Court awaits FDA ruling on CBD, stays class action suit

A federal judge recently “stayed,” or put on hold, a putative class action lawsuit filed against Green Roads of Florida LLC for misrepresenting the amount of CBD in its products pending the completion of a rulemaking by FDA.

U.S. marketers of CBD—a non-psychoactive compound sourced from hemp—are facing a growing number of proposed class action lawsuits. But marketers ensnared in the litigation could get some temporary relief if courts invoke a doctrine known as “primary jurisdiction,” which occurred in the suit against Green Roads of Deerfield Beach, Florida.

The doctrine applies, U.S. District Court Judge Ursula Ungaro wrote, “where a plaintiff’s claims implicate a federal agency’s expertise with a regulated product.”

On Jan. 1, 2020, Florida began regulating CBD products, including their labeling regarding the number of milligrams of hemp extract in a product. FDA, however, has not adopted CBD labeling regulations, Ungaro noted.

According to FDA, CBD cannot be added to conventional food or marketed in dietary supplements because the compound was first studied as a drug by GW Pharmaceuticals plc. The agency is considering whether to authorize CBD in food and supplements, but it has not started any formal rulemaking.

“The FDA regulations currently provide little guidance with respect to whether CBD ingestibles, in all their variations are food supplements, nutrients or additives and what labeling standards are applicable to each itineration,” Ungaro wrote in her Jan. 3 order. Although Florida’s new rule “addresses CBD product labeling, the court would benefit greatly from the FDA’s regulatory oversight.”

The judge stayed the lawsuit against Green Roads until “FDA completes its rulemaking regarding the marketing, including labeling, of hemp-derived ingestible products.”

Ungaro also ruled plaintiffs don’t have “standing” to assert claims based on the marketing of products they did not buy. But the judge denied Green Road’s motion to dismiss the complaint, including allegations of unjust enrichment and violation of the Florida Deceptive and Unfair Trade Practices Act. 

Green Roads, which the September 2019 suit characterized as the “largest privately-owned CBD company,” is accused of misrepresenting the amount of CBD in its products on its labeling, packaging and website. A separate lawsuit was filed against Green Roads in December 2019 as part of a wave of class action complaints following statements in FDA warning letters and an agency news release that CBD cannot be lawfully sold in supplements and poses safety concerns.

"The primary jurisdiction doctrine is even more relevant in this most recent round of lawsuits targeting CBD products labeled as dietary supplements, since whether or not products meet the definition of 'dietary supplement' is clearly a determination that should be left to FDA only," said Rend Al-Mondhiry, a partner in Washington with the law firm Amin Talati Wasserman LLP, in an email.

The definitional issue "requires both expertise and uniformity in administration," added Al-Mondhiry, a regulatory lawyer who is not involved in the Green Roads lawsuit subject to Ungaro's order. "And of course, FDA is still reviewing the potential regulatory pathways for CBD, so it would be premature and inappropriate for courts to step in when FDA hasn’t yet made a final determination."

Green Roads, its attorneys with Greenberg Traurig LLP, and plaintiffs’ lawyers with Kopelowitz Ostrow Ferguson Weiselberg Gilbert Ostrow did not immediately respond to requests for comment on the recent order.

The lawsuit, Brook Snyder and Ryan Terry vs. Green Roads of Florida LLC, 0:19-cv-62342-AHS, is pending in the U.S. District Court for the Southern District of Florida.