Category: Litigation

  • Lawyers Seize on BAT’s Impairment Notice

    Lawyers Seize on BAT’s Impairment Notice

    Image: Bits and Splits

    British American Tobacco’s recent decision to write down the value of some of its U.S. brands has spawned a frenzy among law firms eager to represent investors who feel shortchanged by the multinational’s move.

    On Dec. 6, BAT disclosed that it would take an impairment charge of approximately $31.5 billion after reassessing the value of certain cigarette brands, including Newport, Pall Mall, Camel and Natural American Spirit.

    The write-down reflects the diminished outlook for combustible tobacco products, according to BAT. CEO Tadeu Marroco described it as “accounting catching up with reality.”

    Following the announcement, BAT’s stock price fell by  8.5 percent, to close at $28.86 per share on Dec. 6, 2023, causing investors to lose money.

    At least three law firms, including Frank R. Cruz, Howard G. Smith and Pomerantz, have started investigating BAT on behalf of investors for possible violations of securities laws.

    Each of them is encouraging investors to join their legal cases.

    While acknowledging the short-term pain, others have praised BAT’s impairment as a realistic move, noting that it would be irresponsible to ignore the reality of a shrinking market for traditional tobacco products.

    In a recent op-ed for Tobacco Reporter, Brand Finance Group Managing Director Richard Haigh described the write-down as “a positive step in BAT’s journey toward a resilient future.”

  • Court Stays Kathmandu Ban on Plastic Packs

    Court Stays Kathmandu Ban on Plastic Packs

    Photo: Tobacco Reporter archive

    The Patan High Court on Dec. 15 stayed the Kathmandu Metropolitan City’s decision to ban the sale of tobacco products packed in plastics, reports The Kathmandu Post.

     Judges Janak Pandey and Brajesh Pyakurel issued an interim order not to implement the decision while responding to a tobacco company’s petition against the decision of the metropolis.

    In early December, the city announced a ban on the sale of tobacco products packed in plastics in the areas under its jurisdiction from Dec. 13. In its ruling, the court argued that tobacco companies are preparing to pack their products in biodegradable packages.

     Kathmandu tried to ban tobacco several times before, but failed on each occasion.

  • Mexico Vape Ban Ruled Unconstitutional

    Mexico Vape Ban Ruled Unconstitutional

    Image: mehaniq41

    Mexico’s ban on the sale of e-cigarettes is unconstitutional, the nation’s top arbiter ruled, according to Reuters. The Second Chamber of the Supreme Court found that the presidential decree that established the prohibition contravenes freedom of commerce.

    The ruling permits only retailers who were parties to the case to sell e-cigarettes, however. If other retailers want to sell e-cigarettes, they must file their own court cases to declare the unconstitutionality of the ban in their specific instances.

    Alberto Gomez Hernandez, policy manager of the World Vapers’ Alliance, welcomed the decision of Mexico’s high court, saying that the decree violates not only the freedom of trade of the companies but also the right to health of Mexican adults. “Mexicans should be free to decide how they consume nicotine,” Gomez said in a statement.

    Although the ruling does not establish jurisprudence, we hope that the government or the judiciary will reverse the ban soon.

    Alberto Gomez Hernandez, policy manager, WVA

    The declaration of unconstitutionality was carried out in an amparo lawsuit—a type of lawsuit in Mexico through which a company can seek legal protection or permission not to abide by regulation that violates its rights.

    The general ban will stay in place since the ruling applies only to that specific case and business.

    “Although the ruling does not establish jurisprudence, we hope that the government or the judiciary will reverse the ban soon,” said Gomez. “The ban has failed; it has aggravated the public health problem of smoking in Mexico and has created a huge black market controlled by mafias.

    “Mexico needs to abandon the ban and adopt a strategy that includes the use of less harmful nicotine products as a smoking cessation tool. It should follow the example of Sweden, which is about to become the first smoke-free country, and the U.K., which promotes the use of vapes to quit smoking.”

  • Court Urged to Permit U.S. Graphic Warnings

    Court Urged to Permit U.S. Graphic Warnings

    Image: FDA

    The U.S. Food and Drug Administration urged a federal appeals court to let a regulation requiring graphic health warnings on tobacco packaging and promotions take effect, a year after it was blocked by a lower court, reports Reuters.

    On Dec. 5, FDA representative Lindsey Powell told the 5th U.S. Circuit Court of Appeals that the images on the proposed labels are necessary because text-only warnings failed to deter teenagers from starting to smoke. The labels would include 11 graphic images, such as diseased feet with amputated toes, to illustrate the risks of smoking.

    The tobacco companies that challenged the regulation have argued that the graphic labels violate their right to free speech under the First Amendment of the U.S. Constitution by compelling them to make emotionally charged, controversial statements rather than mere facts like existing written labels stating that smoking can cause cancer.

    The Family Smoking Prevention and Tobacco Control Act of 2009 instructs the FDA to create visual health warnings, but the D.C. Circuit in 2012 blocked the agency’s first attempt, saying that regulators had not convincingly demonstrated that the warnings would actually reduce smoking.

    In March 2020, the FDA released the final rule requiring new graphic warnings for cigarettes that feature some of the lesser known but still serious health risks of smoking, such as diabetes, on the top half of the front and back of cigarette packages and at least 20 percent of the area on the top of cigarette advertisements.

    R.J. Reynolds Tobacco Co., ITG Brands and Liggett Group filed a First Amendment challenge in April 2020. The rule was set to take effect in November 2023 after it was repeatedly pushed back by court.

    In a lengthy opinion issued Dec. 7, 2022, U.S. District Judge J. Campbell Barker of the U.S. District Court for the Eastern District of Texas vacated the FDA’s rule after finding that the required label statements and graphic images are not narrowly tailored to the agency’s interest in promoting public awareness of the health risks of smoking.

  • Panama’s Vapes Ban Heads to Supreme Court

    Panama’s Vapes Ban Heads to Supreme Court

    The Supreme Court of Panama has decided to hear a lawsuit challenging the constitutionality of the country’s ban on e-cigarettes and heated tobacco products.

    In early August, the Panamanian Tobacco Harm Reduction Association (ARDTP) filed a lawsuit with the Supreme Court, arguing that Law No. 315, which prohibits the use, sale, and import of e-cigarettes and heated tobacco in the country, is unconstitutional and should be repealed.

    The Panama Association for Tobacco Damage Reduction (ARDTP) had its appeal case advanced by the Supreme Court on Sept. 21 following a lawsuit, according to media reports.

    If the Supreme Court deems the unconstitutional statement valid, the 315 bill will return to the legislative body for modifications.

    Once the bill is amended, it will be resubmitted to the Supreme Court to confirm its constitutionality. A proposed new law is being drafted to replace the current 315 bill, thereby supporting provisions based on “risk.”

    Panama is one of several Latin American countries, including Mexico, Argentina, and Venezuela, that have implemented strict legislation since 2022 to restrict the use, sale, and import/export of vaping products.

    Many harm reduction advocates argue that the enactment of such legislation has resulted in the creation of a black market for safer nicotine products within their respective countries.

    The World Vapers Alliance (WVA) states that Panama’s Supreme Court’s decision to hear this lawsuit is a positive first step.

  • Philip Morris granted partial VAT refund

    Philip Morris granted partial VAT refund

    Photo: mehaniq41

    The Philippines Court of Tax Appeals (CTA) granted part of a refund claim by Philip Morris Philippines Manufacturing in the amount of PHP32.04 million ($564,407), which represents its unused input value-added tax (VAT) traced to zero-rated sales in 2015, reports Business World Online.

    The court ruling stated that Philip Morris was able to prove its entitlement to the amount by proving that sales invoices were actual shipments from the Philippines to foreign countries for export sales.

    “The court finds that even without the reopening of the trial at the division level, the submissions made by Philip Morris clarifying certain tabular presentations/summaries of its alleged zero-rated sales may already be reconsidered,” Associate Justice Catherine T. Mahan said in the ruling.

    Zero-rated sales are transactions made by VAT-registered taxpayers that do not translate to any output tax. Taxpayers must present official receipts that are attributable to a specific fiscal period, with the term “zero-rated” being written on them to qualify for a 0 percent rating.

    Philip Morris previously sought a refund of PHP90 million covering excess input VAT for 2015, which was partially granted by the CTA Third Division—the commissioner of internal revenue (CIR) was ordered to issue a refund of PHP31.18 million to Philip Morris.

    The CTA said the CIR failed to present new arguments that would call for a dismissal of the case while the CIR argued that the CTA should have rejected Philip Morris’ appeal since the export sales were not proven to be paid in acceptable foreign currency in line with the applicable rules. The CTA disagreed, stating Philip Morris has submitted acceptable bills showing that the shipments were paid for in acceptable foreign currency.

  • NJOY Sues Disposable Vapes Manufacturers

    NJOY Sues Disposable Vapes Manufacturers

    Photo: alexkich

    NJOY has filed litigation against 34 manufacturers, distributors and online retailers of illicit disposable e-vapor products that are unlawfully marketed and sold in California and other U.S. states. The suit alleges that these companies manufacture, distribute, market and sell products that violate California’s flavor ban law, are unlawful under federal law and subject to action by the U.S. Food and Drug Administration, and illegally compete against companies that comply with state and federal laws.

    The suit seeks a nation-wide injunction against the import, marketing and sale of these illicit products and significant compensatory and punitive damages.

    “These companies knowingly violate federal and state laws and need to be held accountable,” said Murray Garnick, executive vice president and general counsel of NJOY’s parent company, Altria Group, in a statement. “Today there are two markets—one for those who play by the rules and one for those who flagrantly ignore them. We are taking this action because the current state of the illicit e-vapor market is intolerable, and we must see more action from FDA and others.”

    Filed in the United States District Court for the Central District of California, the litigation is brought under four claims: unfair competition, false advertising, false advertising in violation of the Lanham Act and violation of the Prevent All Cigarette Trafficking Act of 2009.

    Named defendants in the suit manufacture and distribute illicit disposable e-vapor products which include  brands such as Breeze, Elf Bar, EB, EB Create, Esco Bar, Flum, Juice Box, Lava Plus, Loon, Lost Mary, Mr. Fog and Puff Bar. U.S. defendants include companies doing business in Arizona, California, Delaware, Florida, Michigan, Minnesota, New Jersey, New York and Texas. Foreign Defendants are all based in China.

    None of the Defendants has received premarket authorization from the FDA, according to NJOY.  

    Despite a ban on the sale of flavored tobacco products that went into effect in December 2022, flavored vapor products make up more than 97 percent of the California market according to a recent study commissioned by Altria.

    NJOY’s action against disposable vapor product manufacturers follows a complaint to the International Trade Commission by R.J. Reynolds Tobacco Co. charging multiple manufacturers, distributors and retailers of disposable vaping devices with unfair importation.

  • HTPs: EU Rulemaking Challenged in Court

    HTPs: EU Rulemaking Challenged in Court

    Photo: nmann77

    The European Commission will face a legal challenge over its attempt to restrict the sale of heated tobacco products (HTPs).

    On Nov. 3, 2022, the European Union published a directive banning flavored HTPs throughout the union. The ban, which covers all flavors except tobacco, officially took effect Nov. 23, 2022. EU member states were given until July 23, 2023, to transpose the rule into national legislation.

    When the Ireland did so, it was challenged in the Irish High Court by PJ Carroll & Co. and Nicoventures Trading. The nicotine companies argued that the European Commission had exceeded the powers delegated to it under tobacco products legislation approved by the European Council and the European Parliament. According to them, the Commission made its decision based on political grounds rather than legal grounds.

    In his judgment, Irish High Court Justice Cian Ferriter noted that the Commission had effectively prohibited “a category of tobacco product which was new on the market, which had not been in existence at the time of the enactment of the Tobacco Products Directive in 2014 and which had not been the subject of separate policy and health assessments…”.

    “It is at least arguable that this involved a political choice which was only open to the EU legislature and not to the Commission,” Ferriter said.

    According to Eureporter, the Dublin court will now refer the case to the European Court of Justice in Luxembourg.

    The nicotine companies and the Irish High Court are not the first to raise concerns about regulatory overreach. When the Commission adopted its directive in 2022, four EU member states objected that the directive involved “essential elements reserved for the European legislators.”

  • Court Stays Vuse Alto MDO

    Court Stays Vuse Alto MDO

    Photo: fotofabrika

    The U.S. Court of Appeals for the Fifth Circuit granted R.J. Reynolds Vapor Co. (RJRV) an emergency administrative stay of the Food and Drug Administration’s marketing denial order for menthol flavored Vuse Alto e-cigarette products.

    “We are pleased that the Fifth Circuit Court of Appeals has granted our emergency motion for temporary administrative stay of FDA’s marketing denial order for menthol flavored Vuse Alto e-cigarette products. This decision allows Reynolds to continue offering Vuse Alto Menthol e-cigarette products to adult nicotine consumers age 21+ without interruption,” Reynolds wrote in an e-mailed statement.

    “We believe appropriately regulated flavored vaping products—including menthol—are critical in supporting adult smokers who migrate from combustible cigarettes. We remain confident in the quality of Reynolds’ applications and believe there is ample evidence for FDA to determine that the marketing of these products is appropriate for the protection of public health.”

    RJRV will now apply for a formal stay and challenge the denial of its premarket tobacco product application for Vuse Alto Menthol Pods.

  • Supreme Court Declines to Hear Avail Vapor Case

    Supreme Court Declines to Hear Avail Vapor Case

    Image: Clinton

    The U.S. Supreme Court declined on Oct. 10 to hear Avail Vapor’s objections to the Food and Drug Administration’s regulatory authorization process.

    In 2021, the regulatory agency denied Avail Vapor’s request to approve fruit-flavored and dessert-flavored e-cigarettes. The company protested that the agency had made the application process intentionally difficult.

    In a Supreme Court brief filed Aug. 3, Avail claimed the FDA failed to inform companies of a change in policy that would only allow for approval if the applications included data from studies conducted over time comparing the effectiveness of the multi-flavored products to that of tobacco-flavored products as an aid in adult smoking cessation.

    Avail Vapor had asked the U.S. Supreme Court to examine a lower court’s refusal to review a marketing denial order issued by the FDA to Avail products.

    In its petition, Avail asked the Supreme Court to consider the lower court’s legal reasoning and decision.

    Among other things, Avail argues that the FDA’s decision-making was arbitrary and capricious; that another court sided with a different petitioner against the FDA on the same basic arguments; and that the case is significant not only for Avail but for the entire industry and its customers.