Mondaq Article: United States: Federal Court Presses ‘Pause’ Button On Budding CBD Litigation

United States: Federal Court Presses ‘Pause’ Button On Budding CBD Litigation

14 February 2020
by Stephanie A. Sheridan , Cynthia Taub , Daniel C. Rubenstein and Chelsea Gold
Steptoe & Johnson LLP

A Florida district court has stayed a CBD case based on the primary jurisdiction doctrine, providing retailers and manufacturers with a potential new strategy for delaying litigation until the Food and Drug Administration (FDA) completes its highly anticipated rulemaking on how to regulate such products.
The class-action lawsuit—Snyder v. Green Roads of Florida LLC, case no. 0:19-cv-62342-UU (S.D. Fla., Jan. 3, 2020)—was brought by two plaintiffs who purchased products that contain hemp-derived cannabidiol (CBD), including edibles (gummies, syrups, tea, and coffee); supplements (capsules); and cosmetics (topicals), from defendant Green Roads, the products’ manufacturer and retailer. Plaintiffs’ claims were based on the failure of the products’ labels to disclose the correct amount of hemp extract in the CBD products, as required under Florida’s newly-effective Final Rule on Hemp Extract labeling. The plaintiffs sought damages and injunctive relief on behalf of themselves and the class.
While the court declined to dismiss the action in its entirety (citing relevant state law that may still be considered on the merits), the court’s decision to stay—or postpone—the case under the primary jurisdiction doctrine, determined that FDA, and not the courts, should regulate CBD products, including what constitutes proper labeling.
The primary jurisdiction doctrine involves the consideration of several factors, including whether:
An actual legal issue or controversy is brought before the court;
This issue has been placed under the jurisdiction of a federal agency with authority to regulate such products;
The federal agency is acting under a relevant statute “that subjects industry to a comprehensive regulatory scheme”; and
The regulatory scheme requires uniformity in administration.
In its review, the court concluded that, because FDA is properly exercising its regulatory authority under federal law and its actions require both expertise and uniformity in administration, the factors favored application of the primary jurisdiction doctrine.
The court further noted that the regulation of CBD at the federal level is both active and ongoing. FDA stated in an April 3, 2019 Notice of Public Hearing that the agency is requesting and collecting “scientific data and information about the safety, manufacturing, product quality, marketing, labeling, and sale of products containing cannabis or cannabis-derived compounds.” FDA has also been directed by Congress to develop and implement an enforcement discretion policy with respect to hemp-derived CBD products, due out later this month, as originally discussed in our January 8, 2020 update.
Moreover, the court found the current regulatory framework to be inadequate to resolve the issues presented in the case, highlighting that FDA currently provides little guidance for the marketing and labeling of CBD products.
Based on its conclusion that it would “benefit greatly” from FDA’s pending rulemaking efforts, the court granted the motion to stay, effectively preventing the case from moving forward while FDA updates its regulatory scheme on CBD products.
Though this decision is not legally binding on other federal courts, it nevertheless sets a precedent upon which manufacturers and retailers of CBD-based products can rely as a potential legal defense for the time being. In fact, on February 7, 2020, the defendant in another case—Colette et al. v. CV Sciences, Inc., case no. 2:19-cv-10227 (C.D. Cal.)—brought before a California district court the same argument in its motion to dismiss, citing that “other courts have already stayed litigation involving CBD products to allow the [FDA’s] process to conclude.” As such, while FDA’s regulation of CBD products remains in flux, defendants subject to litigation across the country may continue to use the primary jurisdiction doctrine in their defense strategies.
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