Royal Vape, Inc. d/b/a Royal Smoke Shop Inc., DAB TB9303 (2025)

INITIAL DECISION AND DEFAULT JUDGMENT

Found:

• 1)  Respondent violated 21 U.S.C. § 331, specifically section 906(d)(5) of the Federal Food, Drug, and Cosmetic Act (Act) (21 U.S.C. § 387f(d)(5)), and 21 C.F.R. § 1140.14(a)(4), as charged in the Complaint;
• 2)  Respondent violated 21 U.S.C. § 331, specifically section 906(d)(5) of the Act, and 21 C.F.R. § 1140.14(b)(2)(i), as charged in the prior Complaint;
• 3)  Respondent committed at least five violations in a 36-month period as set forth hereinabove; and
• 4)  Respondent is hereby assessed a civil penalty in the amount of $6,892.

Glossary:

Page 2

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 or Complainant) filed a Complaint on October 25, 2024, against Royal Vape, Inc. d/b/a Royal Smoke Shop Inc. (Respondent or Royal Smoke Shop Inc.), located at 533 Main Street, Clifton Forge, Virginia 24422, alleging that FDA documented at least five violations within a 36-month period.

Respondent Royal Smoke Shop Inc. was served with process on October 24, 2024,

Page 3

by United Parcel Service (UPS).  Civil Remedies Division (CRD) Docket (Dkt.) Entry Numbers (Nos.) 1b, 3.  Respondent timely filed its Answer on October 27, 2024.  CRD Dkt. Entry No. 2.

On November 5, 2024, I issued a Pre-Hearing Order (PHO) setting a schedule for the parties’ exchanges of evidence and the procedures in preparation for a hearing.  CRD Dkt. Entry No. 4.  Pursuant to the PHO, CTP sent a Request for Production of Documents (RFP) to Respondent on December 5, 2024, which was delivered on December 6, 2024.  CRD Dkt. Entry Nos. 6a-6b.  Respondent had ten days after receipt of the RFP (or until December 16, 2024) to file a motion for protective order, or 30 days after an RFP was made (or until January 6, 2025) to provide any responsive documents to CTP.  CRD Dkt. Entry No. 4 ¶ 3; 21 C.F.R. §§ 17.23(a), (d) and 17.25.

On January 16, 2025, CTP filed a Motion to Compel Discovery (MTC) with two exhibits consisting of its RFP and the UPS Delivery Notification.  CRD Dkt. Entry Nos. 6, 6a-6b.  In its MTC, CTP stated that Respondent failed to comply with CTP’s RFP by the January 6, 2025 deadline.  CRD Dkt. Entry No. 6 at 1.  CTP also requested a stay on all outstanding deadlines previously established in my PHO, pending resolution of the discovery issues.  Id. at 2.

On January 24, 2025, I issued an Order giving Respondent until February 10, 2025 to show cause why the MTC should not be granted in CTP’s favor.  CRD Dkt. Entry No. 7 at 2.  I also stayed all remaining deadlines in this case.  Id.  To date, Respondent has not filed a response to my Order or CTP’s MTC.

On February 12, 2025, I issued an Order to Compel Discovery and Order to Show

Page 4

Cause to Respondent (MTC OSC) and ordered Respondent to comply with CTP’s RFP by February 25, 2025.  CRD Dkt. Entry No. 8 at 1.  I warned Respondent:

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.

Id. at 1-2 (citing 21 C.F.R. § 17.35).  Emphasis added.

Further, I ordered Respondent to show cause by February 25, 2025, why default judgment should not be entered against it for failing to comply with the procedural rules.  I also continued the stay on the remaining deadlines in this case.  Id. at 2.  Respondent did not show cause or otherwise respond to my February 12, 2025 MTC OSC. 

On March 3, 2025, CTP filed a Status Report and Motion to Impose Sanctions (MTIS) stating, “Respondent has not produced documents to CTP in response to its RFP,” and “Respondent failed to respond to the ALJ’s February 12, 2025, Order requiring it to comply with CTP’s Request for Production of Documents.”  CRD Dkt. Entry No. 9 at 2.  CTP asserted that sanctions against Respondent are appropriate, and a reasonable sanction for Respondent’s non-compliance is to strike Respondent’s Answer.  Id. at 2.

On March 3, 2025, I issued another Order to Show Cause to Respondent (OSCR).  CRD Dkt. Entry No. 10.  In my OSCR, I noted Respondent Royal Smoke Shop Inc.’s failure to comply with the procedural rules in 21 C.F.R. Part 17, that CTP’s MTIS was construed as a request for an order to show cause, and so I directed Respondent to either comply with CTP’s RFP or to show cause why default judgment should not be entered against it for failing to comply with the procedural rules by March 18, 2025.  Id. at 2.  I

Page 5

again warned Respondent:

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.

Id. at 1 (citing 21 C.F.R. § 17.35).  Emphasis added.  Again, I also continued the stay on all remaining deadlines.  Id. at 2.

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 multiple judicial orders and directives. 

Specifically, Respondent has not complied with:

• the regulation at 21 C.F.R. § 17.23(a) and paragraph 3 of the November 5, 2024 PHO by failing to respond to CTP’s RFP within 30 days;
• my February 12, 2025 MTC OSC by failing to submit documents responsive to CTP’s RFP by February 25, 2025; and
• my March 3, 2025 OSCR by failing to submit documents responsive to CTP’s RFP by March 18, 2025.

Additionally, Respondent failed to defend this action.  21 C.F.R. § 17.35(a)(2).

Page 6

Specifically:

• Respondent did not file a response to CTP’s MTC, as permitted by the regulations, or file a response to my February 12, 2025 MTC OSC giving Respondent until February 25, 2025, to show cause why default judgment should not be entered against it; and
• Respondent did not file a response to CTP’s MTIS, as permitted by the regulations, or file a response to my March 3, 2025 OSCR giving Respondent until March 18, 2025, to show cause why default judgment should not be entered against it.

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 sanctions are appropriate in this proceeding and that striking Respondent’s Answer is an appropriate sanction.  21 C.F.R. §§ 17.35(b), (c)(3).  Striking Respondent’s Answer leaves CTP’s Complaint unanswered.  Therefore, I am required to issue an initial decision by default, provided the Complaint is sufficient to justify a penalty.  See 21 C.F.R. § 17.11(a).  Accordingly, I must determine whether the allegations in the Complaint establish violations of the Act.

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. § 331, specifically section 906(d)(5) of the Act, and 21 C.F.R. §§ 1140.14(a)(4) and 1140.14(b)(2)(i).

VI.   ISSUE

Did Respondent violate 21 U.S.C. § 331, specifically section 906(d)(5) of the Act,

Page 7

and 21 C.F.R. §§ 1140.14(a)(4) and 1140.14(b)(2)(i), as alleged in the Complaint?

VII.  DEFAULT

I find Respondent was served, which Respondent has failed to rebut, and that Respondent is subject to the jurisdiction of this forum, as established by the Notice of Filing filed by CTP on October 28, 2024.

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.

I find Respondent waived its right to a hearing pursuant to 21 C.F.R. § 17.11(b).

VIII.   ALLEGATIONS

1. Agency’s recitation of facts

CTP alleged that Respondent owns an establishment, doing business under the name Royal Smoke Shop Inc., located at 533 Main Street, Clifton Forge, Virginia 24422.  Respondent’s establishment receives tobacco products in interstate commerce and holds them for sale after shipment in interstate commerce.

CTP’s Complaint alleged that during a two-part inspection of Respondent’s establishment, conducted on August 1 and 6, 2024, an FDA-commissioned inspector documented the following violations:

1. Selling regulated tobacco products to a person under 21 years of age, in violation of section 906(d)(5) of the Act.  Specifically, a person younger than 21 years of age was able to purchase a Mr Fog Max Air Blue Raspberry Cherry Lemon electronic nicotine delivery system (ENDS) product on August 1, 2024, at approximately 10:54 AM; and

Page 8

2. Possessing open packages of cigarettes intended for the sale of individual cigarettes, in violation of 21 C.F.R. § 1140.14(a)(4).  Specifically, an FDA-commissioned inspector observed open packages of Marlboro and Newport cigarettes at the establishment on August 6, 2024, at an unspecified time.
   2. Respondent’s recitation of facts

As the result of being sanctioned for failing to comply with my orders and the procedures governing this proceeding, Respondent’s Answer was stricken from the record.  Since Respondent filed no responsive pleadings that I may consider, I must assume those allegations set forth in the Complaint to be true.  21 C.F.R. § 17.11(a).

IX.   PRIOR VIOLATIONS

On May 31, 2024, CTP initiated a previous CMP action, CRD Docket Number T-24-3122, FDA Docket Number FDA-2024-H-2585, against Respondent for at least three3 violations within the 36‑month period relevant to the current Complaint.  CTP alleged those violations to have occurred at Respondent’s business establishment on September 20, 2023, and March 2, 2024.

The previous action concluded when Respondent admitted the allegations contained in the Complaint issued by CTP and agreed to pay a monetary penalty in settlement of that claim.  Further, “Respondent expressly waived its right to contest such violations in subsequent actions.”

Page 9

I find and conclude Respondent committed five violations of 21 U.S.C. § 331, specifically section 906(d)(5) of the Act, and 21 C.F.R. §§ 1140.14(a)(4) and 1140.14(b)(2)(i), within a 36-month period as set forth in the Complaint.

X.    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 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.  The Secretary’s regulations on tobacco products appear in Part 1140 of Title 21, Code of Federal Regulations.

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).”  21 U.S.C. § 387c(a)(7)(B) (2012).  Section 387a‑1 directed FDA to re-issue, with some modifications, regulations previously passed in 1996.  21 U.S.C. § 387 a-1(a) (2012).  These regulations were passed pursuant to section 387f(d), which authorizes FDA to promulgate regulations on the sale and distribution of tobacco products; 75 Fed. Reg. 13,225 (Mar. 19, 2010),

Page 10

codified at 21 C.F.R. Part 1140 (2015); 21 U.S.C. § 387f(d)(1) (2012).  Accordingly, 21 C.F.R. § 1140.1(b) provides “failure to comply with any applicable provision in this part in the sale, distribution, and use of cigarettes and smokeless tobacco renders the product misbranded under the act.”

Under 21 U.S.C. § 331(k), “[t]he alteration, mutilation, destruction, obliteration, or removal of the whole or any part of the labeling of, or the doing of any other act with respect to, a food, drug, device, tobacco product, or cosmetic, if such act is done while such article is held for sale (whether or not the first sale) after shipment in interstate commerce and results in such article being adulterated or misbranded” is a prohibited act under 21 U.S.C. § 331.  Thus, when a retailer such as Respondent misbrands a tobacco product by violating a requirement of 21 C.F.R. Part 1140, that misbranding in turn violates the FDCA, specifically 21 U.S.C. § 331(k).  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.  Under current FDA policy, the first time FDA finds violations of 21 C.F.R. Part 1140 at an establishment FDA only counts one violation regardless of the number of specific regulatory requirements violated, but if FDA finds violations on subsequent occasions, it will count violations of specific regulatory requirements individually in computing any civil money penalty sought.  This policy is set forth in detail, with examples to illustrate, at U.S. Food & Drug Admin., Guidance for Industry, Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers, Responses to Frequently Asked Questions, (Revised) (2023), available at

Page 11

https://www.fda.gov/media/80888/download, at 11-13.  So, for instance, if a retailer sells a tobacco product on a particular occasion to an underage purchaser without checking for photographic identification, in violation of section 906(d)(5) of the Act, and subpart B of part 1140 of title 21, Code of Federal Regulations, this will count as two separate violations for purposes of computing the civil money penalty, unless it is the first time violations were observed at that particular establishment.  This policy of counting violations has been determined by the HHS Departmental Appeals Board to be consistent with the language of the FDCA and its implementing regulations.  See Orton Motor Co. d/b/a Orton’s Bagley v. HHS, 884 F.3d 1205 (D.C. Cir. 2018).

XI.   LIABILITY

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.

As set forth above, it is Respondent’s right to decide whether to participate in the legal process.  It is Respondent’s right to decide to request a hearing and it is Respondent’s right to waive a hearing.

I find Respondent, by failing to respond, waived its right to a hearing.

XII.  IMPACT OF RESPONDENT’S DEFAULT

When a Respondent defaults by failing to answer the complaint, or respond to a

Page 12

OSC, an ALJ must assume as true all factual allegations in the complaint and issue an initial decision within thirty (30) days of the answer’s due date, 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), (a)(2); but see 21 C.F.R. § 17.45 (initial decision must state the “appropriate penalty” and consider aggravating and mitigating circumstances).

Two aspects of Rule 17.11 are important in default cases.

First, the Complainant benefits from a regulatory presumption (the ALJ shall assume that the facts alleged in the complaint are true) which 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).4

Page 13

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) the Complainant’s request or (b) the maximum penalty authorized by law.

XIII.  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).

Based on Respondent’s failure to answer I assume all the allegations in the Complaint to be true.

I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding that Respondent violated 21 U.S.C. § 331, specifically section 906(d)(5) of the Act, in that a person younger than 21 years of age was able to purchase regulated tobacco products on September 20, 2023, March 2, 2024, and August 1, 2024.

I also find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding that Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(a)(4), on August 6, 2024 in that Respondent violated the requirement which prohibits breaking or otherwise opening any cigarette package for the sale or distribution of individual cigarettes.

Page 14

Further, I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding that Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(2)(i), on September 20, 2023 and March 2, 2024 in that Respondent also violated the requirement that retailers verify, by means of photo identification containing a purchaser’s date of birth, that no regulated tobacco product purchasers are younger than 21 years of age.

The conduct set forth above on September 20, 2023, March 2, 2024, August 1, 2024, and August 6, 2024, counts as five violations for purposes of computing the civil money penalty.

XIV.   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).

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

Page 15

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.

XV.  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.

XVI.   CONCLUSION

Respondent committed at least five violations in a 36‑month period and so, Respondent is liable for a civil money penalty of $6,892.  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 comply with my PHO, and my February 12, 2025 and March 3, 2025 Orders.
3. I find Respondent failed to comply with my orders and directives 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).
4. I find Respondent’s misconduct warrants striking its Answer as a sanction.  21 C.F.R. § 17.35(c).
5. I find striking Respondent’s Answer leaves the Complaint unanswered.  21 C.F.R. § 17.11.
6. I find Respondent is in default.

Page 16

7. I assume the facts alleged in the Complaint to be true.  21 C.F.R. § 17.11.
8. I find the facts set forth in the Complaint establish liability under the relevant statute.
9. I assess a monetary penalty in the amount of $6,892.