TR Business Group Inc. d/b/a Buffalo Express Smoke / Gulf, DAB TB9233 (2025)

INITIAL DECISION AND DEFAULT JUDGMENT

Found:

• 1)  Respondent violated 21 U.S.C. § 301 et seq., specifically 21 U.S.C. § 331(c), as charged in the Complaint;
• 2)  Respondent committed at least one violation as set forth hereinafter; and
• 3)  Respondent is hereby assessed a civil penalty in the amount of $20,678.

Glossary:

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I.   JURISDICTION

I have jurisdiction to hear this case pursuant to my appointment by the Secretary of Health and Human Services and my authority under the Administrative Procedure Act (5 U.S.C. §§ 554-556), 5 U.S.C.A. § 3106, 21 U.S.C. § 333(f)(5), 5 C.F.R. §§ 930.201 et seq. and 21 C.F.R. Part 17.2

II.  PROCEDURAL BACKGROUND

The Center for Tobacco Products (CTP/Complainant) filed a Complaint on April 19, 2024, against TR Business Group Inc. d/b/a Buffalo Express Smoke Shop / Gulf (Respondent or Buffalo Express Smoke Shop / Gulf), located at 3095 Buffalo Road, Rochester, New York 14624.  Civil Remedies Division (CRD) Docket (Dkt.) Entry No. 1 (Complaint), 1a (Cover Letter), 1b (Proof of Service).  The Complaint alleges that Respondent received an electronic nicotine delivery system (ENDS) product in interstate

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commerce that lacked the premarketing authorization required and offering such product for sale, in violation of 21 U.S.C. § 331(c).  CRD Dkt. Entry No. 1 ¶¶ 1, 19.

Respondent was served with process on April 18, 2024, by United Parcel Service. CRD Dkt. Entry No. 1b.  On May 17, 2024, Respondent, through counsel, requested an extension of time within which to file an Answer.  CRD Dkt. Entry No. 4 (Request for Extension).  On May 20, 2024, I issued an Order granting Respondent’s request for an extension, establishing a June 19, 20243 deadline for Respondent to file its Answer.  CRD Dkt. Entry No. 5 (Order Granting Request for Extension).  On June 20, 2024, Respondent’s counsel filed a timely Answer to the Complaint.4  CRD Dkt. Entry Nos. 6 (Answer).  In its Answer, Respondent denied the allegations in the Complaint, asserted a defense, and contested the civil money penalty proposed by CTP.  See CRD Dkt. Entry No. 6.

On July 19, 2024, I issued an Order Withdrawing the July 12, 2024 Order and Pre-Hearing Order (PHO) which established deadlines for discovery and the parties’ pre-hearing exchanges.  CRD Dkt. Entry No. 8 (PHO).

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On August 19, 2024, the parties were advised that a newly assigned attorney advisor would be assisting me with this case.  See CRD Dkt. Entry No. 10.

On August 19, 2024, pursuant to 21 C.F.R. § 17.23 and the PHO, CTP served Respondent’s counsel with a Request for Production of Documents (RFP), which was delivered on August 20, 2024.  See CRD Dkt. Entry Nos. 11 at 1, 11a, 11b.  Respondent had ten (10) days after CTP’s RFP was served (or until August 30, 2024) to file a motion for a protective order.  21 C.F.R. §§ 17.23(d)(1), 17.28; PHO ¶ 3.  Respondent also had thirty (30) days after CTP’s RFP was served (or until September 19, 2024), to provide responsive documents.  21 C.F.R. §§ 17.23(a); PHO ¶ 3.  On September 30, 2024, CTP filed a Motion to Compel Discovery in which CTP averred that Respondent failed to respond to its RFP, and requested that an order be entered compelling Respondent to respond to CTP’s RFP in its entirety.  See CRD Dkt. Entry No. 11 at 2.

On October 9, 2024, I issued an Order to Compel Discovery and Order to Show Cause to Respondent.  CRD Dkt. Entry No. 12.  In the Order, I granted CTP’s Motion to Compel Discovery, and instructed Respondent to comply with CTP’s RFP on or before October 18, 2024.  See id. at 1.  In the October 9, 2024 Order, I also explained that Respondent failed to comply with my PHO and the procedural rules governing this proceeding.  See id. at 1.  In addition to ordering Respondent to comply with CTP’s RFP by October 18, 2024, I construed CTP’s Motion to Compel Discovery as a request for an Order to Show Cause, and instructed Respondent to show cause, on or before October 18, 2024, why I should not strike its answer as a sanction for failing to comply with my orders, and the rules and procedures governing the proceeding.  Id. at 1-2.

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I warned:

Failure to comply will result in sanctions, which may include issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.  21 C.F.R. § 17.35

Id.

Respondent did not provide documents responsive to CTP’s RFP, nor did Respondent file a response to my Order to Compel Discovery and Order to Show Cause to Respondent.

On December 9, 2024, CTP filed its Complainant’s Status Report and Motion to Impose Sanctions (Motion to Impose Sanctions), requesting that I strike Respondent’s Answer and issue an initial decision and default judgment imposing a civil money penalty in the amount of $20,678 against Respondent.  CRD Dkt. Entry No. 13 at 2.

On December 17, 2024, I issued another Order to Show Cause to Respondent. CRD Dkt. Entry No. 14.  In the December 17, 2024 Order, I construed CTP’s Motion to Impose Sanctions as a request for an Order to Show Cause and, again, instructed Respondent to comply with CTP’s RFP, and to show cause on or before December 27, 2024 why a default judgment should not be entered against it for failure to comply with the procedural rules governing this proceeding.  Id. at 1-2.  In the December 17, 2024 Order, I warned:

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Failure to comply will result in sanctions, which may include issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.  21 C.F.R. § 17.35

Id. at 1 (emphasis in original).

To date, Respondent has not provided documents responsive to CTP’s RFP. Further, Respondent has not filed a response to CTP’s Motion to Compel Discovery, my October 9, 2024 Order to Compel Discovery and Order to Show Cause to Respondent, CTP’s Motion to Impose Sanctions, nor my December 17, 2024 Order to Show Cause to Respondent.

III.  STRIKING RESPONDENT’S ANSWER

Pursuant to 21 C.F.R. § 17.35(a), I may sanction a person, including any party or counsel for:

• (1)     Failing to comply with an order, subpoena, rule, or procedure governing the proceeding;
• (2)     Failing to prosecute or defend an action; or
• (3)     Engaging in other misconduct that interferes with the speedy, orderly, or fair conduct of the hearing.

Here, Respondent failed to comply with my July 19, 2024 PHO, my October 9, 2024 Order to Compel Discovery and Order to Show Cause to Respondent, and my December 17, 2024 Order to Show Cause to Respondent.  Respondent has failed to

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comply with my orders and procedures governing this proceeding and failed to defend its actions.  Respondent’s misconduct has interfered with the speedy, orderly, or fair conduct of this proceeding.  21 C.F.R. § 17.35(a).  I find sanctions are appropriate pursuant to 21 C.F.R. § 17.35(a).

The harshness of the sanctions I impose upon either party must relate to the nature and severity of the misconduct or failure to comply.  21 C.F.R. § 17.35(b).  I find and conclude that Respondent’s misconduct is sufficient to warrant striking its answer and issuing a decision without further proceedings.  21 C.F.R. § 17.35(c); see 21 C.F.R. § 17.11(a).  In fact, Respondent has not been responsive in these proceedings since its attorney of record filed a Notice of Entry of Appearance on August 5, 2024.  See CRD Dkt. Entry No. 9.

IV.    BURDEN OF PROOF

CTP as the petitioning party has the burden of proof.  21 C.F.R. § 17.33.

V.     LAW

21 U.S.C. § 301 et seq., specifically 21 U.S.C. § 331(c), 21 U.S.C. § 387b(6)(A), 21 U.S.C. § 387c(a)(6), and 21 U.S.C. § 387j(a)(2)(A).

VI.   ISSUE

Did Respondent violate 21 U.S.C. § 301 et seq., specifically 21 U.S.C. § 331(c), as alleged in the Complaint?

VII.  DEFAULT

I find Respondent was served, which Respondent has failed to rebut, and that

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Respondent is subject to the jurisdiction of this forum, as established by the Notice of Filing filed by CTP on April 24, 2024, and by Respondent’s Answer filed on June 20, 2024.  See CRD Dkt. Entry Nos. 2, 6.

As discussed above, pursuant to 21 C.F.R. § 17.35(c), Respondent’s Answer is stricken from the record.  Striking Respondent’s Answer leaves the complaint unanswered.

It is Respondent’s right to participate in the legal process.

It is Respondent’s right to request a hearing or to waive a hearing.

CTP’s Complaint being unanswered, as a result of Respondent’s Answer being stricken from the record, I find Respondent waived its right to a hearing pursuant to 21 C.F.R. §§ 17.35, 17.11(b).

VIII.  ALLEGATIONS

1. Agency’s recitation of facts

In its Complaint, CTP alleged that Respondent owns an establishment, doing business under the name Buffalo Express Smoke Shop / Gulf, located at 3095 Buffalo Road, Rochester, New York 14624.  Complaint ¶ 13.  CTP also alleged that Respondent’s establishment received tobacco products, including an Elfbar Mandarin Lime ENDS product, in interstate commerce and delivered or proffered delivery of such tobacco product for pay or otherwise.  Id. ¶ 14.

CTP’s Complaint further alleged that on August 8, 2023, CTP issued a Warning Letter to Respondent, stating that the new tobacco products that Respondent sells and/or

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distributes are adulterated and misbranded because they lack the required FDA marketing authorization.  Id. ¶ 20.

During an inspection of Buffalo Express Smoke Shop / Gulf on December 17, 2023, an FDA‑commissioned inspector observed an Elfbar Mandarin Lime ENDS product for sale at Respondent’s establishment.  Id. ¶ 15.

Respondent’s ENDS product is a “new tobacco product” because it was not commercially marketed in the United States as of February 15, 2007.  Id. ¶ 16.  Respondent’s ENDS product does not have a Marketing Granted Order (MGO) permitting marketing of the new tobacco product under 21 U.S.C. § 387j(c)(1)(A)(i) and is therefore adulterated under 21 U.S.C. § 387b(6)(A).  Id. ¶ 17.

Respondent neither submitted a substantial equivalent report nor an abbreviated report for Respondent’s ENDS product, and the product is, therefore, misbranded under 21 U.S.C. § 387c(a)(6).  Id. ¶ 18.

Respondent’s receipt of an adulterated and misbranded ENDS product in interstate commerce and delivery or proffer thereof for pay or otherwise violates 21 U.S.C. § 331(c).  Id. ¶ 19.

2. Respondent’s recitation of facts

Respondent’s Answer is stricken from the record as a sanction.  21 C.F.R. § 17.35(a).  Accordingly, Respondent filed no responsive pleadings that I may consider.

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IX.  FAMILY SMOKING PREVENTION AND TOBACCO CONTROL ACT

The “relevant statute” in this case is actually a combination of statutes and regulations:  The Family Smoking Prevention and Tobacco Control Act, Pub. L. No. 111 31, 123 Stat. 1776 (2009) (TCA), amended the Food, Drug, and Cosmetic Act, 21 U.S.C.A. Chap. 9, (FDCA) and created a new subchapter of that Act that dealt exclusively with tobacco products, 21 U.S.C. §§ 387-387u, and it also modified other parts of the FDCA explicitly to include tobacco products among the regulated products whose misbranding can give rise to civil, and in some cases criminal, liability.  The 2009 amendments to the FDCA contained within the TCA also charged the Secretary of Health and Human Services with, among other things, creating regulations to govern tobacco sales.

As of August 8, 2016, pursuant to 21 U.S.C. §§ 387a and 387f(d) (Section 906(d) of the Act), FDA revised the definition of tobacco products to incorporate additional products, subject to regulation under the Act.  These products include, but are not limited to, electronic nicotine delivery systems (including e-cigarettes), e-liquids, and pipe tobacco.  See Final Rule, Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products, 8 Fed. Reg. 28,974 (May 10, 2016), available at https://federalregister.gov/a/2016-10685 (hereafter “Deeming Regulation”).

The TCA prohibits the sale of any “new tobacco product” without authorization from the FDA.  21 U.S.C. § 387(j)(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).  The Secretary’s regulations on tobacco products appear in Part 1140 of Title 21, Code of Federal Regulations (CFR).

The TCA requires new tobacco products to have a premarket authorization in effect.  21 U.S.C. § 387j(a)(2).  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).

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) and 387c(6).

Under the FDCA, “[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.

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§ 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).  Section 387 a-1 directed FDA to re-issue, with some modifications, regulations previously passed in 1996.  21 U.S.C. § 387 a-1(a) (2012).

Under the FDCA, a tobacco product is adulterated if it has not obtained the required premarket authorization.  21 U.S.C. § 387b(6)(A).  Thus, when a retailer does not submit a PMTA for its ENDS products, or when a retailer 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 FDCA.

The FDCA 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 note and 21 C.F.R. § 17.2.

X.   LIABILITY

CTP alleges that Respondent received in interstate commerce and offered for sale an Elfbar Mandarin Lime ENDS product that lacked the required FDA premarket authorization, in violation of 21 U.S.C. § 331(c), on December 17, 2023.  Complaint ¶¶ 15, 19.

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Pursuant to 21 C.F.R. § 17.35(c), Respondent’s Answer is stricken from the record, leaving CTP’s Complaint is unanswered.  Thus, pursuant to 21 C.F.R. § 17.11(a), I assume those allegations set forth in the Complaint to be true.

I find and conclude that the Elfbar Mandarin Lime ENDS product offered for sale at Respondent’s establishment on December 17, 2023, previously traveled in interstate commerce before Respondent’s receipt and delivery, or 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) (holding 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 and conclude that the ENDS product was adulterated because it lacked the FDA premarketing authorization and was not exempt from this requirement.  21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A).

Finally, I find and conclude that the ENDS product at issue was misbranded under 21 U.S.C. § 387c(a)(6) because there was no substantially equivalent determination as required by 21 U.S.C. § 387e(j).

When a retailer such as Respondent is found to have “misbranded” a tobacco product in interstate commerce, it can be liable to pay a CMP.  21 U.S.C. §§ 331, 333. A retailer facing such a penalty has the right, set out in statute, to a hearing under the Administrative Procedure Act (21 U.S.C. § 333(f)(5)(A)).  A retailer can forfeit its rights under the statute and regulations by failing to participate in the process, a failure known as a “default” (21 C.F.R. § 17.11).  Respondent being in default pursuant to 21

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C.F.R. § 17.11, I conclude Respondent’s actions constitute violations of the Act that warrant the imposition of a CMP.

XI.  IMPACT OF RESPONDENT’S DEFAULT

Pursuant to 21 C.F.R. § 17.11, an ALJ must assume as true all factual allegations in the Complaint and issue an initial decision, imposing “the maximum amount of penalties provided for by law for the violations alleged” or “the amount asked for in the Complaint, whichever is smaller” if “liability under the relevant statute” is established. 21 C.F.R. § 17.11(a)(1), (2).  Compare 21 C.F.R. § 17.45 (initial decision must state the “appropriate penalty” and take into account aggravating and mitigating circumstances).

Two aspects of Rule 17.11 are important in default cases.  First, CTP benefits from a regulatory presumption (the ALJ shall assume that the facts alleged in the complaint are true) that relieves it from having to put on evidence:

The presumption affords a party, for whose benefit the presumption runs, the luxury of not having to produce specific evidence to establish the point at issue.  When the predicate evidence is established that triggers the presumption, the further evidentiary gap is filled by the presumption.  See 1 Weinstein’s Federal Evidence § 301.02[1], at 301‑7 (2d ed.1997); 2 McCormick on Evidence § 342, at 450 (John W. Strong ed., 4th ed. 1992).  Routen v. West, 142 F.3d 1434, 1440 (Fed. Cir. 1998).5

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Second, as far as the penalty is concerned, my discretion is limited by the language of the regulation.  I may not tailor the penalty to address any extenuation or mitigation, for example, nor, because of notice concerns, may I increase the penalty beyond the smaller of (a) CTP’s request or (b) the maximum penalty authorized by law.

XII.  LIABILITY UNDER THE RELEVANT STATUTE

Taking the CTP’s allegations as set forth in the complaint as true, the next step is whether the allegations make out “liability under the relevant statute” (21 C.F.R. § 17.11(a)).

I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding Respondent violated 21 U.S.C. § 301 et seq., specifically 21 U.S.C. § 331(c) on December 17, 2023, for purposes of computing the civil money penalty.

XIII.  PENALTY

There being liability under the relevant statute, I must now determine the amount of penalty to impose.  My discretion regarding a penalty is constrained by regulation.  I must impose either the maximum amount permitted by law or the amount requested by the Center, whichever is lower.  21 C.F.R. § 17.11(a)(1), (a)(2).

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In terms of specific punishments available, the legislation that provides the basis for assessing civil monetary penalties divides retailers into two categories:  those that have “an approved training program” and those that do not.  Retailers with an approved program face no more than a warning letter for their first violation; retailers without such a program begin paying monetary penalties with their first.  TCA § 103(q)(2), 123 Stat. 1839, codified at 21 U.S.C. § 333 note.  See 21 C.F.R. § 17.2.  The FDA has informed the regulated public that “at this time, and until FDA issues regulations setting the standards for an approved training program, all applicable CMPs will proceed under the reduced penalty schedule.”  FDA Regulatory Enforcement Manual, Aug. 2015, ¶ 5‑8‑1.  Because of this reasonable exercise of discretion, the starting point for punishments and the rate at which they mount are clear – the lower and slower schedules.

XIV.  MITIGATION

It is incumbent upon Respondent to present any factors that could result in mitigation of CTP’s proposed penalty.  Specifically, it is Respondent’s burden to provide mitigating evidence.  In a default, Respondent has failed to participate and has failed to present any evidence regarding potential mitigation.  Accordingly, I have no reason to mitigate the penalty.

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XV.  CONCLUSION

Respondent received in interstate commerce an electronic nicotine delivery system ENDS product that lacked the premarketing authorization required under the Act and offering such product for sale.  Therefore, Respondent is liable for a civil money penalty of $20,678.  See 21 C.F.R. § 17.2.

WHEREFORE, evidence having read and considered it be and is hereby ORDERED as follows:

1. I find Respondent has been served with process herein and is subject to this forum.
2. I find Respondent failed to respond to my October 9, 2024 Order to Compel Discovery and Order to Show Cause to Respondent.
3. I find that Respondent failed to respond to my December 17, 2024 Order to Show Cause to Respondent.
4. I find Respondent failed to comply with my multiple orders and procedures governing this proceeding and failed to defend its actions, constituting misconduct that has interfered with the speedy, orderly, or fair conduct of this proceeding.  21 C.F.R. § 17.35(a).
5. I find Respondent’s misconduct warrants striking its answer as a sanction.  21 C.F.R. § 17.35(c).
6. I find striking Respondent’s answer leaves the complaint unanswered.  21 C.F.R. § 17.11.
7. I find Respondent is in default.
8. I assume the facts alleged in the complaint to be true.  21 C.F.R. § 17.11.
9. I find the facts set forth in the complaint establish liability under the relevant statute.
10. I assess a monetary penalty in the amount of $20,678.