Tzumi Innovations LLC v. Regan
| Decision Date | 30 July 2021 |
| Docket Number | 21 Civ. 122 (LGS) |
| Citation | 557 F.Supp.3d 499 |
| Parties | TZUMI INNOVATIONS LLC, Plaintiff, v. Michael S. REGAN, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Gregory Edward Reid, Sills Cummis & Gross P.C., Newark, NJ, Mark Steven Olinsky, Sills Cummis & Gross, P.C., New York, NY, for Plaintiff.
Allison Rovner, United States Attorney's Office, New York, NY, for Defendants.
Plaintiff Tzumi Innovations LLC brings this action against the U.S. Environmental Protection Agency ("EPA") and Michael S. Regan, in his official capacity as EPA Administrator (collectively "Defendants"). Plaintiff seeks injunctive and declaratory relief challenging certain actions taken by EPA regarding Plaintiff's sanitizing wipes product Wipe Out! ("Product"). The First Amended Complaint ("Complaint") alleges violations of (1) the Administrative Procedure Act ("APA"), 5 U.S.C. § 500 et seq. , (2) the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. § 136 et seq. , (3) Executive Order No. 13892 ("Executive Order") and (4) the Due Process Clause of the Fifth Amendment to the Constitution.
Two motions are pending. First, Plaintiff seeks a preliminary injunction to enjoin Defendants from bringing certain enforcement actions related to the Product while this case proceeds. Second, Defendants move to dismiss the Complaint. For the reasons stated below, Defendants’ motion to dismiss is granted in part and denied in part, and Plaintiff's motion for preliminary injunction is denied.
The following facts are taken from the Complaint and are assumed to be true for purposes of this motion. See R.M. Bacon, LLC v. Saint-Gobain Performance Plastics Corp. , 959 F.3d 509, 512 (2d Cir. 2020).
In early 2020, Plaintiff Tzumi Innovations LLC sought to bring the Product to market in response to large demand for hand sanitizing products during the COVID-19 pandemic. The Product is a fabric wipe with .13% benzalkonium chloride
, a substance that prevents disease by killing micro-organisms. The Product's physical label lists the bacteria the product kills and contains the following phrases: "Cleans and Sanitizes," "Use it Anytime, Anywhere" and "Safe on Hands." The Product's physical label does not mention surfaces or any use other than on hands.
A Tzumi employee drafted a description of the Product stating that the Product is effective on surfaces. That description appeared on a retailer's website ("Website"). The description stated: "These all-purpose disposable wipes remove common allergens, germs and messes on surfaces like kitchen counters, bathroom surfaces and more."
On or around September 1, 2020, EPA e-mailed Plaintiff and the retailer a letter dated August 29, 2020 ("Letter"), accusing Plaintiff of: (1) selling and distributing unregistered pesticides; (2) claiming that the Product is effective against viruses and bacteria; (3) implying that the Product could be used on inanimate surfaces through use of the phrase "Use it Anytime, Anywhere." The Letter is captioned "Advisory Letter," and states that it is based on information discovered on the Website.
The Letter requested that Plaintiff provide EPA a response "outlining what steps [it has] taken or will take to achieve compliance with FIFRA," including "the date on which the unregistered pesticides and misbranded devices were removed from commerce and how [Plaintiff] intend[s] to lawfully dispose of any inventory of such products in [its] possession or control." EPA stated that it "reserves the right to bring an action against [Plaintiff] assessing or seeking penalties and/or other relief for any FIFRA violations."
Under EPA's interpretation of FIFRA, EPA has a range of enforcement options in response to FIFRA violations. The options listed in EPA's FIFRA Enforcement Response Policy ("Policy") include, inter alia , "Stop Sale, Use, or Removal Orders" ("SSUROs"), civil administrative penalties, referrals for criminal proceedings and recalls. Envtl. Prot. Agency, FIFRA Enforcement Response Policy 5 (Dec. 2009), https://www.epa.gov/sites/production/files/documents/fifra-erp1209.pdf. Pursuant to the Policy, SSUROs can be issued whenever the "EPA has reason to believe that [a] product is in violation of [FIFRA]." Id. at 7 (emphasis in original). Civil penalties can be issued where violations are committed by FIFRA registrants, commercial applicators, wholesalers, dealers, retailers or other distributers, or by a private applicator or other person who has received a warning or citation for a FIFRA violation. Id. at 10. The Policy provides for increases to civil penalties for "knowing or willful" violations of FIFRA and notes that EPA may consider criminal proceedings for such violations. Id. at 34-35. The Policy provides that EPA can "only request a recall where the evidence clearly supports the need for such action," and that "[a]ll information supporting a recall decision should be included in the official file." Id. at 12. The Policy distinguishes between mandatory and voluntary recalls. Id. at 12-13.
Prior to receiving the Letter from EPA, Plaintiff had concluded that the Website's reference to surfaces should be removed and took steps to remove that reference. Plaintiff believes all references to surfaces in the description on the Website were removed by the first week of September 2020.
After Plaintiff notified EPA of the revised description on the Website, EPA continued to focus on the phrase "Use it Anytime, Anywhere" and asked Plaintiff to recall and destroy all inventory of the Product with that phrase. On September 10, 2020, EPA emailed Plaintiff stating that the Product's label needs to be clear that the Product is intended for use only on hands and noting that the front of the Product's label does not mention that the Product is intended for use on hands.
Plaintiff and EPA discussed the Product and its label in a series of phone calls and e-mails through December 2020. Plaintiff designed a new label for the Product and sent the revised label to EPA. EPA declined to comment on the revised label. Plaintiff sought "substantive discussions" with EPA to address EPA's concerns before it issued a Stop Sale, Use and Removal Order ("SSURO"). EPA denied Plaintiff's request for a meeting and instead requested that Plaintiff prepare a plan for a voluntary recall by January 8, 2021. EPA stated that if Plaintiff did not initiate a voluntary recall, then EPA would issue an SSURO.
The Complaint primarily seeks (i) a declaration that "EPA's recall demand and threatened SSURO requiring Tzumi to either destroy [the Product] or register the [P]roduct as a pesticide" is unlawful; (ii) a declaration that "EPA's attempted change of regulatory direction" regarding the division of regulatory authority between EPA and the Food and Drug Administration over hygienic wipes is unlawful; (iii) an order setting aside the recall demand and threatened SSURO; and (iv) an order preliminarily and permanently enjoining EPA from taking enforcement actions in connection with Plaintiff's sale of the Product.
On a motion to dismiss, a court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in favor of the non-moving party, Montero v. City of Yonkers, N.Y. , 890 F.3d 386, 391 (2d Cir. 2018), but gives "no effect to legal conclusions couched as factual allegations," Stadnick v. Vivint Solar, Inc. , 861 F.3d 31, 35 (2d Cir. 2017). To withstand a motion to dismiss, a pleading "must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. It is not enough for a plaintiff to allege facts that are consistent with liability; the complaint must "nudge[ ]" claims "across the line from conceivable to plausible." Twombly , 550 U.S. at 570, 127 S.Ct. 1955. "To survive a motion to dismiss, plaintiffs must provide the grounds upon which [their] claim rests through factual allegations sufficient to raise a right to relief above the speculative level." Rich v. Fox News Network, LLC , 939 F.3d 112, 121 (2d Cir. 2019) (internal quotation marks omitted) (alteration in original).
"A suit brought in federal court is ‘properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.’ " Citizens for Resp. & Ethics in Wash. v. Trump , 939 F.3d 131, 142 (2d Cir. 2019) (quoting Makarova v. United States , 201 F.3d 110, 113 (2d Cir. 2000) ). Plaintiff bears the burden of establishing standing. See Spokeo, Inc. v. Robins , 578 U.S. 330, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016), as revised (May 24, 2016). When the parties are disputing standing based solely on the pleadings, "all material allegations of the complaint" are accepted as true and the complaint is construed "in favor of the complaining party." Am. Psychiatric Ass'n v. Anthem Health Plans, Inc. , 821 F.3d 352, 357 (2d Cir. 2016) ; accord MSP Recovery Claims, Series LLC v. Tech. Ins. Co., Inc. , No. 18 Civ. 8036, 2020 WL 91540, at *1 (S.D.N.Y. Jan. 8, 2020).
The Complaint alleges that EPA violated the APA and FIFRA by arbitrarily and capriciously (1) concluding that the Product is a pesticide under FIFRA, (2) demanding that Plaintiff provide a recall plan for the "Wipe Out!" product and (3) threatening future enforcement action in relation to the Product. EPA argues that this claim is not justiciable because none of those actions are final agency action and the claim is not ripe. For the reasons...
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