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Today’s case is a counterpart to our post a few months ago about a case applying Buckman preemption to a contract dispute where adjudicating the alleged breach would have forced the court to decide FDA regulatory issues.  In that case (Thogus Products Co. v. Bleep, LLC, 2023 WL 5607458 (N.D. Ohio 2023)), the question the court would have had to decide was whether a product was manufactured in compliance with the FDA’s Current Good Manufacturing Practices (CGMP) regulations.  We continue to remain neutral in our position on whether Buckman preemption has a place in breach of contract cases but thought it noteworthy to share a recent case that reached the opposite conclusion, albeit not in a drug or device setting–Grand Rivers Enterprises Six Nations, Ltd. v. Knudsen, 2024 WL 149721 (D. Mon. Jan. 12, 2024). 

Plaintiff in Grand Rivers is a tobacco manufacturer.  To sell tobacco in Montana, a manufacturer must be listed on the Montana Tobacco Directory and to do that a manufacturer must receive an annual certification from the state.  Id. at *1.  After several alleged violations, plaintiff entered into a Voluntary Compliance agreement with the State to bring itself into compliance.  That agreement requires plaintiff to “comply with all local, state, and federal laws.”  Id.  Apparently, plaintiff withdrew certain of its tobacco brands from FDA review in 2021 which led the FDA to deem those brands adulterated and prohibited plaintiff from selling them.  Plaintiff however did not remove those products from the Montana Tobacco Directory certifications.  Montana considered this a violation of both state and federal law and therefore a breach of the compliance agreement and grounds to remove plaintiff from the directory.  Id. at *2.   Plaintiff moved for a preliminary injunction.

In trying to establish a likelihood of success on the merits to support the motion, plaintiff argued that Montana’s claim was impliedly preempted as attempted enforcement of the FDCA.  Plaintiff based its argument on 21 U.S.C. § 337(a) and Buckman.  Section 337(a) being the provision that states that all actions to enforce the FDCA “shall be by and in the name of the United States.” And Buckman interpreting that to mean that “it is the Federal Government rather than private litigants who are authorized to file suit for noncompliance” with the statute and its implementing regulations and that private plaintiffs may not assert claims that “exist sole by virtue of the FDCA.” Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341, 349 n.4, 353 (2001).

So, the question in Grands Rivers, as in Thogus previously, was—does § 337(a) bar enforcement of a private contract that requires compliance with the FDCA?  Only in Grand Rivers the court did not believe the action by the Montana Attorney General “[rose] to the level of an attempted enforcement of the FDA” that would be preempted.  The court drew a distinction between a claim based on state tort law and a claim based on breach of contract offering as its reason only that “the Supreme Court has never determined that federal preemption would apply to an alleged breach of the terms of an express voluntary agreement.”  Grand Rivers, at *4.  Likely because the court had other grounds on which to deny the request for an injunction, it opted not to wade into an undecided area of the law.  Notably, Thogus is not cited in the decision.

As we stated in our prior post, we understand how courts can look at contract requirements to comply with the FDCA like negligence per se claims.  Because plaintiff did not comply with the FDCA, its product was deemed adulterated and Montana’s actions based on that non-compliance is actually a claim for violation of the FDCA.  Read that way, it sounds like it should be preempted.  We presume that would have been the decision if the Thogus court had this case.  On the other hand, a contract is a private agreement.   It is not self-evident that § 337(a) bars the enforcement of private agreements.  That’s Grand Rivers.

Again, we come to the same non-conclusion.  Maybe.  Maybe not.  We return the issue to our readers for reaction.