F and S Investment of Triad, Inc. d/b/a The Vape Emporium, DAB TB8629 (2024)

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks a $19,192 civil money penalty (CMP) against Respondent, F and S Investment of Triad, Inc. d/b/a The Vape Emporium, at 803 West Gate City Boulevard, Suite A, Greensboro, North Carolina 27403. Specifically, CTP alleges that Respondent The Vape Emporium 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 CMP in the amount of $9,596 is appropriate.

I. Background and Procedural History

CTP began this matter by serving an administrative complaint on Respondent at 803 West Gate City Boulevard, Suite A, Greensboro, North Carolina 27403, by United States Postal Service Certified Mail, and by filing a copy of the complaint with the FDA’s

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Division of Dockets Management. Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 1, 1b. On November 27, 2023, Respondent timely filed its Answer denying the allegations, raising defenses, and disputing the amount of the CMP. CRD Dkt. Entry Nos. 3, 3a.1

On November 29, 2023, I issued an Acknowledgment and Pre-Hearing Order (APHO) establishing deadlines for discovery and the parties’ pre-hearing exchanges. CRD Dkt. Entry No. 4. On January 2, 2024, CTP filed a Joint Status Report stating that the parties were unable to reach a settlement. CRD Dkt. Entry No. 5.

On February 13, 2024, CTP filed a Motion to Compel Discovery, stating that Respondent had not responded to CTP’s Request for Production of Documents (RFP). CRD Dkt. Entry No. 6. CTP also requested that the deadlines for filing pre-hearing exchanges be extended by thirty days. CRD Dkt. Entry No. 7.

On February 14, 2024, I issued an Order advising Respondent that it had until February 23, 2024, to respond to CTP’s motion to compel. CRD Dkt. Entry No. 9 at 1. I also granted CTP’s motion to extend deadlines, giving CTP until March 21, 2024, and Respondent until April 11, 2024, to file their pre-hearing exchanges. Id. at 2. Respondent did not file a response to CTP’s motion to compel.

On March 21, 2024, CTP timely filed its pre-hearing exchange, consisting of a brief (CTP Br.), a list of proposed witnesses and exhibits, and eight proposed exhibits (CTP Exhibits (Exs.) 1-8). CRD Dkt. Entry Nos. 11, 11a-i, 12. The exhibits included the written direct testimony of two proposed witnesses: James Bowling, Deputy Director, Division of Enforcement and Manufacturing, Office of Compliance and Enforcement, CTP, FDA (CTP Ex. 1), and Inspector Jazmyne Satterfield (CTP Ex. 2). CRD Dkt. Entry Nos. 11a, 11b. Respondent did not file a pre-hearing exchange.

On May 20, 2024, I held a telephonic pre-hearing conference (PHC) with both parties present. See CRD Dkt. Entry No. 17 (Order Following PHC). At the PHC, I confirmed that CTP’s motion to compel remained outstanding. Id. at 2. Respondent admitted it had not responded to CTP’s RFP or produced any documents, but stated it spoke to CTP in February 2024 and was under the impression no additional documents were needed. Id. Respondent further stated it no longer owned the business and could produce documents showing the underlying corporate entity had been dissolved. Id. I stated that I intended to grant CTP’s motion to compel in my order following the PHC. Id.

During the PHC, I explained the issues in this case and the parties’ respective burdens of proof. Id. at 1. I also explained that CTP timely filed its pre-hearing exchange and asked Respondent if it objected to the admission of CTP’s proposed exhibits into the record. Id.

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Respondent requested additional time to review CTP’s proposed exhibits, which I said I would grant. Id. at 1-2. I then discussed the purpose of a hearing and asked the parties if a hearing was necessary in this case. Id. at 1. Respondent stated it did not wish to cross- examine CTP’s proposed witnesses. Id. Therefore, I advised the parties that no hearing would be held and I would decide the case based on the administrative record. Id. I stated that the parties would have an opportunity to file final briefs before I made my decision. Id. at 2.

On May 21, 2024, I issued an order outlining the issues and deadlines discussed at the PHC. CRD Dkt. Entry No. 17. Specifically, as discussed at the PHC, I granted CTP’s motion to compel and ordered Respondent to produce all documents responsive to CTP’s RFP by May 28, 2024. Id. at 2. I also instructed Respondent to file any written objections to CTP’s proposed exhibits by May 28, 2024. Id. I directed CTP to file a Status Report by June 4, 2024, advising whether it received sufficient discovery from Respondent and, if so, whether it intended to proceed with this case given Respondent’s statements that the business was no longer operational. Id. Finally, I indicated that if the discovery issues were resolved by June 4, 2024, and CTP intended to move forward with the case, then the deadline for final briefs would be July 8, 2024. Id.

On May 24, 2024, Respondent filed a document captioned “Document Request Response,” which contained written statements and arguments regarding the current state of Respondent’s business and the inspections conducted by CTP. CRD Dkt. Entry No. 19. Respondent also separately filed several documents, including Articles of Dissolution filed with the state of North Carolina, showing Respondent’s underlying corporate entity was dissolved on December 29, 2023, and a copy of Respondent’s 2022 corporate tax returns, showing an ordinary business income loss of $19,306. CRD Dkt. Entry Nos. 18, 19. On May 28, 2024, Respondent also filed a narrative summary of its “training protocol” regarding the sale of tobacco products. CRD Dkt. Entry No. 20. CTP did not file any response to these filings.

On May 31, 2024, CTP filed a Status Report stating that CTP had received sufficient discovery from Respondent. CRD Dkt. Entry No. 21. CTP also indicated that, after reviewing the discovery responses, it intended to move forward with the case. Id.

On June 3, 2024, I issued an order confirming the final briefing deadline of July 8, 2024. CRD Dkt. Entry No. 22 at 2. Further, as Respondent filed no written objections to CTP’s proposed exhibits, I admitted CTP’s proposed exhibits 1-8 into the record. Id. at 1. I indicated that once the final briefing deadline passed, I would issue a final decision based on the full administrative record, including exhibits and all papers and requests filed in this proceeding. Id. at 2.

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Neither party submitted additional briefs prior to the final briefing deadline. Therefore, the administrative record is now closed and this case is ready for a decision based on the written record. 21 C.F.R. § 17.41; 21 C.F.R. § 17.45(c); 21 C.F.R. § 17.19(b)(11), (17).

II. Evidence

1. CTP’s Exhibits 1-8 have been admitted into the administrative record.

On March 21, 2024, CTP submitted eight proposed exhibits (CTP Exs. 1-8). CRD Dkt. Entry Nos. 11a-i. The proposed exhibits were admitted into the administrative record without objection on June 3, 2024. CRD Dkt. Entry No. 22 at 1.

2. Respondent’s May 24, 2024, submissions are admitted into the administrative record.

I admit Respondent’s May 24, 2024, submissions into the administrative record.2 Respondent did not submit a pre-hearing exchange in this case, but its May 24, 2024, filings include various statements, arguments, and supporting evidence that are relevant to this case. CRD Dkt. Entry Nos. 18, 19. I consider Respondent’s written statements and arguments in the “Document Requests Response” document (CRD Dkt. Entry No. 19) to be Respondent’s final brief because the document reiterates and expands on contentions previously made in these proceedings and was filed prior to the final briefing deadline.

On the other hand, the supporting evidence Respondent submitted on May 24, 2024, is new evidence that goes to Respondent’s position regarding its ability to pay the CMP. CRD Dkt. Entry No. 18. The evidence is relevant and material. See 21 C.F.R. § 17.39. More specifically, Respondent submitted Articles of Dissolution showing Respondent’s business was dissolved in December 2023. CRD Dkt. Entry No. 18 at 1. Respondent also submitted its 2022 corporate tax returns showing the business incurred substantial losses in the year prior to the violation. Id. at 2-7. I recognize that Respondent did not provide this evidence at any previous point in these proceedings and CTP did not have the opportunity to address this specific evidence in its pre-hearing brief. However, CTP

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did not respond or object to Respondent’s May 24, 2024, submissions, nor did CTP request leave to amend its pre-hearing brief or file a final brief to address the submissions. CTP, represented by counsel, is aware that the regulations require me to exclude evidence that is untimely if a party objects and I determine exclusion is warranted. See 21 C.F.R. § 17.25(b)(1).

In making this determination, I have considered the history of this case, especially the Respondent’s self-represented status and unfamiliarity with the administrative hearing process. See, e.g., CRD Dkt. Entry No. 17 at 1 (memorializing Respondent’s confusion at the PHC over the discovery process). Based on these factors, I find the ends of justice will be served by allowing Respondent’s submissions into the record. See 21 C.F.R. § 17.39(a); see also 21 C.F.R. § 17.19(b)(17). Therefore, I will consider the statements and arguments made in Respondent’s May 24, 2024, written submission (CRD Dkt. No. 19) and I admit Respondent’s supporting documents (CRD Dkt. Entry No. 18) into the administrative record as Respondent (R.) Ex. 1.

III. Issues

1. Whether Respondent received in interstate commerce ENDS products that lack the premarketing authorization required under the Act, specifically an EB Design Strawberry Pina Colada ENDS product, and offered such products for sale on August 28, 2023, in violation of 21 U.S.C. § 331(c); and, if so,
2. Whether the $19,192 CMP is appropriate, considering any mitigating or aggravating factors that I find in this case. 21 C.F.R. § 17.45.

IV. Findings of Fact and Conclusions of Law

1. CTP has demonstrated by a preponderance of the evidence that Respondent received adulterated and misbranded ENDS products in interstate commerce and delivered or offered those products for sale in violation of the Act.

CTP seeks to impose a CMP against Respondent pursuant to the authority conferred by the Act and implementing regulations at Part 21 of the Code of Federal Regulations. The burden is on CTP to prove Respondent’s liability and the appropriateness of the penalty by a preponderance of the evidence. 21 C.F.R. § 17.33(b). The burden is on Respondent to prove any affirmative defenses or mitigating factors by a preponderance of the evidence. 21 C.F.R. § 17.33(c).

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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 relies on the written direct testimony of James Bowling, Deputy Director, Division of Enforcement and Manufacturing, Office of Compliance and Enforcement, CTP, FDA, and Inspector Jazmyne Satterfield, FDA-commissioned officer with the state of North Carolina. CTP Exs. 1-2. Inspector Satterfield testified that during the inspection on August 28, 2023, at approximately 12:15 PM, Inspector Satterfield observed an EB Design Strawberry Pina Colada ENDS product available for sale at Respondent’s establishment. CTP Ex. 2 at 2, ¶ 6; see also CTP Exs. 3-6 (Inspector Satterfield’s narrative report, inspection results, photographs and notice of inspection dated August 28, 2023).

Deputy Director Bowling testified that the EB Design Strawberry Pina Colada ENDS product observed during the August 28, 2023, inspection was manufactured in China, which is outside the state in which Respondent operates. CTP Ex. 1 at 3, ¶ 7. Deputy Director Bowling further testified that EB Design Strawberry Pina Colada ENDS products were not commercially marketed in the United States as of February 15, 2007, and that on August 28, 2023, there were no records of these products having an authorized FDA premarket authorization order in effect under 21 U.S.C. § 387j(1)(A)(i). Id. at 4, ¶¶ 12-13. Finally, Deputy Director Bowling testified that there was no record of these products having a substantial equivalence order in effect under 21 U.S.C. § 387j(a)(2)(A)(i) nor had a report requesting a substantial equivalence order under 21 U.S.C. § 387e(j) been requested; and that the products did not have a found-exempt order in effect under 21 U.S.C. § 387e(j)(3)(A) nor an abbreviated report requesting a found- exempt order submitted. Id. at 4-5, ¶ 14.

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Respondent has not disputed any of the statements made by Inspector Satterfield or Deputy Director Bowling. While Respondent’s Answer denied various allegations in the complaint, it has only articulated one argument challenging liability. Specifically, Respondent states that after CTP issued a warning letter following an earlier inspection of its establishment on May 27, 2023, Respondent removed all products identified in the warning letter. See CRD Dkt. Entry No. 3 at ¶¶ 2-3 (Respondent’s Answer). Respondent claims the ENDS product at issue in this case was present during the May 27, 2023, inspection but was not one of the products listed in the warning letter. Id. In other words, Respondent does not deny that it offered the EB Design Strawberry Pina Colada ENDS product for sale on August 28, 2023, but instead claims CTP did not identify the product as being unlawful during its prior inspection and, therefore, Respondent did not know selling it constituted a violation of the Act.

I do not find Respondent’s argument persuasive as to liability. Tobacco products are highly dangerous and addictive products and, as such, are heavily regulated. 21 U.S.C. § 387 note. Retailers that choose to distribute tobacco products have the burden to assure they sell such products in compliance with the law. Moreover, while I understand Respondent may have been surprised to be penalized for selling a product not identified in the initial warning letter, CTP is not obligated to warn Respondent about every product that could potentially violate the Act prior to finding a violation. To the contrary, as a retailer selling tobacco products, it was incumbent upon Respondent to ensure it sold such products in accordance with the law. Thus, not knowing that the products were unlawful is not an affirmative defense that can relieve the Respondent of its liability.

Based on the uncontroverted testimony of Inspector Satterfield and Deputy Director Bowling, as well as the supporting evidence submitted by CTP, the ENDS product offered for sale at Respondent’s establishment on August 28, 2023, 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”). The ENDS product was adulterated because it lacked the required FDA marketing authorization and was not exempt from this requirement. 21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A). Under 21 U.S.C. § 387c(a)(6), the product was also misbranded because there was no substantially equivalent determination as required by 21 U.S.C. § 387e(j). Therefore, Respondent’s actions constitute violations of law that merit a CMP.

2. Respondent has demonstrated by a preponderance of the evidence mitigating circumstances to support a reduced CMP of $9,596.

I have determined 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).

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Pursuant to 21 U.S.C. § 333(f)(9), Respondent is liable for a CMP not to exceed the amounts listed in FDA’s CMP regulations at 21 C.F.R. § 17.2; see also 45 C.F.R. § 102.3. When determining the appropriate amount of a CMP, I am required to consider any “circumstances that mitigate or aggravate the violation” and “the factors identified in the statute under which the penalty is assessed . . . .” 21 C.F.R. § 17.34(a), (b). Specifically, I must consider “the nature, circumstances, 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).

In its Complaint, CTP requests a CMP in the amount of $19,192, which is the maximum penalty permitted under the applicable regulations. CRD Dkt. Entry No. 1, ¶ 1; 21 C.F.R. § 17.33(a); 45 C.F.R. § 102.3 (2022); 87 Fed. Reg. 15,100, 15,103 (March 17, 2022). In its Answer, Respondent contends the CMP sought by CTP is inappropriate because: (a) the initial warning letter issued by CTP did not include the product at issue in this case; (b) it removed all products identified in the warning letter; and (c) it immediately removed the product at issue in the present case after receiving the notice of violation. CRD Dkt. Entry No. 3 at 2. Respondent further claims the penalty amount is inappropriate because Respondent closed its business “due to financial hardship” shortly after the violation and the business had a negative net income when it was operational. CRD Dkt. Entry Nos. 18, 19.

For the reasons explained below, I find that Respondent has established mitigating factors by a preponderance of the evidence and conclude that a reduced CMP of $9,596 is appropriate. 21 C.F.R. §§ 17.33(a), (c); 17.34(a)-(c).

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

The Family Smoking Prevention and Tobacco Control Act was enacted for the purpose of authorizing regulation of tobacco products for the “protection of the public health.” 21 U.S.C. § 387f(d). There is no dispute that Respondent was in the business of selling a highly regulated and dangerous product. See generally 21 U.S.C. § 387 note (Findings and Purpose).

CTP argues Respondent’s violation is particularly serious because Respondent previously received a written warning letter from CTP on June 15, 2023, citing Respondent for offering for sale ENDS products that lacked the required marketing authorization. CTP Br. at 9; see also CTP Ex. 7. CTP argues that the warning letter notified Respondent that “future violations may lead to enforcement action, including, but not limited to, civil money penalties, seizure, and/or injunction by FDA.” CTP Br. at 9. CTP also notes the letter advised Respondent that “all new tobacco products on the market without the statutorily required premarket authorization are marketed unlawfully and are subject to enforcement action at FDA’s discretion.” Id. CTP further states the letter referred

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Respondent to an FDA website containing information to help tobacco retailers understand and comply with FDA tobacco laws and regulations. Id. CTP contends that by continuing to sell prohibited ENDS products after receiving the warning letter, Respondent demonstrated an “unwillingness or inability to correct the violations.” Id. at 10.

In its Answer, Respondent states that upon receiving the June 15, 2023, warning letter, it “immediately removed all items” listed in the letter. See CRD Dkt. Entry No. 3 at 2. Respondent further states, and CTP does not dispute, that the product at issue in this case was not identified in the warning letter despite being offered for sale at the time of the earlier inspection. Id. In other words, rather than disregarding the warning letter as CTP argues, Respondent contends it attempted to comply by addressing the specific violations identified in the letter.

I have reviewed the June 15, 2023, warning letter and find it was not unreasonable for Respondent to believe that removing the specific products identified in the letter was sufficient to remedy the violation. The warning letter begins by notifying Respondent that it was observed to be in violation of the federal tobacco laws and regulations and states: “[f]ailure to address this violation may result in FDA initiating regulatory or legal action, including monetary penalties.” CTP Ex. 7 at 1 (underline in original, italics for emphasis). The warning letter further states that “on May 27, 2023, the establishment offered for sale Elfbar Tropical Rainbow Blast and Elfbar Grape Energy ENDS products” and instructs the Respondent to “take prompt action to address the violation listed above.” Id. at 1, 3.

The warning letter does not clearly indicate that other products being sold by Respondent may also lack the premarket authorization. See id. While the letter generally states that the “violation indicated in [the] letter may not be a complete list of violations at the establishment,” I note that this statement is in the middle paragraphs on page 3 of 5, without underlining or other marking to highlight this statement. Id. at 3. Had this indication been more prominently placed or plainly written, I might have given more consideration to CTP’s argument that Respondent’s violations are particularly serious because they occurred despite being previously warned.

Instead, the administrative record supports Respondent’s contention that it attempted to take remedial action in response to the warning letter and was not “unwilling” to comply with the law. The photographs from the August 28, 2023, inspection do not show the products identified in the warning letter and CTP does not allege those products remained for sale on August 28, 2023, which supports Respondent’s claim that it removed them upon receipt of the warning letter. CTP Ex. 5. Therefore, despite the serious nature of the violations, I find the Respondent’s attempt to comply with law, while insufficient to relieve it of liability, is a mitigating factor that supports a reduction in the proposed CMP amount.

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

Respondent states it closed its business in December 2023 due to “financial hardship” and was operating at a financial loss prior to the violation. CRD Dkt. Entry No. 19. In support of these statements, Respondent submitted Articles of Dissolution showing the business was dissolved on December 29, 2023. R. Ex. 1 at 1. Respondent also submitted its 2022 corporate tax return showing a negative income of $19,306. Id. at 3-7.

I note that, beyond generalized statements and providing the dissolution and tax return documents, Respondent has not demonstrated a complete inability to pay a CMP or shown how much of a penalty it is able to pay based on its current financial position. In addition, Respondent only provided its 2022 tax return and did not submit documentation showing the financial state of the business at the time of the violation or its closure. I also recognize that Respondent did not notify CTP its business was dissolved until the PHC in this case and did not produce any evidence demonstrating its inability to pay until after the PHC, so CTP was unable to address these claims in its pre-hearing brief.3

Still, I find the evidence showing Respondent’s business was dissolved in December 2023, coupled with the 2022 corporate tax return, persuasive with respect to Respondent’s ability to pay the maximum penalty amount. Indeed, the documents show Respondent was operating at a substantial loss in the year prior to the violation. Further, the fact that Respondent closed the business shortly after the August 28, 2023, inspection supports Respondent’s claim that it was experiencing a significant financial hardship. Given that Respondent has already closed the business, the evidence also establishes that imposing the maximum penalty would negatively impact Respondent’s ability to continue doing business. The maximum penalty of $19,192 is a substantial sum of money, particularly for a struggling business that has ceased its operations. Accordingly, I find that a reduction in the penalty amount is warranted on this basis.

iii. History of Prior Violations

There is no indication in the record of any prior violations of section 331(c) of the Act resulting in a CMP. CTP, however, argues that Respondent “has a history of violating the Act’s requirements” based on the previously discussed June 15, 2023, warning letter. CTP Br. at 9. CTP contends the maximum penalty of $19,192 is appropriate in this case because Respondent’s repeated violations demonstrate an “unwillingness or inability” to comply with the law. Id. at 9-10.

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I agree with CTP that the warning letter demonstrates a prior violation. However, I note that the warning letter did not result in a CMP and Respondent did not have an opportunity to request a hearing or fully respond to that violation. I also disagree with CTP’s contentions that the prior violation demonstrates an unwillingness or inability to comply with the law. As explained previously, Respondent attempted to remedy the violations identified in the warning letter. Accordingly, I find that Respondent’s history of violations is not as significant as CTP argues and does not support CTP’s position that the maximum penalty amount is appropriate in this case.

iv. Degree of Culpability

Based on my finding that Respondent committed the violation alleged in the Complaint, I find Respondent fully culpable for offering for sale new tobacco products that were adulterated and misbranded, in violation of the Act. The Act places a heavy burden on retailers who choose to sell prohibited tobacco products because of their highly dangerous and addictive nature. See 21 U.S.C. § 387 note. Although I find that Respondent attempted to take remedial action upon receipt of the warning letter, those actions do not absolve Respondent of its responsibility as a retailer of tobacco products.

v. Other Considerations

The Act gives me discretion to consider “other matters as justice may require” to mitigate the amount of the CMP. See 21 U.S.C. § 333(f)(5)(B). In this context, separate and apart from the “ability to pay” factor, I again consider the evidence showing Respondent’s business was dissolved in December 2023. R. Ex. 1 at 1. Given that Respondent’s business is no longer operating, I find that imposing the maximum penalty would place a significant financial strain personally on Respondent. I also find that the dissolution of Respondent’s business mitigates concerns CTP may have regarding Respondent’s likelihood to commit future violations.

In addition, I consider that CTP is seeking the maximum penalty permitted under the regulations. See 45 C.F.R. § 102.3 (2022); 87 Fed. Reg. 15,100, 15,103 (March 17, 2022). While CTP is within its discretion to determine which penalty amount to request in any given case, I find that justice requires me to consider the full range of available penalties in light of the specific facts and circumstances of each case when determining whether the proposed penalty is appropriate. The purpose of the CMP provision is to promote compliance and deter future violations by penalizing retailers for non- compliance. To accomplish these objectives, a CMP should be significant, but not overly punitive.

Here, Respondent is a small-scale retailer with no history of prior violations resulting in a CMP. Respondent did not manufacture the ENDS product at issue in this case. Further, as explained above, Respondent made attempts, albeit unsuccessfully, to comply with the

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law by addressing the violations identified in CTP’s initial warning letter. Additionally, since Respondent has dissolved its business and is no longer operating, Respondent’s likelihood of committing future violations is low. Based on these factors, I find that imposing the maximum penalty amount would be overly punitive and would not serve the interests of justice.

I acknowledge that the reduced penalty is not insubstantial and still places a heavy financial burden on Respondent. However, I find that a significant penalty is appropriate to ensure justice is served and to promote compliance with the Act and tobacco regulations.

In sum, after considering the record evidence, applicable law, and aggravating and mitigating circumstances in this case, I find that a fifty percent reduction in the proposed penalty amount is warranted. Therefore, I find a reduced penalty of $9,596 is appropriate under 21 U.S.C. §§ 333(f)(5)(B), (f)(5)(C), and (f)(9).

VI. Conclusion

For these reasons, I impose a CMP against Respondent F and S Investment of Triad, Inc. d/b/a The Vape Emporium in the amount of $9,596 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.