Rusda Oil Company Inc. d/b/a BP / To Go, DAB TB9099 (2025)

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks to impose a $20,678 civil money penalty (CMP) against Rusda Oil Company Inc. d/b/a BP / To Go (Respondent).  Specifically, CTP alleges that Respondent received in interstate commerce an electronic nicotine delivery system (ENDS) product that lacked the premarketing authorization required and offered such product for sale, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 331(c).

For the reasons discussed below, I find Respondent violated the Act as alleged by CTP and that a CMP in the amount of $8,271 is appropriate.

I.     Background and Procedural History

CTP began this matter by serving an Administrative Complaint (Complaint) on Respondent at 1147 South Federal Highway, Boynton Beach, Florida 33435 by United Postal Service (UPS), and by filing a copy of the Complaint with the FDA’s Division of

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Dockets Management.  Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 1 (Complaint), 1b (Delivery Notification).

On March 8, 2024, Respondent filed a timely request for extension of time to file an Answer.  CRD Dkt. Entry No. 3a (Request for Extension of Time).1  On March 11, 2024, the previously assigned Administrative Law Judge (ALJ)2 granted Respondent’s request and allowed until April 10, 2024, for Respondent to file an Answer.  CRD Dkt. Entry No. 6 (Order Granting Respondent’s Request for Extension of Time).

On April 11, 2024, Respondent filed an Answer and a 2023 Tax Return.  CRD Dkt. Entry Nos. 7 (Answer), 8 (2023 Tax Return).  In its Answer, Respondent admitted that the ENDS product referenced in CTP’s Complaint was in the store but denied “willfully knowing the products were banned” and stated that “if made personally aware [the business owners] would have immediately ceased selling the product and would have destroy[ed] all such products at the initial inspection.”  Answer at ¶ 1.  Respondent requested the ALJ consider that the business owners were unaware of the Complaint because they were not personally served.  Id. at ¶ 2.  I infer that Respondent intended to convey that the owners were not personally aware of CTP’s Warning Letter, not CTP’s Complaint, as Respondent filed a timely request for an extension of time to file an answer and stated in the request that Respondent was “trying to locate the person that received the warning notice and collect all the facts.”  CRD Dkt. Entry No. 3a.   Respondent also claims that the CMP that CTP requests would “further cripple the business, and most likely cost people jobs” and that the 2023 tax return would show a loss.  Id. at ¶ 3.

On April 18, 2024, the previously assigned ALJ issued an Acknowledgment and Pre-Hearing Order (APHO) establishing procedural deadlines for this case.  CRD Dkt. Entry No. 14 (APHO).  On April 30, 2024, Jeffrey Clark entered a Notice of Appearance on behalf of Respondent.  CRD Dkt. Entry No. 16 (Notice of Appearance).3  Mr. Clark is described as a “friend and consultant” who is not an attorney and is assisting Respondent “as English is neither of the two partners first language.”  Id.  On May 17, 2024, the parties submitted a Joint Status Report stating that they were unable to reach a settlement and intended to proceed to a hearing.  CRD Dkt. Entry No. 19 (Joint Status Report).

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On May 23, 2024, Respondent timely filed its Pre-Hearing Brief and a copy of the Proof of Service of the Complaint which indicates it was received by an individual named Sandra.  CRD Dkt. Entry Nos. 21 (R’s Pre-Hearing Brief), 20 (Proof of Service).  In its Pre-Hearing Brief, Respondent admitted all allegations.  CRD Dkt. Entry No. 21.  As defenses, Respondent claimed it was unaware that the product was banned, that it would have removed the product from the shelf if Respondent had known, that Respondent has no prior violations and that the owners did not personally receive the “certified mail” as it was given to an employee who “just laid it on the counter like she does with all the mail.”  Id. at 6.  Respondent claims that because of this, “respondent was never actually notified about the ban or to take it off the shelf - which in all fairness, this should be considered in regards to any type of fine or warning.”  Id.

On July 3, 2024, CTP timely submitted its pre-hearing exchange, consisting of its informal brief, a list of proposed witnesses, and eight proposed exhibits.  See CRD Dkt. Entry Nos. 22, 22a-22i.  CTP’s exchange included the written testimony of two witnesses: 1) James Bowling, Deputy Division Director, Office of Compliance and Enforcement, FDA, CTP (CTP Ex. 1); and 2) Marcus Wesker, an FDA-commissioned officer with Computer Evidence Specialists, LLC (CTP Ex. 2).

On September 11, 2024, the previously assigned ALJ conducted a pre-hearing conference (PHC).  CRD Dkt. Entry No. 26 (Order Following PHC).  During the PHC the parties discussed the allegations in the Complaint, the CMP requested by CTP, Respondent’s Answer, the issues to be decided in this case, the burdens of proof, the purpose of conducting a hearing in this case, the procedural history, the administrative record, the parties’ pre-hearing exchanges and proposed witnesses, and the parties’ efforts to engage in settlement negotiations.  Id. at 2.

Respondent’s representative, Mr. Clark, did not object to the admission of CTP’s eight exhibits.  Id. at 3.  Because Mr. Clark is not an attorney, the previously assigned ALJ provided Respondent with an opportunity to file written objections to CTP’s proposed exhibits.  Id.  CTP’s counsel did not object to Respondent’s 2023 Tax Return being admitted into evidence.  Id.  The previously assigned ALJ marked the 2023 Tax Return as R. Exhibit 1.  Id.

During the PHC, the parties stated that they did not intend to cross-examine any witnesses.  Id.  The previously assigned ALJ explained to the parties that the case will be decided on the written administrative record because the parties do not wish to cross-examine witnesses at a hearing.  Id.

On October 21, 2024, this case was reassigned to me.  CRD Dkt. Entry No. 27 (ALJ Transfer Letter).  On November 15, 2024, Respondent submitted its Final Brief and again uploaded the Proof of Service with the caption “Proof of delivery, cannot see signature.”  CRD Dkt. Entry Nos. 29 (R’s Final Brief), 30 (Proof of Delivery).  Also on November

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15, 2024, CTP filed its Final Brief and four Civil Remedies Division ALJ decisions as exhibits to the brief.  CRD Dkt. Entry Nos. 31, 31a -31d.

On December 4, 2024, Respondent submitted an additional letter “to clarify a couple of the statements the plaintiff submitted.”  CRD Dkt. Entry No. 32 (R’s Letter re: sworn testimony).

I will consider the full administrative record in deciding this case.  The administrative record contains the exhibits and other evidence admitted as well as all documents and requests filed in this proceeding.  21 C.F.R. § 17.41(b).

II.     Admission of Exhibits

During the PHC, Respondent’s non-attorney representative, Mr. Clark, stated that Respondent did not object to the admission of CTP’s eight exhibits.  CRD Dkt. Entry No. 26 at 2-3.  The previously assigned ALJ allowed Respondent an opportunity to file written objections to CTP’s proposed exhibits by October 1, 2024.  Id. at 3.  As there are no objections, I hereby admit CTP Exs. 1-8 into the record.

Also, during the PHC, CTP’s counsel stated that CTP did not object to the admission of Respondent’s 2023 Tax Return, which was marked as R. Exhibit 1 by the previously assigned ALJ.  Id.  As CTP did not object, I hereby admit R. Exhibit 1 into the record.

III.    Issues

1. Whether Respondent received in interstate commerce an ENDS product that lacked the premarketing authorization required under the Act, specifically an Elfbar Passion Fruit Orange Guava product, and offered such product for sale on December 2, 2023, in violation of 21 U.S.C. § 331(c); and, if so,
2. Whether the $20,678 CMP proposed by CTP is appropriate, considering any mitigating or aggravating factors I find in this case.  21 C.F.R. § 7.45.

IV.    Findings of Fact and Conclusions of Law

1. CTP has demonstrated by a preponderance of the evidence that Respondent received an adulterated and misbranded ENDS product in interstate commerce and delivered or offered such product 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.  CTP has the burden to prove Respondent’s liability and the appropriateness of the penalty

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by a preponderance of the evidence.  21 C.F.R. § 17.33(b).  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).  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 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 Deputy Division Director James Bowling, Division of Enforcement and Manufacturing in the Office of Compliance and Enforcement, CTP, FDA, and Inspector Marcus Wesker, an FDA commissioned officer in the state of Florida.  CTP Exs. 1 and 2.  Inspector Wesker stated that during the inspection on December 2, 2023 at approximately 2:58 PM, an Elfbar Passion Fruit Orange Guava ENDS product was available for sale at Respondent’s establishment.  CTP Ex. 2 at 2.  See also CTP Exs. 3-6 (Inspector Wesker’s narrative report, inspection details, photographs and notice of inspection dated December 2, 2023).

Deputy Division Director Bowling states that the ENDS product observed for sale during the December 2, 2023, inspection was manufactured in China.  CTP Ex. 1 ¶ 9.  Deputy Division Director Bowling also explained that he:

. . . can confirm that the Elfbar Passion Fruit Orange Guava ENDS products were not commercially marketed in the United States as of February 15, 2007 . . . that on December 2, 2023, the day on which FDA observed the Elfbar Passion Fruit Orange Guava ENDS product being offered for sale at BP / To Go, that there was no record of this product having an FDA marketing granted order in effect under 21 U.S.C. § 387j(c)(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), . . . a report requesting a substantial equivalence order under 21 U.S.C. § 387e(j) [had not been requested for this product] . . . the Elfbar Passion Fruit Orange Guava

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

CTP Ex. 1 ¶¶ 11-13.

Respondent has not disputed any of the statements made by Inspector Wesker or Deputy Division Director Bowling.  Respondent does not deny that the Elfbar Passion Fruit Orange Guava ENDS product observed by Inspector Wesker was at its establishment and being proffered for sale on December 2, 2023.  Rather, Respondent denies “willfully knowing the products were banned and if made personally aware would have immediately ceased selling the product . . . .”  CRD Dkt. Entry No. 7 ¶ 1.  Respondent’s main defense is that the owners were not personally served with the Warning Letter.  Respondent claims that “[a] document of this importance was thought to be personally delivered and had to be signed by one of the business owners on record, but it was not . . . .” Id. at ¶ 2.

In its Pre-Hearing Brief, Respondent reiterated its objection to the owners not being personally served with the Warning Letter: “[a]ll but one of the facts of this case are not disputed by the respondents.  The only disputed statement is that two owners of the business were made aware of the violation occurred.  As the proof of service was never delivered to either of the owners or to an employee.”  CRD Dkt. Entry No. 21 at 6.  In Respondent’s Final Brief, it again stated that “[b]usiness owners never received notice to take those products off the shelves” and stated that “[t]hey can’t remove an item they are not aware of.”  CRD Dkt. Entry No. 29 at 1.

Whether the owners of the Respondent business were personally served with the Warning Letter is immaterial.  First, there is no legal requirement for CTP to send a Warning Letter before proceeding with a CMP complaint against Respondent.  See 21 U.S.C. §§ 331(c); 333(f)(9)(A).  Second, Respondent was obligated to obey the law regardless of whether its owners were given specific warning.  See Smokers Haven 3 LLC d/b/a Smoker’s Haven DAB TB8497, at 6 (“As a retailer of tobacco products, Respondent holds sole responsibility for complying with the regulations.  Respondent’s lack of awareness does not negate the evidence CTP provided . . . ”).  Finally, as a business, Respondent is legally responsible for the actions of its employees.  Sajid S. Salimi, Inc. d/b/a Excel Mart / Conoco, DAB TB8736, at 7 (citing Station Management Consultants Inc. d/b/a Sunoco, DAB No. 2296, at 10 (2020)); see also 1701 Express, Inc. d/b/a Citgo, DAB No. 2979, at 8 (2019) (“The onus is on the Respondent to comply with the provisions of the Act and regulations.  To that end, Respondent is responsible for ensuring that its employees follow steps as necessary for compliance with those authorities.”).

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Based on the undisputed facts including the uncontested testimony of Inspector Wesker and Deputy Division Director Bowling, as well as the supporting evidence submitted by CTP, I find that the Elfbar Passion Fruit Orange Guava ENDS product offered for sale at Respondent’s establishment on December 2, 2023, previously traveled in interstate commerce before Respondent’s receipt and delivery and proffered delivery of such tobacco product 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”).  I find that the Elfbar Passion Fruit Orange Guava 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, I find that Respondent’s actions constitute a violation of law.

2. Respondent has demonstrated by a preponderance of the evidence the existence of mitigating circumstances to support a reduced CMP.

I 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).  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.

In its Complaint, CTP seeks to impose a CMP in the amount of $20,678 against Respondent.  CRD Dkt. Entry No. 1, ¶ 1 (Complaint).  In its Answer, Respondent contends that the CMP sought by CTP is too high because “[a] fine of such a high amount . . . would hurt not only our families but also our employees’ families.”  CRD Dkt. Entry No. 7 at ¶ 3.  Respondent further claims that the “heavy fine would further cripple the business, and most likely cost people jobs.”  Id.  In its Final Brief, Respondent requests that the fine be lowered because “[a] fine of $20,000 is the maximum fine under the law, which is excessive for a business that has no prior offenses.”  CRD Dkt. Entry No. 29 at 2.

When determining the appropriate amount of a CMP, I must consider any aggravating or mitigating circumstances and the factors listed in the Act.  21 C.F.R. § 17.34(a)-(b).  Specifically, I am required to take into account “the nature, circumstances, extent and gravity of the violations and, with respect to the violator, ability to pay, effect on ability 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).

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

The Family Smoking Prevention and Tobacco Control Act (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).  Respondent was in the business of selling a highly regulated and dangerous product.  See generally 21 U.S.C. § 387 note (Findings and Purpose).  Respondent admitted that it offered for sale tobacco products without the marketing authorization required, such as the Elfbar Passion Fruit Orange Guava ENDS product observed for sale at Respondent’s establishment on December 2, 2023.  The inability of Respondent to comply with federal tobacco law is serious in nature and demands a proportional CMP amount.

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

In its Answer, Pre-hearing Brief, and Final Brief, Respondent explains that it does not believe the penalty amount is appropriate because it will cause financial hardships and the business is already not profitable.  See CRD Dkt. Entry Nos. 7, 21, and 29.  Respondent filed in support of its contention of financial hardship a 2023 Tax Return.

CTP argues that Respondent’s 2023 Tax Return is insufficient alone to establish Respondent’s inability to pay the $20,678 penalty.  CRD Dkt. Entry No. 22 at 10 (Informal Brief of Complainant).  CTP also argues that in order to establish inability to pay the penalty, Respondent should have provided evidence as to its business assets, such as, “proof as to its cash reserves, its credit worthiness, or other potential sources of capital, all of which are highly relevant to the issue of ability to pay a penalty.”  Id.

Based on my review, the Respondent may have difficulty paying the CMP that CTP seeks.  A $20,678 CMP could affect the Respondent’s ability to do business.  In Respondent’s 2023 Tax Return, it shows an ordinary business income loss of $13,519.  CRD Dkt. Entry No. 8 at 5.  I find that a $20,678 CMP is a very significant amount for a small business, such as Respondent, and is a mitigating factor.  While Respondent did not provide additional financial documents or bank statements, based on Respondent’s statements, it can be reasoned that Respondent it not in a financial position to pay the full CMP without significant consequences.  In fact, Respondent contends that a CMP of this size would “affect people’s jobs and livelihood.”  CRD Dkt. Entry No. 21 at ¶ 6.  Moreover, CTP did not present any evidence or argument regarding Respondent’s current financial position, Respondent’s ability to pay the penalty, or Respondent’s ability to continue to do business which could weigh in favor of imposing the maximum $20,678 CMP.  Therefore, after considering all the evidence and documentation in the record, I find that Respondent’s contentions regarding the difficulty to repay the CMP that CTP seeks, due to its financial condition, to be sincere and credible, and the evidence persuasive on this issue.  Thus, I find a reduction in the CMP amount to be appropriate.

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3. History of Prior Violations

There is no indication in the record of any prior violations of section 331(c) resulting in a CMP.  However, CTP argues that there is a history of prior violations because Respondent was notified in the Warning Letter that it was in violation of the Act by manufacturing, selling, and/or distributing new tobacco products that lacked the required premarketing authorization required under the Act.  Informal Brief of Complainant at 9 (citing CTP Ex. 7).  CTP also argues that Respondent continued to offer for sale new tobacco products that lacked the required premarket authorization or exemption, and thus demonstrated an unwillingness or inability to comply with federal tobacco laws and regulations.  Id.  However, I disagree with CTP’s contentions that Respondent’s repeated violations in this case were based on an unwillingness or inability to comply with the law.

Respondent asserted in its pre-hearing brief that the business owners did not receive a Warning Letter, and if they personally reviewed it, Respondent’s sales of products without premarket approval would have ceased immediately.  CRD Dkt. Entry No. 21 at 6.  While CTP points to the Warning Letter as evidence of a prior violation, there is no evidence of any prior violations resulting in a CMP.  Therefore, contrary to CTP’s arguments, I find the record does not demonstrate Respondent’s unwillingness or inability to comply with tobacco laws and regulations based on its history of violations.  Instead, I find that Respondent’s single violation resulting in a CMP is a mitigating factor, and the CMP should be reduced accordingly.

4. Degree of Culpability

Based on my finding that Respondent committed the violation alleged in the Complaint, I hold Respondent fully culpable for offering for sale a new tobacco product that was adulterated and misbranded, in violation of the Act.  As discussed previously, Respondent’s owners alleged lack of receipt of the Warning Letter does not mitigate Respondent’s liability.  Additionally, 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 note (Findings and Purpose).  Although I find the Respondent took remedial action upon receipt of the Complaint, these actions do not absolve Respondent of its responsibility as a retailer of tobacco products.

5. Other Matters as Justice May Require

The Act gives me discretion to consider any other evidence or arguments to mitigate the amount of the CMP.  21 U.S.C. § 333(f)(5)(B).  Based on the statements above, I find the proposed penalty amount of $20,678 will place a significant financial strain on Respondent.  However, having found the Respondent violated the law, to ensure that justice is served, the amount of the CMP imposed should ensure future compliance with the Act and tobacco regulations.

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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 has participated in this matter from its onset.  Further, Respondent has provided what it deemed as sufficient evidence and arguments 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 reduction of the penalty amount is appropriate under 21 U.S.C. §§ 333(f)(5)(B) and 21 C.F.R. § 17.45(b)(1)-(3).  After considering the record evidence, applicable law, and mitigating circumstances in this case, and after full evaluation of the relevant factors, I find reducing the CMP that CTP seeks by sixty percent is appropriate and impose a $8,271 penalty.

V.     Conclusion

For the reasons set forth above, I impose a civil money penalty against Respondent Rusda Oil Company Inc. d/b/a BP / To Go in the amount of $8,271 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. § 17.45(d), this order becomes final and binding upon both parties after 30 days of the date of its issuance.