INITIAL DECISION

On November 24, 2023, the Center for Tobacco Products (CTP) served a Complaint on Mini Market and Tobacco LLC d/b/a Mini Market / Tobacco and Vape (Respondent), at 732 Beechurst Avenue, Morgantown, West Virginia 26505, 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 against Respondent for impermissibly receiving in interstate commerce an electronic nicotine delivery system (ENDS) product lacking the required premarketing authorization and offering such product for sale, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq.

Respondent admits the allegations in the Complaint and argues that the civil money penalty is too high. For the reasons discussed below, I find Respondent violated the provisions of 21 U.S.C. § 331(c) and conclude that a civil money penalty in the amount of $16,192 is appropriate.

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I. Background and Procedural History

Respondent does business under the name of Mini Market and Tobacco LLC d/b/a Mini Market / Tobacco and Vape located at 732 Beechurst Avenue, Morgantown, West Virginia 26505. Complaint ¶13.

On May 25, 2023, CTP issued a Warning Letter to Respondent notifying Respondent that on February 16, 2023, an FDA inspector witnessed electronic nicotine delivery system (ENDS) products offered for sale at Respondent’s establishment that lacked the required marketing authorization. CTP Ex. 7.

On August 13, 2023, FDA-Commissioned Officer Randell M. Schambach inspected Respondent’s business. CTP Ex. 2 ¶5. During the inspection, Inspector Schambach observed, “that the establishment sold FDA-regulated tobacco products and had a sales display containing tobacco products, including an Elfbar Kiwi Passion Fruit Guava ENDS product, available for sale.” Id. ¶7.

Inspector Schambach took photographs at the establishment, including the store and its external signage, and the tobacco products, including the Elfbar Kiwi Passion Fruit Guava ENDS product, and its placement within the establishment. Id.

On November 24, 2023, CTP served an Administrative Complaint on Respondent by United Parcel Service at 732 Beechurst Avenue, Morgantown, West Virginia 26505, as provided in 21 C.F.R. §§ 17.5 and 17.7. See Civil Remedies Division (CRD) Docket (Dkt.) Entry No. 1b.

On December 15, 2023, Respondent’s representative electronically filed its Answer. CRD Dkt. Entry No. 3 (Answer). In its Answer, Respondent admitted selling the Elfbar Kiwi Passion Fruit Guava ENDS product but disputes that it personally received the Warning Letter dated May 25, 2023 and argues the civil money penalty is too high. Answer at 1-3.

On January 17, 2024, Respondent’s representative filed its Request for Discovery. CRD Dkt. Entry No. 5. On January 25, 2024, CTP filed a Motion for a Protective Order and supporting documents in response to Respondent’s Request for Discovery. CRD Dkt. Entry Nos. 6, 6a., and 9. On January 27, 2024, Respondent filed its Motion to Oppose CTP’s Protective Order and supporting documents. CRD Dkt. Entry Nos. 10, 11, and 12.

On February 13, 2024, CTP filed is Memorandum in Support of Complainant’s Motion for a Protective Order and supporting documents. CRD Dkt. Entry Nos. 14, 14a-d. On February 20, 2024, Respondent’s representative filed a Motion to Withdraw its representation of Respondent. CRD Dkt. Entry No. 16. Neither Respondent, nor its representative, filed any update to its January 27, 2024 Motion to Oppose CTP’s Motion

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for Protective Order. On March 13, 2024, I issued my ruling on CTP’s Motion for a Protective Order, which I granted in part, and denied in part. CRD Dkt. Entry No. 17.

On March 14, 2024, CTP filed a Motion to Clarify Scope of Protective Order and for an Extension of the Production Deadline, its Informal Pre-Hearing Brief (CTP PH Brief), its Witness and Exhibit List along with its proposed exhibits. CRD Dkt. Entry Nos. 18, 19, 19a-i. On March 14, 2024, I issued a Supplemental Protective Order responding to CTP’s clarification request. CRD Dkt. Entry No. 20.

Respondent did not submit a pre-hearing exchange.

I held a pre-hearing conference (PHC) via Microsoft Teams on May 16, 2024. At the PHC, Respondent appeared with his independently chosen interpreter advising that his native language was Arabic. Respondent advised that he wanted to proceed with his interpreter and not an interpreter provided by the Departmental Appeals Board (DAB). During the PHC, the participants discussed the violation alleged by CTP during an inspection at Respondent’s establishment on August 13, 2023. Respondent was asked about CTP’s eight (8) proposed exhibits and two (2) proposed witnesses. Specifically, it was discussed whether Respondent intended to cross examine either of CTP’s witnesses. Respondent waived the right to a hearing for the purpose of cross-examination and agreed to a decision based on the written record. I advised the parties that I would not be holding a hearing and will therefore enter a Decision on the Record once the record has closed. CTP did not object. Respondent also indicated that he had no objection to the admission into the record of CTP’s exhibits.

On June 12, 2024, I issued an order summarizing the PHC, which set a due date of July 31, 2024, for the parties to file their Final Briefs. CRD Dkt. No. 23. During the PHC, I advised the parties that DAB would provide Respondent with an Arabic translation of the order summarizing the PHC and CTP’s final brief, if one were filed. Id. at 2. Respondent confirmed at that time he did not need any of the previous filings translated. On June 12, 2024, DAB mailed the Arabic translation of the order summarizing the PHC to Respondent. CRD Dkt. Entry No. 23a.

On July 31, 2024, CTP filed a Notice of Waiver of Final Brief providing notification that it would not file a final brief. CRD Dkt. Entry No. 24. Respondent also has not filed a final brief.

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).

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II. Issues

A. Whether the allegations in the Complaint are true, and, if so, whether Respondent's actions identified in the Complaint violated the law;

B. Whether any affirmative defenses are meritorious; and

C. If Respondent is liable for penalties or assessments, the appropriate amount of any such penalties or assessments, considering any mitigating or aggravating factors that I find in this case.

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 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 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). 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). Alternatively, the product manufacturer 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 product manufacturer may submit a report, in response to which the Secretary may issue an exemption order. 21 U.S.C. § 387e(j)(3).

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(6).

Under the Act, “[a] tobacco product shall be deemed to be misbranded if, in the case of any tobacco product sold or offered for sale in any State, it is sold or distributed in violation of regulations prescribed under section 387f(d).” Under 21 U.S.C. § 387c(a)(6), a new tobacco product is misbranded if a “notice or other information respecting it was not provided as required” under the substantial equivalence or substantial equivalence

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exemption pathway, including a substantial equivalence report or an abbreviated report. 21 U.S.C. § 387c(a)(6).

Under the Act, a tobacco product is adulterated if it has not obtained the required premarket authorization. 21 U.S.C. § 387b(6)(A). Thus, when a manufacturer does not submit a PMTA for its ENDS products, or when a manufacturer submits a PMTA for its ENDS products and receives a denial order, the products are being adulterated. 21 U.S.C. § 387b(6)(A). The adulterated and misbranded ENDS products in turn violates the Act.

The Act prohibits the receipt in interstate commerce of any tobacco product that is adulterated or misbranded and the delivery or proffered delivery thereof for pay or otherwise. 21 U.S.C. § 331(c). The FDA may seek a civil money penalty from “any person who violates a requirement of this chapter which relates to tobacco products.” 21 U.S.C. § 333(f)(9)(A) (2012). Penalties are set by 21 U.S.C. § 333 and 21 C.F.R. § 17.2.

IV. Analysis

CTP alleges that Respondent received in interstate commerce and offered for sale ENDS products that required FDA premarket authorization in violation of 21 U.S.C. § 331(c) on August 13, 2023. Complaint ¶¶15, 19.

In its Answer, Respondent admitted selling the Elfbar Kiwi Passion Fruit Guava ENDS product, but disputes that it received the Warning Letter dated May 25, 2023, and argues the civil money penalty is too high. Answer at 1-3. Respondent asserts that to the “best of Respondent’s knowledge, [it had] lawfully obtained [the Elfbar products] from their tobacco wholesaler” and “Respondent was under the impression that this product was lawful to sell as it (a), [was] sold by their licensed wholesaler, (b), was readily sold and available at numerous other retail locations in Respondents [sic] immediate area.” Id.

Regarding the unauthorized product, CTP submitted a signed declaration from James Bowling, Deputy Division Director for the Division of Enforcement and Manufacturing in the Office of Compliance and Enforcement. CTP Ex. 1. Mr. Bowling has personal knowledge of CTP’s tobacco record keeping, registration process, and new tobacco product premarket authorization requirements. Id. ¶3. Mr. Bowling confirmed that a search of the Tobacco Registration and Product Listing Module Next Generation did not reveal any registered establishments containing the name “Elfbar” or any listed product named “Elfbar Kiwi Passion Fruit Guava” in West Virginia or elsewhere in the United States. Id. ¶6.

Additionally, Mr. Bowling confirms that the Elfbar Kiwi Passion Fruit Guava ENDS product purchased during the August 13, 2023 inspection, is manufactured in China by VAPEONLY. Id. ¶7. Mr. Bowling confirmed that VAPEONLY does not have any

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registered tobacco production facilities in the state of West Virginia. Id. ¶10. Further, Mr. Bowling confirms that Elfbar Kiwi Passion Fruit Guava ENDS products were not commercially marketed in the United States as of February 15, 2007. CTP Ex. 1 ¶12. FDA did not have any record of a Substantial Equivalence Order or an abbreviated report requesting a Found-Exempt Order. Id. ¶¶13-14.

Lastly, Respondent did not object to Mr. Bowling’s declaration or wish to cross-examine him; therefore, I find Mr. Bowling’s statements about the Elfbar Kiwi Passion Fruit Guava ENDS products and its manufacturer VAPEONLY credible with respect to the question of whether it had marketing authorization or if the manufacturer was registered for business in the United States for its new tobacco products. I also find that the Elfbar Kiwi Passion Fruit Guava ENDS products are adulterated and misbranded as its manufacturer VAPEONLY did not obtain FDA’s required premarket authorization.

Mr. Bowling’s declaration also supports a finding that the unauthorized product was received via interstate commerce, as the product manufacturer, VAPEONLY is based in China, a foreign country. Id. ¶7.

Regarding Respondent’s possession of the unauthorized product, CTP submits the signed declaration of inspector Robert Schambach. CTP Ex. 2. Mr. Schambach is an FDA-commissioned inspector with the West Virginia State Police who performs advertising and labeling inspections required under FDA’s Tobacco Retail Inspection Contract. Id. ¶3. Mr. Schambach’s declaration states that on August 13, 2023, Mr. Schambach visited Respondent’s business establishment to conduct a compliance check. Id. ¶5. During the inspection, Mr. Schambach observed a sales display containing an Elfbar Kiwi Passion Fruit Guava ENDS product available for sale. Id. ¶7. Photographs were taken by Mr. Schambach of the business establishment and the unauthorized product. Id. The inspection was recorded in the FDA’s record system and a Narrative Report was created. Id. ¶8. Respondent did not object to Mr. Schambach’s declaration or wish to cross-examine him. Therefore, I find Mr. Schambach’s statements regarding what he observed during the August 13, 2023 inspection of Respondent’s business establishment credible.

Taking the above alleged facts as true, I conclude that Respondent possessed the Elfbar Kiwi Passion Fruit Guava ENDS product observed by FDA-commissioned Inspector Schambach on August 13, 2023. Respondent violated the prohibition against receiving and offering for sale a new tobacco product that was adulterated and misbranded because the Elfbar Kiwi Passion Fruit Guava ENDS product lacked the required FDA marketing authorization order, substantially equivalent order, or a found exempt order. 21 U.S.C. § 331(c); see also 21 U.S.C. § 387b(6)(A), 21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A).

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V. Civil money penalty

Having determined that Respondent is liable under the Act, I conclude that I have the authority to impose a civil money penalty under 21 U.S.C. 333(f)(9)(A). In its Complaint, CTP sought to impose the penalty amount of $19,192 against Respondent. Complaint at 1. In its pre-hearing brief, CTP continued to assert that a $19,192 civil money penalty is appropriate. CTP PH Brief at 8-11. Respondent argues the civil money penalty is too high and should be reduced because in its review of other civil money penalties against retailers that have committed “violations … concerning underaged sales of tobacco products … FDA sought …$2559.00 … and $320.00.” Answer at 2-3.

In determining whether a $19,192 civil money penalty 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 $16,192 civil money penalty 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). On May 25, 2023, CTP issued a Warning Letter informing Respondent that its establishment was unlawfully marketing new tobacco products lacking the statutorily required premarket authorization, which are subject to enforcement action by the FDA. CTP Ex 7. The Warning Letter referenced a February 16, 2023 inspection, where the establishment offered for sale a Puff Plus Strawberries and Cream ENDS product and states that “[t]he listed violation causes the ENDS product you offer for sale or distribution in the United States to be ‘adulterated’ and ‘misbranded’ under Sections 902 and 903 of the FD&C Act” (emphasis added). Id. at 1-2.

Respondent argues that it did not receive the May 25, 2023 Warning Letter although it does not dispute that CTP may have issued the Warning Letter. Answer at 1-2. In the subsequent inspection on August 13, 2023, Inspector Schambach found other Elfbar products, specifically, an Elfbar Kiwi Passion Fruit Guava ENDS product on display (emphasis added). CTP Ex. 2 ¶7. Respondent’s continued marketing and selling of new tobacco products demonstrates it did not comply with federal tobacco law, which is serious in nature and demands a proportional civil money penalty amount.

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

Respondent states that it “operates a small retail location with recent downturns in the local economy” and the proposed civil money penalty “would in effect, cause [its] business to cease operations.” Answer at 2. Respondent acknowledges that it should pay a civil money penalty but asks for a reduction. Id. I am sympathetic to Respondent’s statements but I am limited by the evidence documented in the record. Having no specifics of Respondent’s financial situation, I cannot find Respondent has established an inability to pay.

3. History of Prior Violations

There is no indication in the record of any prior violations of Section 331(c) resulting in a civil money penalty.

4. Degree of Culpability

The May 25, 2023 Warning Letter provided Respondent with a written notice that it was in violation of federal law that could subject it to a fine. In a subsequent inspection on August 13, 2023, Respondent was found to be selling products of a different brand and flavor. Respondent had a duty to comply with the federal laws applicable to the tobacco products it chooses to sale. Therefore, I find that Respondent actions warrant culpability in receiving the civil money penalty.

However, the Warning Letter, whether Respondent received it or not, references a single flavor, a single “violation,” a single “product,” and a single “ENDS product.” CTP Ex. 7. As written, CTP’s Warning Letter may have led the retailer to believe that the discontinued sale of the Elfbar flavor mentioned in the Warning Letter was the solution to the violation. I note that CTP’s August 13, 2023 inspection did not indicate that Respondent was continuing to sale the Puff Plus Strawberries and Cream ENDS product flavor but, instead, found an Elfbar Kiwi Passion Fruit Guava ENDS product for sale. Further, CTP asserts no other prior violations against Respondent during its time in business.

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VI. Conclusion

For the reasons set forth above, I impose a reduced civil money penalty in the amount of $16,192 against Respondent, Mini Market and Tobacco LLC d/b/a Mini Market / Tobacco and Vape, for its violation of the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 331(c), by receiving via interstate commerce adulterated and misbranded tobacco products and offering the products for sale in its establishment. Pursuant to 21 C.F.R. § 17.45(d), this order becomes final and binding upon both parties after 30 days of the date of its issuance.