Kokomo Pure Vapors, LLC d/b/a Kokomo Pure Vapors, DAB TB8232

INITIAL DECISION

On September 2, 2023, the Center for Tobacco Products (CTP) served a Complaint on Kokomo Pure Vapors, LLC d/b/a Kokomo Pure Vapors (Respondent), at 1216 East Markland Avenue, Kokomo, Indiana 46901, and filed a copy of the Complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management. CTP seeks to impose a $19,192 civil money penalty (CMP) against Respondent for impermissibly manufacturing, selling, and/or distributing new tobacco products that lacked the required premarketing authorization, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. §§ 301 et seq.

Respondent denies the allegations in the Complaint, offers defenses, and argues that a lower CMP would be appropriate. For the reasons discussed below, I find Respondent violated the provisions of 21 U.S.C. § 331(k) and conclude that a CMP in the amount of $19,192 is appropriate.

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I.                   Background and Procedural History

Respondent does business under the name of Kokomo Pure Vapors, LLC d/b/a Kokomo Pure Vapers located at 1216 East Markland Avenue, Kokomo, Indiana 46901. Complaint at 4,¶14;CTP Exhibit (Ex.) 3 at 2,¶¶2-3.

On September 26, 2017, Respondent registered as a tobacco product manufacturer and retailer with FDA, as required by Section 905(b), (c), and (d) of the Act. 21 U.S.C. § 387e(b), (c), and (d); CTP Ex. 1 at 2,¶¶4-5. Respondent also registered over 3,000 Electronic Nicotine Delivery System (ENDS) or ENDS Parts for consumer use that Respondent manufactured or sold at the time of registration. CTP Ex. 1 at 2,¶5;CTP Ex. 7 at 2.

On December 16, 2021, the FDA issued a Warning Letter to Respondent determining the manufacturing, selling, and/or distributing, in the United States, of Kokomo Pure Vapors’ Horney Parrot 60ml 12mg e-liquid product, without a marketing authorization order, was a violation of the Act.CTP Ex. 7 at 1-2.

On May 16, 2023, at approximately 11:09 AM, FDA-Commissioned Officer Derryl O’Neal inspected Respondent’s business. CTP Ex. 2 at 2,¶5. During the inspection, Inspector O’Neal observed and photographed,

“evidence of e-liquid product manufacturing . . . including nicotine, bulk e-liquid flavorings, bottles, vegetable glycerin (“VG”), Propylene Glycol (“PG”), Kokomo Pure Vapor labeled bottles with e-liquids, equipment to manufacture e-liquid products, and a recipe card for some products available for purchase all within a locked area behind the retail portion of the store. Further, . . . a digital menu in the retail area [was observed] from which customers ordered e-liquid products.”

Id.¶7.Additionally, during the inspection, Mr. Jeffrey W. Lamberson, who was as the owner, admitted that finished e-liquid products, components, or parts are sold in the establishment to customers. Id.¶6, Id. at 3,¶10.

Inspector O’Neal also photographed “several Flavor West¹ flavors listed as components of Kokomo Pure Vapors’ house blend flavor, Horny [sic] Parrot . . . [which] included . . . bottles of Horney Parrot in 6 mg, 3mg, and 0 mg finished e-liquid products ready for sale.” Id.¶8; CTP Ex. 9. Also “observed [were] PG, VG, and nicotine in bulk bottles of

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combined solution in concentration of 100 mg per kilogram of nicotine from Liquid Nicotine Wholesalers . . . .²” CTP Ex. 2 at 2-3,¶8; CTP Ex. 10.

On August 2, 2023, CTP served the Complaint on Respondent at 1216 East Markland Avenue, Kokomo, Indiana 46901, by United Parcel Service, as provided in 21 C.F.R. §§ 17.5 and 17.7. Proof of Service at 1. On that same, day, CTP also filed a copy of the Complaint with the Civil Remedies Division (CRD) of the Departmental Appeals Board (DAB).

On September 1, 2023, Respondent timely filed an Answer via the DAB’s Electronic Filing System (E-File). In its Answer, Respondent denied the allegations in the Complaint and stated that

“[w]e did send in the [premarket tobacco product application] as requested. We had to respond by mail due to the fact that [the FDA’s] servers were down at the time because of over loading. This was prior to December of 2021. We are diligently doing our best to retrieve this from our archives.”

Answer at 3. In its defense, Respondent stated,

“[d]ue to the negative campaigning in the media and ruling you are currently trying to impose; I am forced to close my doors due to the financial insolvency that I currently face.

We have tried our best to remain compliant with all state and federal regulations. We currently don’t see any other recourse that will keep up [sic] solvent and still allow us to regain our compliancy.”

Id.

Respondent also stated that the requested CMP is too high and indicated that “I again have utilized all my resources to try to keep the doors open, from remortgaging my house and other business assets. I am currently up against the wall with no other choice but to close the doors unless another resolution can be sought out.” Id.

On September 5, 2023, I issued an Acknowledgment and Pre-Hearing Order (APHO) that established a deadline for discovery and a schedule for pre-hearing exchanges between the parties.

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On November 27, 2023, CTP filed a pre-hearing exchange consisting of an Informal Brief of Complainant (CTP PH Brief), Complainant’s List of Proposed Witnesses and Exhibits, and exhibits 1 through 10 (CTP Exs. 1-10, respectively). CTP’s exhibits included the declaration of two witnesses: (1) Loretta Chi, Senior Regulatory Counsel in the Office of Compliance and Enforcement, CTP, FDA (CTP Ex. 1), and (2) Derryl O’Neal, FDA-Commissioned officer for the State of Indiana (CTP Ex. 2). Respondent did not submit a pre-hearing exchange.

I held a pre-hearing conference (PHC) via Microsoft Teams on January 24, 2024. At the PHC, Mr. Lamberson affirmed that the inspection occurred and admitted that Respondent was in possession of the items mentioned in the complaint at the time of the inspection. When asked about CTP’s proposed exhibits and witnesses, Mr. Lamberson stated he had not reviewed the ten proposed exhibits due to issues with the DAB E-File system. Based on Respondent’s representations, I provided Respondent additional time to review the exhibits and expressed that CTP would have an opportunity to respond to any potential arguments Respondent raised. With regard to cross-examining CTP’s witnesses, Respondent waived the right to a hearing for the purpose of cross-examination and I agreed to proceed to a decision based on the written record.

On January 29, 2024, I issued an order summarizing the PHC, which directed Respondent to fill out a supplemental form attached to the order. The supplemental form was drafted as a tool for Respondent to confirm that all of CTP’s proposed exhibits were reviewed. The supplemental form also provided Respondent an opportunity to specify any objections to CTP’s exhibits, and allowed for additional arguments. A copy of CTP’s proposed exhibit list was also included with the filing. The supplemental form was due on February 15, 2024.

Respondent filed the supplemental form on February 21, 2024. In its filing Respondent indicated they reviewed all ten of CTP’s exhibits, had no objections, and made no additional arguments. On February 22, 2024, Respondent emailed the assigned attorney advisor a Microsoft Word document stating,

“I would like to add an additional statement as to a settlement. I am out of business as of Sept. 1^st and have no intentions of doing anything in the industry. I am pleading with the appeals board and Judge Kunz to drop the amount down as I only have a $943.00 social security check to live off of. I was not aware of the PMTA and I know ignorance of the law is not an excuse.”

February 22, 2024 Email Attachment.

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In response to the late-filed supplemental form, on February 26, 2024, I issued an order that sua sponte granted Respondent an E-File Waiver³, provided CTP’s due date to file a response brief to Respondent’s late-filed supplemental form, and directed Respondent to provide good cause for the late-filed supplemental form. On March 6, 2024, Respondent mailed in a timely filed letter explaining that the supplemental form was filed late because he had been ill and had problems accessing the form with his computer.

On March 20, 2024, I issued an order finding good cause to accept Respondent’s supplemental form. The March 20, 2024 Order also construed Respondent’s Answer, supplemental form, and February 22, 2024 email, as Respondent’s final brief. CTP’s ten exhibits were also admitted into the record without objection, and CTP was given until April 25, 2024, to submit a final brief, which CTP did not file.

The administrative record is now complete and this matter is ready for a decision. 21 C.F.R. § 17.41; 21 C.F.R. § 17.45(c). I will now decide this case based on the evidence in the administrative record. 21 C.F.R. § 17.19(b)(11), (17).

II.               Issues

1. Whether Respondent manufactured, sold, and/or distributed new tobacco products that were adulterated and misbranded because they lacked the required FDA marketing authorization order, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. §§ 301 et seq.; and
2. If so, whether the CMP amount of $19,192 sought by CTP is an appropriate amount, pursuant to the provisions of 21 C.F.R. § 17.2 and 21 U.S.C. § 333(f)(9)(A).

III.            Applicable Law and Industry Guidance

In 2009, Congress enacted the Family Smoking Prevention and Tobacco Control Act (TCA) to regulate tobacco products. 21 U.S.C. §§ 387 et seq. The TCA prohibits manufacturers from selling any “new tobacco product” without authorization from the FDA. 21 U.S.C. § 387j(a); 21 U.S.C. § 387a(b) (delegating the FDA the authority to determine what constitutes new tobacco products). A new tobacco product is any tobacco

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product that was not commercially marketed in the United States as of February 15, 2007. 21 U.S.C. § 387j(a)(1).

The TCA requires new tobacco products to have a premarket authorization in effect. 21 U.S.C. § 387j(a)(2). Alternatively, the manufacturer of the product may submit a substantial equivalence report, in response to which the FDA may issue an order finding the product is substantially equivalent to a predicate tobacco product. 21 U.S.C. § 387e(j). Or, the manufacturer may submit a report, in response to which the Secretary of Health and Human Services (Secretary) may issue an exemption order. 21 U.S.C. § 387e(j)(3).

To obtain premarket authorization, manufacturers of new tobacco products are required to submit a premarket tobacco application (PMTA) to the FDA for approval to sell their products. 21 U.S.C. § 387j(b)(1). The TCA directs FDA to review PMTAs to determine whether “permitting such tobacco product to be marketed would be appropriate for the protection of the public health.” 21 U.S.C. § 387j(c)(2)(A). Absent an approval from the FDA, the new tobacco products are considered adulterated and misbranded if they lack the required FDA marketing authorization order, substantial equivalence order, or an exemption order. 21 U.S.C. §§ 387b(6) and 387c(a)(6).

CTP’s December 16, 2021 Warning Letter, included a link to the FDA’s guidance titled “Enforcement Priorities for Electronic Nicotine Delivery Systems (ENDS) and Other Deemed Products on the Market Without Premarket Authorization, available at https://www.fda.gov/regulatory-information/search-fda-guidance-documents/enforcement-priorities-electronic-nicotine-delivery-system-ends-and-other-deemed-products-market.” CTP Ex. 7 at 2. The link opens a PDF, where Section IV is titled “Enforcement Priorities Regarding Certain Ends Products on the Market Without Premarket Authorization.” Id. There it states that “[b]eginning February 6, 2020, FDA intends to prioritize enforcement . . . against: “[f]lavored, cartridge-based ENDS products (except for tobacco – or menthol-flavored products) . . . .” Id. (citing U.S. Department of Health and Human Services Food and Drug Administration Center for Tobacco Products: Enforcement Priorities for Electronic Nicotine Delivery System (ENDS) and Other Deemed Products on the Market Without Premarket Authorization (Revised) (April 2020)).

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IV.                Analysis

CTP alleges that Respondent failed to obtain the required premarket authorization for its new tobacco products, causing them to become adulterated and misbranded while they were held for sale after interstate shipment of one or more of their components, thereby violating 21 U.S.C. § 331(k).

Respondent does not dispute that it manufactured new tobacco products. On September 26, 2017, Respondent registered as a tobacco product manufacturer and retailer with FDA as required by the Act. 21 U.S.C. § 387e(b), (c), and (d); CTP Ex. 1 at 2,¶¶4-5. Respondent also registered over 3,000 e-liquid products that is manufactured or sold. Id. at 2; CTP Ex. 7 at 2. One of the products that Respondent manufactured and sold is Kokomo Pure Vapors Horney Parrot (KPVHP), an e-liquid product sold in 3mg 100ml. Complaint¶17. KPVHP contains “honeydew, pear, and strawberry” flavoring and is sold in various nicotine concentrations. CTP Ex. 6; CTP Ex. 2 at 3,¶8. KPVHP is a new tobacco product that requires a marketing authorization order from the FDA.

Respondent also acknowledged that its new tobacco products were held for sale. As indicated above, during the inspection on May 16, 2023, Mr. Lamberson admitted that finished e-liquid products, components, or parts are sold in the establishment to customers. CTP Ex. 2 at 3,¶10. Further, Respondent does not dispute the conclusion that the manufacturing components for the tobacco products were shipped in interstate commerce. Respondent does not deny that some of the products used to manufacture Respondent’s e-liquid products originated from outside of the State of Indiana, and were shipped to Respondent’s establishment in Indiana. CTP Ex.1 at 4,¶9. For instance, Flavor West flavoring, the brand observed in the establishment during the May 16, 2023 inspection, is fulfilled in a facility in Lake Elsinore, California. Id. at 3,¶8; CTP Ex. 5 at 3-5; CTP Ex. 9. Similarly, Liquid Nicotine Wholesaler’s nicotine, VG, and PG products, originate from Phoenix, Arizona. CTP Ex. 1 at 4; CTP Ex. 3 at 5,¶29; CTP Ex. 5 at 6-13; CTP Ex. 10.

There was an initial conflict in the record as to whether Respondent had submitted a PMTA for the new tobacco products it manufactured. During the May 16, 2023 inspection, Mr. Lamberson told Inspector O’Neal that “all necessary paperwork was submitted to the FDA approximately five years from the date of the inspection.” CTP Ex. 2 at 3,¶11. In its Answer, Respondent continued to claim that it submitted a PMTA for its e-liquid products by mail. However, Respondent never provided evidence of a PMTA

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submission during the instant proceeding. Moreover, as part of an email received on February 22, 2024, Respondent stated he was “not aware of the PMTA.”⁴

CTP rebuts Respondent’s PMTA statements by submitting a signed declaration from Ms. Loretta Chi, Senior Regulatory Counsel in the Office of Compliance and Enforcement, with CTP, FDA. CTP Ex. 1 at 1,¶2. Ms. Chi attested to serving in her role since 2020, and to having personal knowledge of CTP’s tobacco record keeping, registration process, and enforcement actions. Id. at 1-2,¶3. Ms. Chi confirmed that as of May 16, 2023 inspection, “there was no record of the Respondent having submitted an application for an FDA premarket authorization request for its e-liquid products.” Id. at 4,¶10. Similarly, Ms. Chi confirmed the FDA did not have any record of Respondent submitting a report requesting a Substantial Equivalence Order or an abbreviated report requesting a Found-Exempt Order. Id. at 4-5,¶¶10-11. Respondent did not object to Ms. Chi’s declaration or wish to cross-examine her; therefore, I find Ms. Chi’s statements about Respondent’s PMTA registration should be given greater weight than the statements from Respondent with respect to the question of whether it received a marketing authorization for its new tobacco products.

Upon weighing the evidence, I conclude the FDA never issued a marketing authorization for Respondent’s new tobacco products. I also find that there is no dispute that Respondent did not apply for a substantial equivalence order or an exemption order from the Secretary. I also find that Respondent’s new tobacco products were manufactured using at least one component that traveled in interstate commerce. Therefore, Respondent’s new tobacco products are adulterated and misbranded and violate Section 331(k) of the Act.

V.                Civil Money Penalty

Having determined that Respondent’s new tobacco products are adulterated and misbranded, I conclude that I have the authority to impose a CMP under 21 U.S.C. § 333(f)(9)(A). In its Complaint, CTP sought to impose the penalty amount of $19,192 against Respondent for manufacturing, selling, and/or distributing new tobacco products that lacked the required premarket authorization. Complaint at 1. In its pre-hearing brief, CTP continued to assert that a $19,192 CMP is appropriate. CTP PH Brief at 11-12. Respondent argues the CMP is too high and should be reduced due to the owner’s limited income. Answer¶3; February 22, 2024 Email Attachment at 1.

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In determining whether a $19,192 CMP is appropriate, I must consider any aggravating or mitigating circumstances and the factors listed in the Act. 21 C.F.R. § 17.34(a)-(b). Specifically, I am required to take into account “the nature, circumstances, extent and gravity of the violation or 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); 21 C.F.R. § 17.45(b)(1)-(3). Respondent must prove any mitigating factors by a preponderance of the evidence. 21 C.F.R. § 17.33(c). For the following reasons, I conclude that a $19,192 CMP is appropriate based upon the record evidence, applicable law, and aggravating and mitigating circumstances in this case.

1.       Nature, Circumstances, Extent and Gravity of the Violations

The TCA was enacted for the purpose of authorizing regulation of tobacco products for the “protection of the public health.” 21 U.S.C. § 387f(d). Respondent was in the business of manufacturing and selling this highly regulated and dangerous product. It received a written warning on December 16, 2021, that the “FDA has determined that you manufacture, sell, and/or distribute to customers in the United States Kokomo Pure Vapors Horney Parrot 60ml 12mg e-liquid product without a marketing authorization order,” which was a prohibited act under 21 U.S.C. § 331(k). CTP Ex. 7 at 2. Yet, after receiving this warning that it was in violation of federal law, Respondent continued to manufacture and sell this and other “new tobacco products.” The inability of Respondent to comply with federal tobacco law is serious in nature and demands a proportional CMP amount.

2.       Respondent’s Ability to Pay and Effect on Respondent’s Ability to Continue to Do Business

In evaluating this factor, I have considered Respondent’s arguments, made by the business owner, Mr. Lamberson, in an email attachment dated February 22, 2024, that he was seeking a reduced CMP because he was out of business and was living solely on a Social Security check of $943. However, Respondent has not provided any evidence documenting the specifics of its financial situation. The prehearing brief from CTP indicates that “[i]n response to CTP’s Request for Production of Documents, Respondent sent payroll transactions for May 2023 and January through August 2023, what appears to be a monthly tobacco sales tax summary for May 2023, and profit and loss summaries for May 2023 and January through August 2023.” CTP PH Br. at 13,¶5B. However, these documents were never submitted by Respondent in its prehearing exchange, as required by the APHO. APHO at 4-5,¶6. As a result, I have no documentary evidence that supports Respondent’s allegations. Moreover, the details of the structure of the business are also unknown. While Mr. Lamberson indicated he was supporting himself solely with his Social Security check, this does not answer the question of whether the business has or had assets that could be utilized to pay the CMP. The record does not indicate whether

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Kokomo Pure Vapers was a corporation, sub-chapter S corporation, a partnership, or a sole proprietorship, which would be relevant in determining whose “pockets” are to be examined as a source of payment of the CMP. Accordingly, I cannot find that Respondent has established an inability to pay.

In considering the effects of the CMP on Respondent’s ability to continue to do business, I note that Mr. Lamberson has indicated in an email that the business has been closed since September 1, 2023. February 22, 2024 Email Attachment at 1. In the Answer, Mr. Lamberson asserted that he had “utilized all my resources to try to keep the doors open, from remortgaging my house and other business assets. I am currently up against the wall with no other choice but to close the doors unless another resolution can be sought out.” Answer at 3. While I am certainly sympathetic to his personal financial situation, Respondent has not established that the alleged inability to continue to operate the business is due to the CMP, rather than the fact that the business lacks the premarketing approval necessary to continue to sell new tobacco products.

3.       History of Prior Violations

There is no indication in the record of any prior violations of Section 331(k) resulting in a CMP. However, Respondent did receive a Warning Letter dated December 16, 2021, advising that it was in violation of federal law for manufacturing and selling a new tobacco product without marketing authorization. CTP Ex. 7. Thus, Respondent was on notice of the need for premarket approval for its manufactured products.

4.       Degree of Culpability

As noted above, Respondent received written notice that it was in violation of federal law by manufacturing and selling “new tobacco products” without obtaining a marketing authorization order. This notice was contained in the Warning Letter dated December 16, 2021, which contained the directive to “take prompt action to address any violations that are referenced above, as well as violations that are the same as or similar to the ones stated above and take any necessary actions to bring your tobacco products into compliance with the . . . Act.” CTP Ex. 7 at 2. Yet, Respondent continued to manufacture and sell these same products, without any apparent modification to its business practices or attempts to contact the FDA for information or assistance, until at least the time of the inspection on May 16, 2023, a period of nearly a year and a half. Thus, I must find that this degree of culpability does not merit a reduction in the CMP.

In so doing, I must note that I found Respondent to be candid and sincere and I am sympathetic to his financial situation. However, I am bound to base my decision solely on consideration of the regulatory required factors and the evidence presented on those factors. In this case, after this consideration, I must find that the CMP of $19,192 is appropriate.

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VI.            Conclusion

For these reasons, I enter judgment in the amount of $19,192 against Respondent,

Kokomo Pure Vapors, LLC d/b/a Kokomo Pure Vapors, for manufacturing, selling, and/or distributing new tobacco products that lacked the premarketing authorization required by the Act, 21 U.S.C. §§ 301 et seq. Pursuant to 21 C.F.R. § 17.11(b), this order becomes final and binding upon both parties after 30 days of the date of its issuance.

Endnotes

¹ Flavor West is located at 2940 Hunco Way, Lake Elsinore, California 92530. CTP Ex. 9 at 1.

² Liquid Nicotine Wholesalers is located at 1606 East University Drive, Suite 108, Phoenix, Arizona 85034. CTP Ex. 10 at 1.

³ There were at least six occasions where Respondent required assistance with the DAB E-File system. To ensure he was being accorded full due process, I construed the numerous requests for assistance from Respondent as a request for a waiver of the requirement to file documents electronically, pursuant to the provisions of 21 C.F.R. § 17.19(b)(19) (referencing the March 20, 2024 Order).

⁴ The inconsistencies in the statements from Mr. Lamberson are not significant since he, at no point, asserted that the business had received a marketing authorization, which is the relevant query in this analysis.