Train Smoke LLC d/b/a Train Smoke Vapor Shoppe, DAB TB9232 (2025)

INITIAL DECISION

On January 24, 2024, the Center for Tobacco Products (CTP) served a Complaint on Train Smoke LLC d/b/a Train Smoke Vapor Shoppe (Respondent), at 809 North Hervey Street, Suite E, Hope, Arkansas 71801, and filed a copy of the Complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management on January 30, 2024.  CTP seeks to impose a $20,678 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 Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq.

Respondent admits the allegations in the Complaint and argues that the civil money penalty is too high.  For the reasons discussed below, I find Respondent violated the provisions of 21 U.S.C. § 331(c) and conclude that a civil money penalty in the amount of $15,000 is appropriate.

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I. Background and Procedural History

Respondent does business under the name of Train Smoke LLC d/b/a Train Smoke Vapor Shoppe located at 809 North Hervey Street, Suite E, Hope, Arkansas 71801.  Civil Remedies Division (CRD) Docket (Dkt.) Entry No. 1 ¶ 13 (Complaint).

On June 13, 2023, CTP issued a Warning Letter to Respondent notifying Respondent that on May 2, 2023, an FDA inspector witnessed an electronic nicotine delivery system (ENDS) product that lacked the required marketing authorization offered for sale at Respondent’s establishment.  CRD Dkt. Entry No. 10h at 1.

On August 11, 2023, FDA-Commissioned Officer Laura J. Hoover inspected Respondent’s business.  CTP Ex. 2 ¶ 4.  During the inspection, Inspector Hoover observed, “that the establishment had Esco Bars Fruit Medley ENDS products available for sale in a sales display case.”  Id. ¶ 6.

While at the establishment, Inspector Hoover took photographs of the store and its external signage, of the Esco Bars Fruit Medley ENDS product, and of the product’s placement within the establishment.  Id. ¶ 5.

On January 24, 2024, CTP served an Administrative Complaint on Respondent by United Parcel Service at 809 North Hervey Street, Suite E, Hope, Arkansas 71801, as provided in 21 C.F.R. §§ 17.5 and 17.7.  See CRD Dkt. Entry No. 1b.

On February 20, 2024, Respondent electronically filed its Answer.  CRD Dkt. Entry No. 3 (Answer).  In its Answer, Respondent admitted selling the Esco Bars Fruit Medley ENDS product and requested “leniency regarding the imposed penalty . . . [w]e1 are not contesting the importance of regulation nor the necessity of compliance.”  Answer at 1.

On February 22, 2024, I issued an Acknowledgement and Status Report Order (ASRO) ordering the parties to file a joint status report by April 22, 2024.  CRD Dkt. Entry No. 4.  On April 18, 2024, CTP filed a Joint Status Report stating that the parties intended to engage in further settlement discussions.  CRD Dkt. Entry No. 5.

On May 6, 2024, I issued a Pre-Hearing Order (PHO) establishing deadlines regarding how this matter would proceed.  CRD Dkt. Entry No. 6.  My PHO instructed the parties to file a joint status report by June 10, 2024, and the parties were given deadlines for the service of requests for discovery.  Id. at ¶¶ 3-4.  CTP was given a deadline of July 29, 2024 to file its pre-hearing exchange and Respondent was given a deadline of August 19, 2024.  Id. at ¶ 6.

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On June 3, 2024, Respondent filed its pre-hearing informal brief (R. PHB).  CRD Dkt. Entry No. 7.  On June 10, 2024, CTP filed a Joint Status Report stating that the parties were unable to reach a settlement in this case.  CRD Dkt. Entry No. 8.  On July 1, 2024, Respondent filed three additional documents which included Respondent’s responses to CTP’s document requests, an August 11, 2023 transaction report, and an identical copy of Respondent’s pre-hearing brief filed on June 3, 2024.  CRD Dkt. Entry Nos. 9, 9a, and 9b.

On July 29, 2024, CTP filed its pre-hearing brief, a proposed witness and exhibit list, and seven proposed exhibits.  CRD Dkt. Entry Nos. 10, 10a-10h.

I held a pre-hearing conference (PHC) via Microsoft Teams on September 26, 2024.  At the PHC, we discussed the allegations in the Complaint, 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, and the parties’ pre-hearing exchanges and proposed witnesses.  CRD Dkt. Entry No. 14 at 1.  During the PHC, I advised that I would allow the parties to file written objections to the opposing party’s exhibits by October 25, 2024, and that the parties would have until November 8, 2024 to respond to any objections to the opposing party’s proposed exhibits or pre-hearing exchange, and that, thereafter, I would review any objections and responses and issue a ruling on the admission of the parties’ proposed exhibits and pre-hearing exchanges.  Id.  at 1-2; CRD Dkt. Entry No. 15 at 1.

During the PHC, it was further explained to the parties that the sole purpose of conducting a hearing is to allow for the cross-examination of any witnesses in which sworn direct testimony was submitted in a party’s pre-hearing exchange.  CRD Dkt. Entry No. 14 at 2.  Respondent requested to cross-examine CTP’s proposed witnesses: James Bowling, Deputy Director, Division of Enforcement and Manufacturing, Office of Compliance and Enforcement, CTP, FDA and FDA-commissioned Inspector Laura J. Hoover.  Id.  I reminded Respondent that any cross-examination questions are limited to the information in the statements made in the sworn declaration.  Id. at 2.  After the conclusion of the pre-hearing conference, both parties confirmed availability for a hearing on Tuesday, December 17, 2024 at 10:00 AM Eastern Time.  Id.

On November 7, 2024, I issued an Order admitting the parties’ exhibits into the record as unopposed as neither Respondent or CTP responded to my order and neither filed objections to opposing parties’ exhibits.  CRD Dkt. Entry No. 15 at 1.  I reminded the parties that the hearing in this case was scheduled for Tuesday, December 17, 2024 at 10:00 AM Eastern Time and reminded Respondent that “if Respondent still request[ed] that a hearing be conducted for the sole purpose of allowing Respondent to cross-examine CTP’s witnesses, Respondent must email Rochelle Howard by no later than November 29, 2024 that it still wants to cross-examine CTP’s witnesses.”  Id. at 1-2.

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On December 16, 2024, Rochelle Howard, the attorney advisor assisting me with this case, sent an electronic mail message to the parties reminding them that the hearing would be canceled and that an Order was forthcoming.  CRD Dkt. Entry No. 16 at 2-3.  Respondent replied that even though they did not wish to cross-examine CTP’s witnesses, they still wanted to argue the penalty at the hearing.  CRD Dkt. Entry No. 17 at 2.  In response, Rochelle Howard reminded Respondent of my instructions and explanation of the purpose of the hearing as it is only permissible to cross-examine witnesses.  Respondent replied that it understood.  Id. at 1-2.

On December 17, 2024, I issued an Order Canceling Hearing and Setting Final Briefing Schedule.  CRD Dkt. Entry No. 18.  In my Order, I informed the parties that I would cancel the hearing as Respondent no longer wished to cross-examine CTP’s witnesses and would decide the case based on the record.  Id. at 1.  As the only remaining dispute concerned the appropriateness of the civil money penalty in this case, I provided the parties with a January 10, 2025 deadline to file simultaneous final briefs.  Id. at 2.

On January 7, 2025, Respondent filed its final brief consisting of a one-page letter (R. Final Brief).  CRD Dkt. Entry No. 19.  CTP did not file a final brief.

The administrative record is now complete, and this matter is ready for a decision.  21 C.F.R. § 17.41; 21 C.F.R. § 17.45(c).  I will now decide this case based on the evidence in the administrative record.  21 C.F.R. § 17.19(b)(11), (17).

II. Issues

1. Whether the allegations in the Complaint are true, and, if so, whether Respondent’s actions identified in the Complaint violated the law;
2. Whether any affirmative defenses are meritorious; and
3. If Respondent is liable for penalties or assessments, the appropriate amount of any such penalties or assessments, considering any mitigating or aggravating factors that I find in this case.

III. Discussion

In 2009, Congress enacted the Family Smoking Prevention and Tobacco Control Act (TCA) to regulate tobacco products.  21 U.S.C. §§ 387 et seq.  The TCA prohibits selling any “new tobacco product” without authorization from the FDA.  21 U.S.C. § 387j(a); 21 U.S.C. § 387a(b) (delegating the FDA the authority to determine what constitutes new tobacco products).  A new tobacco product is any tobacco product that was not commercially marketed in the United States as of February 15, 2007.  21 U.S.C. § 387j(a)(1).

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The TCA requires new tobacco products to have a premarket authorization in effect.  21 U.S.C. § 387j(a)(2)(A).  To obtain premarket authorization, manufacturers of new tobacco products are required to submit a premarket tobacco application (PMTA) to the FDA for approval to sell their products.  21 U.S.C. § 387j(b)(1).  Alternatively, the product manufacturer may submit a substantial equivalence report, in response to which the FDA may issue an order finding the product is substantially equivalent to a predicate tobacco product.  21 U.S.C. § 387e(j).  Or, the product manufacturer may submit a report, in response to which the Secretary may issue an exemption order.  21 U.S.C. § 387e(j)(3)(A).

The TCA directs FDA to review PMTAs to determine whether “permitting such tobacco product to be marketed would be appropriate for the protection of the public health.”  21 U.S.C. § 387j(c)(2)(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, substantial equivalence order, or an exemption order.  21 U.S.C. § 387b(6).

Under the Act, “[a] tobacco product shall be deemed to be misbranded if, in the case of any tobacco product sold or offered for sale in any State, it is sold or distributed in violation of regulations prescribed under section 387f(d).”  Under 21 U.S.C. § 387c(a)(6), a new tobacco product is misbranded if a “notice or other information respecting it was not provided as required” under the substantial equivalence or substantial equivalence exemption pathway, including a substantial equivalence report or an abbreviated report.  21 U.S.C. § 387c(a)(6).

Under the Act, a tobacco product is adulterated if it has not obtained the required premarket authorization.  21 U.S.C. § 387b(6)(A).  Thus, when a manufacturer does not submit a PMTA for its ENDS products, or when a manufacturer submits a PMTA for its ENDS products and receives a denial order, the products are being adulterated.  21 U.S.C. § 387b(6)(A).  The adulterated and misbranded ENDS products in turn violate the Act.

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).  The FDA may seek a civil money penalty from “any person who violates a requirement of this chapter which relates to tobacco products.”  21 U.S.C. § 333(f)(9)(A) (2012).  Penalties are set by 21 U.S.C. § 333 and 21 C.F.R. § 17.2.

CTP alleges that Respondent received in interstate commerce and offered for sale an ENDS product that required FDA premarket authorization in violation of 21 U.S.C. § 331(c) on August 11, 2023.  Complaint ¶¶ 15, 19.

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In its Answer, Respondent admitted selling the Esco Bars Fruit Medley ENDS product, but asked for leniency in the civil money penalty amount stating that they implemented immediate corrective actions by “ensur[ing] the banned product is no longer available for sale and [] initiated a comprehensive review of our inventory against the latest FDA guidelines.”  Answer at 1.  In its pre-hearing brief, Respondent stated that “we do not deny the allegation that we specifically carried Esco Bar products, stated in the penalty letter, our actions were prompt and if the warning letter and references for compliance would have been more clear, this would not have been taken to the extent that it has.”  R. PHB at ¶ 7.  Respondent further states that “[t]his penalty more so feels like an attack on a small business that it is known will not survive a penalty of this amount.”  Id.

Lastly, Respondent stated in its final brief that “[w]e . . . remain in agreement that the penalty amount in its entirety is excessive . . . [a]s stated in previous letters . . . we acted immediately and removed the brand from our shelves . . . [t]hese circumstances and our responses to them should prove implied compliance.”  R. Final Brief.  Further, Respondent states that “[i]f the court finds that the full penalty amount will be necessary, it is highly unlikely that we will be able to pay it . . . [w]e are a very small business consisting of myself (Shelby) and Mr. Butler, and one paid part-time employee.”  Id.

Regarding the unauthorized product, CTP submitted a signed declaration from James Bowling, Deputy Division Director for the Division of Enforcement and Manufacturing in the Office of Compliance and Enforcement.  CTP Ex. 1.  Mr. Bowling has personal knowledge of CTP’s tobacco record keeping, registration process, and new tobacco product premarket authorization requirements.  Id. ¶ 3.  Mr. Bowling confirmed that a search of the Tobacco Registration and Product Listing Module Next Generation did not reveal any registered establishments containing the name “Esco Bars” or any listed product named “Esco Bars Fruit Medley” in Arkansas.  Id. ¶ 6.

Additionally, Mr. Bowling confirms that the Esco Bars Fruit Medley ENDS product purchased during the August 11, 2023 inspection, is manufactured in China.  Id. ¶ 9.  Further, Mr. Bowling confirms that Esco Bars Fruit Medley ENDS products were not commercially marketed in the United States as of February 15, 2007.  CTP Ex. 1 ¶ 11.  Mr. Bowling also confirms that there was no record of the Esco Bars Fruit Medley ENDS product having an FDA marketing granted order in effect, and that the FDA did not have any record of a Substantial Equivalence Order or an abbreviated report requesting a Found-Exempt Order.  Id. ¶¶ 12-13.

Lastly, Respondent did not object to Mr. Bowling’s declaration or wish to cross-examine him; therefore, I find Mr. Bowling’s statements about the Esco Bars Fruit Medley ENDS products credible with respect to the question of whether it had marketing authorization or if the manufacturer was registered for business in the United States for its new tobacco products.  I also find that the Esco Bars Fruit Medley ENDS products are adulterated and misbranded and they did not have the FDA’s required premarket authorization.

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Mr. Bowling’s declaration also supports a finding that the unauthorized product was received via interstate commerce as they were manufactured in China, a foreign country.  Id. ¶ 7.

Regarding Respondent’s possession of the unauthorized product, CTP submits the signed declaration of inspector Laura J. Hoover.  CTP Ex. 2.  Ms. Hoover is an FDA‑commissioned inspector with the United States Food and Drug Administration, Office of Regulatory Affairs.  Id. ¶ 2.  Ms. Hoover’s declaration states that on August 11, 2023, Ms. Hoover visited Respondent’s business establishment to conduct a compliance check.  Id. ¶ 5.  During the inspection, Ms. Hoover observed a sales display containing an Esco Bars Fruit Medley ENDS product available for sale in a display case.  Id. ¶ 6. When asked by Ms. Hoover, the most responsible person present during the inspection confirmed that the Esco Bars Fruit Medley ENDS product was available for sale.  Id.  Ms. Hoover took photographs of the business establishment and the unauthorized product.  Id. at ¶ 9.  The inspection was recorded in the FDA’s record system and a Narrative Report was created.  Id. ¶ 7.  Respondent did not object to Ms. Hoover’s declaration or wish to cross-examine her.  Therefore, I find Ms. Hoover’s statements regarding what she observed during the August 11, 2023 inspection of Respondent’s business establishment credible.

Taking the above alleged facts as true, I conclude that Respondent possessed the Esco Bars Fruit Medley ENDS product observed by FDA-commissioned Inspector Hoover on August 11, 2023.  Respondent violated the prohibition against receiving and offering for sale a new tobacco product that was adulterated and misbranded because the Esco Bars Fruit Medley ENDS product lacked the required FDA marketing authorization order, substantially equivalent order, or a found exempt order.  21 U.S.C. § 331(c); see also 21 U.S.C. § 387b(6)(A), 21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A).

IV. Civil money penalty

Having determined that Respondent is liable under the Act, I conclude that I have the authority to impose a civil money penalty under 21 U.S.C. 333(f)(9)(A).  In its Complaint, CTP sought to impose the penalty amount of $20,678 against Respondent.  Complaint at 1.

In determining whether a $20,678 civil money penalty is appropriate, I must consider any aggravating or mitigating circumstances and the factors listed in the Act.  21 C.F.R. § 17.34(a)-(b).  Specifically, I am required to consider “the nature, circumstances, extent and gravity of the violation or violations and, with respect to the violator, ability to pay, effect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other matters as justice may require.”  21 U.S.C. § 333(f)(5)(B); 21 C.F.R. § 17.45(b)(1)-(3).  Respondent must prove any mitigating factors by a preponderance of the evidence.  21 C.F.R. § 17.33(c).  For the following

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reasons, I conclude that a $15,000 civil money penalty is appropriate based upon the record evidence, applicable law, and aggravating and mitigating circumstances in this case.

1. Nature, circumstances, extent, and gravity of the violations

The 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).  There is no dispute that the Respondent was in the business of selling a highly regulated and dangerous product.  See 21 U.S.C. § 387 note.

CTP contends that Respondent’s violations are particularly serious because they occurred despite earlier warnings that future violations could result in an enforcement action, and after providing Respondent with information and resources designed to help retailers to comply with federal tobacco law.  CRD Dkt. Entry No. 10 at 8-9.  CTP specifically refers to a warning letter it issued to Respondent on June 13, 2023, citing Respondent for offering for sale an ENDS product that lacked the required marketing authorization order.  Id. at 9; see also CTP Ex. 7 at 1-2.  CTP states 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 and advised Respondent that “[t]he violation indicated in this letter may not be a complete list of violations at the establishment.”  CRD Dkt. Entry No. 10 at 8; CTP Ex. 7 at 3.  Finally, CTP states the warning letter referred Respondent to the FDA website, which includes information to help tobacco retailers understand and comply with FDA tobacco laws and regulations.  Id.  CTP concludes that Respondent’s repeated violation demonstrates its unwillingness or inability to correct the violations.  Id.

In its Answer, Respondent stated that when they “received a warning letter for one of our products, . . . it was taken immediately off our shelves and made unavailable to our customers.”  CRD Dkt. Entry No. 3.  In other words, rather than disregarding the warning letter as CTP proffers, Respondent avers that it attempted to come into compliance upon receiving the warning letter by removing the identified product.  Respondent further asserts in its pre-hearing brief that once they received the June 13, 2023 Warning Letter, they “immediately removed said product, and even all other products not mentioned in the letter from this brand, from our store.”  CRD Dkt. Entry No. 7 at 6.

I have reviewed the warning letter issued to Respondent in this case and find that, rather than disregarding the warning letter as CTP proffers, Respondent attempted to remedy the violation identified in the warning letter.  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 (emphasis in original, underlining replaced by italics).  The warning letter then states that “the

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establishment offered for sale an Elfbar Sakura Grape ENDS product,” and instructed Respondent to correct the identified violation.  Id. at 1, 3.  The warning letter does not identify the product as an example or otherwise signal that other flavors of the brand may also lack the premarket authorization required under the Act.  See id.

While CTP is correct that the warning letter states that the “violation indicated in [the] letter may not be a complete list of violations at the establishment,” it does so midway through the letter on page 3 of 5.  Id. at 3.  Had this indication been more prominently placed or plainly written, CTP’s argument that Respondent’s violations are particularly serious because they occurred despite being previously warned would be more persuasive.  I find Respondent’s belief that it had remedied the violation in the warning letter to be reasonable.

Therefore, despite the serious nature of the violations, I find the Respondent’s attempt to comply with law, although insufficient to relieve it of liability, is a mitigating factor and the CMP amount should be accordingly reduced.

2. Respondent’s ability to pay and effect on respondent’s ability to continue to do business

Respondent states that “[a]s a small, family-owned business that has only been operational for a few years, a penalty of this magnitude poses a significant financial hardship.”  Answer at 2.  Respondent further states that “[i]f the court finds that the full penalty amount would be necessary, it is highly unlikely that we will be able to pay it . . . [t]he business was not profitable for the entire of the year 2024 and it still on a downward trend beginning 2025 . . . we will be closing our business on March 31, 2025.”  CRD Dkt. Entry No. 19.  Respondent provided its 2023 Form 8879-PE, E-file Authorization for Form 1065.  The form contains some of the information from Respondent’s Form 1065 U.S. Return of Partnership Income, including Respondent’s gross profit and ordinary business income.  CTP argues that this document alone is insufficient to establish that the Respondent is incapable of paying the $20,678 penalty.  CRD Dkt. Entry No. 10 at 9.  CTP has not challenged Respondent’s statements regarding the impact on the business.

Respondent acknowledges that it should pay a civil money penalty but asks for leniency.  Answer at 1; CRD Dkt. Entry No. 19.  I am sympathetic to Respondent’s statements, but I am limited by the evidence documented in the record.  Respondent did not include its complete tax return or any other evidence to support its inability to pay the civil money penalty.  Since the record lacks support for Respondent’s averments and I am limited to the evidence in the record, I find that Respondent has not established that it is unable to pay the civil money penalty.

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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 civil money penalty.  CTP notes, however, that Respondent received a warning letter that it had previously violated the law and that it nevertheless continued to receive in interstate commerce and offer for sale new tobacco products that lacked the required premarket authorization, which shows an unwillingness or inability to comply with the law.  CRD Dkt. Entry No. 10 at 10.  CTP therefore proffers Respondent’s repeated violation supports a penalty of $20,678.

I agree with CTP that the warning letter demonstrates a prior violation.  However, I disagree with the contention that Respondent’s repeated violation in this case was based on an unwillingness or inability to comply with the law.  As explained previously, Respondent acted upon receipt of CTP’s warning letter to remedy the violation identified in the letter.  Therefore, I find that the history of violations in this case is not significant as CTP contends.

4. Degree of culpability

Based on my finding that Respondent committed the violation alleged in the Complaint, I hold Respondent culpable for offering for sale new tobacco products that were adulterated and misbranded, in violation of the Act.  I acknowledge Respondent’s statements that it has attempted to comply with the warning letters it received.  However, 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.  As such, although I have no basis to doubt Respondent’s statements that it was unaware that the specific products at issue violated the law, Respondent’s lack of awareness does not absolve it of its responsibility as a retailer of tobacco products to sell tobacco products in compliance with the law.

V. Conclusion

For the reasons set forth above, I impose a reduced civil money penalty in the amount of $15,000, against Respondent, Train Smoke LLC d/b/a Train Smoke Vapor Shoppe, 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.