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. In its order, the court said the appeal process will run into next month.
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.
The FDA said in a statement Thursday Juul must stop selling and distributing the products, and that those that are on the market must be removed or risk enforcement action. A rise in teenage use of vaping products had compelled the agency to conduct a thorough review of e-cigarettes, according to FDA Commissioner Robert Califf.
‘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 executives steadfastly maintain they have never targeted youth in its 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.
“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, a lawyer for Juul, said in court filings that he asked FDA in-house lawyers on Thursday to put the ban on hold until the company could file appeal briefs, but 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.”
A stay by the court could buy Juul some time. It could take as much as six months for both sides to get briefs in and argue the case, said Carl Tobias, a University of Richmond law professor. “So this could take awhile — even if they put the case on the fast track.”
The case is Juul Labs v. FDA, 22-1123, U.S. Circuit Court for the District of Columbia (Washington)
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