Imperial Amoco Inc. d/b/a Marathon / Food Center, DAB TB8702 (2024)

INITIAL DECISION

On September 27, 2023, the Center for Tobacco Products (CTP) served a Complaint on Imperial Amoco Inc. d/b/a Marathon / Food Center (Respondent), at 3230 West Pipkin Road, Lakeland, Florida 33811, 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 receiving in interstate commerce electronic nicotine delivery system (ENDS) products that lack the premarketing authorization required under the Federal Food, Drug, and Cosmetic Act (Act) and offering such products for sale, in violation of 21 U.S.C. § 331(c). 

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 that CTP did not establish, by a preponderance of the evidence, that Respondent violated the provisions of 21 U.S.C. § 331(c) and, for that reason, no CMP is appropriate.

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I.     Background and Procedural History

Respondent does business under the name of Marathon / Food Center located at 3230 West Pipkin Road, Lakeland, Florida 33811.  Complaint at 3, ¶13.

On June 15, 2023, CTP issued a Warning Letter to Respondent stating that “[t]he establishment offered for sale tobacco products that are required to have, but lack, premarket authorization.  Specifically, on May 30, 2023, the establishment offered for sale an Elfbar Malysian Mango ENDS product.” CTP Exhibit (Ex.) 7 at 1. 

On August 15, 2023, at approximately 7:13 PM, FDA-Commissioned Officer Deja Sparkman inspected Respondent’s business. CTP Ex. 2 at 2, ¶ 4.  During the inspection, Inspector Sparkman observed “that the establishment had a display that contained tobacco products, including an Elfbar Sour Candy ENDS product, available for sale.”  Id. at 2, ¶ 7. 

On September 27, 2023, CTP served the Complaint on Respondent at 3230 West Pipkin Road, Lakeland, Florida 33811, by United Parcel Service, as provided in 21 C.F.R. §§ 17.5 and 17.7.  Civil Remedies Division (CRD) Docket (Dkt) Entry No. 1b (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 October 12, 2023, Respondent timely filed an Answer via the DAB’s Electronic Filing System (E-File).  In its Answer, Respondent admitted that its establishment is located at 3230 West Pipkin Road, Lakeland, Florida 33811, and that it received tobacco products in interstate commerce.  CRD Dkt. Entry No. 3a (Answer).  However, Respondent denied all other allegations.  Id.

On October 17, 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.

On October 22, 2023, Respondent filed the Pre-hearing Brief of Respondent (R. PH Br.).  Subsequently, on December 4, 2023, Respondent also filed a response to CTP’s request for production of documents, and an affidavit of its witness, Ibrahim Youssef.  CRD Dkt. Entry Nos. 7, 7a.  On December 7, 2023, Respondent also filed an IRS Form 1120-S, 2020 U.S. Income Tax Return for an S Corporation.  CRD Dkt. Entry No. 8.  On January 8, 2024, CTP filed a pre-hearing exchange consisting of an Informal Brief of Complainant (CTP PH Br.), Complainant’s List of Proposed Witnesses, and eight proposed exhibits (CTP Exs. 1-8).  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) Deja Sparkman, FDA-Commissioned officer for the State of Florida (CTP Ex. 2).

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On January 10, 2024, CTP filed Complainant’s Unopposed Motion for Leave to Amend Complainant’s Exhibits, specifically CTP Ex. 1 and CTP Ex. 2, to include the required exhibit labels.  CRD Dkt. Entry No. 10.  On January 12, 2024, I issued an order granting Complainant’s Unopposed Motion for Leave to Amend Complainant’s Exhibits.  CRD Dkt. Entry No. 11.  On that same day, CTP submitted amended CTP Ex. 1 and CTP Ex. 2.

On March 29, 2024, I held a pre-hearing conference (PHC) via Microsoft Teams-Video.  In the pre-hearing conference, the parties agreed to amend issues as to whether Respondent violated 21 U.S.C. § 331(c).  In accordance with the schedule established in my October 17, 2023 APHO, CTP moved to admit its eight proposed exhibits.  Respondent did not object to the admission of Complainant’s proposed exhibits.  Accordingly, I admitted CTP Exs. 1-8 into the record.  Respondent submitted a pre‑hearing brief, its tax return, and an affidavit of its witness.  However, I observed that these documents were not prepared or identified in accordance with the APHO.  Respondent moved to amend its exchange to be in accordance with the APHO and this was unopposed by CTP.  Respondent was also informed that it may not supplement its exchange without establishing the criteria set forth in the APHO.

Also during the PHC, Respondent requested to cross-examine CTP’s witness, Deja Sparkman.  CTP requested to cross examine the proposed witness of Respondent, with the assumption that Respondent would submit the direct written statement of that witness as a proposed exhibit.  I stipulated that once Respondent has submitted an amended exchange, CTP will be given the opportunity to object to any of the proposed exhibits.  On April 17, 2024, I issued an order following the PHC which summarized the issues addressed in the PHC and gave both parties an opportunity to discuss a date for a hearing.  Order Following PHC at 1-2.  After the conclusion of the PHC, both parties agreed, via email sent to the Attorney‑Advisor working with me, that they were available for a hearing on May 30, 2024, at 10:30 AM EST. 

On April 18, 2024, Respondent submitted an amended affidavit of its witness, Ibrahim Youssef.  CRD Dkt. Entry No. 17.  However, the affidavit was still submitted incorrectly as it was identified as “Defendant’s Exhibit.” 

On May 30, 2024, at 10:30 AM EST, I conducted a hearing.  At the outset of the hearing, I addressed Respondent’s amended affidavit.  I gave Respondent an opportunity to resubmit the affidavit in the correct format.  Transcript (Tr.) at 1-2.  Respondent then moved to resubmit the affidavit and CTP did not object.  Id. at 2.  During the hearing, Respondent cross-examined CTP’s witness, Deja Sparkman.  CTP also cross-examined Respondent’s witnesses, Ibrahim Youssef.

After the hearing, on May 31, 2024, Respondent resubmitted its affidavit of Ibrahim Youssef.  CRD Dkt. Entry No. 20.

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On July 2, 2024, the hearing transcript was uploaded to the DAB E-file system for both parties to access.  CRD Dkt. Entry No. 21.  On the same date, I issued a Final Briefing Order which gave both parties until August 2, 2024, to file post-hearing briefs.  CRD Dkt. Entry No. 22.  I also admitted Respondent’s Ex. 1 (Affidavit of Ibrahim Youssef) into the record.  The parties were given until August 2, 2024, to submit any corrections to the transcript. 

On August 2, 2024, Respondent filed a notice indicating its desire to rest on the pleadings submitted.  CRD Dkt. Entry No. 23.  On the same date, CTP submitted a notice indicating its waiver of a final brief.  CRD Dkt. Entry No. 24.  

Accordingly, the record is now closed, and I will decide this case based on the evidence in the administrative record. 21 C.F.R. §§ 17.41, 17.45(c); see also id. §§ 17.19(b)(11), (17).

II.     Issues

A. Whether Respondent received in interstate commerce an ENDS product that lacks the premarketing authorization required under the Act, specifically an Elfbar Sour Candy ENDS product, and offered such product for sale on August 15, 2023, in violation of 21 U.S.C. § 331(c); and, if so

B. Whether the $19,192 civil money penalty is appropriate, considering any mitigating or aggravating factors that I find in this case.  21 C.F.R. § 17.45.

III.     Applicable Law

The FDA has the authority to seek civil money penalties from any person who violates any Act requirement that relates to tobacco products.  21 U.S.C. § 333(f)(9)(A).  The term “person” is defined to include individuals, partnerships, corporations, and associations.  21 U.S.C. § 321(e).  Any person who violates a requirement of the Act that relates to tobacco products may incur a CMP up to the maximum amounts provided for by law, which, at the time of the violation, was $19,192 for each such violation, and not to exceed $1,279,448 for all violations adjudicated in a single proceeding.  21 U.S.C. § 333(f)(9)(A); 21 C.F.R. § 17.2; 45 C.F.R. § 102.3 (2022); 87 Fed. Reg. 15,100, 15,104 (March 17, 2022).

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.  CTP has the burden to prove the Respondent’s liability and the appropriateness of the penalty by a preponderance of the evidence.  21 C.F.R. § 17.33(b).

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IV.     Analysis

1. CTP has not demonstrated by a preponderance of the evidence that the Respondent received adulterated and misbranded ENDS products in interstate commerce and delivered or proffered those products for sale on August 15, 2023, in violation of the Act.

CTP alleges that Respondent violated section 331(c) of the Act by holding for sale a new tobacco product that lacked premarket review or marketing granted order. Complaint, ¶¶ 16-18.  Specifically, CTP alleged that Respondent received an adulterated and misbranded ENDs product, in the form of an Elfbar Sour Candy ENDS product, in interstate commerce and delivered or proffered delivery thereof for pay or otherwise, in violation of 21 U.S.C. § 331(c).  Complaint, ¶¶ 13, 19.

Respondent does not specifically deny the statements made by Senior Regulatory Counsel Loretta Chi in her declaration that the Elfbar Sour Candy ENDS product was a “new” tobacco product, which had traveled in interstate commerce, and did not have a premarket review, Marketing Granted Order (MGO), a substantial equivalence order or a found exempt order.  CTP Ex. 1.  Instead, it argues that it did not “offer for sale” any new tobacco product.

As support for the allegation in the Complaint that the Elfbar Sour Candy ENDS product was held for sale by Respondent, CTP offers the statements of Inspector Sparkman, who conducted the inspection of Respondent’s establishment on August 15, 2023.  It alleges that “during the August 15, 2023 inspection, Inspector Sparkman observed that the establishment had an ENDS product, specifically an Elfbar Sour Candy ENDS product, available for sale in the establishment.”  CTP PH Br. at 4.  It cites the Declaration of Inspector Sparkman, who stated therein that “[d]uring the inspection, I observed that the establishment had a display that contained tobacco products, including an Elfbar Sour Candy ENDS product, available for sale.”  See August 2023 Photographs of Elfbar Sour Candy ENDS product, CTP Ex. 6; CTP Ex. 2 at 2. 

CTP Ex. 6 does contain photographs of Elfbar products.  However, those photographs do not fully corroborate the allegations of CTP and are inconsistent with the testimony of Inspector Sparkman on the relevant issue here.  At the hearing, Inspector Sparkman testified that “[w]hen I walked into the store, I observed that there was an Elfbar on the shelf.”  Tr. at 9.  When questioned about this observation by Respondent’s counsel at the hearing, she affirmed that “[t]here were other tobacco products on the shelf, but there was one Elfbar.”  Id.  When asked by counsel “[o]ther than this one Elfbar box, did you find any others on the premises?” and she responded “No.”  Id. at 12.

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The photographs in CTP Ex. 6 do not corroborate this testimony.  The only photograph of an Elfbar product “on the shelf” indicates that the product was not an Elfbar Sour Candy ENDS product, as alleged in the Complaint.  Instead, the Elfbar product photographed “on the shelf” is labeled “Mandarin Lime.”  CTP Ex. 6 at 1.  CTP Ex. 6 also contains a photograph of an Elfbar Sour Candy ENDS product, but this photograph does not definitively confirm that this product was found on a shelf.  CTP Ex. 6 at 6.

The obvious problems here are that the inspector testified that she observed an Elfbar Sour Candy ENDS product “on the shelf” and she did not observe any other Elfbar products on the premises.  Tr. at 9, 11.  Yet, the product photographed “on the shelf” was not an Elfbar Sour Candy ENDS product and she reportedly photographed two different Elfbar products, after testifying and confirming that she only observed one.  Thus, I find Inspector Sparkman’s testimony to be unreliable on the issue of whether the Elfbar Sour Candy ENDS product was held for sale. 

One might argue that this would not make any difference since there was an Elfbar Sour Candy ENDS product somewhere in the establishment, even if it wasn’t actually “on the shelf,” and why else would a business have a product if not to sell it.  It is not necessary to evaluate Respondent’s argument that the product was a return and not held for sale since CTP has the burden of proof to establish that it was held for sale.  The inspector did not attempt to purchase the Elfbar Sour Candy ENDS product nor was anyone else observed making such a purchase.  There were no observations or photographs of a price tag on or near the Elfbar Sour Candy ENDS product.  There was a photograph in CTP Ex. 6 at 1 showing an Elfbar product with a posted price tag of $19.99.  However, the product in that photograph with the price tag is the Elfbar Mandarin Lime, not the Elfbar Sour Candy.  The only evidence to establish that the Elfbar Sour Candy ENDS product was “held for sale” is the inconsistent testimony and written statement from Inspector Sparkman, which I do not find reliable, given these inconsistencies.   

One might also argue that there was an Elfbar Mandarin Lime ENDS product observed on the shelf, supporting a conclusion that there was at least one Elfbar product held for sale.  The problem with this approach is that both the Complaint and the Declaration of Loretta Chi, Senior Regulatory Counsel, address only the Elfbar Sour Candy ENDS product and there has been no evidence to establish the Elfbar Mandarin Lime ENDS product was adulterated or misbranded.  Complaint ¶¶15-19, CTP Ex. 1.  

The regulations clearly state that “In order to prevail, the Center must prove respondent’s liability and the appropriateness of the penalty under the applicable statute by a preponderance of the evidence.”  21 C.F.R. § 17.33(b).  I find that CTP has not proven, by a “preponderance of the evidence” that Respondent received adulterated and misbranded ENDS products, in the form of an Elfbar Sour Candy ENDS product, in

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interstate commerce and delivered or proffered delivery thereof for pay or otherwise, in violation of 21 U.S.C. § 331(c).

Having determined that Respondent did not violate 21 U.S.C. § 331(c), no civil money penalty is appropriate.¹

Conclusion

Pursuant to 21 C.F.R. § 17.45, I find that Respondent, Imperial Amoco Inc. d/b/a Marathon/Food Center, did not violate 21 U.S.C. § 331(c) and no civil money penalty is appropriate.  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  Having reached this conclusion, it is not necessary to ponder the appropriateness of a $19,192 CMP for a violation involving one, or perhaps two, products lacking premarket authorization.