F and R, LLC d/b/a 59th Quick Mart Smoke Shop, DAB TB9377 (2025)

INITIAL DECISION

The Food and Drug Administration (FDA), Center for Tobacco Products (CTP) seeks to impose a $20,678 civil money penalty (CMP) against Respondent, F and R, LLC d/b/a 59th Quick Mart Smoke Shop for receiving in interstate commerce an electronic nicotine delivery system (ENDS) product that lacked the required premarketing authorization and offering such product for sale, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 331(c).  For the reasons discussed below, I conclude that CTP did not establish, by a preponderance of the evidence, that Respondent violated the Act.  Accordingly, no CMP is appropriate.

I. Background and Procedural History

CTP began this case by serving the Complaint on Respondent at 1300 Southwest 59th Street, Oklahoma City, Oklahoma, 73119 and filing a copy of the Complaint with the 

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Departmental Appeals Board (DAB), Civil Remedies Division (CRD).  CRD Docket (Dkt.) Entry Numbers (Nos.) 1 (Complaint), 1b (Proof of Service).

On March 11, 2024, CRD Management received an electronic message from Sherise Verhelst, Senior Executive Commercial Loan Assistant to Shawn Null, EVP First National Bank of Oklahoma, which included Respondent’s timely filed Answer.  See CRD Dkt. Entry Nos. 4, 4a.  On March 14, 2024, the attorney advisor assigned to this case received an electronic message from CTP which included a mailed copy of Respondent’s Answer.  See CRD Dkt. Entry Nos. 3 (Answer), 28.  In its Answer,1 Respondent denied the allegations in the Complaint, stating that “I purchased items needed for the store and didn’t know it is [sic] illegal for retail since April 14, 2022.”  CRD Dkt. Entry No. 3 ¶ 1.  Respondent further requested that I:

• Waive all the penalty or reduce the fine.  We apologize for selling this product since we didn’t get any notice from the wholesaler . . . .  The item is out of battery and it was the last items (2) waited to be exchange [sic] for credit and got forgotten . . . .

Id. ¶¶ 2-3.

On March 18, 2024, the previously assigned Administrative Law Judge, Kourtney LeBlanc, issued an Acknowledgment and Pre-Hearing Order establishing procedural deadlines for this case.  CRD Dkt. Entry No. 5 (APHO).  On April 15, 2024, CTP filed a Status Report stating that the parties had been unable to reach a settlement in this case and CTP remains willing to engage in settlement discussions but, absent an executed settlement agreement, intends to proceed to a hearing.  CRD Dkt. Entry No. 6 at 1.

On May 6, 2024, CTP filed Complainant’s Motion to Compel Discovery stating that it served CTP’s Request for Production of Documents (RFP) on Respondent on March 29, 2024, but CTP had not received a response to its RFP.  CRD Dkt. Entry No. 7.  Also on May 6, 2024, CTP filed Complainant’s Motion to Extend Deadlines.  CRD Dkt. Entry No. 8.  On May 6, 2024, Judge LeBlanc issued an Order giving Respondent until May 21, 2024, to respond to CTP’s Motion to Extend Deadlines.  CRD Dkt. Entry No. 9.  On May 21, 2024, CTP filed Complainant’s Notice of Withdrawal of Motion to Compel Discovery.  CRD Dkt. Entry No. 10.  On May 21, 2024, Judge LeBlanc issued an Order granting CTP’s Notice of Withdrawal of Motion to Compel Discovery and finding CTP’s Motion to Compel Discovery moot.  CRD Dkt. Entry No. 11.

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On June 20, 2024, Respondent registered for the DAB Electronic Filing System.  CRD Dkt. Entry No. 29.  On July 3, 2024, this case was transferred to me.  CRD Dkt. Entry No. 12.

On July 5, 2024, CTP timely filed its pre-hearing exchange, consisting of the Informal Brief of Complainant (CTP Br.), Complainant’s List of Proposed Witnesses and Exhibits, and eight proposed exhibits.  CRD Dkt. Entry Nos. 13, 13a-13i.  CTP’s exchange included the written direct testimony of two proposed witnesses:  (1) James Bowling, Deputy Division Director, Office of Enforcement and Manufacturing, Office of Compliance and Enforcement, CTP, FDA (CTP Exhibit (Ex.) 1); and (2) Melissa Galvez, an FDA-commissioned officer for the State of Oklahoma (CTP Ex. 2).  CRD Dkt. Entry Nos. 13b-13c.

On July 21, 2024, Respondent filed its pre-hearing exchange consisting of its Pre-Hearing Brief of Respondent and five pages of invoices.  CRD Dkt. Entry No. 14 (R. Br.).  In its pre-hearing brief, Respondent’s owner, Tung Nguyen, stated:

• I am not denying that I have purchased Elfbar for retail sale as indicated on my attached invoices . . . The 3 items were actually defective and placed behind the sales counter awaiting return approval from the wholesaler.  They were no longer for sale and were not on display to be for sale. . . . there is a visible hole on the Ebar [sic] aisle. . . .  Since we had purchased them from an Oklahoma licensed wholesaler, we were under the understanding that they were a sellable product . . . .

Id. ¶ 4; accord id. ¶¶ 5-6.  Respondent also stated that “I no longer am the owner of the convenience store business and have sold my inventory with intentions of returning to college . . . .  I will not have the money needed to pay such a hefty fine . . . .  I am not guilty of offering the items for sale on December 8, 2023.  I am no longer in business and no future violations can or will be made by myself.”  Id. ¶ 6.

On July 30, 2024, I issued an Order Scheduling the Pre-Hearing Conference (PHC) for September 10, 2024, at 2:00 PM Eastern Time.  CRD Dkt. Entry No. 15.  On September 10, 2024, I held the PHC as scheduled.  CRD Dkt. No. 17 at 1.  However, Respondent did not appear at the PHC, or provide any response to my July 30, 2024, Order.  Id.  Later on the evening of September 10, 2024, Respondent contacted the attorney advisor assisting in this case, by email transmission, explaining a misunderstanding regarding the scheduling of the PHC.  Respondent stated that she thought the PHC was scheduled for September 12, 2024, and not September 10, 2024.  CRD Dkt. Entry No. 16.  Upon finding good cause, I rescheduled the PHC call for September 24, 2024, at 2:00 PM Eastern Time.  CRD Dkt. Entry No. 17 at 1-2; see generally 21 C.F.R. §§ 17.19(b)(17), 17.21.

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On September 19, 2024, Respondent called the attorney advisor assisting me with this case and requested a Vietnamese translator for the September 24, 2024, PHC.  See CRD Dkt. Entry No. 18 at 1.

On September 24, 2024, I held a PHC with a certified English-Vietnamese interpreter.2  I explained my role as an impartial Administrative Law Judge, the issues to be decided in this case, and the parties’ respective burdens of proof.  CRD Dkt. Entry No. 23 (Order Summarizing Pre-Hearing Conference and Stay of Hearing Schedule, hereinafter “Post-PHC Order”) at 1; see 21 C.F.R. § 17.33.  I admitted CTP Exhibits 1-8 into the record.  Post-PHC Order at 2.  I also marked and admitted Respondent’s five pages of invoices as Respondent Exhibit 1.  Id.  I explained that the purpose of a formal hearing was to allow for the cross-examination and re-direct examination of any witnesses who have provided sworn testimony in their pre-filed exchanges.  Id. at 2-3; see APHO ¶¶ 9-11, 17-18.  As CTP was the only party to propose witnesses, I asked Respondent if it wished to cross-examine CTP’s witnesses.  Post-PHC Order at 3.Respondent indicated that it had not reviewed the witnesses’ testimony and wished to have them translated to Vietnamese.  Id.  CTP did not object.  I granted Respondent’s request to review translated testimony of CTP’s witnesses (CTP Exhibits 1-2) before deciding whether to cross-examine CTP’s witnesses.  I also ordered Respondent to inform me whether it wished to cross-examine CTP’s witnesses after reviewing the translated testimony.  Id. at 4.  To ensure Respondent fully understood CTP’s allegations, arguments, and evidence in this case, I directed CRD to translate CTP’s Complaint and pre-hearing exchange.3 Id. at 3-4.  I also directed CRD to translate all forthcoming CTP filings and my orders to Vietnamese and any Vietnamese documents filed by Respondent to English.  Id. at 4.  I stayed scheduling a hearing in this case pending issuance of the translated documents, Respondent’s review of those documents, and Respondent’s final decision regarding its election to cross-examine CTP’s witnesses.  Id. at 4.

On November 19, 2024, I issued an order summarizing the PHC and my directives.  Post-PHC Order.  The Post-PHC Order was accompanied by a Vietnamese translation of the Post-PHC Order and Complaint.  See CRD Dkt. Entry Nos. 23a-b.

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On November 26, 2024, Respondent timely notified the attorney advisor assisting me with this case, by electronic mail message from Rosetta Nguyen and Tung Nguyen, that Respondent did “not want to cross examine the witnesses and would like to wait for the judge’s decision.”  CRD Dkt. Entry No. 24.  On December 26, 2024, CTP timely filed a Notice of Wavier of Final Brief.  CRD Dkt. Entry No. 25.

On February 20, 2025, I issued an Order Attaching Complainant’s Translated Pre-Hearing Exchange and Establishing a Schedule and Directives for a Decision With or Without a Hearing.  CRD Dkt. Entry No. 26.4  In my Order, I explained that an administrative error prevented Respondent from receiving translated copies of CTP’s prehearing exchange, as ordered at the PHC.  Id. at 1-2.  Therefore, I afforded Respondent another opportunity to review the translated copies of CTP’s Complaint and pre-hearing exchange, including CTP’s witnesses’ testimonies, and inform me whether it wishes to cross-examine CTP’s witnesses.  Id. at 2.  The Order also established a schedule for the simultaneous submission of the parties’ final briefs, in the event Respondent declined to cross-examine CTP’s witnesses and, consequently, a hearing is not necessary.  Id. at 2.

On March 31, 2025, CTP timely filed a second Notice of Waiver of Final Brief.  CRD Dkt. Entry No. 27.  Respondent has not responded to my February 20, 2025, Order.

I infer from Respondent’s lack of response, that it rests on its initial election to not cross-examine CTP’s witnesses and to proceed to a decision on the written record.  The administrative record is now closed and complete, including all Vietnamese translations at my direction, and this matter is ready for a decision.  I will consider the full administrative record in deciding this case. 21 C.F.R. §§ 17.41(b), 17.45(a).

II. Issues

The issues in this case are:

• (1) Whether Respondent is liable for receiving in interstate commerce and offering for sale an Elfbar Summer Peach Ice electronic nicotine delivery system (ENDS) product that lacked premarketing authorization on December 8, 2023, in violation of 21 U.S.C. § 331(c); and

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• (2) If so, whether the requested $20,678 civil money penalty is appropriate, considering any aggravating or mitigating factors.

21 C.F.R. § 17.33(a)-(c) (identifying the legal issues and respective burdens of proof).

III. Admission of Evidence

The regulations grant me the authority to “receive, rule on, exclude, or limit evidence.”  21 C.F.R. § 17.19(b)(11).  I also have the authority to “[w]aive, suspend, or modify any rule in this part if the presiding officer determines that no party will be prejudiced, the ends of justice will be served, and the action is in accordance with law . . . .”  21 C.F.R. § 17.19(b)(17).  As explained above, I previously admitted CTP Exhibits 1 through 8 and Respondent Exhibit 1 into the administrative record at the PHC.

IV. Analysis, Findings of Fact, and Conclusions of Law

1. A. Applicable law

A “new tobacco product” may not be introduced into interstate commerce5 without FDA authorization.  See 21 U.S.C. §§ 387j(a)(1), 387j(a)(2)(A).  The Act defines a “new tobacco product” to include “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 FDA may authorize the marketing of a new tobacco product through three pathways: (1) a Marketing Granted Order (MGO); (2) a Substantial Equivalence (SE) Order; or (3) an SE Exemption Order.6  21 U.S.C. §§ 387j(a)(2)(A), 387j(c)(1)(A)(i), 387e(j)(1), and 387e(j)(3)(A).

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The Act also prohibits “[t]he 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).  A new tobacco product is “adulterated” if it is required by 21 U.S.C. § 387j(a) to have premarket review and does not have a MGO permitting marketing of the new tobacco product.  21 U.S.C. § 387b(6)(A).  A new tobacco product is “misbranded” if a “notice or other information respecting it was not provided as required” under the SE or SE exemption pathway, including an SE report or an abbreviated report.  21 U.S.C. § 387c(a)(6).

CTP has authority to seek a CMP from any person7 who violates a requirement of the Act related to tobacco products, up to the maximum amounts authorized by the Act, as adjusted for inflation.  21 U.S.C. § 333(f)(9)(A).  At the time of the alleged violation, the maximum CMP was $20,678 for each violation, and not to exceed $ 1,378,541 for all violations adjudicated in a single proceeding.  21 C.F.R § 17.2; 45 C.F.R. § 102.3.  CTP has the burden to prove Respondent’s liability and the appropriateness of the proposed CMP by a preponderance of the evidence.  21 C.F.R. § 17.33(b).  Respondent has the burden to prove any affirmative defenses and any mitigating factors, likewise by a preponderance of the evidence.  21 C.F.R. § 17.33(c).  The Supreme Court of the United States 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 its nonexistence before finding in favor of the party that had the burden to persuade the judge of the fact’s existence.  Concrete Pipe and Prods. of Cal., Inc. v. Constr. Laborers, 508 U.S. 602, 622 (1993) (citing In re Winship, 397 U.S. 358, 371-72 (1970) (Harlan, J., concurring)).

1. B. CTP has not proven by a preponderance of the evidence that Respondent received in interstate commerce and offered for sale an Elfbar Summer Peach Ice ENDS product that lacked premarketing authorization on December 8, 2023, in violation of the Act.

CTP brought this case alleging Respondent violated 21 U.S.C. § 331(c).  Complaint ¶¶ 4, 19.  Specifically, the Act prohibits:

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• The receipt in interstate commerce of any food, drug, device, tobacco product, or cosmetic that is adulterated or misbranded, and the delivery or proffered delivery thereof for pay or otherwise.

21 U.S.C. § 331(c).  In the Complaint, CTP alleges that, during an inspection on December 8, 2023, Respondent received in interstate commerce and offered for sale an adulterated and misbranded Elfbar Summer Peach Ice ENDS product that lacked premarket authorization.  Complaint ¶¶ 14-15, 19.

There is no dispute that the ENDS product in question traveled in interstate commerce and was a new tobacco product that lacked premarket authorization, as Respondent does not specifically deny those allegations in the Complaint or challenge the testimony of Deputy Division Director James Bowling on those factual issues.  See CTP Ex. 1 ¶¶ 9, 11-13.  Respondent generally concedes that it received the Elfbar Summer Peach Ice ENDS product from a wholesale distributor and was not aware that it was adulterated and misbranded because it lacked premarket authorization.  See Answer ¶ 1 (“I purchased items needed for the store and didn’t know it is illegal”); R. Br. at 4 (“Since we had purchased them from an Oklahoma licensed wholesaler, we were under the understanding that they were a sellable product . . . .  There was not a recall issued from the wholesaler or any information about the [Summer] Peach [Ice] Elfbar being not legal to sell when we purchased them.”)

However, to prevail, CTP must show that the Elfbar Summer Peach Ice ENDS product was delivered or proffered for delivery for pay or otherwise.  21 U.S.C. § 331(c).  Upon consideration of the entire evidentiary record, I conclude that CTP has failed to prove by a preponderance of the evidence that the ENDS product in question was sold or offered for sale by Respondent.  CTP primarily relies on the testimony of Inspector Melissa Galvez.  CTP Ex. 2.  In the declaration, Inspector Galvez states that a compliance check inspection was conducted at Respondent’s business establishment on December 8, 2023, at approximately 12:58 PM.  CTP Ex. 2 ¶ 5.  She further states:

• During the inspection, I observed that the establishment sold FDA-regulated tobacco products, and had a sales display containing tobacco products, including an Elfbar Summer Peach Ice ENDS product, available for sale.  The Elfbar Summer Peach Ice ENDS product available for sale was displayed on shelving with other ENDS products, including many with price tags, and located behind the sales counter where the establishment employees retrieve the tobacco product for customers.  I took photographs at the establishment, including of the store and its external signage, and of the tobacco products and their placement within the establishment.  Exhibit 5 is a true and accurate copy of photographs I took during the inspection, including the display containing the Elfbar Summer Peach Ice ENDS product.

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Id. ¶ 7.  Notably, the photographs at CTP Exhibit 5 do not corroborate Inspector Galvez’s testimony that the “Elfbar Summer Peach Ice ENDS product [was] available for sale [and] was displayed on shelving with other ENDS products . . .”  Id.  Although CTP Exhibit 5 includes photographs of various ENDS products on shelving, presumably on display for sale, the Elfbar Summer Peach Ice ENDS product is not among them.  CTP Ex. 5 at 3, 6.  Contrary to Inspector Galvez’s testimony, there is no photograph of a “display containing the Elfbar Summer Peach Ice ENDS product.”  Id.  The only photographs of the Elfbar Summer Peach Ice ENDS product in CTP Exhibit 5 show that the product was on a counter.  Id. at 4-5.  Moreover, the Narrative Report and Tobacco Inspection Management System report do not specifically identify the Elfbar Summer Peach Ice ENDS product as being “offered for sale at the establishment.”  CTP Exs. 3, 4 at 1.  Upon consideration of the record evidence, I find that the testimony of Inspector Galvez is not credible because it is inconsistent with CTP’s photographic evidence and is not corroborated by other evidence in the record.

In the photographs, there appears to be a box with similar pink and purple colors as the Elfbar Summer Peach Ice ENDS product on the second shelf towards the right, but the box is turned to its rear (or side) without any means of identifying the product.  CTP Ex. 5 at 3, 6.  Given the array of flavors and brightly colored Elfbar boxes and the lack of a photo clearly showing the full backside or side of the ENDS product at issue for comparison, I cannot reasonably infer that the turned box is the Elfbar Summer Peach Ice ENDS product at issue.  Even if it were the product at issue, I cannot reasonably infer that it was on display for sale, given its rear- (or side-) facing placement, compared to all of the other ENDS products that were positioned to face forward.  See generally id.  In the photographs, there also appears to be an Elfbar “Peach Ice” ENDS product in a light pink and purple box on the second shelf towards the left, located between an Elfbar Cranberry Grape ENDS product and an Elfbar Strawberry Kiwi ENDS product.  Id.  Although slightly similar, it is not the Elfbar Summer Peach Ice ENDS product alleged in the Complaint.  Complaint ¶ 15 (“On December 8, 2023, . . . the inspector observed an Elfbar Summer Peach Ice ENDS product for sale at Respondent’s establishment.”).

Although it is not necessary,8 I note that CTP’s photographic evidence corroborates Respondent’s argument that the Elfbar Summer Peach Ice ENDS products were not on display for sale.  Respondent repeatedly argues that the ENDS product in question was not offered for sale.  Specifically, Respondent states that the Elfbar Summer Peach Ice ENDS product was:

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• . . . defective and placed behind the sales counter awaiting return approval from the wholesaler.  They were no longer for sale and were not on display to be for sale . . . .

R. Br. at 4; see also Answer ¶ 3 (“The item is out of battery and it was . . . to be exchange[d] . . .”); R. Br. at 5 (“the defective [Summer] Peach [Ice] Elfbars were not on display for sale.  They were placed behind the sales counter . . .”); R. Br. at 6 (“The 3 I still had were defective and were not offered or on display for sale.”).  As stated previously, CTP’s photographs do not show the product in question “displayed on shelving with other ENDS products,” but rather, on the counter and stacked on two other similar-looking boxes.  See CTP Ex. 5 at 3-6.  The Elfbar Summer Peach Ice ENDS product did not have a price tag and was not placed by a sale sign or on shelving with other tobacco products for sale.  Id. at 4-5.   Thus, I find that the evidence of record establishes that the Elfbar Summer Peach Ice ENDS product was “not on display for sale.”

CTP argues that “Respondent acknowledged selling tobacco products as alleged in the Complaint when it stated in its Answer, ‘[w]e apologize for selling this product since we didn’t get any notice from the wholesaler.’”  CTP Br. at 4.  I reject CTP’s argument because it is misleading.  Contrary to CTP’s contention, Respondent did not specifically state that it sold “tobacco products as alleged in the Complaint.”  Likewise, Respondent did not specifically state that it sold the “Elfbar Summer Peach Ice ENDS product on December 8, 2023.”  Further, CTP ignores and fails to rebut Respondent’s other statements in its Answer and prehearing brief that the Elfbar Summer Peach Ice ENDS product at issue was defective and not for sale.  See Answer ¶ 3; R. Br. at 4-6.

Although other Elfbars or ENDS products may have been on display for sale, CTP’s Complaint is limited to the Elfbar Summer Peach Ice ENDS product on December 8, 2023.  Complaint ¶ 15 (“On December 8, 2023, an FDA-commissioned inspector . . . observed an Elfbar Summer Peach Ice ENDS product for sale at Respondent’s establishment.”).  “In order to prevail, the Center must prove respondent’s liability and the appropriateness of the penalty under the applicable statute by a preponderance of the evidence.”  21 C.F.R. § 17.33(b).  I find that CTP has failed to provide credible evidence that Respondent offered the Elfbar Summer Peach Ice ENDS product for sale on December 8, 2023.  Therefore, CTP has not met its burden of proving Respondent violated the Act.  Consequently, Respondent is not liable for a CMP and the imposition of a CMP is not appropriate.  21 U.S.C. § 333(f)(9)(A); 21 C.F.R. § 17.33(a)-(b).

V. Conclusion

Pursuant to 21 C.F.R. § 17.45, I hold that Respondent, F and R, LLC d/b/a 59th Quick Mart Smoke Shop did not violate 21 U.S.C. § 331(c) and no CMP is appropriate.  

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Pursuant to 21 C.F.R. §§ 17.11(b), 17.45(d), this decision becomes final and binding upon both parties after 30 days of the date of its issuance.