Justia U.S. 9th Circuit Court of Appeals Opinion Summaries

Oregon enacted a law requiring prescription drug manufacturers to report detailed information about certain drugs, including pricing, costs, and factors contributing to price increases, to the state’s Department of Consumer and Business Services. The law also directs the agency to post most of this information online, but prohibits public disclosure of information designated as a trade secret unless the agency determines that disclosure is in the public interest. Since the law’s enactment, manufacturers have claimed thousands of trade secrets, but the agency has not publicly disclosed any such information.A trade association representing pharmaceutical manufacturers sued the director of the Oregon agency in the United States District Court for the District of Oregon, raising several facial constitutional challenges. The district court granted summary judgment for the association on two claims: that the reporting requirement violated the First Amendment by compelling speech, and that any use of the public-interest exception to disclose trade secrets would constitute an uncompensated taking under the Fifth Amendment. The court declared the entire reporting requirement unconstitutional and held that any disclosure of trade secrets under the public-interest exception would violate the Takings Clause unless just compensation was provided.The United States Court of Appeals for the Ninth Circuit reviewed the case. It reversed the district court’s summary judgment for the association on both the First and Fifth Amendment claims. The Ninth Circuit held that the reporting requirement compels commercial speech and survives intermediate scrutiny under the First Amendment, as it directly advances substantial state interests in transparency and market efficiency and is not more extensive than necessary. On the takings claim, the court found the association’s challenge justiciable but concluded that, under the Penn Central regulatory takings framework, none of the factors supported a facial claim that every disclosure under the public-interest exception would constitute a taking. The court remanded with instructions to enter summary judgment for the state on these claims. View "Pharmaceutical Research and Manufacturers of America v. Stolfi" on Justia Law

A pharmaceutical company developed a sublingual opioid painkiller, DSUVIA, which could only be administered in medically supervised settings due to safety concerns and was subject to a strict FDA Risk Evaluation and Mitigation Strategy (REMS). The company marketed DSUVIA with the slogan “Tongue and Done” at investor conferences, accompanied by additional disclosures about the drug’s limitations and REMS requirements. After the FDA issued a warning letter objecting to the slogan as potentially misleading under the Federal Food, Drug, and Cosmetic Act, several shareholders filed suit, alleging that the slogan misled investors about the complexity of administering DSUVIA and the drug’s limited market potential.The United States District Court for the Northern District of California dismissed the shareholders’ complaint, finding that the plaintiffs failed to adequately plead facts supporting a strong inference of scienter, but did not rule on whether the statements were false or misleading. The plaintiffs were given two opportunities to amend their complaint, but the court ultimately dismissed the case with prejudice.On appeal, the United States Court of Appeals for the Ninth Circuit reviewed the dismissal de novo. The Ninth Circuit held that the plaintiffs failed to adequately plead falsity because a reasonable investor would not interpret the “Tongue and Done” slogan in isolation, but would consider the context provided by accompanying disclosures and other available information. The court also held that the FDA’s warning letter did not establish falsity under securities law, as the standards and intended audiences differ. Additionally, the court found that the plaintiffs did not plead a strong inference of scienter, as the facts suggested the company’s officers acted in good faith. The Ninth Circuit affirmed the district court’s dismissal. View "Sneed v. Talphera, Inc." on Justia Law

The case involves doctors who create and administer a stem cell mixture called stromal vascular fraction (SVF) by removing fat tissue from patients, processing it to concentrate stem cells, and then re-administering it to the same patients. The FDA inspected the clinics and found that the doctors were manufacturing and administering unapproved drug products, leading to a lawsuit alleging violations of the Food, Drug, and Cosmetic Act (FDCA).The United States District Court for the Central District of California held a bench trial and ruled in favor of the defendants. The court concluded that the SVF was not a "drug" under the FDCA and that the same-day SVF treatment fell under the "same surgical procedure" (SSP) exception, which exempts certain procedures from FDA regulation. The district court found that the cells in the same-day SVF were not altered chemically or biologically and that the procedure did not introduce any foreign material into the body.The United States Court of Appeals for the Ninth Circuit reviewed the case and reversed the district court's judgment. The appellate court held that the SVF constitutes a "drug" under the FDCA based on the plain text of the statute, which defines drugs as articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease, or intended to affect the structure or any function of the body. The court also rejected the defendants' argument that their same-day SVF treatment was exempt from FDA regulation under the SSP exception. The court concluded that the SSP exception applies only if the removed and implanted human cells, tissues, and cellular and tissue-based products (HCT/Ps) are the same, and in this case, the removed fat tissue and the implanted SVF are not the same.The Ninth Circuit reversed the district court's judgment and remanded the case for further proceedings. View "USA V. CALIFORNIA STEM CELL TREATMENT CENTER, INC." on Justia Law

The case involves James Fejes, a pilot who held a certificate issued by the Federal Aviation Administration (FAA) under 49 U.S.C. § 44703. Fejes used his aircraft to transport and distribute marijuana to retail stores within Alaska, an activity that is legal under state law but illegal under federal law. After an investigation, the FAA revoked Fejes's pilot certificate under 49 U.S.C. § 44710(b)(2), which mandates revocation when a pilot knowingly uses an aircraft for an activity punishable by more than a year's imprisonment under a federal or state controlled substance law.Fejes appealed the FAA's decision to an Administrative Law Judge (ALJ), who affirmed the revocation. He then appealed the ALJ's decision to the National Transportation Safety Board (NTSB), which also affirmed the ALJ. Throughout the agency proceedings, Fejes admitted that he piloted an aircraft to distribute marijuana within Alaska, but argued that his conduct fell outside of § 44710(b)(2)'s reach.The United States Court of Appeals for the Ninth Circuit denied Fejes's petition for review of the NTSB's order affirming the FAA's revocation of his pilot certificate. The court rejected Fejes's argument that the FAA lacked jurisdiction to revoke his pilot certificate because Congress cannot authorize an administrative agency to regulate purely intrastate commerce like marijuana delivery within Alaska. The court held that airspace is a channel of commerce squarely within congressional authority, and therefore, Congress can regulate Fejes's conduct. The court also rejected Fejes's argument that his conduct was exempt under FAA regulation 14 C.F.R. § 91.19, and that the FAA misinterpreted § 44710(b)(2). The court concluded that the FAA's revocation of Fejes's pilot certificate was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. View "FEJES V. FAA" on Justia Law

The United States Court of Appeals for the Ninth Circuit upheld the drug-trafficking and money-laundering convictions of Benjamin Galecki and Charles Burton Ritchie for their distribution of "spice," a synthetic cannabinoid product. The defendants were found guilty of manufacturing and distributing spice through their company, Zencense Incenseworks, LLC. The drug-trafficking charges were based on the premise that the cannabinoid used, XLR-11, was treated as a controlled substance because it was an "analogue" of a listed substance. The court rejected the defendants' arguments that their convictions should be set aside due to Fourth Amendment violations, insufficient evidence, and vagueness of the Controlled Substance Analogue Enforcement Act of 1986. However, the court reversed their mail and wire fraud convictions due to insufficient evidence. The case was remanded for further proceedings. View "USA V. GALECKI" on Justia Law

The Butter! Spray is a butter-flavored vegetable oil dispensed in pump-action squirt bottles with a spray mechanism. The front label on the product states that the Butter! Spray has 0 calories and 0 grams of fat per serving. Plaintiffs are a class of consumers who brought their lawsuit against the then-manufacturer, Unilever United States, Inc., contending that the product’s label makes misrepresentations about fat and calorie content based on artificially low serving sizes. The district court found that Plaintiffs failed to plausibly allege that Butter! Spray was not a “spray type” fat or oil under Food and Drug Administration (FDA) regulations. The district court further held that the FDCA preempted plaintiffs’ serving size claims.   The Ninth Circuit affirmed the district court’s Fed. R. Civ. P. 12(b)(6) dismissal. The panel held that, as a matter of legal classification, Butter! Spray was a “spray.” In common parlance, a “spray” refers to liquid dispensed in the form of droplets, emitted from a mechanism that allows the product to be applied in that manner. In addition, the notion that Butter! Spray could be housed under the FDA’s legal classification for “butter” is implausible. The panel also rejected Plaintiffs’ argument that Butter! Spray is a “butter substitute” based on how it is marketed so it should be treated as “butter” for serving size purposes, too. The court explained that because Plaintiffs’ challenge to the Butter! Spray serving sizes would “directly or indirectly establish” a requirement for food labeling that is “not identical” to federal requirements, the FDCA preempts their serving size claims. View "KYM PARDINI, ET AL V. UNILEVER UNITED STATES, INC." on Justia Law

Nexus Pharmaceuticals, Inc. (Nexus) developed the trademarked and FDA-approved drug Emerphed, ready-to-use ephedrine sulfate in a vial. Drug compounding by “outsourcing facilities” is permitted without FDA approval, but 21 U.S.C. Section  353b, a part of the Food, Drug, and Cosmetic Act, excludes from this exception compounded drugs that are “essentially a copy of one or more approved drugs.” To avoid the Act’s bar on private enforcement, Nexus alleged violation of state laws that prohibit the sale of drugs not approved by the FDA.   The Ninth Circuit affirmed the district court’s dismissal, for failure to state a claim, of state law claims brought by Nexus against Central Admixture Pharmacy Services, Inc., operator of a network of compounding pharmacies that sold the drug ephedrine sulfate pre-loaded into ready-to-use syringes without FDA approval.   The panel affirmed the district court’s conclusion that, under the implied preemption doctrine, Nexus’s state law claims were barred because they were contrary to the Food, Drug, and Cosmetic Act’s exclusive enforcement provision, which states that proceedings to enforce or restrain violations of the Act, including the compounding statute, must be by and in the name of the United States, not a private party. The panel held that all of Nexus’s claims depended on a determination of whether Central Admixture’s ephedrine sulphate was “essentially a copy” of Nexus’s Emerphed, and the plain text of the Food, Drug, and Cosmetic Act left that determination in the first instance to the FDA and its enforcement process. View "NEXUS PHARMACEUTICALS, INC. V. CAPS, ET AL" on Justia Law

An attorney sought guidance on how a physician could administer psilocybin to a terminally ill patient without incurring liability under the Controlled Substances Act (CSA), specifically asking the Drug Enforcement Administration (DEA) how the CSA would accommodate the Right to Try Act (amending the Food, Drug, and Cosmetic Act) to give patients the possibility of access to new investigational drugs under certain circumstances. The DEA responded by identifying the available exemptions in the CSA and indicating that the Right to Try Act did not create any additional exemptions.The Ninth Circuit dismissed a petition for review for lack of jurisdiction, reasoning that DEA’s response was not a final decision of the Attorney General under 21 U.S.C. 877. To be considered final, the agency action must mark the consummation of the agency’s decision-making process and must be one where rights or obligations have been determined, or from which legal consequences flow. The DEA’s response was the sort of advice letter that agencies prepare multiple times a year. There was no indication that the letter represented the consummation of a decision-making process. The letter did not lead to legal consequences for the prescribing physician but only provided guidance about the interaction of the Right to Try Act and the CSA. View "Advanced Integrative Medical Science Institute v. United States Drug Enforcement Administration" on Justia Law

Zyszkiewicz, a prisoner and a medical cannabis patient, wrote a one-page letter to the DEA, seeking the rescheduling of marijuana under the Controlled Substances Act (CSA), 21 U.S.C. 801, which places federally-regulated substances into one of five schedules depending on “potential for abuse,” “medical use,” “safety,” and the likelihood of “dependence.” The DEA responded that the letter was not in the proper format for a petition but that it welcomed the opportunity to respond to his concerns. The DEA’s letter gave reasons for having denied an earlier rescheduling petition filed by Governors Chafee of Rhode Island and Gregoire of Washington State. Zyszkiewicz treated the DEA’s answer as a denial of his petition and unsuccessfully sought judicial review.Dr. Sisley, her associated institutions, and veterans (Petitioners) sought judicial review of the DEA’s response but did not seek to intervene in Zyszkiewicz’s petition before the DEA, nor have they filed a DEA petition of their own. The arguments Petitioners sought to raise were not made in Zyszkiewicz’s petition.The Ninth Circuit held that the Petitioners satisfy Article III standing requirements, but that they failed to exhaust their administrative remedies under the CSA and dismissed their petition for review. Petitioners alleged direct and particularized harms due to the misclassification of cannabis. Dr. Sisley and her associated institutions contend that the misclassification impedes their research efforts, and the veterans contend that it forecloses their access to medical treatment with cannabis through the VA. View "Sisley v. United States Drug Enforcement Agency" on Justia Law

To fight his hair loss, Greenberg bought an $8 bottle of biotin. The product label states that biotin “helps support healthy hair and skin” and has an asterisk that points to a disclaimer: “This statement has not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.” A Supplement Facts panel on the bottle states that the biotin amount in the product far exceeds the recommended daily dosage. Greenberg filed a putative class action under California’s Unfair Competition Law, alleging that the labels are deceptive because most people do not benefit from biotin supplementation.The panel affirmed summary judgment in favor of the manufacturer and distributors. The plaintiff’s state law claims were preempted by the federal Food, Drug, and Cosmetic Act (FDCA), under which the FDA requires that dietary supplement labels be truthful and not misleading; 21 U.S.C. 343(r)(6)(B) authorizes several categories of statements, including disease claims and structure/function claims. The FDCA includes a preemption provision to establish a national, uniform standard for labeling. The challenged statement was a permissible structure/function claim. There was substantiation that biotin “helps support healthy hair and skin”; that statement was truthful and not misleading. The label had the appropriate disclosures and did not claim to treat diseases. The state law claims amounted to imposition of different standards from the FDCA. View "Greenberg v. Target Corp." on Justia Law