Pooja 1, LLC d/b/a Valero / Lincoln Express Mart, DAB TB8610 (2024)

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks a $19,192 civil money penalty against Respondent, Pooja 1, LLC d/b/a Valero / Lincoln Express Mart, at 2701 Lincoln Road, Hattiesburg, Mississippi 39402.  Specifically, CTP alleges that Respondent Valero / Lincoln Express Mart received in interstate commerce an electronic nicotine delivery system (ENDS) product that lacks the premarketing authorization required under the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 331(c) and offered such product for sale.  For the reasons discussed below, I find that Respondent violated the provisions of 21 U.S.C. § 331(c) and conclude that a reduced civil money penalty in the amount of $12,500 is appropriate.

I. Background and Procedural History

CTP began this matter by serving an administrative complaint on Respondent at 2701 Lincoln Road, Hattiesburg, Mississippi 39402, by United Parcel Service, and by filing a

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copy of the complaint with the FDA’s Division of Dockets Management.  Civil Remedies Division (CRD) Docket (Dkt.) Entry No. 1.

On October 19, 2023, Respondent, through counsel, filed a timely request for an extension of time within which to file an answer.  CRD Dkt. Entry No. 3.  On October 26, 2023, I issued an Order granting Respondent’s request for an extension and giving it until November 24, 2023, to file a timely answer.  CRD Dkt. Entry No. 4.

On November 22, 2023, Respondent’s counsel filed a timely Answer to CTP’s complaint (Answer).  CRD Dkt. Entry No. 6.  On November 28, 2023, I issued an Acknowledgment and Pre-Hearing Order (APHO) that established deadlines for discovery and the parties pre-hearing exchanges.  CRD Dkt. Entry No. 7.

On January 24, 2024, CTP filed a Motion to Compel Discovery and an Unopposed Motion to Extend Deadlines in this case.  CRD Dkt. Entry Nos. 10; 11.  On January 30, 2024, I issued an Order giving Respondent until February 13, 2024, to file a response to CTP’s Motion to Compel Discovery.  CRD Dkt. Entry No. 12.  I also extended the parties’ pre-hearing exchange deadlines by thirty days.  Id.  On February 22, 2024, having received no response from Respondent and noting a discrepancy with the addresses provided in CTP’s certificate of service for its Request for Production of Documents (RFP), I stayed the proceedings of this case and ordered CTP to prove service of the RFP on Respondent’s counsel pursuant to 21 C.F.R. § 17.31(b) and (c), by March 4, 2024.  CRD Dkt. Entry No. 13.

On March 1, 2024, CTP filed its timely Response to the Order Establishing Proper Service on Respondent (CTP’s Response) and provided supporting documentation.  CRD Dkt. Entry No. 14.  On March 6, 2024, I issued an Order Lifting Stay and Granting Complainant’s Motion to Compel Discovery.  I found that CTP properly served the RFP on Respondent’s counsel pursuant to 21 C.F.R. § 17.31(b) and (c), and lifted the stay of proceedings imposed by my February 22, 2024, Order.  CRD Dkt. Entry No. 15. Respondent did not file any response to CTP’s Motion to Compel Discovery or to the January 30, 2024, Order.  My March 6, 2024, Order also granted CTP’s Motion to Compel Discovery, and ordered Respondent to produce documents responsive to CTP’s RFP by March 18, 2024.  Id.  On March 18, 2024, Respondent filed its Notice of Service of Responses to Complainant’s Request for Production of Documents.  CRD Dkt. Entry No. 16.

On April 17, 2024, CTP timely filed its pre-hearing exchange, consisting of an Informal Brief of Complainant, Complainant’s List of Proposed Witnesses and Exhibits, and nine proposed exhibits.  CRD Dkt. Entry Nos. 17; 17a and CTP Exs. 1-9.  CTP’s pre-hearing exchange included the written direct testimony of two proposed witnesses, James Bowling, Deputy Director, Division of Enforcement and Manufacturing, Office of

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Compliance and Enforcement, CTP, FDA, and William D. Edgar, former FDA-commissioned officer with the state of Mississippi.  CTP Exs. 1-2.

On May 8, 2024, Respondent timely filed its pre-hearing exchange consisting of its Pre-Hearing Brief of Respondent but did not include a list of witnesses or exhibits.  CRD Dkt. Entry No. 18.  By Order dated May 28, 2024, I scheduled a pre-hearing conference (PHC) for June 20, 2024, at 2:00 PM Eastern Time.  CRD Dkt. Entry No. 21.

On June 20, 2024, I held a telephonic PHC in this case.  I explained to the parties the issues before me and the purpose and function of a hearing on the record.  Respondent’s counsel raised no objections to the admission of CTP’s proffered Exhibits Nos. 1 through 9.  Therefore, I admitted CTP’s Exhibits Nos. 1-9 into evidence.  Respondent’s counsel confirmed it did not wish to cross-examine CTP’s proposed witnesses.  I also gave the parties until July 25, 2024, to file final written briefs.

On June 25, 2024, I issued an Order summarizing the PHC and confirmed that both parties waived their rights to a hearing and agreed to proceed to a decision based on the written record.  CRD Dkt. Entry No. 23.

On July 25, 2024, CTP filed its Notice of Waiver of Final Brief and Respondent also filed its Waiver of Final Brief.  CRD Dkt. Entry No. 24, 25, respectively.  The administrative record is now complete and closed, 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 the allegations in the complaint are true, and, if so, whether Respondent’s actions identified in the complaint violated the law;
2. Whether any affirmative defenses are meritorious; and
3. 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.  21 C.F.R. § 17.45.

III. Analysis and Findings

To prevail, CTP has the burden of proving the Respondent’s liability and the appropriateness of any civil money penalty, whereas the Respondent has the burden of proving any affirmative defenses and mitigating factors.  21 CFR § 17.33(b)-(c).  As the presiding officer, I do not have the authority to find Federal Statues or regulations invalid.  21 C.F.R. § 17.19(c).

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CTP has determined to impose a civil money penalty against Respondent pursuant to the authority conferred by the Act and implementing regulations at Part 21 of the Code of Federal Regulations.  The Act prohibits the receipt in interstate commerce of any tobacco product that is adulterated or misbranded and the delivery or proffered delivery of any tobacco product that is adulterated or misbranded for pay or otherwise.  21 U.S.C. § 331(c); see also 21 U.S.C. § 321(b).  Premarket authorization from the FDA is required for all “new tobacco products.”  21 U.S.C. § 387j(a)(2)(A).

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).  A “new tobacco product” is required to have premarket review with a Marketing Granted Order (MGO) unless it has a substantial equivalence or substantial equivalence exemption order (found-exempt order) in effect for such product.  21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A).  A new tobacco product is adulterated if it has not obtained the required premarket authorization.  21 U.S.C. § 387b(6)(A).  A new tobacco product for which a “notice or other information respecting it was not provided as required” under the substantial equivalence or substantial equivalence pathway is misbranded.  21 U.S.C. § 387c(a)(6).

CTP’s case against Respondent rests on the written direct testimony of James Bowling (Bowling), Deputy Director, Division of Enforcement and Manufacturing, Office of Compliance and Enforcement, CTP, FDA, and William D. Edgar (Edgar), former FDA-commissioned officer with the state of Mississippi.  CTP Exs. 1-2.  Edgar testified that during the inspection at Respondent’s establishment on August 14, 2023, at approximately 12:21 PM, Elfbar Rainbow Candy Electronic Nicotine Delivery System ENDS products were available for sale.  CTP. Ex. at 2, ¶¶ 5-7.  Bowling testified that the Elfbar Rainbow Candy ENDS product observed during the August 14, 2023, inspection was manufactured in China, which is outside of the state in which Respondent operates. CTP Ex. 1 at 3, ¶ 7.  Bowling further testified that he:

can confirm that the Elfbar Rainbow Candy ENDS product is a new tobacco product because it was not commercially marketed in the United States as of February 15, 2007 . . . that on August 14, 2023, the day on which FDA observed the Elfbar Rainbow Candy ENDS product being offered for sale at Valero / Lincoln Express Mart, there was no record of this product having an authorized FDA premarket authorization order in effect under 21 U.S.C. § 387jI(1)(A)(i) . . . there was no record of this product having a substantial equivalence order in effect under 21 U.S.C. § 387j(a)(2)(A)(i), and a report requesting a substantial equivalence order under 21 U.S.C. § 387e(j) had not been requested for the product . . . the Elfbar Rainbow Candy ENDS product did not have a found-exempt order in effect under 21 U.S.C. § 387e(j)(3)(A) (SE pathway under 21 U.S.C. § 387j(a)(2)(A)(ii)), and that an abbreviated

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report requesting a found-exempt order for such product under 21 U.S.C. § 387e(j)(1) had not been submitted.

CTP Ex. 1 at 4, ¶¶ 12-14.

Thus, the Elfbar Rainbow Candy ENDS product offered for sale at Respondent’s establishment on August 14, 2023, was manufactured in China and therefore had previously traveled in interstate commerce before the Respondent’s receipt and delivery or proffered delivery of such tobacco products for pay or otherwise.  See 21 U.S.C. § 331(c); see also United States v. Sullivan, 332 U.S. 689, 696 (1948), 92 L. Ed. 297, 303 (holding that the Act applies “to articles from the moment of their introduction into interstate commerce all the way to the moment of their delivery to the ultimate consumer”).

Paragraphs 14 and 15 of CTP’s complaint state:

14. Respondent’s establishment receives tobacco products in interstate commerce, including an Elfbar Rainbow Candy ENDS product (hereinafter "Respondent's ENDS product"), and delivers or proffers delivery of such tobacco product for pay or otherwise.

15. On August 14, 2023, an FDA-commissioned inspector conducted an inspection of Valero / Lincoln Express Mart. During this inspection, the inspector observed an Elfbar Rainbow Candy ENDS product for sale at Respondent’s establishment.

CRD Dkt. Entry No. 1, at 3-4 ¶¶ 14-15.

In its Answer, “Respondent neither admits nor denies the allegations contained in Paragraph No. 14. of the Complainant’s Petition.”  CRD Dkt. Entry No. 6, at 3 ¶ 14. Respondent further states that it “lacks knowledge to admit or deny the allegations contained in Paragraph No. 15. of the Complainant’s Petition.”  Id. ¶ 15.  Pursuant to 21 C.F.R. § 17.9(b)(1), “. . . allegations not specifically denied in an answer are deemed admitted.”  21 C.F.R. § 17.9(b)(1).

As a defense, Respondent asserts “[t]hat there exists no evidence that Respondent has ever sold the described “ENDS” product, but only that it was found in the store shelves.” CRD Dkt. Entry No. 6, at 4.  However, pursuant to 21 U.S.C. § 331(c), 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) (emphasis added).

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Respondent also asserts as a defense “[t]hat the owner of the business is an Indian immigrant, a member of a minority class, and he may have been discriminated against due to his minority race and heritage in the choice of which store to prosecute.”  CRD Dkt. Entry No. 6, at 4.  However, Respondent submitted no evidence to substantiate its claim that CTP’s enforcement action against Respondent may have been discriminatory based on Respondent’s race or ethnic heritage.  Thus, I find the defenses asserted by Respondent to be unpersuasive and without merit.

In Respondent’s Pre-Hearing Brief, Respondent admits that it received tobacco products in interstate commerce, including an Elfbar Rainbow Candy ENDS product, and delivered or proffered delivery of such tobacco product for pay or otherwise on August 14, 2024.  CRD Dkt. Entry No. 18, at 4-5 ¶¶ 4-5.  In its Pre-Hearing Brief, Respondent further admits that the Elfbar Rainbow Candy ENDS product is a “new tobacco product” because it was not commercially marketed in the United States as of February 15, 2007, that there is no FDA marketing authorization order in effect for this product, and that the Elfbar Rainbow Candy ENDS product has not been found to be either substantially equivalent or otherwise exempt from the premarket authorization requirement.  Id.  In its Pre-Hearing Brief, Respondent also stated that “Respondent no longer carries any of the prohibited items.”  CRD Dkt. Entry No. 18, at 4 ¶ 4.  Accordingly, I accept the Respondent’s admissions.

The testimony offered by Bowling and Edgar along with the corroborating evidence consisting of photographs of the Elfbar Rainbow Candy ENDS product and of the Elfbar Rainbow Candy ENDS product displayed on the store shelves of Respondent’s establishment is persuasive.  CRD Dkt. Entry Nos. 17b, 17c and 17f, respectively.  I find the testimony of Bowling and Edgar and the photographs provided, clearly document Respondent’s August 14, 2023, violation for receiving in interstate commerce an ENDS product that lacks the premarketing authorization required under the Federal Food, Drug, and Cosmetic Act (Act) and offering such product for sale.

IV. Civil Money Penalty

I find that Respondent violated the prohibition against receiving and offering for sale a new tobacco product that was adulterated and misbranded.  21 U.S.C. § 331(c).  On August 14, 2023, Respondent offered for sale an ENDS product that was adulterated because it lacks the required FDA marketing authorization and is not exempt from this requirement.  21 U.S.C. §§ 387j(a)(2), 387e(j)(3)(A).  Under 21 U.S.C. § 387c(a)(6), Respondent’s ENDS product is also misbranded because it has no substantially equivalent determination or found-exempt order, as required by 21 U.S.C. § 387e(j). Therefore, Respondent’s actions constitute violations of law that merit a civil money penalty.

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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 consider “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 reduced penalty of $12,500 CMP is appropriate based upon the record evidence, applicable law, and aggravating and mitigating circumstances in this case.

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

Respondent received a Warning Letter on June 14, 2023, citing Respondent for offering for sale ENDS products, specifically Elfbar Gumi and Elfbar Watermelon Cantaloupe Honeydew ENDS products, without a marketing authorization order on May 23, 2023. CTP Ex. 7.  The Warning Letter also notified Respondent that future violations may lead to enforcement action, including, but not limited to, civil money penalties, seizure, and/or injunction by FDA and advised Respondent that “[t]he violation indicated in this letter may not be a complete list of violations at the establishment.”  CTP Ex. 7 at 3.

In Respondent’s Pre-Hearing Brief, Respondent argues that they “no longer carr[y] any prohibited items” and “only recently began in this industry, and was unaware and misunderstood which products were not allowed, and quickly moved to distance himself from these products.”  CRD Dkt. Entry No. 18, at 6.

Nonetheless, after receiving this warning that Respondent was in violation of federal law, it continued to sell other “new tobacco products” without a marketing authorization order.  The inability of Respondent to comply with federal tobacco law after being warned of its violations is serious in nature and demands a proportional civil money penalty.  Id.

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

In Respondent’s Answer, it asserts that “Respondent is a new business owner, having operated said business for less than two years, and accordingly has very little money and experience operating in his new field as a business owner.”  CRD Dkt. Entry No. 6, at 4. Respondent further asserts that “the gas station owned by Respondent is in a poorer section of town where a penalty of over nineteen thousand dollars would not be earned by said store for a long period of time, and instead would necessitate the ending of a business in a needed area.”  Id.  Included in the record is Respondent’s Citizens Bank Activity Summary statement for transactions during the period of October 23, 2023, to November 22, 2023. CTP. Ex. 9.  The summary indicates that on November 22, 2023,

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Respondent’s account contained a balance as low as $7,362.47 and on November 10, 2023, had a balance as high as $25,174.42.  Id.   Thus, I find that that a maximum civil penalty of $19,192 is more than half of the financial resources available to Respondent in a one-month banking period demonstrating some inability to pay the maximum civil money penalty of $19,192 as proposed by CTP, and that paying the proposed civil money penalty would affect Respondent’s ability to do business.

C. 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, however, Respondent did receive a Warning Letter dated June 13, 2023, advising that it was in violation of federal law for selling a new tobacco product without marketing authorization. CRD Dkt. Entry No. 17h.  Therefore, I find that although Respondent was on notice of the need for a premarket authorization for its products and the possibility of future compliance inspections, this is its first violation that CTP has brought and proposed a civil money penalty.

D. Degree of Culpability

As previously discussed, Respondent admitted the allegations and has not offered any affirmative defenses.  As a mitigating circumstance Respondent explained it was new to the industry and that once they realized and fully understood the violations, they removed all unauthorized products from its shelves. I considered that Respondent, in its Pre-Hearing Brief stated that “Respondent no longer carries any of the prohibited items.” CRD Dkt. Entry No. 18, at 4 ¶ 4.  I also considered that Respondent received a warning about the violation prior to this action.  Thus, I find that Respondent intentionally received in interstate commerce and offered for sale an ENDS product that lacks the premarketing authorization required under the Act, as alleged in the Complaint but that it also took corrective action once it fully understood the need to comply with the law.

V. Conclusion

For these reasons, I impose a civil money penalty against Respondent, Pooja 1, LLC d/b/a Valero / Lincoln Express Mart in the amount of $12,500 for receiving in interstate commerce an ENDS product that lacks the premarketing authorization required under the Act and offering such product for sale.  Pursuant to 21 C.F.R. §§ 17.11(b), 17.45(d), this decision becomes final and binding upon both parties after 30 days of the date of its issuance.