Courts Are Delaying CBD Class Action Lawsuits

One of the next major frontiers in class action litigation is lawsuits against CBD oil companies. In order to sell products, many of these companies have been making unverified claims that are not always true. However, despite the growing number of class action claims, federal courts may not be in a hurry to decide the fate of the lawsuits. The FDA has yet to speak out on CBD products in terms of its regulations, and courts may be waiting to see how the federal government handles the matter. As a result, some courts have issued orders delaying these lawsuits until the FDA decides how it wants to regulate the products.

Many of these lawsuits have claimed that the CBD companies have misleading information on their labels. On behalf of the class, they seek a refund of the purchase price. The lawsuits have alleged that CBD products violate a federal law about mislabelling called the Food, Drug and Cosmetic Act. In some cases, the defendants have allegedly advertised their products as dietary supplements in spite of instructions to the contrary from the FDA.

Judges Are Waiting for the FDA to Act

However, it would be difficult for a court to rule on a lawsuit about mislabelling when the judge does not know the exact legal status of these products. The FDA has promised a review of the CBD industry. The regulator has spoken out about some incorrect claims made by these manufacturers and has generally counseled caution, but the agency has never made a definitive statement of the status. The major issue to be determined is whether CBD products can be made available to consumers without a prescription. In addition, the FDA will be promulgating rules about the sale and marketing of CBD products.

CBD manufacturers have been trying to dismiss or delay these cases. They have argued that the court cannot take jurisdiction over these cases while a matter is pending in front of a government agency. This is called the "primary jurisdiction" doctrine. In several cases, these arguments have been successful. Judges have now given postponements of the trial while the matter is pending in front of the FDA, and the government seems to be taking its time in deciding. In one case, the judge directed the parties to the lawsuit to "check in" every 90 days with the court.

The plaintiff in one of these cases has argued that, no matter what the FDA decides, it would retroactively apply to the facts of these cases. In other words, there was no FDA status ruling in place when the consumers were buying CBD products. Thus, the FDA could not make a decision now and apply it to facts that occurred beforehand. However, one court cited the fact that Congress can pass a retroactive law and seems to think that an FDA ruling could have the same effect.

In addition, the plaintiffs also argued that the issues in front of the FDA do not directly relate to the issues at trial. In other words, the FDA's ruling would not really apply to the issue raised that these companies relied on false and misleading statements to sell their products. However, courts do not want to seem like they are getting out ahead of the FDA. Even if the FDA's findings do not impact the issues at trial, these judges feel like it would be best to wait so that there are not inconsistent decisions. The courts cite the sheer number of current and expected lawsuits in wanting consistency.

The Cases Will Still Proceed But May Take Years to Decide

Note that a court's ruling delaying the case is nowhere close to dismissal. Of course, the defendants want a delay if they cannot get a dismissal, and the courts' decisions are in their interests. However, the delay is nothing close to a ruling on the merits of the cases. Chances are that, at some point, these defendants will have to substantively defend their conduct in selling these products.

It is unclear when the agency will be announcing these rules. Major rulemaking exercises can take years from start to finish until they are formalized. If this trend of delaying cases continues, it may take years for these lawsuits to even begin. Then, given how long lawsuits take to complete, it may be many more years until these cases finally reach a decision if the defendants take them all the way to trial.

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