Opinion ID: 4431323
Heading Depth: 2
Heading Rank: 1

Heading: Safe-Harbor Provision

Text: The Illinois Consumer Fraud Act exempts some acts and practices from liability under a safe-harbor provision. See 815 ILL. COMP. STAT. 505/10b(1). One component of that safe harbor covers actions “specifically authorized by laws administered by any regulatory body or officer acting under statutory authority of this State or the United States.” Id. This provision allows regulated actors to “rely on the directions received from [regulatory] agencies without risk that such reliance might expose them to … liability.” Price v. Philip Morris, Inc., 848 N.E.2d 1, 38 (Ill. 2005). To trigger the safe harbor, the regulatory body must be operating within its statutory authority and the challenged conduct must be “specifically authorized by laws administered by” that regulatory body. § 10b(1). Formal rulemaking is not necessary; “informal regulatory activity” is enough. Price, 848 N.E.2d at 46. The FDA’s statutory authority includes regulation of pet food, so the dispute centers on whether the agency’s guidance qualifies as informal regulatory activity and specifically authorizes the relevant conduct. No. 17-3633 7 The Food, Drug, and Cosmetic Act (“FDCA”), 21 U.S.C. §§ 301 et seq., regulates pet food. Because Hill’s Prescription Diet cat food is intended to treat or prevent disease and is marketed as such, the products are considered “drugs” under the FDCA. Id. § 321(g)(1)(B). Without FDA approval, a new animal drug cannot be sold in interstate commerce, id. § 331(a), and the product is deemed misbranded and adulterated, id. §§ 352(o), 351(a)(5). Manufacturers face two additional requirements, regardless of whether the animal drug at issue has been approved. All drug manufacturers must list their drugs and register their facilities or else the drugs are misbranded. Id. § 352(o). And animal drug products must be manufactured in compliance with current good-manufacturing practices applicable to drugs, otherwise the drugs are adulterated. Id. § 351(a)(2)(B). Most pet-food products claiming to treat or prevent disease lack FDA approval and do not comply with the FDCA’s drug registration and listing requirements. Nor do the manufacturers of these products follow the appropriate manufacturing practices for animal drugs. The FDA issued guidance acknowledging this longstanding noncompliance and identifying circumstances in which the agency may exercise its discretion against initiating an enforcement action. The 2016 FDA Compliance Policy Guide offers the FDA’s current thinking on the likelihood of an enforcement action. The guide lists factors for agency staff to consider— including, for example, whether the product presents a known safety risk when used as labeled, whether the product label represents that it can be used to treat disease, and 8 No. 17-3633 whether the product is marketed as an alternative to approved new drugs. U.S. DEP’T OF HEALTH & HUMAN SERVS. FOOD & DRUG ADMIN., COMPLIANCE POLICY GUIDE SEC. 690.150 LABELING & MARKETING OF DOG & CAT FOOD DIETS INTENDED TO DIAGNOSE, CURE, MITIGATE, TREAT, OR PREVENT DISEASES: GUIDANCE FOR FDA STAFF 6 (Apr. 2016), https://www.fda.gov/media/83998/download. The guide goes on to list 11 factors that make an enforcement action “less likely”—but only if all 11 are present. Id. at 7. Hill’s and PetSmart characterize the Compliance Policy Guide as informal regulatory activity specifically authorizing the prescription requirement and prescription label for Hill’s Prescription Diet pet food. They are mistaken. The FDA classifies the guide as a “Level 1 guidance document[]” that “[s]et[s] forth initial interpretations of statutory or regulatory requirements” and details “changes in interpretation or policy that are of more than a minor nature.” 21 C.F.R. § 10.115(c)(1)(i)-(ii); Draft Compliance Policy Guide Sec. 690.150 on Labeling and Marketing of Nutritional Products Intended for Use in Dogs and Cats, 77 Fed. Reg. 55,480, 55,480 (Sept. 10, 2012). But the guide does not establish any legally enforceable responsibilities, and it is not binding on either the FDA or the public. Contrast the Compliance Policy Guide with the regulatory action in Price v. Philip Morris, where the Illinois Supreme Court held that a consent order between the Federal Trade Commission (“FTC”) and a cigarette manufacturer triggered the Consumer Fraud Act’s safe harbor because the consent order could be understood as “provid[ing] guidance” about cigarette labeling to the entire industry. 848 N.E.2d at 46. Even though the consent order No. 17-3633 9 did not bind other industry actors, the safe harbor applied because the order “announce[d] to an entire industry what behavior is and is not authorized.” Id. at 43. Hill’s and PetSmart cite Price for support, but the case cuts against them. The FDA Compliance Policy Guide does not establish industry-wide standards for labeling and marketing of pet food intended to treat or prevent disease. Rather, the document helps FDA staff allocate enforcement resources. It does not qualify as informal regulatory activity. Nor does the guide specifically authorize the prescription requirement and label. To determine whether conduct has been specifically authorized by a regulatory body, Illinois courts look to the “affirmative acts or expressions of authorization” by the relevant agency. Id. at 36. For an authorization to be “specific,” it must be “related to a particular thing,” but “it need not be express.” Id. at 42 (emphases added). In Price, for example, the defendant cigarette company’s use of the term “lights” in its marketing was held to be specifically authorized by FTC consent orders with other manufacturers—even though those orders authorized the use of the terms “low,” “lower,” “reduced,” or “like qualifying terms” to describe tar and nicotine content but did not expressly include the term “lights.” Id. at 43. In contrast, of the 11 factors listed in the Compliance Policy Guide as making an enforcement action less likely, only one is relevant here: whether “[t]he product is made available to the public only through licensed veterinarians or through retail or internet sales to individuals purchasing the product under the direction of a veterinarian.” U.S. FDA COMPLIANCE POLICY GUIDE 7. The defendants rely on this factor as evidence that the FDA specifically authorizes the 10 No. 17-3633 prescription requirement. But this argument wrongly equates regulatory forbearance with regulatory authorization. To be sure, if pet food intended to treat or prevent disease is purchased from or under the direction of a licensed veterinarian, the FDA is less likely to initiate an enforcement action based on the lack of an approved new animal drug application—provided, however, that the other 10 factors are also present. And “less likely” does not mean “will not”; it certainly doesn’t signal authorization. Because the Compliance Policy Guide doesn’t specifically authorize the Hill’s prescription requirement, prescription label, and related marketing representations, the safe harbor does not apply.