Another Federal Court Halts False Advertising Case Pending FDA Review of CBD

On May 22, Central California District Court Judge Virginia A. Phillips granted CBD retailer CV Sciences, Inc.’s (CV Sciences) request to stay the case of Colette et al. v. CV Sciences Inc., Case No. 2:19-cv-10227 (C.D. Cal), until the U.S. Food and drug Administration (FDA) completes its rule making regarding the marketing and labeling of CBD ingestible products.  This marks the second time this year that a federal court has paused class action litigation over alleged mis-branding of products containing CBD.

The complaint alleges that certain of CV Sciences’ CBD products are illegal under the Federal Food, Drug, and Cosmetic Act because they are mislabeled as dietary supplements or contain the illegal dietary ingredient CBD.  Plaintiffs further claim that if they had known that CBD products are “not legally sold in the United States,” they would not have purchased them.

Judge Phillips stayed the case pursuant to the primary jurisdiction doctrine and adopted the analysis from a similar class action suit out of the Southern District of Florida, Snyder v. Green Roads of Fla. LLC, 2020 WL 42239 (S.D. Fla. Jan. 3, 2020).  As we have written about before, the Snyder court ruled that where a case implicates a federal agency’s expertise with a regulated product, and where federal guidance or rule making is forthcoming, courts can stay the case to take advantage of the agency’s expertise and promote uniformity among the courts.  Accordingly, because both FDA and the State of Florida were exercising regulatory authority over the labeling of CBD products, the Snyder court halted a putative class action while FDA completes its rule making.

In further support of the decision, Judge Phillips noted that the number of CBD class actions currently pending in the federal district courts (including at least four in the Central and Northern Districts of California alone) makes clear the danger of inconsistent adjudications.  She also distinguished the case from situations where it was unlikely that the relevant agency would be issuing guidance in the short term, finding that FDA has already conducted a public hearing, has instituted an agency task force on CBD regulation, and “is working feverishly” to issue rule making.

The court’s decision further solidifies the primary jurisdiction doctrine as a tool for cannabis companies to pause litigation pending federal rule making.  However, as we have cautioned before, this issue is far from settled, and cannabis companies facing mislabeling class actions should be fully prepared for the scenario that courts choose to proceed with litigation.

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