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Judge grants e-liquid maker temporary restraining order in vaping case

July 1, 2016

One scorned e-liquid manufacturer will get a short reprieve from Indiana’s new vaping laws, which effectively shut many players out of the market when the laws took effect Friday.

A federal judge on Thursday afternoon granted a temporary restraining order for Naples, Florida-based GoodCat LLC and ordered the Indiana Alcohol and Tobacco Commission to grant it a provisional manufacturing permit so that it could continue participating in the Indiana market. The order is set to expire in 14 days.

Richard Young, chief judge for the U.S. District Court in the Southern District of Indiana, wrote in the order that “Goodcat has a reasonable likelihood of succeeding on the merits” of its case against the vaping laws. Temporary restraining orders are essentially short-term injunctions before a trial happens.

GoodCat’s lawsuit against the state, which was filed June 20, focused on the constitutionality of the laws’ stringent security firm requirements, which critics said essentially put one private Lafayette firm in charge of vetting security practices for all manufacturers permitted in Indiana. GoodCat sells its products in 200 Indiana retailers.

The laws set out narrow rules for which security firms could qualify, and then required all manufacturers to sign a five-year contract with a qualified firm before they submitted applications to the state. Six of the seven e-liquid manufacturers approved by the state used Lafayette-based Mulhaupt's as their security firm.

IBJ reported June 18 that at least 30 national and local manufacturers tried to do business with Mulhaupt’s, but many were unsuccessful, including Goodcat. The security firm said it was being choosy with whom it worked.

“Permitting GoodCat to continue essentially under the status quo for two weeks does not pose significant harm to the public interest," Young wrote in his order.

Young has scheduled a hearing for July 11 to collect more information about the case.

“GoodCat is grateful that the temporary restraining order will allow the e-liquid products it manufactures to, at least for now, remain on the shelves of Indiana retailers,” said GoodCat’s lawyer Eric Heyer, counsel at Washington, D.C.-based Thompson Hine LLP.

The GoodCat decision was a bit of good news for scorned e-liquid manufacturers on Thursday. Another judge acting in a second federal case challenging the vaping law did not grant plaintiffs' request for a preliminary injunction and upheld the law's constitutionality.

Evan McMahon, who runs vaping industry group Hoosier Vapers and owns his own shop, told IBJ that Young's order "shows there is a path to victory here."

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