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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’ EMERGENCY APPEAL OF THE MAGISTRATE JUDGE’S JULY 2,

2018 ORDER SUA SPONTE REVERSING THE DENIAL OF TRANSFER
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On July 2, 2018, the Magistrate Judge sua sponte reversed the Magistrate Judge’s own May 22,

2018 order rejecting the Government’s motion to transfer this case to Washington, D.C. Dkt. #55.

Plaintiffs’ appeal the new transfer Order and request an emergency hearing on this appeal.

In this case, three Texas Plaintiffs claim their First Amendment rights are violated by an FDA

regulation compelling speech that takes effect on August 10, 2018. The Magistrate Judge applied the

“first to file” principle to effect a transfer, a discretionary concept that is not found in any statute and

appears to spring from a federal court’s discretion under 28 U.S.C. § 1404(a) to transfer a matter “in the

interests of justice.” But the timing of a transfer decision certainly affects whether the “interests of justice”

are being served. The Magistrate Judge reversed herself and ordered a transfer only 39 days before the

Plaintiffs are forced by the Government to speak in violation of their constitutional rights. The Magistrate

Judge did so nearly 14 weeks after Plaintiffs moved for a preliminary injunction, after that motion had

been fully briefed, and after a 3½-hour oral argument in which the prospect of transfer was never

mentioned. Transferring the case now effectively denies Plaintiffs substantive relief against a violation

of constitutional rights. It is contrary to the interests of justice and an abuse of discretion.

The Magistrate Judge’s reversal of direction also is based on manifest legal errors. Chief among

them is the Magistrate Judge’s failure to address the central claim in this case: That the FDA’s warnings

are inaccurate as applied to premium cigars, a complex issue that consumed substantive briefing and oral

argument. That issue is nowhere to be found in the Washington court. The Magistrate Judge also

improperly ignored the Washington court’s own holding that the extension of the warnings regulation to

premium cigars was not before that court. The Magistrate Judge used “Count V” of the complaint in

Washington to second guess the Washington court, but overlooked that Count V attacks an FDA

regulatory action entirely separate from the creation of the warnings regulation.

I. The Magistrate Judge’s Transfer Order Is Contrary to the Interests of Justice

The Magistrate Judge’s order is contrary to the interests of justice and judicial economy. The first-

to-file principle is entirely “discretionary” and “rests on principles of comity and sound judicial

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administration.” Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599, 603 (5th Cir. 1999). It is not

statutorily mandated; the federal transfer statute refers only to the “interests of justice.” 28 U.S.C.

§ 1404(a). Rather, it is a judicially crafted guide that “is not a rigid or inflexible rule to be mechanically

applied.” Tex. Instruments v. Micron Semiconductor, Inc., 815 F. Supp. 994, 997 (E.D. Tex. 1993).

The timing of the Magistrate Judge’s order violates these standards. Its effect is clear: The order

substantively denies Plaintiffs’ request for an injunction before their speech is compelled by regulation on

August 10. That is because an injunction based on substantive consideration of Plaintiffs’ claims, at this

late hour, practically cannot be obtained other than in this Court.

Plainly, Plaintiffs’ time to obtain relief is up. And the orders entered by the Magistrate Judge had

previously so recognized. Once the Magistrate Judge had denied the motion to transfer on May 22, the

Magistrate Judge set a hearing for June 26 on Plaintiffs’ preliminary injunction motion. Dkt. #35. That

was virtually the last day on which the Magistrate Judge could give meaningful and serious consideration

to protecting Plaintiffs’ constitutional rights before the regulation takes effect on August 10. The

Magistrate Judge zealously guarded that schedule, striking a Government brief that threatened to delay

proceedings and warning that sanctions would be imposed for further “tactics” interfering with her ability

to grant relief before August 10. See Dkt. #49, at p. 3. The Magistrate Judge held 3½ hours of oral

argument on June 26, 2018, wholly dedicated to the substance of Plaintiffs’ constitutional claims and

never mentioning litigation in Washington or the possibility of transfer. Dkt. #52. In response to the

Supreme Court’s very recent watershed First Amendment decision in National Institute of Family and

Life Advocates v. Becerra, No. 16-1140 (U.S. June 26, 2018), strengthening the constitutional protection

against compelled commercial disclosures, the Magistrate Judge on June 28 ordered expedited

supplemental briefing to assist the Court in reaching a swift and correct result. See Dkt. #53.

However, instead of ruling on Plaintiffs’ fully ripe preliminary injunction motion, the Magistrate

Judge reached back seven weeks and reversed her original order denying transfer. Dkt. #55. This forces

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Plaintiffs to start all over again in Washington with virtually no time left. Effectively denying substantive

consideration of a constitutional claim is not in the interests of justice.

The order is also contrary to judicial economy. After the original denial of the transfer motion,

the parties spent hundreds of hours fully briefing the preliminary injunction motion and preparing for oral

argument, as did the Magistrate Judge. The transfer effectively will double the effort of the federal court

system, as the Washington judge will need to start from the beginning on the substance and familiarize

himself with the entirely distinct claims raised here. As explained below, the core legal and factual claims

in this case have not been presented in Washington, and not even the Magistrate Judge claims the

Washington court already had evaluated them.

II. The Magistrate Judge’s Order Misapplies the First-to-File Principle

The Magistrate Judge also substantively misapplied the first-to-file principle. The first-to-file

principle comes into play only when “a substantial overlap” of substantive issues “exists,” considering

factors such as “whether ‘the core issue . . . [is] the same’” and whether “‘much of the proof adduced . . .

would likely be identical.’” Int’l Fidelity Ins. Co. v. Sweet Little Mex. Corp., 665 F.3d 671, 678 (5th Cir.

2011). The Magistrate Judge held on May 22 that there was not even a likelihood of substantial overlap

with the Cigar Association case in Washington. Dkt. #35, at pp. 4–6. The Magistrate Judge was correct

in her May 22 order and erred in reversing her position.

First, the Magistrate Judge imbedded a legal error in her conclusion that the cases substantially

overlap. The Magistrate Judge relied on Count V of the Complaint in Cigar Association to hold that the

plaintiffs there had challenged the FDA’s decision to extend the warnings to premium cigars. Dkt. #55,

at p. 5. But that holding misunderstands the structure of the Family Smoking Prevention and Tobacco

Control Act and the regulatory action challenged in Count V of the Washington complaint. In Count V,

the plaintiffs challenged the FDA’s decision to “deem” a category of premium cigars “subject to” the Act

and its allegedly automatic regulatory provisions. See 21 U.S.C. § 387a(b); Final Rule, 81 Fed. Reg.

28,974, 28,976 (May 10, 2016). Those allegedly automatic provisions include registration of

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manufacturers, testing and listing of ingredients, and a drug-like premarket review of products. 21 U.S.C.

§§ 387d, 387e, 387j; 81 Fed. Reg. at 28,976.

But those provisions did not include the mandatory health warnings. The FDA separately decided

to impose warnings on several tobacco products and extended those warnings to cover premium cigars.

See 81 Fed. Reg. at 28,976, 29,060. To do so, the agency invoked a statutory provision separate from its

statutory authority to deem tobacco products subject to the Act’s automatic regulatory provisions. See

id. at 28,982, 28,988 (citing 21 U.S.C. § 387f(d)). That statutory provision authorized the agency to place

marketing restrictions on tobacco products, but required the agency to make specific and additional

statutory findings to do so. 21 U.S.C. § 387f(d)(1). The Texas Plaintiffs in this case challenge that separate

regulatory decision. This distinction was not created for the current appeal: Before the Magistrate Judge’s

new transfer analysis ever appeared, Plaintiffs criticized the Government for attempting to use its reasoning

for deeming premium cigars subject to the Act to justify the separate regulatory decision of imposing

warnings. Dkt. #51, at p. 12.

Moreover, Count V of the Washington Complaint challenged the distinct deeming decision as

arbitrary and capricious under the Administrative Procedure Act. See Complaint at 32, CAA v. FDA, No.

16-1460 (D.D.C. July 15, 2016) (Dkt. #1). The Texas Plaintiffs’ main claim here is that the separate decision

to impose warnings on premium cigars violates the First Amendment. Among other things, the Texas

Plaintiffs argue that the warnings are not “purely factual and uncontroversial” as applied to premium cigars

and “extend broader than reasonably necessary” in reaching premium cigars. See Dkt. #22, at pp. 13–19;

see also Becerra, slip op. at 17. Those constitutional claims are nowhere to be found in Count V of the

Washington complaint.

In this way, the Magistrate Judge improperly ignored the Washington court’s own assessment of the

claims before it. The plaintiffs in Washington challenged the constitutionality of the warnings in Count VII

of their complaint, but the Washington court held that count did not challenge the constitutionality of

extending those warnings to premium cigars. CAA v. FDA, --- F. Supp. 3d ----, 2018 WL 2223653, at *23

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(D.D.C. 2018) (holding that the court “already has rejected Plaintiffs’ statutory and constitutional challenges

to the warnings requirements” and they did not raise the improper extension of the warnings to premium

cigars). The Washington court also held that the plaintiffs there (unlike Plaintiffs here) had not challenged

the “refusal to stay the warnings requirements during the pendency of the present rulemaking process.” Id.

The Magistrate Judge should not have second-guessed the Washington court’s determination that the

treatment of premium cigars was not part of the Washington case’s challenge to the warnings, especially on

the basis of Count V attacking a different regulatory decision. The Magistrate Judge’s reasoning is

inconsistent with a first-to-file principle that seeks to afford the first court deference.

Second, the Magistrate Judge ignored that the Texas Plaintiffs here are challenging the content of

the warnings as applied to premium cigars. They say the warnings are not “purely factual and

uncontroversial,” as the First Amendment requires. See Becerra, slip op. at 9. This was not some secondary

argument: It was the lead in briefing and consumed oral argument. Its resolution requires extensive analysis

of scientific studies about the usage patterns of premium cigars and their health effects. And it goes to the

heart of First Amendment freedom. As the Supreme Court explained last week: “Compelling individuals

to mouth support for views they find objectionable violates [the First Amendment’s] cardinal constitutional

command” and is even more damaging than restricting speech. Janus v. AFSCME, No. 16-1466, slip op. at

8, 9 (U.S. June 27, 2018). By stark contrast, no plaintiff in Washington challenged the accuracy of the

warnings. That was no coincidence; companies controlling the lead plaintiff in Washington had carried the

same warning content on their products for 17 years under an FTC consent decree. The Plaintiff Texas-

based premium cigar manufacturers and retailers here are being forced to convey this message for the first

time. They have a constitutional right to test its accuracy, and the Washington court has not even begun that

complex task. See CAA, 2018 WL 2223653, at *15.

Plaintiffs respectfully request that the Court (1) direct Defendants to file any opposition no later

than 12:00 PM on Monday, July 9, 2018, (2) grant an oral hearing on this appeal; (3) vacate the Magistrate

Judge’s July 2 order, and (4) enter an order denying Defendants’ motion to transfer.

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Dated: July 5, 2018 Respectfully submitted,

/s/ Clyde M. Siebman

SIEBMAN FORREST BURG & 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 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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CERTIFICATE OF SERVICE

The undersigned certifies that on this 5th day of July, 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 FORREST BURG & SMITH, LLP

By: /s/ Clyde M. Siebman