

website, dated January 12, 2018, purporting to list El Cubano and En Fuego as current IPCPR
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members as of that date. Dkt. #18-3, -4. The reality is that El Cubano and En Fuego did not

renew their IPCPR memberships, which expired in 2017. See Declaration of Lee Moore

(“Moore Decl.”) ¶¶ 3–4; Declaration of Manuel Lopez (“Lopez Decl.”) ¶¶ 3–4. While they were

members of IPCPR, they never participated in a leadership meeting of that group and had no

control over or input into the lawsuit filed in Washington, D.C. See Moore Decl. ¶ 4; Lopez

Decl. ¶ 4. They were two of the association’s more than two-thousand members nationwide.

The Texas Cigar Merchants Association (“TxCMA”) is an independent not-for-profit association

incorporated in Texas. See TxCMA Certificate of Formation (Ex. A). The Board of Directors is

elected by the membership of the Texas organization and shares no common members with the

board of directors of IPCPR. See Declaration of Paul Carroll (“Carroll Decl.”) ¶ 3. 1

ARGUMENT

The Government presents a single ground for transferring this case to our Nation’s capital:

The “first-to-file” principle. This entirely discretionary principle has no application in this case. It

is designed to move cases to one court regarding a single transaction, bad action, legal dispute, or

episode of corporate misconduct, where the intensely factual proof will primarily concern what

happened. The principle has no place in cases challenging a nationwide regulation.

Even if the first-to-file principle were relevant, its criteria are not met here. This case—

seeking to hold the FDA to account for treating premium cigars identically to mass-produced

products allegedly used by youth and in a manner similar to cigarettes—is not “substantially

similar” to the litigation in Washington, D.C. The Washington case involves a challenge to the

1
Defendants fault Plaintiffs for not filing a notice of related case pursuant to Local Rule CV-
42(a). Dkt. #18 p. 8. The Washington case is not a “collateral proceeding” within the meaning
of that rule because it does not “involve[] subject matter that either comprises all or a material
part of the subject matter or operative facts” of this case. E.D. Tex. Local R. CV-42(a). If the
Washington case were a “collateral proceeding,” then the same would be true of the roughly ten
other lawsuits around the country challenging various aspects of the Rule.

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entire FDA regulatory scheme for cigars, brought by national trade associations, claiming the

scheme made no sense for any type of cigar. Unlike several of the large companies leading the

Washington case, carrying a health warning message is entirely new for the Plaintiffs in this case.

Plaintiffs are thus challenging the accuracy of the warnings’ content, their intrusive effect on

communications with consumers, and the lack of evidence regarding premium cigars to support

the application of the warnings. See Dkt. #20 ¶¶ 52–96; Dkt. #22 pp. 13–33. These Texas small

businesses are entitled to have their First Amendment rights adjudicated by their local federal

district court applying the law of the Fifth Circuit. The motion to transfer should be denied.

A. The First-to-File Principle Does Not Apply to Nationwide Federal Regulations

The first-to-file principle has never been endorsed by the Fifth Circuit to support transfer of

a lawsuit challenging a nationwide federal regulation. And for good reason. It is a discretionary

doctrine meant to deal with lawsuits about events—tortious acts, breaches of contract, and

corporate wrongdoing. In such cases, there are significant efficiencies in one court determining

what happened and avoiding conflicting findings and judgments. See, e.g., Cadle Co. v.

Whataburger of Alice, Inc., 174 F.3d 599, 602 (5th Cir. 1999) (dispute over a debt and collection

on a judgment in bankruptcy); Save Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947, 948–49 (5th

Cir. 1997) (dispute over a debt); W. Gulf Mar. Ass’n v. ILA Deep Sea Local 24, 751 F.2d 721, 728–

31 (5th Cir. 1985) (labor dispute); Mann Mfg., Inc. v. Hortex, Inc., 439 F.2d 403, 407–08 (5th Cir.

1971) (patent dispute); Platt v. Nash, No. 4:16-cv-00294, 2016 WL 6037856, at *1 (E.D. Tex. Oct.

14, 2016) (Mazzant, J.) (insurance dispute). When the federal government has sought to invoke

the first-to-file principle to consolidate cases in various district courts challenging a far-reaching

federal regulation, courts often have declined to do so. See, e.g., See Nat’l Indus. For Blind v.

Dep’t of Veterans Affairs, --- F. Supp. 3d ----, 2017 WL 5176326, at *5–6 (D.D.C. 2017); Permian

Basin Petroleum Ass’n v. Dep’t of Interior, No. MO-14-CV-050, 2015 WL 11622492, at *4–5
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(W.D. Tex. Feb. 26, 2015); cf. In re Clean Water Rule: Definition of “Waters of the United

States”, 140 F. Supp. 3d 1340, 1341 (J.P.M.L. 2015) (denying Government’s motion to centralize

pretrial proceedings in nine actions challenging “Waters of the United States” rule). 2

There are strong judicial policy reasons for not applying the “first-to-file” principle to

lawsuits challenging nationwide regulations. First, the cases often do not involve an intensely

factual dissection of a historical event, a situation where one court’s attention may serve the

interests of judicial economy. See, e.g., Needbasedapps, LLC v. Robbins Research Int’l, Inc.,

926 F. Supp. 2d 907, 914 (W.D. Tex. 2013) (dispute over ownership of applications and related

intellectual property); Wells Fargo Bank, N.A. v. W. Coast Life Ins. Co., 631 F. Supp. 2d 844,

847 (N.D. Tex. 2009) (dispute over life insurance policies and applications for policies).

Second, that parties from throughout the country seek to challenge a federal regulation is a

problem of the Government’s own making. When the Government attempts to regulate an entire

industry across the country, many businesses are going to attack the rule from different

perspectives in their local courts. That is clear here, where Plaintiffs come at the FDA warnings

not from a 17-year history of posting similar content on their packages and advertisements, as

many of the largest cigar companies have. Instead, they challenge even the accuracy of the

warnings themselves. There is no reason to place the fate of every business nationwide in the

hands of the federal courts in Washington, D.C., especially where (as here) constitutional rights are

at stake. It all but ensures that one distant circuit will provide the only scrutiny of a national

regulatory scheme with breathtaking and varied economic consequences. Such transfers also make

2
The only exception cited by the Government is one decades-old case from another jurisdiction
involving sharply distinguishable circumstances. See Nat’l Health Fed’n v. Weinberger, 518
F.2d 711, 713–14 (7th Cir. 1975) (California corporation with no Illinois ties filed identical suit
challenging federal regulations in Illinois after Government won summary judgment on same
claims in New York federal court).

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it less likely that the Supreme Court will review the regulation, as they reduce the possibility of a

disagreement among the lower courts.

The Government wants to have it both ways: It has harshly criticized the prospect of one

court deciding the legality of a government program, practice, or regulation for the whole country, 3

yet that is exactly the result it seeks here. Seeking to transfer all cases challenging a nationwide

regulation to Washington ensures that one court will preside over the constitutional rights of

everyone affected by the regulation across the country. The Government’s arguments cannot be

taken seriously if it deviates from its preferred legal principle when it is in its strategic interests.

Third, consolidation creates problems of judicial administration and comity. Taking the

First Amendment’s protections of commercial speech as an example, interpretations among the

circuits radically differ. The D.C. Circuit—the court system to which the Government wants this

case transferred—does not require that the Government show that warnings correct consumer

deception, as other circuits have required and the Fifth Circuit has suggested. Compare Am.

Meat Inst. v. USDA, 760 F.3d 18, 22–23 (D.C. Cir. 2014) (en banc), with Pub. Citizen Inc. v. La.

Attorney Disciplinary Bd., 632 F.3d 212, 227 (5th Cir. 2014), Entm’t Software Ass’n v.

Blagojevich, 469 F.3d 641, 652 (7th Cir. 2006), and United States v. Wenger, 427 F.3d 840, 849

(10th Cir. 2005). This is crucial here because Plaintiffs are barred by the FDA from making

nearly any claim about the health effects of their products and have no even alleged history of

3
See Attorney General Sessions Delivers Remarks at the Federalist Society’s Student
Symposium, U.S. Dep’t of Justice, Mar. 10, 2018 (Ex. B) (“Today, in effect, single district court
judges are going beyond proper adjudicative bounds and making themselves super-legislators for
the entire United States.”); Petition for a Writ of Certiorari at 32–33, Trump v. Hawaii, No. 17-
965 (filed Jan. 5, 2018) (“The injunction entered in this case continues a deeply troubling trend
in the lower courts of entering relief that extends well beyond the parties.”). In fact, the
Government explicitly criticized the scope of this Court’s order enjoining implementation of the
Department of Labor’s overtime rule in 2016. See Brief for Appellants at 39–40, Nevada v. U.S.
Dep’t of Labor, No. 16-41606 (filed Dec. 15, 2016).

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misleading consumers. The consumer deception point is but one example of legal differences

between the circuits on First Amendment protections of commercial speech. These Texas

plaintiffs are entitled to have their claims adjudicated by a Texas federal court applying Fifth

Circuit precedents interpreting the First Amendment.

Accordingly, the modern cases have not transferred local challenges to nationwide

regulations to one district court. For example, when Jones Day brought claims that the Obamacare

contraceptive mandate violated the First Amendment and RFRA in multiple different districts,

each on behalf of different affiliates of the Catholic Church, the cases were not transferred or

consolidated. See DOJ Says It’s Settled ‘Contraception Mandate’ Cases, Wash. Times, Oct. 23,

2017, https://www.washingtontimes.com/news/2017/oct/23/doj-says-its-settled-contraception-

mandate-cases. Likewise, when faced with nine different challenges to the EPA’s “Waters of the

United States” rule, the Judicial Panel on Multidistrict Litigation rejected the Government’s efforts

to consolidate the cases. See In re Clean Water Rule, 140 F. Supp. 3d at 1340–41.

B. The Government Has Not Shown that the Cases Are “Substantially Similar,”
As Is Required for Transfer Under the First-to-File Principle

Even if the first-to-file principle were to apply to challenges to nationwide regulatory

schemes, its criteria are not met in this case. That is because the claims of the premium cigar

Plaintiffs regarding the health warnings’ violation of their First Amendment rights here are not

“substantially similar” to the omnibus challenge to the whole regulatory scheme on behalf of

different products, including mass-produced cigars, in Washington, D.C. The first-to-file

principle is a “discretionary doctrine . . . rest[ing] on principles of comity and sound judicial

administration.” Cadle Co., 174 F.3d at 603. Consistent with the general rule that a plaintiff’s

choice of venue is entitled to deference and “places a significant burden on the movant to show

good cause for [a] transfer,” Frito-Lay N. Am., Inc. v. Medallion Foods, Inc., 867 F. Supp. 2d

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859, 871 (E.D. Tex. 2012) (Mazzant, J.), the party invoking the first-to-file principle must prove

that transfer is warranted, Samuel v. Signal Int’l L.L.C., No. 1:13-cv-323, 2014 WL 12597393, at

*2 (E.D. Tex. July 3, 2014).

The Government must show “substantial overlap” between the cases, considering such

factors as (1) “whether the core issue [is] the same,” (2) whether “much of the proof adduced

would likely be identical,” and (3) whether the cases “overlap on the substantive issues.” Int’l

Fidelity Ins. Co. v. Sweet Little Mex. Corp., 665 F.3d 671, 678 (5th Cir. 2011). Id. 4 “Where the

overlap between two suits is less than complete, the judgment is made case by case, based on

such factors as the extent of overlap, the likelihood of conflict, the comparative advantage and

the interest of each forum in resolving the dispute.” Id. (citation omitted). The cases must be

“more than merely related to support a motion for transfer when venue is otherwise appropriate.”

Buckalew v. Celanese, Ltd., No. G-05-315, 2005 WL 2266619, at *2 (S.D. Tex. Sept. 16, 2005).

The Government has not satisfied these standards here. First, the “substantive issues” are

not the same. Int’l Fidelity, 665 F.3d at 678. Plaintiffs here make and sell exclusively premium

cigars and pipe tobacco, not the mass-produced cigars that were the main focus of the

Government’s papers in Washington, D.C. Indeed, in this case, Plaintiffs’ principal point is that

the FDA unconstitutionally and illegally lumped premium cigars with mass-produced cigars into

a warnings scheme ill-suited to premium cigars. Plaintiffs make the case that premium cigars are

different than mass-marketed cigars: They are made by hand, they are expensive, and they are

4
Contrary to the Government’s claims, Dkt. #18 pp. 9–10, intervening case law makes clear that
the Fifth Circuit seeks a determination of whether a substantial overlap exists, not whether it is
likely to exist. See Int’l Fidelity, 665 F.3d at 678 (“The relevant inquiry is whether the district
court abused its discretion in concluding that the matters pending in the CIT and the district court
do not substantially overlap.” (emphasis added)); Platt, 2016 WL 6037856, at *1 (“Th[e] role [of
the second-filed court] is to decide whether the moving party . . . has demonstrated a ‘substantial
overlap’ between the two suits.”).

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used less frequently than mass-marketed cigars and by a radically different demographic group.

See Dkt. #20 ¶¶ 27–33; Dkt. #22 pp. 5–7. The FDA cannot use evidence regarding mass-

marketed cigars, as it did nearly exclusively, to justify a warnings scheme for the very different

category of premium cigars. Granting this motion effectively would jump to the Government’s

preferred conclusion on the merits and hold that all cigars, whether handmade by artisans or

rolling off an assembly line like cigarettes, are the same, and that lawsuits affecting any of them

should be treated the same.

Moreover, the Plaintiffs here mount very different First Amendment attacks on the

warnings scheme than the plaintiffs in Washington, D.C. Plaintiffs here contest the accuracy of

the warnings themselves. See Dkt. #20 ¶¶ 64–96. And studies published by the FDA staff

demonstrate that the warnings are misleading when applied to premium cigars, an issue the FDA

has formally acknowledged requires additional scientific study. See Dkt. #22 pp. 5–10.

Adjudicating that claim will require a review of data regarding the infrequent use of premium

cigars—the median premium cigar consumer smokes 1.7 days per month—and regarding the

health effects of less than daily use of cigars, which show no statistically significant increase in

mortality. See Dkt. #22 pp. 13–19. Moreover, Plaintiffs here seek invalidation of the warnings

requirement because the Rule was promulgated by an FDA employee who is not an officer of the

United States, in violation of the Appointments Clause. See Dkt. #20 ¶¶ 15, 39–43, 130–49.

None of these issues was before the court in Washington, D.C. Instead, the plaintiffs

sought relief against the warnings requirements for all cigars. See Dkt. #18-1 ¶¶ 53, 134–48.

The case did not entail a review of the science of whether the warnings as applied to this distinct

segment of the cigar market are misleading. And the Government’s papers in Washington did

not focus on how the FDA sought to justify the warnings as applied to premium cigars and how

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the warnings would affect premium cigar consumers, who have very distinct demographic

characteristics. See Addendum; see also Jones v. Xerox Commercial Solutions, LLC, No. H-13-

0650, 2013 WL 3245957, at *3 (S.D. Tex. June 26, 2013) (denying transfer where suits involved

“several causes of action independent from [the common] claims”); Buckalew, 2005 WL

2266619, at *3 (same, where “the claims in the two cases are not identical”).

Where the “overlap” between claims in two cases is not “complete”—as plainly is the case

here—the transfer inquiry becomes more discretionary, looking to “comparative advantage” and

the “interests of each forum.” Int’l Fidelity, 665 F.3d at 678. Here, the Eastern District of Texas

and eventually the Fifth Circuit have strong interests in adjudicating these claims. The warnings at

issue here will litter the retail stores and communications with customers of a Plaintiff with two

locations in this district. See Dkt. #22-11–19. This Court, after all, “has an interest in resolving

disputes brought before it in a timely and efficient manner, especially when those suits involve

local citizens.” Buckalew, 2005 WL 2266619, at *3. And, as discussed above, the law concerning

First Amendment protections of commercial speech is simply different in the Fifth Circuit than in

the D.C. Circuit. That court has systematically cut back on the protections against compelled

commercial speech in ways the Fifth Circuit has not. Plaintiffs are entitled to the application of

Fifth Circuit law in defending their constitutional rights.

Second, the parties are not the same. If the parties are not identical, that fact cuts against

transfer under the first-to-file principle. See Samuel, 2014 WL 12597393, at *2. The plaintiffs

in Washington, D.C. are three national trade associations, including one that explicitly represents

the interests of the mass-produced cigar industry. By stark contrast, Plaintiffs En Fuego and El

Cubano manufacture and sell exclusively premium cigars and pipe tobacco. The Government

makes much of the fact that En Fuego and El Cubano are members of one of the national trade

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associations that was a plaintiff in Washington. However, En Fuego and El Cubano are not now,

and were not when this case was filed, members of IPCPR. Moore Decl. ¶¶ 2–3; Lopez Decl.

¶¶ 2–3. Their memberships lapsed in 2017. Moore Decl. ¶ 4; Lopez Decl. ¶ 4. In any event,

their historical membership in the Association is irrelevant. Even prior to 2017, they were two of

more than two-thousand members nationwide and were not active in the leadership or

management of IPCPR, much less the formation of its litigating positions in the Washington

case. See Moore Decl. ¶ 4; Lopez Decl. ¶ 4. Federal courts have made clear that “mere

membership” in an association is insufficient to bind members to litigation undertaken by the

association. See, e.g., Cal. Cosmetology Coal. v. Riley, 871 F. Supp. 1263, 1267 (C.D. Cal.

1994), aff’d, 110 F.3d 1454 (9th Cir. 1997). Rather, there generally must be evidence that the

member authorized, participated in, or controlled the litigation. See id. (citing cases); see also

18A Charles Alan Wright et al., Federal Practice & Procedure § 4456 (2d ed. 2017). The

Government’s assertions about En Fuego and El Cubano’s historical passive membership in a

national trade association do not make the parties the “same.”

The participation of TxCMA as a plaintiff in this case does not change this analysis. The

Government contends that TxCMA is effectively a local subsidiary of IPCPR, a plaintiff in the

Washington case, like the U.S. subsidiary of Royal Dutch Shell. But the Texas association is

independently incorporated in the State of Texas, with its own Board of Directors comprised of

Texans. See Ex. A; Carroll Decl. ¶ 3. It is not owned by IPCPR, and there is no overlap between

the boards of TxCMA and IPCPR. Carroll Decl. ¶ 3. The associations do share the expense of a

single lobbyist in Austin, Texas, when their interests happen to coincide, but they have different

goals and organizational focuses. Id. ¶¶ 3–4. The existence of an occasional joint venture

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between two associations, here unrelated to the subject matter of this litigation, does not make

the organizations the same for all purposes.

Third, judicial economy would not be served by transfer. See Int’l Fidelity, 665 F.3d at

678. The Washington case is seeking to overturn the entire cigar regulatory regime, including its

FDA product review and funding mechanism; the narrower grounds on which Plaintiffs here

have sought relief—limited to the application of the warnings requirement to premium cigars and

pipe tobacco only—enable this Court to rule quickly. See Associated Fisheries of Me., Inc. v.

Evans, 329 F. Supp. 2d 172, 174 (D. Me. 2004).

Fourth, even if the criteria for the first-to-file principle somehow applied here (and they do

not), “[c]ourts may exercise their discretion and decline application of the rule in light of

‘compelling circumstances.’” Hart v. Donostia LLC, --- F. Supp. 3d ----, 2018 WL 1110383, at *4

(W.D. Tex. 2018). Here, the predominance of legal issues over any common question of fact is

precisely such a compelling circumstance. There is very little factual overlap between the cases,

given the Government’s intense focus on blocking the requested relief for all types of cigars,

including mass-produced cigars, in the Washington case, see Addendum, and this case’s exclusive

focus on premium cigars and pipe tobacco, see Dkt. #20. The First Amendment legal issues are a

“compelling” reason to keep this regulatory challenge by Texas businesses in Texas. See Hart,

2018 WL 1110383, at *4. These Texas businesses are entitled, by any measure of fairness, to an

adjudication of their First Amendment rights under Fifth Circuit precedents by the courts

responsible for developing that law. The judicial system and the Constitution are best protected by

not funneling every plaintiff challenging a nationwide regulation into one column of lower courts.

CONCLUSION

The Court should deny Defendants’ motion to transfer and set a prompt hearing on

Plaintiffs’ motion for summary judgment or, in the alternative, for a preliminary injunction.
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Dated: April 2, 2018 Respectfully submitted,

/s/ Clyde M. Siebman

SIEBMAN, BURG, PHILLIPS & SMITH, LLP
Clyde M. Siebman
Texas Bar No. 18341600
clydesiebman@siebman.com
Elizabeth S. Forrest
Texas Bar No. 24086207
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
michael.edney@nortonrosefulbright.com
799 9th Street NW, Suite 1000
Washington, DC 20001-4501
Telephone: (202) 662-0200
Facsimile: (202) 662-4643
Ryan E. Meltzer
Texas Bar No. 24092821
ryan.meltzer@nortonrosefulbright.com
98 San Jacinto Boulevard, 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
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ADDENDUM

Excerpts from the Government’s Cross-Motion for Partial Summary Judgment in Cigar
Association of America v. FDA, No. 16-1460 (D.D.C.)
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INTRODUCTION

The use of cigars and pipe tobacco has persisted even as the use of other tobacco products

has declined. Indeed, more than 8% of high school students currently smoke cigars, comparable

to the 9% who smoke cigarettes. In contrast to popular perception, the typical cigar is not a

luxury indulgence hand-rolled by an artisan, but instead a relatively inexpensive, machine-made

product, likely in a kid-friendly fruit flavor. And while cigars are often perceived to be a safe

alternative to cigarettes, there is abundant evidence that they pose significant health risks. To

begin, they can deliver nicotine—one of the most addictive substances known to man—as

effectively as cigarettes. Nicotine is also toxic—it impairs brain development in youth, and

causes pre-term delivery and stillbirth. And because cigar smoke contains essentially the same

toxins and carcinogens as cigarette smoke, it causes cancer, lung disease, and death.

Plaintiffs acknowledge none of these risks. Their brief gives no inkling that nicotine is

highly addictive, that cigar and pipe tobacco smoke is carcinogenic, or that their products, when

used as directed, may be lethal. Instead, Plaintiffs contend that cigars and pipe tobacco should

be exempted from regulation under several key provisions of the Tobacco Control Act—if not

from the entire Act, a question they reserve for later briefing. Congress saw the matter

differently; it expressly authorized the FDA to regulate cigars and pipe tobacco under the

Tobacco Control Act, 21 U.S.C. §§ 387g(d)(3)(A), 387s(b)(2)(B), and it plainly expected that the

agency would do so. The FDA reasonably exercised that authority here, and its expert judgment

merits substantial deference.1

1
The agency has announced that it intends to issue an Advance Notice of Proposed Rulemaking
seeking public comment on the patterns of use and resulting public health impacts of premium
cigars. See FDA, Press Release, FDA Announces Comprehensive Regulatory
Plan to Shift Trajectory of Tobacco-Related Disease, Death (July 28, 2017), available at

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cigarettes and smokeless tobacco to minors, and restricts the distribution of free samples. 21

C.F.R. §§ 1140.14(a), 1140.16(d) (2010).

Together, these provisions effectuate several of the Act’s principal goals: to make

“consumers . . . better informed” about “the health and dependency effects or safety of tobacco

products”; to permit the FDA to “regulate the levels of tar, nicotine, and other harmful

components” of tobacco products; and to ensure “effective oversight of the tobacco industry’s

efforts to develop, introduce, and promote less harmful tobacco products.” Pub. L. No. 111-31,

§ 3(4)–(6).

C. Regulatory Background

Congress made the TCA applicable to four categories of tobacco products—“all

cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco”—as well as “to any

other tobacco products that the Secretary by regulation deems to be subject to this chapter.” 21

U.S.C. § 387a(b) (emphasis added). In the deeming rule, the FDA exercised that authority,

subjecting cigars and pipe tobacco, among other products, to regulation under the TCA.

A “cigar” is any “roll of tobacco” that is “wrapped in leaf tobacco or any substance

containing tobacco” and is not a cigarette. 21 C.F.R. § 1143.1; cf. 21 U.S.C. § 387(3) (defining

“cigarette”). There are three major categories of cigar products: little cigars, cigarillos, and

traditional cigars, labeled as numbers 2, 3, and 4-6 (respectively) in the figure below.2

2
This figure is from Cigars: Health Effects and Trends, NCI Smoking and Tobacco Control
Monograph, at 57 (AR 742), which describes (1) as a bidi, (2) as a little cigar with a filter tip, (3)
as a small cigar or cigarillo with a plastic mouth piece, (4) as a regular cigar, and (5)-(6) as
premium cigars.
6

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Little cigars resemble cigarettes and are often smoked in the same manner. They are

about the same size as cigarettes, containing about 1 gram of tobacco; they are commonly sold in

packs of 20; and they often have filters:

Delnevo (2006) at 116–17 (AR 308–09); see also 21 U.S.C. § 387(11) (defining “little cigar” as

a tobacco product that meets the definition of a “little cigar” in [15 U.S.C. § 1332(7)], which is

“any roll of tobacco wrapped in leaf tobacco or any substance containing tobacco (other than any

roll of tobacco which is a cigarette within the meaning of subsection (1)) and as to which one

thousand units weigh not more than three pounds”). Indeed, little cigars are positioned as

cheaper substitutes for cigarettes, given that they have avoided the stricter regulations applied to

cigarettes. Id. at 116–18 (AR 308–10); Delnevo & Hrywna (2007) at 1368–73 (AR 300–05).

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Cigarillos are shorter, slimmer versions of traditional cigars, and generally contain

between 3 and 10 pounds of tobacco per thousand units. Kozlowski et al. (AR 7703). They may

have wooden or plastic tips. AR 742.

Traditional cigars vary in length and diameter, and are generally larger than cigarillos.

Kozlowski et al. (AR 7703). While little cigars and cigarillos are generally machine-rolled,

traditional cigars may be either machine-rolled or hand-rolled. AR 882. The term “premium

cigar” is not defined by federal law, and does not have an agreed-upon definition, but is

sometimes used to refer to traditional cigars that are hand-rolled, made with higher-grade

tobacco, or more expensive. See, e.g., Corey et al. (2014) at 650 (AR 22,253).

Cigar use in the United States has persisted even as the use of other tobacco products has

declined. In 2012–13, 7.4% of adults reported current cigar use. Coleman et al. (2014) at 1 (AR

960). That figure is even higher among youth: In 2014, 8.2% of high school students—some 1.2

million youth—were current cigar users, 81 Fed. Reg. at 29,960, 28,985 (2016) (citing Ref. 22 at

AR 15,634), comparable to the 9.2% of high school students who smoked cigarettes, id.

Just as cigar use skews young, it also skews poor. While the “stereotypical public image

of the cigar tends to be one of premium handmade products,” in reality, “machine-manufactured

cigars dominate” the market, “accounting for 90% of retail volume sales.” Euromonitor (2014)

at 1, 3 (AR Supp. 2870, 2872). These mass-produced cigars are “typically much less expensive

than handmade cigars” and “tend to be purchased by a younger, less affluent demographic.” Id.

The industry structure reflects these market trends. The U.S. cigar industry is dominated

by four large manufacturers, which together account for 75% of total sales volume. Euromonitor

at 3 (AR Supp. 2872). The industry leader, Swisher International—a member of Plaintiff Cigar

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Association of America—controls a full 33% of the domestic cigar market, “due mainly to its

strength in machine-manufactured” products. Id.

In contrast to cigarettes, which since 2009 have been permitted in only two characterizing

flavors—tobacco and menthol—most machine-manufactured cigars are flavored, magnifying

their appeal to youth. Delnevo et al. (2015) at 391 tbl. 2, 393 (AR 20,899); 81 Fed. Reg. at

29,014, 29,027. For example, Swisher International’s industry-leading “Swisher Sweets”

product line includes flavors ranging from “peach” and “chocolate” to “cherry dynamite” and

“banana smash.” See http://swishersweets.com; Euromonitor at 8 tbl. 8 (AR Supp. 2877). It is

these sorts of products marketed as flavored cigars that are principally driving growth in the

cigar industry: Between 2008 and 2011, flavored cigars were responsible for 75% of the total

increase in cigar sales. Delnevo et al. (2015) at 390 (AR 20,898). While 63.2% of cigar smokers

over age 35 report using a brand that makes flavored cigars, fully 95.1% of youth under age 17

do. Id. at 392–93 & tbl. 4 (AR 20,900–01).3

The record before the agency demonstrates that cigars and pipe tobacco present

significant risks to public health—chief among them, addiction, cancer, and heart disease.

First, cigars and pipe tobacco contain nicotine, “one of the most addictive substances

used by humans,” 81 Fed. Reg. at 28,988, and “a powerful pharmacologic agent that acts in the

brain and throughout the body,” Surgeon General’s Report (1988) at 14 (AR 1183). “[N]icotine

is psychoactive (‘mood altering’) and can provide pleasurable effects,” and “causes physical

dependence characterized by a withdrawal syndrome that usually accompanies nicotine

3
The agency has announced that it intends to issue an Advance Notice of Proposed Rulemaking
seeking public comment on, inter alia, the role that flavors in tobacco products play in attracting
youth. See FDA, Press Release, FDA Announces Comprehensive Regulatory
Plan to Shift Trajectory of Tobacco-Related Disease, Death (July 28, 2017), available at
https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/UCM568923.htm.
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abstinence.” Id. Youth and young adults have a “unique susceptibility” to these addictive

effects. 81 Fed. Reg. at 29,023, 29,047 (citing multiple studies). Cigars can deliver as much

nicotine as cigarettes—sometimes much more. Id. at 29,022.

Second, nicotine is also toxic at high doses, and can harm adolescents, pregnant women,

and fetuses. Id. at 29,033. The Surgeon General has concluded that nicotine exposure during

pregnancy “contribut[es] to multiple adverse outcomes, such as pre-term delivery and stillbirth,”

and “has lasting consequences for [fetal] brain development.” Surgeon General’s Report (2014)

at 126 (AR 14,708). Likewise, nicotine exposure during adolescence “may have lasting adverse

consequences for brain development.” Id.

Third, cigars and pipe tobacco cause cancer and other fatal diseases. Cigar and pipe

smoke contain many of the same harmful constituents as cigarette smoke and may have higher

levels of several harmful compounds. 81 Fed. Reg. at 29,020, 29,070; Nat’l Cancer Inst. (1998)

at 17–18 (AR 21,109-10). Indeed, in comparison to cigarette smoke, cigar smoke contains more

tar, carbon monoxide, ammonia, lead, cadmium, and nitrosamines. 81 Fed. Reg. at 29,070;

Baker et al. (2000) at 737 (AR 18,741). Cigar smokers have an increased risk of a variety of

fatal diseases, including lung cancer, oral cancer, laryngeal cancer, esophageal cancer, stomach

cancer, heart disease, aortic aneurysm, stroke, and chronic obstructive pulmonary disease

(“COPD”). 81 Fed. Reg. at 29,020, 29,024. All told, cigar smoking is “responsible for

approximately 9,000 premature deaths”—or the loss of “almost 140,000 years of potential

life”—every year. Id. at 29,020.

While pipe tobacco use is less common, the risk of disease and death is comparable. Pipe

smokers have an “increased risk of death from cancers of the lung, oropharynx, esophagus,

colorectum, pancreas, and larynx, and from coronary heart disease, cerebrovascular disease, and

10

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COPD.” Id. at 29,049. Indeed, “their risk of tobacco-related disease is similar to the risk in

those who . . . smoke cigarettes.” Id.

Fourth, the secondhand smoke from cigars and pipes causes disease and death in

nonusers. Exposure to secondhand cigar and pipe smoke “can cause the same or similarly

dangerous effects as exposure to secondhand cigarette smoke” given its similar chemical

composition. 81 Fed. Reg. at 29,071. And secondhand smoke has long been known to cause

lung cancer and heart disease in nonsmokers, resulting in tens of thousands of deaths each year.

Id. at 29,070–71; Surgeon General’s Rpt. (2014) at 660 tbl 12.4 (AR 15,244).

Fifth, the health risks of cigar and pipe tobacco are widely underappreciated. For

example, there is a common misconception, repeated by some commenters, that cigars are not

addictive unless the user inhales. 81 Fed. Reg. at 28,988 (comment 11). In fact, most cigar users

inhale some smoke even if they do not intend to; regardless, because cigar smoke dissolves in

saliva, “sufficient nicotine to create dependence” is absorbed through the oral mucosa. Id. at

28,988, 29,069. Likewise, there is a widespread misperception that cigars are a safe alternative

to cigarettes. Id. at 29,070. Indeed, in one nationwide survey, less than half of cigar smokers

believed that “cigar smoking is a high-risk behavior for developing cancer.” Baker et al. (2000)

at 737 (AR 18,741).

The scientific evidence is overwhelming: cigars and pipe tobacco pose significant public

health risks. In view of this record, the FDA concluded that regulatory oversight would mitigate

the underappreciated risks that these products pose to public health.

D. The Deeming Rule

Congress authorized the FDA to subject “any” “tobacco product” (except certain raw

tobacco leaf) to the TCA as it “deems” fit. 21 U.S.C. § 387a(b). The Act “broadly defines

11

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CERTIFICATE OF SERVICE

The undersigned certifies that on this 2nd day of April, 2018, all counsel of record who

are deemed to have consented to electronic service are being served with a copy of this document

through the Court’s CM/ECF system under Local Rule CV-5(a)(3).

SIEBMAN, BURG, PHILLIPS & SMITH, LLP

By: /s/ Clyde M. Siebman