Bandala, Inc. d/b/a Supertest Joy America, DAB TB9321 (2025)

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks a $20,678 civil money penalty against Respondent, Bandala, Inc. d/b/a Supertest Joy America, located at 2180 West Main Street, Danville, Virginia 24541.  Specifically, CTP alleges that Respondent Supertest Joy America received in interstate commerce an electronic nicotine delivery system (ENDS) product that lacks the required premarketing authorization and offered such product for sale, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 331(c).

Respondent does not deny any of the allegations alleged in the administrative complaint (Complaint) but asserts that the violation occurred due to oversight, not non-compliance.  Respondent asserts that the business runs in accordance with local and federal laws and asks that the penalty be waived.  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 $13,441 is appropriate.

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I. Background and Procedural History

CTP began this matter by serving a Complaint on Respondent, at 2180 West Main Street, Danville, Virginia 24541, by United Parcel Service, and by filing a copy of the Complaint with the FDA’s Division of Dockets Management.  Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 1 (Complaint), 1b (Proof of Service).

On May 6, 2024, Respondent filed a timely request for extension to file its Answer.  CRD Dkt. Entry No. 3.  On May 7, 2024, I issued an Order granting Respondent’s Motion for Extension, setting Respondent’s Answer deadline for June 5, 2024.  CRD Dkt. Entry No. 4.

On June 4, 2024, Respondent filed its Answer to CTP’s Complaint along with a photograph of the alleged sightline of the tobacco product in its establishment.  CRD Dkt. Entry Nos. 5 (Answer), 5a.  In its Answer, Respondent did not deny the allegations in the Complaint but offered defenses and sought a waiver of the civil money penalty sought by CTP.  CRD Dkt. Entry No 5. at 1.  On June 5, 2024, I issued an Acknowledgment and Status Report Order (ASRO) giving the parties sixty days to file a joint status report on the status of settlement discussions.  CRD Dkt. Entry No. 6.  On August 5, 2024, the parties filed a Joint Status Report stating they “intend to engage in further settlement discussions.”  CRD Dkt. Entry No. 7.  On August 6, 2024, I issued a Pre-Hearing Order (PHO) establishing procedural deadlines in this case.  CRD Dkt. Entry No. 8.

On October 7, 2024, Respondent timely filed its pre-hearing exchange consisting of three unmarked exhibits, including an explanation of its financial inability to pay the civil money penalty amount and its 2023 federal and state tax returns.  CRD Dkt. Entry Nos. 10, 10a-10b.  In its explanation, Respondent did not discuss the alleged violation but focused on highlighting specific areas of its tax returns as proof of its inability to pay the civil money penalty.  CRD Dkt. Entry No. 10.

On October 25, 2024, CTP timely filed its pre-hearing exchange, consisting of a pre-hearing brief (CTP’s Br.), a list of two proposed witnesses and seven proposed exhibits (CTP Exhibits (Exs.) 1-7).  CRD Dkt. Entry Nos. 11, 11a-h.  Specifically, the exhibits included the written direct testimony of two proposed witnesses, James Bowling, Deputy Division Director, Office of Compliance and Enforcement for CTP, FDA (CTP Ex. 1), and FDA-Commissioned Officer Jody W. Edwards with the Commonwealth of Virginia (CTP Ex. 2).  CRD Dkt. Entry Nos. 11b, 11c.

On December 11, 2024, I scheduled a pre-hearing conference for February 18, 2025, at 11:00 AM Eastern Time.  CRD Dkt. Entry No. 12 (Order Scheduling Pre-Hearing Conference).

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II. Admission of Exhibits

On February 18, 2025, I held a telephone pre-hearing conference (PHC) call via Microsoft Teams.  See CRD Dkt. Entry No. 13 (Post-PHC Order).  During the PHC, I discussed the procedural history of the case, the record, and the parties’ pre-hearing submissions.  Id.  At the PHC, the parties agreed that a hearing would not be required.  Id.  I marked Respondent’s three October 7, 2024 submissions as Respondent’s Exhibits 1-3 (R. (Ex.) 1-3) and admitted them into the record without objection.  Id. at 2.Additionally, I admitted CTP’s Exhibits 1-7 into the record without objection.  Id.

On February 21, 2025, I issued an Order memorializing the issues discussed at the PHC.  CRD Dkt. Entry No. 13.  I also set a deadline of March 21, 2025 for the parties to file final briefs.  Id. at 2.  On March 21, 2025, CTP filed a Notice of Waiver of Final Brief.  CRD Dkt. Entry No. 14.  On March 21, 2025, Respondent filed a supplemental brief that summarized previous arguments about its inability to pay the $20,678 civil money penalty that CTP is seeking.  CRD Dkt. Entry No. 15.

As the final briefing deadline has passed, the administrative record is now closed, and this matter is ready for a decision based on the written record.  See 21 C.F.R. §§ 17.41, 17.45(c), 17.19(b)(11), 17.19(b)(17).

III. Issues

1. A. Whether Respondent received in interstate commerce an ENDS product that lacks the premarketing authorization required under the Act, specifically an Elfbar Sour Apple ENDS product, and offered such product for sale on December 19, 2023, in violation of 21 U.S.C. § 331(c); and, if so,
2. B. Whether the $20,678 civil money penalty sought by CTP is appropriate, considering any aggravating and mitigating factors.

IV. Applicable Law

In order to prevail, CTP has the burden to prove Respondent’s liability and appropriateness of the penalty by a preponderance of the evidence.  21 C.F.R. § 17.33(b). The U.S. Supreme Court has described the preponderance of the evidence standard as requiring that the trier-of-fact believe that the existence of a fact is more probable than not before finding in favor of the party that had the burden to persuade the judge of the fact’s existence.  In re Winship, 397 U.S. 358, 371-72 (1970); Concrete Pipe and Prods. of Cal., Inc. v. Constr. Laborers, 508 U.S. 602, 622 (1993).  Respondent has the burden to prove any affirmative defenses and any mitigating factors likewise by a preponderance of the evidence.  21 C.F.R. § 17.33(c).

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The Act prohibits the receipt in interstate commerce of any tobacco product that is adulterated or misbranded and the delivery or proffered delivery 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 exempt from this premarket authorization requirement only if the Secretary has issued a substantial equivalence report or a found exempt order 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).

The FDA has the authority to seek civil money penalties from any person who violates any Act requirement that relates to tobacco products.  21 U.S.C. § 333(f)(9).  The term “person” is defined to include individuals, partnerships, corporations, and associations.  21 U.S.C. § 321(e).  Retailers who violate a requirement of the Act that relates to tobacco products shall be liable for a civil money penalty up to the maximum amounts provided for by law, which was $20,678 during the relevant period, for each such violation, not to exceed $1,378,541 for all violations adjudicated in a single proceeding.  21 U.S.C. § 333(f)(9)(A); 21 C.F.R. § 17.2; 45 C.F.R. § 102.3.

V. Findings of Fact and Conclusions of Law

1. A. 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 on December 19, 2023.
   1. 1.    Violations of 21 U.S.C. § 331(c) of the Act 

On September 22, 2023, CTP issued a Warning Letter to Respondent, notifying Respondent that on August 15, 2023 an FDA inspector observed an Elfbar Kiwi Passion Fruit Guava electronic nicotine delivery system (ENDS) product offered for sale at Respondent’s establishment that lacked the required marketing authorization.  CRD Dkt. Entry No. 11h (CTP Exhibit (Ex.) 7); see also CRD Dkt. Entry No. 1.

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On December 19, 2023, FDA-Commissioned Officer Jody W. Edwards conducted an inspection of Respondent’s business establishment.  CRD Dkt. Entry No. 11c (CTP Exhibit (Ex.) 2).  During this inspection, Inspector Edwards observed “that the establishment sold FDA-regulated tobacco products and had a sales display containing tobacco products, including an Elfbar Sour Apple electronic nicotine delivery system (‘ENDS’) product, available for sale.”  Id. ¶ 6.  Inspector Edwards took photographs at the establishment, including the store and its external signage, the Elfbar Sour Apple ENDS product, and its placement in the display shelf within the establishment.  Id.

1. 2. Analysis

In its Answer, Respondent did not deny the allegations set forth in the Complaint, and thus conceded the factual allegations raised therein.  CRD Dkt. Entry No. 5.  Therefore, Respondent affirms that its establishment receives tobacco products in interstate commerce, including the Elfbar Sour Apple ENDS product, and delivers or proffers delivery of the product for pay at its establishment.  Respondent has not disputed any of the above alleged facts; instead, Respondent stated during the pre-hearing conference that it would not contest the violation or cross-examine the witnesses but would only contest the civil money penalty amount.  CRD Dkt. Entry No. 13.  Therefore, I conclude that Respondent violated the prohibition against receiving and offering for sale a new tobacco product that was adulterated and misbranded because the Elfbar Sour Apple ENDS product lacked the required FDA marketing authorization order, substantially equivalent order, abbreviated report nor 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).  Thus, Respondent’s action constitutes a violation of law that merits a civil money penalty.

1. B. Respondent has demonstrated by a preponderance of the evidence, the existence of mitigating circumstances to support a reduced civil money penalty of $13,441.

I have found that Respondent violated the prohibition against receiving and offering for sale new tobacco products that were adulterated and misbranded.  21 U.S.C. § 331(c).  Pursuant to 21 U.S.C. § 333(f)(9), CTP may seek civil money penalties from any person who violates the Act’s requirements as they relate to the sale of regulated tobacco products.  When determining the appropriate amount of a civil money penalty, I am required to consider any “circumstances that mitigate or aggravate the violation” and “the factors identified in the statute under which the penalty is assessed . . . .”  21 C.F.R. §§ 17.34(a); 17.34(b).  Specifically, I must consider “the nature, circumstances, extent and gravity of the 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).

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In its Complaint, CTP sought the maximum penalty amount for a single violation, $20,678, against Respondent.  CRD Dkt. Entry No. 1 ¶¶ 1, 12, 24.  Accordingly, I now turn to whether a $20,678 civil money penalty is appropriate.

In its Answer, Respondent argues that the civil money penalty sought by CTP is too high because

• . . . we work hard at remaining diligent and compliant with all rules and regulations while running our local store and had no intentions to display or sell this product after receiving the FDA Warning letter. We took immediate action after the Warning letter and additional action after inspector’s visit (which brought that one box to our attention). Furthermore, please note that we have had no sale of this product since the receipt of the Warning letter which is another reason why the remaining one box did not come to our attention.

CRD Dkt. Entry No. 5 at 2.

Respondent further argued that the one ENDS product box found during the December 19, 2023 inspection was not a result of “non-compliance” on its part but an oversight.  CRD Dkt. Entry No. 5 at 2.  Respondent maintained that after receipt of the September 22, 2023 Warning Letter, it discarded “10-12 boxes of the [Elfbar] product” and that the one ENDS product found during the December 19, 2023 inspection was “out of the line of sight for us or any of our customers.”  Id. at 1.  Respondent provided a photograph allegedly showing that the ENDS product location was not visible to an individual standing in its establishment.  CRD Dkt. Entry No. 5a.  Respondent also noted that its business would not benefit from discarding the approximately 10-12 Elfbar ENDS products and keeping one Elfbar ENDS product on the shelf “with an expected profit margin of no more than $40” when it knowingly cannot afford to pay any fines or penalties due to its limited financial gains.  CRD Dkt. Entry No. 5 at 1-2.

In its brief, Respondent expounded on how selling prohibited tobacco products in its establishment would provide no financial incentive and lacks any business rationale.

• Prior to receiving the FDA Warning Letter, our total inventory of the product in question (Elfbar) consisted of only 10 to 12 boxes, with an estimated resale value of $1,200 to $1,500 and a gross profit margin of approximately $300 to $500. Even before the violation, sales of this product were low and infrequent, demonstrating that it was never a significant revenue driver for our store. At the time of the 

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• inspector’s visit, only one remaining box was inadvertently left on a lower shelf, out of our immediate line of sight.

CRD Dkt. Entry No. 15 at 1. 

Respondent stated, “[t]he risk of potential penalties far outweighed any potential profit from the product in question.”  Id.  Respondent has consistently asserted it is committed to complying with the regulations and that it was quick to take action after receiving the September 22, 2023 Warning Letter.

For the reasons explained below, I find a reduced civil money penalty of $13,441 is appropriate.

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

The Family Smoking Prevention and 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).  There is no dispute that Respondent engaged in the sale of a highly regulated and dangerous product.  See generally 21 U.S.C. § 387 note (Findings and Purpose).

CTP argues the violation in this case is particularly serious because CTP previously issued a Warning Letter to Respondent on September 22, 2023, for selling an ENDS product that lacked the required marketing authorization.  CTP Br. at 8; see also CTP Ex. 7.  Specifically, the Warning Letter stated that during an inspection on August 15, 2023, an FDA inspector observed Respondent offering for sale an “Elfbar Kiwi Passion Fruit Guava ENDS product” which lacked the premarket authorization under the Act.  CRD Dkt. Entry No. 11h at 1.  The letter explained the sale of such a product was prohibited and warned Respondent to take action to correct the violation.  Id. at 1-5.  The Warning Letter stated that “[a]ll new tobacco products on the market without the statutorily required premarket authorization are marketed unlawfully and are subject to enforcement action at FDA’s discretion.”  Id. at 3.  The letter explained that future violations could result in enforcement action, including, but not limited to, civil money penalties, seizure, and/or injunction by FDA.  Id.  CTP contends that by continuing to sell prohibited ENDS products after receiving the letter, Respondent demonstrated an “unwillingness or inability to correct the violations . . . . ”  CTP Br. at 9.

In its Answer to the Complaint, Respondent asserts that after it noticed the inspector “taking pictures of one of the displays we noticed one box of the product lying at the bottom most part of the shelf towards the back. The box was out of the line of sight for us or any of our customers to notice.”  R.’s Answer at 1.  Respondent states that the box the inspector found was immediately removed and discarded.   Id.  Respondent also 

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explained that the products left in the display were due to an oversight and once Respondent received the Warning Letter, it immediately removed the products.  Id.  

Respondent was in the business of selling highly regulated and potentially dangerous products.  It received a written warning on September 22, 2023, stating that the “FDA has determined that your establishment markets new tobacco products lacking premarket authorization in the United States . . . .”  September 2023 Warning Letter, CRD Dkt. Entry No. 11h at 3.  Yet, three months after receiving this warning that it was in violation of federal laws, Respondent “had a sales display containing tobacco products, including an Elfbar Sour Apple electronic nicotine delivery system (‘ENDS’) product, available for sale.”  CRD Dkt. Entry No. 11c at 2.

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

Respondent contends it is unable to pay the proposed civil money penalty due to its “limited financial resources.”  R. Br. at 1.  In support of these arguments, Respondent submitted its 2023 federal and state corporate income tax returns.  CRD Dkt. Entry Nos. 10a-b.  For Respondent’s federal tax return in 2023, the tax returns show Respondent reported gross profits of $348,761 with a taxable income of negative $1,254.  For the 2023 Virginia Form 502, distributive or pro-rata income and deductions also show Respondent reported total taxable income of negative $1,254.  Id.

CTP argues that Respondent has not met its burden of proving an inability to pay.  CRD. Dkt. Entry No. 11 at 9.  CTP also argues that Respondent’s 2023 federal and state tax returns are insufficient alone to establish Respondent’s inability to pay.  Id. at 10.  CTP argues that the $20,678 civil money penalty will not affect Respondent’s ability to do business.  Id. at 10.  CTP states that “Respondent may continue to sell gas, groceries, [and] tobacco products that do not require premarket authorization, and authorized new tobacco products at its establishment.”  Id.

I am persuaded by Respondent’s arguments and submissions that it is unable to pay a $20,678 civil money penalty.  Despite finding that Respondent is unable to pay the $20,678 civil money penalty, I agree with CTP that Respondent can continue to do business if a civil money penalty is imposed.

1. C. 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.  However, Respondent received a Warning Letter, dated September 22, 2023, advising that it was in violation of federal laws for selling a new tobacco product (Elfbar Kiwi Passion Fruit Guava ENDS product) without the required premarketing authorization or exemption.  CRD Dkt. Entry No. 11h.  Despite the Warning Letter, Respondent continued to receive in interstate commerce and offer new 

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tobacco products for sale or distribution that lacked the required premarket authorization as evidenced by the violation on December 19, 2023.  CTP proffers Respondent’s repeated violations support a penalty of $20,678.  CRD Dkt. Entry No. 11 at 10-11.

1. D. Degree of Culpability

Based on my finding that Respondent committed the violation alleged in the Complaint, I find Respondent fully culpable for offering for sale a new tobacco product that was adulterated and misbranded, in violation of the Act.  The Act places a heavy burden on retailers who choose to sell prohibited tobacco products because of their highly dangerous and addictive nature.  See 21 U.S.C. § 387 note (Findings and Purpose).

While Respondent states it has taken steps to avoid future violations, I find that those actions do not absolve Respondent of its responsibility to comply with the law at the onset.  The September 22, 2023 Warning Letter provided Respondent with a written notice that it was in violation of federal law that could subject it to a fine.  In a subsequent inspection on December 19, 2023, Respondent was found offering for sale a prohibited tobacco product.  As discussed above, Respondent complied with the Warning Letter by immediately removing, what it believed, were all the prohibited products.  Based on Respondent’s account, 10-12 tobacco products were removed in compliance and an ENDS product found on December 19, 2023 was the only prohibited product that was unintentionally left behind.

Respondent maintains that it lacks the culpability of offering a prohibited product for sale at its establishment because Respondent did not know that the product was in its establishment.  Even if I find Respondent’s claim to be true, Respondent is solely responsible for ensuring that it maintains and keeps a diligent inventory of all products on its sales floor.  Respondent had almost three months between the time it received the Warning Letter and the December 19, 2023 inspection to inspect its establishment to uncover and account for all tobacco products on its shelves.  If Respondent diligently checked its sales floors within the three-month timeframe, Respondent would have found and removed the products prior to the December 19, 2023 inspection.  Respondent has a duty to comply with the federal laws applicable to the tobacco products it chooses to sell.  Therefore, I find that Respondent actions warrant culpability in receiving the civil money penalty.

1. E. Additional Mitigating Factors and Other Such Matters as Justice May Require

The Act gives me discretion to consider “other matters as justice may require” in determining whether a civil money penalty is appropriate.  See 21 U.S.C. § 333(f)(5)(B).  As noted above, CTP is requesting the maximum penalty amount permitted by the regulations.  See 45 C.F.R. § 102.3 (2022); 87 Fed. Reg. 15,100, 15,103 (March 17, 

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2022).  In assessing this request, I find that justice requires me to consider the range of available penalties in light of the specific facts and circumstances of the case, separate and apart from the factors discussed above.  In doing so, I note that the purpose of a civil money penalty under the Act is to promote compliance with the law and deter future violations to protect public health.  Therefore, a civil money penalty should be sufficient to achieve this purpose, but not overly punitive.  However, Respondent is required to prove any affirmative defenses and any mitigating factors by a preponderance of the evidence.  21 C.F.R. § 17.33(c).

Here, the record shows Respondent operates an establishment, which offers tobacco products for sale.  CRD Dkt. Entry No. 1.  Respondent, despite CTP’s argument, does not have a history of prior violations of the Act resulting in a civil money penalty.  In these proceedings, Respondent has not challenged CTP’s allegations but has consistently argued that its establishment is in a weak financial position.  CRD Dkt. Entry Nos. 5, 10, 10a-b, 15.  Additionally, Respondent argues that moving forward it will work with CTP to prevent future violations.  CRD Dkt. Entry No. 15 at 1-2.

Respondent provided tax documents and an explanation of the documents to establish its lack of assets and low cash revenue that “is barely sufficient to cover day to day operations of the business.”  CRD Dkt. Entry Nos. 10, 10a-b.  Although CTP argues Respondent’s financial submissions are insufficient to meet the burden of proving an inability to pay, I disagree.  I find that Respondent’s financial submissions support mitigation of the civil money penalty.

1. F. Penalty Determination

Respondent is specifically requesting that I revoke the Complaint and the entire civil money penalty amount.  See CRD Dkt. Entry No. 5 at 2.  However, Respondent’s request is not supported by any legal rationale.  Further, the Act contemplates substantially higher penalties to disincentivize the sale of unauthorized tobacco products.  Based on these factors, as well as the circumstances of the violation and the overriding public health interests at stake, I find that dismissing the entire penalty in this case would not sufficiently promote compliance with the Act or deter future violations.

In Respondent’s final brief, Respondent asked for a “waiver or significant reduction” of the civil money penalty.  CRD Dkt. Entry No. 15 at 1.  I find that the civil money penalty proposed by CTP, which is more consistent with the penalties authorized by the Act, provides a reasonable starting point for determining an appropriate reduction.  Based on the record evidence, the applicable law, and the aggravating and mitigating factors outlined in this decision, I find that a reduced penalty of $13,441 is appropriate under 21 U.S.C. §§ 333(f)(5)(B), (f)(5)(C), and (f)(9).

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VI.      Conclusion

For the above reasons, I enter judgment in the amount of $13,441 against Respondent, Bandala, Inc. d/b/a Supertest Joy America for receiving in interstate commerce an ENDS product that lacks the premarketing authorization required under the Act and offering such product for sale.  21 U.S.C. §§ 333(f)(5)(B) and 333(f)(9).  Pursuant to 21 C.F.R. § 17.45(d), this decision becomes final and binding upon both parties after 30 days of the date of its issuance.