5th and Nine Vape Co. LLC d/b/a 5th and Nine Alternatives Co., DAB TB7906 (2024)

INITIAL DECISION

I sustain the determination of the Center for Tobacco Products (“CTP”) of the United States Food and Drug Administration (“FDA”) to impose a civil money penalty of $19,192 against Respondent, 5th and Nine Vape Co. LLC d/b/a 5th and Nine Alternatives Co.

I.     Background

Respondent requested a hearing to challenge CTP’s determination to impose a civil money penalty.  I held a pre-hearing conference on January 18, 2024 in which I received into evidence CTP’s and Respondent’s exhibits.  CTP filed a pre-hearing exchange that included a brief and 13 proposed exhibits that it identified as CTP Exhibit (Ex.) 1- CTP  Ex. 13.  Respondent filed a pre-hearing brief and five exhibits that it identified as R. Ex. 1 - R. Ex. 5.  Additionally, the parties agreed that this case would be decided based on their written exchanges and arguments, and the parties were afforded the opportunity

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to submit final briefs.  On February 27, 2024, both CTP and Respondent filed a Supplemental Brief. 

Accordingly, the record is now closed, and I am issuing a decision on the record in this case.

II.     Issues, Findings of Fact and Conclusions of Law

A. Remaining Issues Outlined in the Pre-Hearing Conference

1. Did Respondent avoid liability by dividing a vaping product into components and selling the components separately;

2. Do I have the authority to order a reduction in the civil money penalty in light of Respondent’s financial condition; and

3. If so, has Respondent proven that its financial condition should be a basis for mitigating the civil money penalty amount of $19,192.

B. Findings of Fact and Conclusions of Law

CTP determined to impose a civil money penalty against Respondent pursuant to the authority conferred by the Federal Food, Drug, and Cosmetic Act (“Act”) and implementing regulations at Part 21 of the Code of Federal Regulations (“C.F.R.”).  The Act prohibits adulterating or misbranding of a tobacco product.  21 U.S.C. § 331(k).  A tobacco product is adulterated if it has not obtained the required premarket authorization.  21 U.S.C. § 387b(6)(A).  Under 21 U.S.C. § 387j(a)(2)(A), premarket authorization is required for a “new tobacco product.”  A “new tobacco product” is defined as any tobacco product that was not commercially marketed in the United States as of February 15, 2007, or any modification of a tobacco product where the modified product was commercially marketed in the United States after February 15, 2007.  21 U.S.C. § 387j(a)(1).  Respondent did not obtain premarket authorization for its tobacco product application (PMTA) for its e-liquid products.

Although there is no statutory requirement for FDA to do so, on April 7, 2022, CTP issued a Warning Letter to Respondent.  CRD Docket (Dkt.) Entry No. 10h.  The Warning Letter stated, among other things, that the new tobacco products that Respondent manufactures, sells, and/or distributes were adulterated and misbranded, because they lacked the required FDA marketing authorization order.  Id. at 2.

CTP premises its case on the result of an inspection of Respondent’s establishment, conducted on April 22, 2023.  On that date, an FDA-commissioned inspector, Garrett

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Carter, observed Respondent’s e-liquid products, including 5th & Nine 6mg e-liquid products, available for sale at Respondent’s establishment.  CRD Dkt. Entry No. 10c at 2.

Respondent admits that, at the time the Complaint was filed, all allegations in the Complaint are true.  CRD Dkt. Entry Nos. 6, 11, 13c, 14. 

Respondent admits to offering for sale new tobacco products: 1) that were not commercially marketed in the United States as of February 15, 2007; 2) that did not have FDA marketing authorization; and 3) were found to not be either substantially equivalent or otherwise exempt from the premarket authorization requirement at the time of the April 7, 2022 Warning Letter.  CRD Dkt. Entry Nos. 6 at 2; 11 at 2.  Respondent further admits that it was offering for sale a single product made from vegetable glycerin with flavor additives and nicotine to be used in vapor devices.  Id.  After the April 7, 2022 Warning Letter and at the time of the April 22, 2023 inspection, Respondent admits that it was selling a “DIY Kit” with two separate products: a product containing a food grade flavoring, and a separately sold nicotine additive product premixed with vegetable glycerin.  Respondent admits that one of the products it sold was a glycerin solution that contained nicotine.  Id.; CRD Dkt. Entry Nos. 13c at 2; 14 at 3. Thus, Respondent’s product was a new tobacco product because it was a modified product commercially marketed in the United States after February 15, 2007.  See 21 U.S.C. § 387j(a).

Respondent contends that after receiving the April 7, 2022 Warning Letter, Respondent sent a letter to CTP detailing its remedy to discontinue the sale of the named product and instead sell the DIY Kit, which it believed would bring Respondent’s sale of tobacco products into compliance.  CRD Dkt.  Entry Nos. 11 at 3; 13c at 2; 14 at 3.  Regardless of Respondent’s asserted effort to not sell tobacco products without authorization, selling products that contain nicotine are in fact tobacco products and are subject to regulation.

Hypothetically, if Respondent sold the food grade flavoring without a solution that contained nicotine, the food grade flavoring may not be a tobacco product subject to regulation. However, those are not the facts in this case and Respondent admits selling a DIY Kit that contained all the components necessary for a purchaser to make a nicotine infused vape product, including vegetable glycerin premixed with a nicotine additive.  See Nicopure Labs, LLC v. FDA, 266 F. Supp. 3d 360, 382 (D.D.C. 2017), aff’d, 944 F.3d 267 (D.C. Cir. 2019).  As a result, Respondent’s tobacco products are misbranded, under the provisions of 21 U.S.C. § 387c(a)(6) and adulterated because Respondent did not obtain the required premarket authorization.  21 C.F.R. § 1140.1(b); 21 U.S.C. § 387b(6)(A); see also 21 U.S.C. § 387c(a)(7)(B).

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C.  Civil Money Penalty

The regulation at 21 C.F.R. § 17.34 grants the presiding officer designated to decide an appeal and determine an appropriate amount of civil money penalties to consider any circumstances that mitigate or aggravate the violation, and “articulate in their opinions the reasons that support the penalties and assessments imposed.”

Further, when determining the amount of a civil money penalty, I am required to consider “the nature, circumstance, extent and gravity of the violations and, with respect to the violator, ability to pay, effect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other matters as justice may require.”  21 U.S.C. § 333(f)(5)(B).

Both parties admit that I have the authority to impose any civil money penalty that is within the range established by law, and I agree.  Supplemental Brief of Complainant CRD Dkt. Entry No. 19 at 4-6; Respondent’s Supplemental Brief CRD Dkt. Entry No. 20 at 3-5.

On April 22, 2023, Respondent violated the prohibition against selling and/or distributing tobacco products that were adulterated because they lacked the required FDA marketing authorization order and misbranded because they did not obtain a substantially equivalent order or possess an exempt order.  21 U.S.C. § 387b(6)(A); 21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A).  Therefore, Respondent’s actions constitute violations of law that merit a civil money penalty and CTP’s proposed penalty in this case is reasonable.  Respondent received an explicit warning that it was selling an unlawful product and continued to do so.  Even after receiving the warning letter, Respondent persisted in selling nicotine products without any attempt to procure the appropriate premarket authorization or subject itself to the FDA tobacco product approval process.

I take notice that tobacco products are highly addictive and dangerous to the health of those who consume them.  They may have lethal long-term effects on consumers.  It is for these reasons that the regulations herein exist.  Attempts to circumvent the regulatory process result in highly dangerous products being offered to the public in defiance of the requirements of law.

Respondent has not proven that paying the $19,192 civil money penalty would create an undue hardship despite its assertions and evidentiary documentation of its assets and reserves that it might utilize to pay the penalty amount.  CRD Dkt. Entry Nos. 6, 11, 13, 13a, 13b.  Respondent was given an opportunity to comply with CTP’s warnings to avoid a civil money penalty for selling an unapproved vape product, and instead, it continued to seek a profit from nicotine products without proper authorization.

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CTP has requested a civil money penalty of $19,192 which is a permissible penalty under the regulation.  21 C.F.R. § 17.2.  A penalty of $19,192 is plainly reasonable given the dangers of tobacco products and Respondent’s disregard for the regulatory approval process.  Therefore, I find that a civil money penalty of $19,192 is warranted and so order one imposed.