Mulberry Food and Pharmacy LLC d/b/a Mulberry Food Mart and Pharmacy, DAB TB8873 (2025)

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks a $19,192 civil money penalty against Mulberry Food and Pharmacy LLC d/b/a Mulberry Food Mart and Pharmacy (Respondent or Mulberry Food Mart and Pharmacy), for violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq. Specifically, 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 Act. For the reasons discussed below, I find Respondent violated the Act as alleged by CTP and that a reduced CMP of $9,596 is appropriate.

I. Background and Procedural History

CTP began this case by serving an administrative complaint (Complaint) on Respondent Mulberry Food Mart and Pharmacy, at its establishment located at 806 North Church Avenue, Mulberry, Florida 33860, by United Parcel Service, and by filing a copy of the

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complaint with the Food and Drug Administration’s (FDA’s) Division of Dockets Management. Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 1, 1b.

On December 20, 2023, Respondent filed a timely Answer to CTP’s Complaint. CRD Dkt. Entry Nos. 3, 41 (Answer). On January 5, 2024, I issued an Acknowledgement and Pre-Hearing Order (APHO) in which I established, among other things, deadlines for discovery and the parties’ pre-hearing exchanges. CRD Dkt. Entry No. 6.

On February 5, 2024, CTP filed a Joint Status Report stating that “the parties intend to engage in further settlement discussions.” CRD Dkt. Entry No. 7.

CTP timely filed its pre-hearing exchange, which consisted of a pre-hearing brief (CTP’s Br.), a list of proposed witnesses and exhibits, and seven proposed exhibits (CTP Exs. 1- 7), including 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 FDA-commissioned Inspector Deja Sparkman (CTP Ex. 2). CRD Dkt. Entry Nos. 8, 9, 9a-9g. Derek Usman, counsel for Respondent, did not submit an informal brief or any evidence, including the written direct testimony of any witnesses.

On June 5, 2024, I held a telephone pre-hearing conference (PHC) in this case. See CRD Dkt. Entry No. 14 (Order Following Pre-Hearing Conference). During the pre-hearing conference, we discussed the procedural history of the case and the issues before me. We also discussed the parties’ exchange and witnesses, and the availability of the witnesses. I explained that the purpose of a formal hearing is to allow for the cross examination of the other parties’ witnesses. CTP submitted sworn testimony from its witnesses, Deputy Division Director Bowling, and Inspector Sparkman, as well as a pre-hearing brief, and proposed exhibits CTP Ex. 1 through CTP Ex. 7. Id. at 1. On questioning, Mr. Usman further stated that there were no objections to the proposed exhibits filed by CTP. Therefore, I admitted into evidence CTP Exhibits 1 through 7. Id. at 1-2. Further, during the PHC, Respondent’s counsel advised of his intent to cross-examine only Inspector Sparkman at the hearing. Id. at 1-2.

I noted the absence of Respondent’s pre-hearing submission from the record. Respondent’s counsel affirmed that there were no exhibits or witnesses to be presented by Respondent at a hearing. Id. at 2. Counsel informed me that, due to an error in interpreting the APHO directives as they related to the discovery process, the documentation provided to CTP in response to its request for production of documents was not filed as a part of the pre-hearing exchange. See id. at 2. Respondent then

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requested to untimely submit two documents that were previously disclosed to CTP in discovery. CTP indicated it would oppose Respondent’s request; at which time I afforded Respondent an opportunity to file a motion for leave to file documents out of time (Motion for Leave). Id. I gave Respondent until June 10, 2024, to file a Motion for Leave, and CTP until June 25, 2024, to file any objections. Id.

Lastly, the parties were directed to confer and advise this office by June 14, 2024, of the proposed date and time for a hearing. Id. On June 14, 2024, I issued an Order scheduling a virtual hearing in this case for July 24, 2024, at 11:00 AM Eastern Time. CRD Dkt. Entry No. 17.

On June 10, 2024, Respondent’s counsel filed a Motion for Leave to Untimely File Exhibit (Motion for Leave). CRD Dkt. Entry No. 15. Specifically, counsel sought to file out of time a one-page document identified as Respondent’s proposed Exhibit 1. See id. at 1, 4. In the Motion to Leave, Respondent’s counsel asserted, in part, that the proposed exhibit was previously provided to CTP during the discovery process; however, the document was not filed with this tribunal during pre-hearing exchange. Id. at 1-2. Counsel further stated:

. . . Good cause for the untimely submission of the Exhibit exists because Respondent produced the document in its response to [CTP’s] discovery requests on March 11, 2024, . . . [g]ood cause is also present since Respondent intends to continue settlement discussion in good faith. The inclusion of the Exhibit will facilitate settlement and conserve judicial resources . . . .

Id. at 1-2.

On June 25, 2024, CTP filed a timely Response to Respondent’s Motion to File Untimely Exhibit (CTP’s Response). CRD Dkt. Entry No. 18. In the Response, CTP advised of Respondent’s production of proposed Exhibit 1 during the discovery process and, therefore did not object to Respondent’s Motion for Leave. Id. That same day, I issued an Order which granted Respondent’s Motion for Leave and admitted proposed Exhibit 1 into the administrative record as R’s Ex. 1. CRD Dkt. Entry No. 19.

On July 24, 2024, I conducted a hearing in this case. During the hearing, I admitted on the record CTP’s Exhibits 1-7, and Respondent’s Exhibit 1 into evidence. Hearing Transcript (Tr.) at 7. Respondent’s counsel conducted cross-examination of Inspector Sparkman. Tr. at 8-10. CTP conducted re-direct examination of Inspector Sparkman. Tr. at 10-11.

On August 15, 2024, the hearing transcript was received and uploaded to the DAB E-File system, and the parties were advised of its availability. CRD Dkt. Entry No. 20. On

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August 16, 2024, I issued an Order setting deadlines for the parties’ simultaneous post- hearing brief submissions. I also gave the parties until September 16, 2024, to file any corrections to the transcript. CRD Dkt. Entry No. 21.

On October 15, 2024, CTP filed a Consent Motion to Extend Deadlines for post-hearing briefs by two days, noting an unexpected leave of absence. CRD Dkt. Entry No. 22. On October 16, 2024, I issued an Order Granting Request for Extension of Time, giving the parties until October 18, 2024, to file their respective post-hearing briefs. CRD Dkt. Entry No. 24. That same day, Respondent submitted its post-hearing brief (R’s Post- Hearing Br.). CRD Dkt. Entry No. 23. Subsequently, on October 18, 2024, CTP filed its post-hearing brief (CTP’s Post-Hearing Br.). CRD Dkt. Entry No. 25.

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. at §§ 17.19(b)(11), (17).

Issues

• Whether Respondent violated 21 U.S.C. § 331(c), as alleged in the Complaint; and if so,
• Whether the CMP of $19,192 that CTP seeks is an appropriate amount in violation of 21 U.S.C. § 333(f)(9); and if so,
• Whether the $19,192 civil money penalty amount sought by CTP should be reduced, considering any aggravating and mitigating factors.

II. Analysis

To prevail, CTP must prove Respondent’s liability by a preponderance of the evidence. The United States Supreme Court has described the preponderance of the evidence standard as requiring that the trier-of-fact believe that the existence of a fact is more probable than not before finding in favor of the party that had the burden to persuade the judge of the fact’s existence. In re Winship, 397 U.S. 358, 371-72 (1970); Concrete Pipe and Prods. of Cal., Inc. v. Constr. Laborers, 508 U.S. 602, 622 (1993).

CTP has the burden to prove Respondent’s liability and appropriateness of the penalty by a preponderance of the evidence. 21 C.F.R. § 17.33(b). Likewise, Respondent has the burden to prove any affirmative defenses and any mitigating factors by a preponderance of the evidence. 21 C.F.R. § 17.33(c).

CTP seeks 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.

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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 thereof for pay or otherwise. 21 U.S.C. § 331(c). A tobacco product is adulterated if it has not obtained the required premarket authorization. 21 U.S.C. § 387b(6)(A). Under 21 U.S.C. § 387j(a)(2)(A), premarket authorization is required for a “new tobacco product.” 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 exempt from this premarket authorization requirement only if there is a substantial equivalence (SE) or a found exempt order (found-exempt order) in effect for such product. 21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(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 (Marketing Granted Order or MGO), substantial equivalence order, or an exemption order. 21 U.S.C. §§ 387b(6) and 387c(6).

The FDA, through CTP, has the authority to seek civil money penalties from any person who violates the Act’s requirements as they relate to the sale of tobacco products. 21 U.S.C. § 333(f)(9)(A). Retailers who violate a requirement of the Act that relates to tobacco products may incur a civil money penalty up to the maximum amounts provided for by law, $19,192 for each such violation, 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.

As detailed below, I find that based on the evidence of record, CTP’s imposed civil money penalty amount of $19,192, for Respondent’s violation on August 15, 2023, is inappropriate and should be reduced to $9,596.

1. Violation of 21 U.S.C. § 331(c)

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 ¶¶ 15, 16, 17. Specifically, CTP alleges that Respondent received adulterated and misbranded ENDS products in interstate commerce and delivered or proffered delivery thereof for pay or otherwise, in violation of section 331(c) of the Act. Complaint ¶ 19.

Initially, Respondent argued that it was not aware of a problem with the ENDS product at issue because the owner had been out ill at the time of the initial inspection and warning letter. It asserted that, had it been aware of this, it would have removed the products at issue immediately. CRD Dkt. Entry No. 3 at 6. However, in its post-hearing brief, Respondent’s counsel did not dispute the allegation of receiving in interstate commerce

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an ENDS product that lacked the premarketing authorization required under the Act and offered such product for sale. Counsel does contest the $19,192 CMP sought by CTP and presents arguments as to Respondent’s ability to pay the CMP. CRD Dkt. Entry No. 23.

In resolving the issues raised in this case, it is first necessary to establish that the Elfbar ENDS product in question was a new tobacco product that is adulterated and misbranded because it lacked FDA authorization, a substantial equivalence or found exempt order. CTP’s case against Respondent relies heavily on the testimony of Deputy Division Director James Bowling and Inspector Deja Sparkman. CTP Exs. 1, 2. According to the Declaration of Deputy Division Director Bowling, the Elfbar Peach Ice ENDS product was not commercially marked in the United States as of February 15, 2007. CTP Ex. 1 at 4 ¶ 12. Mr. Bowling further confirmed that, on August 15, 2023, the day on which the inspector observed the Elfbar Peach Ice ENDS product in Respondent’s establishment, there was no record in the FDA’s data base of an FDA marketing granted order, a substantial equivalence order, or a found-exempt order for the Elfbar Peach Ice ENDS product. Id. at 4 ¶¶ 13, 14. Finally, Mr. Bowling stated that the Elfbar Peach Ice ENDS product was manufactured in China by a company that did not have any registered production facilities in Florida. Id. at 3 ¶¶ 7, 10.

Respondent has not offered any evidence to counter the statements made by Mr. Bowling. As a result, I first find that the Elfbar Peach Ice ENDS product was a new tobacco product because it was not commercially marketed in the United States as of February 15, 2007. 21 U.S.C. § 387j(a)(1). As a “new” tobacco product, the Elfbar ENDS product in question did not have a marketing granted order or a substantial equivalence or found exempt order in effect. I further find that the Elfbar ENDS product in question traveled in interstate commerce since it traveled in “commerce between any State or Territory and any place outside thereof.” 21 U.S.C. § 321(b). With these findings, the Elfbar Peach Ice ENDS product, which was received by Respondent in interstate commerce, was adulterated and misbranded, pursuant to the provisions of 21 U.S.C. §§ 387b(6)(A) and 387c(a)(6). Thus, the final question for resolution is whether Respondent “delivered or proffered delivery thereof for pay or otherwise” the Elfbar Peach Ice ENDS product, in violation of 21 U.S.C. § 331(c).

In her Declaration, Inspector Sparkman stated that during the inspection on August 15, 2023, she “observed that the establishment sold FDA-regulated tobacco products and had a sales display containing tobacco products, including Elfbar Peach Ice ENDS products, available for sale.” CTP Ex. 2 at 2 ¶ 6. Inspector Sparkman further stated in her Declaration that she took photographs of the establishment, including the tobacco products, and that CTP Exhibit 5 was a true and accurate copy of the photographs she took during the inspection. Id. At the hearing, Inspector Sparkman confirmed that, during the inspection conducted of Respondent’s establishment, the Elfbar ENDS product was on display in a clear case at the front of the store. Tr. at 9. The physical evidence is consistent with the testimony of Inspector Sparkman. The photographs referenced by

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Inspector Sparkman reveal the Elfbar ENDS product on a shelf bearing a price tag of $24.99. CTP Ex. 5 at 4.

Respondent has not offered any evidence to counter the testimony of Inspector Sparkman. Josemon Thathamkulam, Respondent’s owner, initially asserted that he had been out of his store at the time of the initial inspection in May 2023 recovering from a stroke and was unaware of the inspection and the warning letter. He stated that he would have removed the problem products had he known about this at the time, but subsequently removed the products in question following the second inspection. Respondent further argued that since he purchased the products in question from a licensed wholesaler, CTP should fine the wholesaler and not him. CRD Dkt. Entry No. 3 at 5, 6.

I have considered Respondent’s arguments but do not find that they, in any way, negate the evidence presented by CTP. Even though no evidence was presented to corroborate Mr. Thathamkulam’s allegations, I have no reason to question his statements about being out of the store while he recovered from a stroke. However, even accepting his statements at face value, the fact remains that, after receiving a written warning in bold print stating “FDA Warning Letter Regarding Tobacco Retailer Inspection Violation,” his business continued to sell a product after being notified the product was marketed unlawfully. See CTP Ex. 7 at 1, 2 (original emphasis).

Respondent also argued that CTP should look to the wholesalers, rather than the retailers who purchase products on the assumption that the products are legal. CRD Dkt. Entry No. 3 at 5. While this argument is an interesting one, section 331(c) is clearly directed at retail businesses who receive adulterated and misbranded tobacco products in interstate commerce and offer such products for sale. Thus, I have no authority to look beyond the intent of Congress in including section 331(c) in the Act. Moreover, the regulations at 21 C.F.R. § 17.19(c) specifically indicate that I have no authority to find Federal statutes or regulations invalid.

In the absence of any evidence to the contrary, I find that, on August 15, 2023, Respondent “delivered or proffered delivery thereof for pay or otherwise” the Elfbar Peach Ice ENDS product, in violation of 21 U.S.C. § 331(c).

2. Civil Money Penalty

Having determined that Respondent held for sale an adulterated and misbranded tobacco product, I have the authority to impose a CMP under the provisions of 21 U.S.C. § 333(f)(9)(A). In its Complaint, CTP sought to impose the penalty amount of $19,192 against Respondent for selling a new tobacco product that lacked the required premarketing authorization. Complaint ¶ 1. Respondent offers mitigating circumstances and argues those circumstances should “preclude the imposition of the harshest penalty in

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the form of the maximum penalty of $19,192 for a first-time, single violation.” R’s Post- Hearing Br. at 2.

In determining whether a $19,192 CMP is appropriate, I must consider any aggravating or mitigating circumstances. 21 C.F.R. §§ 17.34(a), 17.45(b)(3). I am also 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). Respondent bears the burden to prove the existence of certain considerations, or mitigating factors, relevant to determining the CMP, by a preponderance of the evidence.

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

Respondent held for sale a tobacco product that was adulterated and misbranded. To hold such a product for sale is a serious offense that threatens public health. The Family Smoking Prevention and Tobacco Control Act (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 selling this highly regulated and dangerous product.2 In a written warning dated June 15, 2023, Respondent was notified that during an inspection on May 30, 2023, it offered for sale Elfbar Watermelon Bubble Gum and Elfbar Peach Ice ENDS products that lacked the required marketing authorization. CTP Ex. 7 at 1.

In the Answer, Josemon Thathamkulam, the owner of Respondent’s establishment, stated that he had a stroke in March 2023 and was not present in the establishment at the time of the initial May 2023 inspection or the warning letter. He stated that the inexperienced person he left in charge during his illness did not maintain good records and never told him about the inspection or the warning letter. CRD Dkt. Entry No. 3 at 6. I have no reason to doubt the statements made by Mr. Thathamkulam and I am sympathetic to the health problem he has identified. However, even assuming his statements as true, Respondent left an “inexperienced” individual to manage a business selling “inherently dangerous” products while apparently disregarding the warning that it was in violation of federal law, and therefore, continued to offer for sale the specified Elfbar ENDS product. This is not consistent with a serious attempt to comply with federal tobacco law and demands a proportional CMP.

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

Respondent argues that the $19,192 CMP would have a significant impact on the business’s finances. CRD Dkt. Entry No. 3 at 5. In support of its assertions, Respondent submitted an Income Statement for year ending December 31, 2023, which shows a net loss of $10.41 for Mulberry Food and Pharmacy LLC. R. Ex. 1. Respondent further argued that it would be deemed a “very small businesses[sic],” defined as averaging less than $1,000,000 per year in sold and unsold products during the preceding three-year calendar period. Respondent concluded that such status would merit a reduction in the CMP under the Small Business Regulatory Enforcement Fairness Act of 1996. R’s Post- Hearing Br. at 2.

In evaluating this factor, I note at the outset that a formal tax return for the business would have been a more persuasive document since it would reflect what the business reported to the Internal Revenue Service. Moreover, the “Income Statement” is confusing since it cites identical amounts for “Current Month” and “Year to Date.” See R. Ex. 1. So, unless an entire year’s worth of business was conducted in December 2023, which would appear unlikely, this document is not found to be persuasive on the question of the current ability to pay.

While Respondent has argued it would be entitled to a reduced CMP as a “very small business,” it has provided no evidence to establish that status, assuming those provisions would apply to this proceeding. The “Income Statement” for 2023, standing alone, would certainly not document the three years of sold and unsold products reportedly required to establish this status. Accordingly, I cannot find that Respondent has established an inability to pay a CMP.

3. History of Prior Violations

Respondent has asserted that it “does not have a history of prior violations for the resale of tobacco products.” R’s Post-Hearing Br. at 3. However, the business received a Warning Letter dated June 15, 2023, that it was “observed to be in violation of federal tobacco laws and regulations.” CTP Ex. 7 at 1. While Respondent asserts that the owner did not receive the warning letter because he was recovering from a stroke and was not informed of such by the cashier,” there is no evidence that the letter was not received by the business, Mulberry Food Mart and Pharmacy. Thus, there was a prior violation, even though it did not result in a CMP.

4. Degree of Culpability

The June 15, 2023, Warning Letter provided Respondent with written notice that it was in violation of federal law that could result in a civil money penalty. In a subsequent

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inspection on August 15, 2023, Respondent was observed offering Elfbar Peach Ice ENDS products for sale. Based on my findings that Respondent committed the violation alleged in the Complaint, I hold 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 tobacco products because of their highly dangerous and addictive nature. See 21 U.S.C. § 387 (Findings and Purpose). Although Respondent claims to have been unaware of the initial inspection due to illness, and subsequently took steps to remove the ENDS product at issue after the August 15, 2023, inspection, I find that those actions do not absolve Respondent of its responsibility as a retailer of tobacco products.

5. Additional Mitigating Factors and Other Matters as Justice May Require

Mitigation is an affirmative defense for which Respondent bears the burden of proof by a preponderance of the evidence. 21 C.F.R. § 17.33(c). Respondent, or Respondent through counsel, has participated in this matter from its onset. Further, Respondent has provided, what it deemed, as sufficient evidence and testimony to support its position. These civil money penalties are in place to ensure retailers uphold the regulations that aid in keeping the American people safe. However, these tobacco regulations are not here to unjustly penalize retailers who made an earnest attempt to comply with the regulations. When a retailer earnestly tries to correct its wrongdoing, imposing the maximum civil money penalty for a single violation does not encourage compliance and accountability.

Based on the foregoing reasoning, I find a penalty amount of $9,596 appropriate under 21 U.S.C. §§ 333(f)(5)(B) and 333(f)(9).

Conclusion

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $9,596 against Respondent, Mulberry Food and Pharmacy, LLC d/b/a Mulberry Food Mart and Pharmacy, for its violation of the 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.