Juul Labs Inc. persuaded a federal court to grant an emergency order blocking the Food and Drug Administration’s decision to ban its e-cigarette products from the US market.
The US Circuit Court of Appeals in Washington on Friday said the ban should be “administratively stayed” while Juul’s lawyers prepare a full appeal of the FDA’s finding it must stop selling its products. Earlier this week, FDA officials refused to put the ban on hold themselves pending Juul’s appeal, according to court filings.
“FDA’s extraordinary and unlawful action, which demands that JLI immediately halt essentially all of its business operations, warrants the emergency interim relief requested,” Juul said Friday in court filings. The court stated that the appeals process would continue into the next month in its decision.
Representatives of Washington-based Juul didn’t immediately respond to an email seeking comment about the federal court’s decision to put the sales ban on hold.
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According to the FDA, Juul should stop selling or distributing these products. Any remaining products must also be removed from the marketplace. Otherwise the FDA could take enforcement action. Robert Califf (FDA Commissioner) said that there had been a significant increase in teens vaping. This prompted the FDA to do a comprehensive review of electronic cigarettes.
‘Out of Business’
Juul’s legal moves comes as the company is reportedly weighing a bankruptcy filing. The Wall Street Journal reported on Friday that the company may seek protection if it doesn’t get relief from the government ban.Chuck Tatelbaum, a veteran bankruptcy lawyer, said it would make sense for Juul executives to be considering a Chapter 11 filing since the FDA ban “basically puts the company out of business.
Representatives of Washington-based Juul didn’t immediately respond to an email seeking comment.
Once a highly touted startup, Juul’s business has declined in recent years after regulators frowned on its flavored e-cigarette products and lawsuits accused the company of targeting its marketing at underage users. Juul’s executives insist that they never targeted young people in their advertising. The company’s sales have fallen by more than $500 million and its been forced to lay off workers.
‘Arbitrary and Capricious’
In its 10-page filing, Juul officials decried the FDA’s move to ban their products as “arbitrary and capricious.” They also contend the agency didn’t consider all the evidence about their e-cigarettes before making a decision.
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“FDA cannot credibly argue there is a critical and urgent public interest in removing JLI’s products from the market right now, rather than after this court reviews FDA’s action,” according to the filing.
Sean Griffin, Juul’s lawyer, stated in court filings that on Thursday, he requested FDA lawyers to suspend the ban until Juul could file appeal briefs. They refused. He said Juul was experiencing “disruptions and other severe harms” the company feared “were likely irreparable and were expected to continue and worsen.”
Juul might be able to get a court stay. Carl Tobias of the University of Richmond, a law professor, stated that it could take up to six months for each side to file briefs and then argue the case. “So this could take awhile — even if they put the case on the fast track.”
This case is Juul Labs V. FDA (22-1123), U.S. Circuit Court for the District of Columbia in Washington
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