Troutman Sanders – Tobacco Law Blog: Federal Courts May Be Trending Toward Delaying CBD Consumer Class Action Lawsuits

 

Relying on the regulatory and legal uncertainty surrounding cannabidiol (CBD), Food and Drug Administration statements and state laws, several class actions have been filed since late 2019 against companies selling CBD products, a number of which have been filed in California federal courts. In at least two cases, courts have adopted defendants’ requests to delay the cases while the FDA continues to study CBD and how it should be federally regulated. These cases could represent a developing “wait and see” approach by federal courts dealing with CBD class action lawsuits.

In Colette v. CV Sciences, Inc.a federal district court recently granted a CBD company’s motion to stay the lawsuit indefinitely on the basis that FDA is actively considering how it plans to regulate CBD-containing products. In this case, Michelene Colette and Leticia Shaw represent a class of plaintiffs throughout the U.S. who have purchased CV Sciences’ CBD products (e.g., sprays, oil drops, gummies, capsules, and softgels). Their suit alleges that the company’s sale of CBD products is illegal under the Federal Food, Drug, and Cosmetic Act, essentially adopting the logic in many of FDA’s recent warning letters that CBD products are unapproved new or misbranded drugs in violation of the FDCA. In addition, the plaintiffs claim that CV Sciences’ sales violate several California and Arizona unfair competition, false advertising, warranty and consumer fraud laws.

In response, CV Sciences asked the court either to dismiss the case or pause it until FDA makes a final decision on how it will regulate CBD products. To support its argument, the company relied on a legal doctrine known as “primary jurisdiction.” This doctrine allows a court to dismiss or pause a case while the resolution of the main issue is pending before a government agency. CV Sciences cited to FDA’s ongoing rulemaking, public hearings, and information collection activities regarding CBD products.

The court was persuaded by CV Sciences argument and decided to delay the case. The court cited a few main reasons for its decision.

  • Notably, the court stated “[t]he fact remains that the FDA has not formally established its position.”
  • The court found that regulatory oversight of CBD products is complex and involves multiple federal and state agencies.
  • Congress delegated regulation of CBD products to FDA and has increased pressure on the agency to issue guidance.
  • The number of similar class action lawsuits increases the risk of inconsistent decisions.

The court also rejected two of the plaintiffs’ counter arguments. First, plaintiffs argued that any future FDA regulatory action could not be retroactively applied. The court, however, pointed out that Congress has the power to pass retroactive legislation.

Second, the plaintiffs argued that the court had the power to decide issues of unlawful, misleading, or deceptive labeling and advertising without FDA’s guidance. But the court countered that, given the number of CBD-related class action lawsuits, there would be a real risk of inconsistent rulings without FDA guidance. Consequently, the court approved the defendant CBD company’s motion for a stay until “FDA completes its rulemaking regarding the marketing, including labelling, of CBD ingestible products.”

It appears the court’s decision to delay the case may be a trend. In at least one other case, Snyder, et al., v. Green Roads of Florida LLC, another federal district court has granted a delay based on similar legal arguments. Given the fact that FDA has made no commitment to engage in rulemaking regarding the marketing or labelling of CBD products, and the length of time it could take the agency to complete such a rulemaking, these cases are likely to be stayed for years.

Federal Courts May Be Trending Toward Delaying CBD Consumer Class Action Lawsuits

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