Short Stop MC LLC d/b/a Short Stop Market, DAB TB9604 (2025)

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks a $20,678 civil money penalty (CMP) against Respondent Short Stop MC LLC d/b/a Short Stop Market, at 525 West Elva Street, Idaho Falls, Idaho 83402.  Specifically, CTP alleges that Respondent Short Stop Market 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).  For the reasons discussed below, I find Respondent violated the provisions of 21 U.S.C. § 331(c) and conclude that a reduced CMP in the amount of $16,542 is appropriate.

I. Background and Procedural History

CTP began this matter by serving an administrative complaint on Respondent Short Stop Market at 525 West Elva Street, Idaho Falls, Idaho 83402, by United Parcel Service, and by filing a copy of the complaint with the FDA’s Division of Dockets Management. Civil

Page 2

Remedies Division (CRD) Docket (Dkt.) Entry Numbers (Nos.) 1 (Complaint), 1b (UPS Delivery Notification).

On February 20, 2024, Respondent timely filed its answer to the complaint, along with a notice of appearance of counsel.  CRD Dkt. Entry Nos. 3, 3a In the answer, Respondent denied various allegations and claimed the proposed penalty was excessive and inappropriate for numerous reasons.  See CRD Dkt. Entry No. 3a.

On February 22, 2024, I issued an Acknowledgment and Pre-Hearing Order (APHO), outlining the procedures governing this case and establishing deadlines for discovery and the parties’ pre-hearing exchanges.  CRD Dkt. Entry No. 4.  On March 25, 2024, CTP filed a Joint Status Report stating that the parties intended to engage in further settlement discussions and that CTP would notify my office if the parties reached a settlement. CRD Dkt. Entry No. 5.

On April 30, 2024, counsel for Respondent filed an unopposed motion seeking an additional 14 days to respond to CTP’s request for production of documents.  CRD Dkt. Entry No. 6.  On April 30, 2024, I issued an Order granting the requested extension and gave Respondent until May 14, 2024 to respond to CTP’s discovery requests. CRD Dkt. Entry No. 7.  I also extended the pre-hearing exchange deadlines to accommodate the request, giving CTP until June 12, 2024 to file its pre-hearing exchange, and Respondent until July 3, 2024 to file its pre-hearing exchange.  Id. at 2.

On May 29, 2024, CTP filed an unopposed motion requesting an additional 30-day extension of all deadlines due to technical issues involving Respondent’s transmission of discovery materials.  CTP Dkt. Entry No. 8.  On June 10, 2024, I granted the request and extended the pre-hearing exchange deadlines to July 12, 2024 for CTP’s pre-hearing exchange, and August 2, 2024 for Respondent’s pre-hearing exchange.  CRD Dkt. Entry No. 9 at 2.

On July 12, 2024, CTP timely filed its pre-hearing exchange, consisting of a pre-hearing brief (CTP Br.), a list of proposed witnesses and exhibits, and seven1 proposed exhibits. CRD Dkt. Entry Nos. 10, 10a-10h.  CTP’s proposed exhibits included the written direct testimony of two proposed witnesses, James Bowling, Deputy Director, Division of Enforcement and Manufacturing, Office of Compliance and Enforcement, CTP, FDA, and Greg M. Christensen, an FDA-commissioned officer with the state of Idaho.  CRD Dkt. Entry Nos. 10b, 10c.

Page 3

On July 31, 2024, Respondent timely filed its pre-hearing exchange, consisting of a pre-hearing brief (R. Br.) and several proposed exhibits.  CRD Dkt. Entry Nos. 11, 11a-11b, 12.  Respondent’s pre-hearing submissions included sworn affidavits of two proposed witnesses, Casey Davenport and Martha Maldonado.  CRD Dkt. Entry Nos. 11a, 11b.

On September 4, 2024, after conferring with the parties regarding their availability, I issued an Order directing the parties to appear for a pre-hearing conference on Wednesday, November 6, 2024, at 11:00 AM Eastern Time.  CRD Dkt. Entry No. 16; see also CRD Dkt. Entry Nos. 13-15.  The Order explained that the purpose of the conference was to discuss all matters related to the hearing, including any objections to the parties’ evidentiary submissions and whether either party wished to cross-examine any witnesses. CRD Dkt. Entry No. 16at 2.

On November 6, 2024, I convened the pre-hearing conference as scheduled.  Although counsel for CTP was in attendance, neither Respondent nor its counsel appeared at the scheduled time.  See CRD Dkt Entry No. 17.  As a result, I issued an Order to Show Cause directing Respondent to state any reasons why I should not impose sanctions for its failure to appear.  Id.  In response to the Order to Show Cause, Respondent stated the failure was due to an internal calendaring error by its counsel.  See CRD Dkt. Entry No. 19.  Respondent also filed a motion to reschedule the pre-hearing conference.  CRD Dkt. Entry No. 18.  Based on Respondent’s statements, I found that Respondent’s failure to appear was due to excusable neglect and declined to impose sanctions.  CRD Dkt. Entry No. 20.  I also granted the motion to reschedule but warned Respondent “to carefully review and comply with all future orders in this case.” Id.

On November 25, 2024, after again conferring with the parties regarding their availability, I issued an Order rescheduling the pre-hearing conference for Wednesday, December 18, 2024, at 11:00 AM Eastern Time (9:00 AM Mountain Time).  CRD Dkt. Entry No. 23; also CRD Dkt. Entry Nos. 21-22.  In the Order, I instructed the parties to join the conference “at least 5 minutes prior to the scheduled start time.”  CRD Dkt. Entry No. 23 at 2.  I also specifically warned Respondent that failure to appear at the rescheduled pre-hearing conference could result in sanctions.  Id.

On December 18, 2024, I convened the rescheduled pre-hearing conference as scheduled. Once again, CTP’s counsel was in attendance, but neither Respondent nor its counsel appeared at the scheduled time.  CRD Dkt. Entry No. 24.  After waiting more than ten minutes past the scheduled start time, I canceled the conference and issued a second Order to Show Cause, giving Respondent until December 27, 2024 to state any reasons why it should not be sanctioned for its repeated noncompliance with my orders.  Id. at 2. I also gave CTP until January 10, 2025 to file an optional response, stating its position on whether sanctions were appropriate under the circumstances.  Id. at 2.

Page 4

On December 26, 2024, Respondent filed a one-page response to my second Order to Show Cause.  CRD Dkt. Entry No. 25.  In the response, Respondent stated that it failed to appear at the rescheduled pre-hearing conference because “Respondent’s counsel was delayed by inclement weather, icy roads, and traffic.”  Id.  Respondent also claimed that its counsel joined the conference “as soon as he was able.”  Id.  Notably, Respondent did not provide any evidence or details concerning the alleged traffic or weather conditions, nor did it identify any circumstances which prevented its counsel from contacting my office prior to the start time to explain he was running late. Id.

On January 10, 2025, CTP filed a response to my Order to Show Cause and moved to impose sanctions against Respondent.  CRD Dkt. Entry No. 26.  In the motion, CTP argued that sanctions were warranted due to Respondent’s repeated noncompliance with my orders.  See id.  CTP claimed the appropriate sanction was to strike Respondent’s answer and issue a default judgment against Respondent.  Id. at 3.

Also on January 10, 2025, Respondent filed a response to CTP’s motion for sanctions. CRD Dkt. Entry No. 27.  In the response, Respondent argued that the sanctions sought by CTP “[were] unduly harsh, disproportionate to the Respondent’s actions, and fail to consider the principle of least restrictive means.”  Id. at 1.  Respondent asked me to deny the request for sanctions and schedule a third pre-hearing conference.  Id. at 3.

On February 14, 2025, after considering the parties’ respective positions, I issued an Order imposing sanctions against Respondent for its repeated noncompliance with my orders to appear at the pre-hearing conference.  CRD Dkt. Entry No. 28.  Rather than strike Respondent’s answer and issue a default judgment, however, I concluded that the appropriate sanction was a finding that Respondent had forfeited its right to participate in the pre-hearing conference.  Id. at 5.  As a result, I found Respondent had forfeited any objections to CTP’s proposed exhibits, as well as the opportunity to cross-examine CTP’s witnesses or respond to any evidentiary objections raised by CTP. Id.  I also gave CTP until February 28, 2025 to file written objections to Respondent’s proposed exhibits and state whether it wished to cross-examine Respondent’s witnesses.  Id. at 5-6.  I explained that if CTP declined to cross-examine Respondent’s witnesses, I would establish a final briefing schedule and decide this case based on the written record.  Id. at 5.

On March 25, 2025, having received no objections or request for cross-examination from CTP, I issued an Order establishing final briefing deadlines and stating that this case would be decided based on the written record.  CRD Dkt. Entry No. 29.  In the Order, I gave the parties until April 24, 2025 to file final briefs and until May 9, 2025 to file any responses.  Id. at 2.

On April 4, 2025, CTP requested a 30-day extension of the final briefing deadline, explaining that it was evaluating the impact of a recent staffing reduction on CTP’s operations.  CRD Dkt. Entry No. 30.  On April 8, 2025, I granted the motion and issued

Page 5

an Order extending the final briefing deadlines to May 27, 2025 and June 9, 2025, respectively.  CRD Dkt. Entry No. 31.

On May 27, 2025, CTP filed a Notice of Waiver of Final Brief, stating that it did not intend to submit a final brief.  CRD Dkt. Entry No. 32.  Also on May 27, 2025, Respondent timely filed a final brief (R. Final Br.).  CRD Dkt. Entry No. 33.  On June 9, 2025, CTP timely filed a response to Respondent’s final brief and attached one exhibit. CRD Dkt. Entry Nos. 34, 34a.

As both parties have had the opportunity to submit evidence and fully brief their positions, the administrative record is now closed and this case is ready for a decision. 21 C.F.R. §§ 17.41(b), 45(a).

II. Evidence

1. CTP’s Exhibits

CTP submitted seven proposed exhibits with its pre-hearing exchange. I hereby admit CTP’s proposed exhibits 1-7 into the record without objection as follows:

• CTP Ex. 1: Declaration of James Bowling
• CTP Ex. 2: Declaration of Greg M. Christensen
• CTP Ex. 3: August 2023 Narrative Report
• CTP Ex. 4: August 2023 TIMS Assignment Form
• CTP Ex. 5: August 2023 Photographs of Esco Bars ENDS Product
• CTP Ex. 6: August 2023 Form FDA 482
• CTP Ex. 7: June 2023 warning letter

2. Respondent’s Proposed Exhibits

Respondent submitted several proposed exhibits with its pre-hearing exchange, including the sworn affidavits of two proposed witnesses.  See CRD Dkt. Entry Nos. 11a, 11b, 12. While CTP did not file any objections, I note that Respondent’s submissions were not filed in accordance with the instructions in the APHO and the Civil Remedies Division Procedures.  For example, Respondent failed to provide a list of proposed exhibits and witnesses and did not mark the two affidavits as exhibits.  See CRD Dkt. Entry Nos. 11a and 11b.  Respondent also filed multiple documents with the same exhibit markings. Compare CRD Dkt. Entry Nos. 11a and 11b at 4-155 (marked as “Respondent’s Exhibit A”) with CRD Dkt. Entry No. 12 (same).  In addition, I note that Respondent misidentified certain exhibits in its brief and other filings. See, e.g., CRD Dkt. Nos. Entry 11 at 5, 11a at 1, and 11b at 1 (referring to the June 13, 2023 warning letter, which is marked as “Respondent’s Exhibit B,” as “Exhibit A”).

Page 6

Despite these problems, I find that it serves the interests of justice to admit Respondent’s proposed exhibits into the record as evidence.  However, to help clarify the record, I hereby re-mark Respondent’s submissions and admit them as follows:

• R. Ex. A: Affidavit of Casey Davenport (CRD Dkt. Entry No. 11a at 1-3)
• R. Ex. B: Affidavit of Martha Maldonado (CRD Dkt. Entry No. 11b at 1-3)
• R. Ex. C: Miscellaneous Documents Bates Stamped 1-152 (CRD Dkt. Entry Nos. 11a and 11b at 4-155)
• R. Ex. D: warning letter (CRD Dkt. Entry Nos. 11a and 11b at 156-160)
• R. Ex. E: Respondent’s Written Discovery Responses (CRD Dkt. Entry No. 12)

III. Issues

There are two issues for me to decide in this case:

1. Whether Respondent received in interstate commerce an ENDS product that lacks the premarketing authorization required under the Act, specifically an Esco Bars Peach Watermelon ENDS product, and offered such product for sale on August 14, 2023, in violation of 21 U.S.C. § 331(c); and, if so,
2. Whether the $20,678 CMP proposed by CTP is appropriate, considering any mitigating or aggravating factors I find in this case.  21 C.F.R. § 17.45.

IV. Findings of Fact and Conclusions of Law

1. 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 in violation of the Act.

CTP seeks to impose a CMP against Respondent pursuant to the authority conferred by the Act and implementing regulations at Part 21 of the Code of Federal Regulations.  The burden is on CTP to prove Respondent’s liability and the appropriateness of any civil money penalty by a preponderance of the evidence.  21 C.F.R. § 17.33(b). The burden is on Respondent to prove any affirmative defenses and mitigating factors by a preponderance of the evidence. 21 C.F.R. § 17.33(c).

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

Page 7

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 required to have premarket review with a Marketing Granted Order (MGO) unless it has a substantial equivalence or substantial equivalence exemption order (found-exempt order) in effect 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).

Here, CTP’s case against Respondent relies on the written direct testimony of James Bowling, Deputy Director, Division of Enforcement and Manufacturing, Office of Compliance and Enforcement, CTP, FDA, and Inspector Greg M. Christensen, an FDA-commissioned officer with the state of Idaho.  CTP Exs. 1-2. Inspector Christensen testified that during an inspection of Respondent’s establishment on August 14, 2023, at approximately 8:30 PM, he observed an Esco Bars Peach Watermelon ENDS product available for sale.  CTP Ex. 2 ¶¶ 4-6; see also CTP Exs. 3-6 (Inspector Christensen’s narrative report, inspection results, photographs and notice of inspection dated August 14, 2023).

Deputy Director Bowling testified that the Esco Bars Peach Watermelon ENDS product observed during the August 14, 2023, inspection was manufactured in China. CTP Ex. 1 ¶ 9.  Deputy Director Bowling further testified that Esco Bars Peach Watermelon ENDS products were not commercially marketed in the United States as of February 15, 2007, and that at the time of inspection on August 14, 2023, there were no records of these products having an authorized FDA premarket authorization order in effect under 21 U.S.C. § 387j(1)(A)(i).  Id. ¶¶ 11-13.  Finally, Deputy Director Bowling testified that there was no record of Esco Bars Peach Watermelon ENDS products having a substantial equivalence order in effect under 21 U.S.C. § 387j(a)(2)(A)(i), nor had a report requesting a substantial equivalence order under 21 U.S.C. § 387e(j) been submitted; and that the products did not have a found-exempt order in effect under 21 U.S.C. § 387e(j)(3)(A), nor had an abbreviated report requesting a found-exempt order been submitted.  Id. ¶ 13.

Besides claiming a lack of information concerning the “marketing history of Esco Bars,” Respondent does not directly dispute or challenge the testimony and evidence submitted by CTP.  See R. Br. 3-4.  In fact, Respondent acknowledges it offered the Esco Bars Peach Watermelon ENDS product for sale on August 14, 2023 and appears to concede

Page 8

that a “reasonable and proportionate” penalty is appropriate.  Id. at 4, 8-9; see also CRD Dkt. Entry No. 3a at 3. Otherwise, Respondent’s arguments are focused on the appropriateness of the penalty amount. Therefore, I find that Respondent has failed to present any evidence or defense to overcome a finding of liability.

Based on the uncontroverted testimony of Deputy Director Bowling and Inspector Christensen, as well as the corroborating evidence submitted by CTP, I find that the Esco Bars Peach Watermelon ENDS product offered for sale at Respondent’s establishment on August 14, 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 also find the 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 the product 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).  Therefore, I conclude Respondent’s actions constitute violations of the Act that warrant a CMP.

2. Based on the aggravating and mitigating circumstances established by the parties, I find that a reduced CMP of $16,542 is appropriate.

I have determined that Respondent violated the prohibition against receiving and offering for sale a new tobacco product that was adulterated and misbranded.  21 U.S.C. § 331(c). Pursuant to 21 U.S.C. § 333(f)(9), Respondent is liable for a CMP not to exceed the amounts listed in FDA’s CMP regulations at 21 C.F.R. § 17.2; see also 45 C.F.R. § 102.3.  When determining the appropriate amount of a CMP, 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), (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).

Here, CTP is proposing a CMP in the amount of $20,678, which is the maximum penalty permitted by the regulations.  CRD Dkt. Entry No. 1, ¶ 1; 21 C.F.R. § 17.2; 45 C.F.R. § 102.3 (2022); 87 Fed. Reg. 15,100, 15,103 (March 17, 2022).  CTP argues the maximum penalty is appropriate based on the statutory factors set forth in 21 U.S.C. § 333(f)(5)(B).  See CTP Br. 9-11.  Respondent, on the other hand, argues that the maximum penalty is excessive, unreasonable, and unconstitutional. R. Br. at 4-9; R. Final Br. at 1-2; see also CRD Dkt. No. 3a. Respondent contends the penalty should be reduced to $100, which it claims matches the fine for similar violations under Idaho state law.  R. Br. at 8; R. Final Br. at 2; CRD Dkt. No. 3a at 7-8.

Page 9

For the reasons discussed below, after considering the parties’ arguments, the record, and the underlying facts and circumstances in this case, I conclude that a reduced CMP of $16,542 is appropriate.  21 C.F.R. §§ 17.33(a), (c); 17.34(a)-(c).

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

The Family Smoking Prevention and Tobacco Control Act was enacted for the purpose of authorizing the regulation of tobacco products for the “protection of the public health.” 21 U.S.C. § 387f(d).  There is no dispute that Respondent was in the business of selling a heavily regulated, addictive, and dangerous product. See generally 21 U.S.C. § 387 note (Findings and Purpose).

CTP claims the violation in this case is particularly serious because CTP previously issued a warning letter to Respondent on June 13, 2023, directing it to stop selling unauthorized ENDS products.  CTP Br. at 9; see also CTP Ex. 7.  Specifically, the warning letter notified Respondent that on May 6, 2023, an FDA inspector observed Respondent offering for sale “Elfbar Crazi Berry and Elfbar Sakura Grape ENDS products,” both of which lacked premarket authorization.  CTP Ex. 7 at 1.  The letter explained that the sale of such products is prohibited by the Act and warned Respondent to correct its violations. Id.  The letter also stated it was not an exhaustive list of every violation at the establishment and explained that “all 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 directed Respondent to visit a link to the FDA’s website “for a list of products that received marketing granted orders.”  Id.  In addition, the letter warned Respondent that future violations may result in enforcement action, including “civil money penalty, no-tobacco-sale order, seizure, and/or injunction.” Id. at 3-4.  CTP contends that by continuing to sell unauthorized ENDS products after receiving the warning letter, Respondent demonstrated an “unwillingness or inability” to correct its violations. CTP Br. at 10.

By contrast, Respondent argues that the circumstances surrounding the warning letter support a reduction or waiver of the penalty.  Specifically, Respondent notes that the warning letter did not mention Esco Bars ENDS products, but instead cited a different brand, which Respondent claims it removed from its establishment. R. Br. at 5. Respondent also claims it tried to visit FDA’s website to review the list of authorized ENDS products but was unable to access the link provided in the warning letter.  Id. Because the letter cited a different brand of ENDS products and allegedly provided an incorrect link, Respondent contends CTP is at fault for failing to “ensure that Respondent was aware of what products could be marketed and what products could not.”  Id. at 4. According to Respondent, without specific guidance and direction from CTP, it had “no other means to discern what ENDS products were approved or what other violations may have occurred and was given no ability to discern or correct them.”  Id. at 5.

Page 10

I am not persuaded by Respondent’s arguments concerning the warning letter.  As a retailer that has chosen to sell heavily regulated tobacco products, Respondent has an affirmative duty to ensure it understands and complies with the applicable legal and regulatory requirements.  Respondent cannot shift that burden to CTP or avoid responsibility for its noncompliance by claiming CTP failed to tell it what to do.  Indeed, CTP has no legal obligation to “ensure” individual tobacco retailers are “aware” of the Act’s requirements, which are publicly available, nor is it required to give noncompliant retailers multiple chances to correct their violations.  In fact, CTP is not required to issue any warning at all prior to seeking a penalty for a violation of the Act. Therefore, I find no merit in Respondent’s position that CTP failed to provide sufficient guidance or information prior to initiating this action.

From a factual standpoint, I also find that the June 13, 2023 warning letter provided more than enough information for Respondent to understand its obligations under the Act.  The letter outlined the relevant statutory and regulatory requirements, advised Respondent that the sale of all unauthorized ENDS products was prohibited, directed Respondent to review the list of ENDS products with marketing granted orders, and invited Respondent to contact CTP with any questions.  See CTP Ex. 7.  Contrary to Respondent’s claims, I also note that the link in the warning letter does, in fact, lead to a working website with a list of all marketing granted order letters issued by CTP through March 28, 2024.  See https://www.fda.gov/tobacco-products/market-and-distribute-tobacco-product/tobacco-products-marketing-orders#PMTAView%20all%20marketing%20granted (last visited September 2, 2025).  Therefore, I find Respondent’s arguments about the warning letter are not supported by the record.

Finally, I find no merit in Respondent’s contention that it had “no other means to discern” which ENDS products it was authorized to sell.  Respondent should have conducted its own due diligence and been aware of which tobacco products it was authorized to sell before the warning letter was even issued. However, if Respondent was confused or uncertain about its obligations after receiving the warning letter, it could have taken any number of reasonable steps to obtain clarification.  Respondent, for example, could have followed up with CTP to request additional guidance, conducted its own research, or consulted with counsel.2  Instead, by its own account, Respondent decided to keep selling ENDS products with no understanding of the legal requirements for doing so, thereby demonstrating an inexcusable lack of diligence and reckless disregard for the law.

Page 11

In sum, I find that CTP has shown by a preponderance of the evidence that Respondent continued selling unauthorized ENDS products in violation of the Act, even after being previously warned about similar conduct and the potential consequences.  I also find that Respondent has failed to demonstrate any accountability for the violation and instead attempts to place the blame entirely on CTP. Based on these findings, I conclude that CTP has demonstrated aggravating circumstances which support the imposition of a substantial CMP in this case.

2. Ability to Pay and Effect on Ability to Continue to Do Business

Respondent claims that paying the maximum penalty would be “impossible” and result in the closure of its business.  R. Br. at 4-5; see also R. Exs. A, B. Respondent also states it is “a small convenience store” that “has been forced to take out a Capital loan to make payroll due to insufficient sales,” and its “gross sales are down 17.46% from the previous year.”  R. Ex. E at 6.

In response, CTP contends, in conclusory fashion, that Respondent has not provided any evidence showing an inability to pay or continue doing business. CTP Br. at 10. Contrary to CTP’s position, however, Respondent submitted various financial records with its pre-hearing exchange, including its 2022 and 2023 state and federal partnership tax returns. See R. Ex. C, Bates Nos. 21-152.  The 2022 tax return shows Respondent reported annual gross profits of $248,466 and an ordinary business income of $94,282.  Id. at Bates No. 30.  The 2023 tax return shows Respondent reported annual gross profits of $293,478 and an ordinary business income of $72,098. Id. at Bates No. 109.

Respondent also submitted a document that appears to be a quarterly summary report of its gross sales and profits from January 1, 2024 to April 30, 2024. R. Ex. C, Bates No. 19. The summary report shows quarterly gross sales of $260,382.19 and quarterly gross profits of $177,711.11 during that timeframe. Id.  In addition, Respondent submitted an undated printout that appears to be a screenshot from an online banking portal.  Id. at Bates No. 18.  The printout, which contains no business name, account name, or other identifying information, lists ten transactions made on May 1 and 2, 2024, including a deposit of $15,000 from “Lightspeed Comme Capital,” apparently as evidence that Respondent took out a “Capital loan.”  Id.  Finally, Respondent submitted written testimony of its two owners, both of which state, without any explanation, that they “have no ability to pay” the requested penalty. R. Exs. A, B.

After considering Respondent’s arguments and evidentiary submissions, I find that Respondent has failed to establish an inability to pay the maximum penalty.  As a threshold matter, I note that Respondent’s financial records were submitted as part of a single exhibit containing over 150 pages of miscellaneous documents.  See R. Ex. C. Further, Respondent did not cite, describe, or discuss any specific records, pages, or data in support of its arguments.  Instead, Respondent generically incorporated all the

Page 12

documents by reference into its affidavits, making it difficult to determine which specific information Respondent wants me to consider.  See R. Exs. A, B.  As a result, I must review and consider the documents without Respondent’s input or assistance.

Contrary to Respondent’s claims, the tax returns suggest Respondent’s business was relatively profitable in both 2022 and 2023.  R. Ex. C, Bates No. 30, 109.  Moreover, the 2024 quarterly summary report indicates Respondent’s gross profits exceeded $175,000 in a single quarter in 2024, which suggests, at a minimum, that Respondent continued to maintain (if not increase) its profitability.  Id. at Bates No. 19.3  The bank portal printout, which only shows a handful of transactions from an unnamed account over a two-day period, is patently insufficient to support any findings or conclusions.  Id. at Bates No. 18. However, even if I found that the printout proved Respondent took out a “Capital loan” in May 2024, that fact alone is not enough to establish an inability to pay the penalty, particularly when other records from the same timeframe show significant sales and profits.  I also note that Respondent’s affidavits are devoid of substance or specificity and instead consist entirely of conclusory assertions and arguments.  See R. Exs. A, B. Given the lack of detailed evidence and testimony demonstrating an inability to pay, I find that the record does not support Respondent’s claim that paying the penalty would be “impossible.”

I further find that Respondent has failed to demonstrate that imposing the proposed penalty would require it to close its business. Indeed, nothing in the record suggests Respondent is on the verge of insolvency or that paying the maximum penalty would result in the closure of the business.  Nonetheless, considering Respondent’s arguments, evidence, and testimony, I acknowledge that the maximum penalty is a substantial sum for any small business, even a relatively profitable one, and that imposing the full penalty amount might negatively impact Respondent’s continued business operations.  Thus, while I find Respondent’s evidence lacking, I do find that a modest reduction in the penalty amount is warranted on this basis.

3. History of Prior Violations

There is no indication in the record that Respondent committed any prior violations of section 331(c) of the Act resulting in a CMP. Nonetheless, CTP argues that Respondent “has a history of violating the Act’s requirements” based on the previously discussed June 13, 2023 warning letter.  CTP Br. at 10.

Page 13

As discussed above, I have already found that the circumstances surrounding the warning letter constitute an aggravating factor.  However, I do not agree with CTP that the warning letter also establishes a significant history of prior violations.  The warning letter was not a final agency determination and did not result in any penalties imposed against Respondent.  See CTP Ex. 7 at 3 (“Please note that this warning letter does not constitute final agency action .  .  .  .”).  Moreover, Respondent did not have the opportunity to request a hearing or otherwise dispute the violations alleged in the letter.  Id.  In my view, the mere fact that CTP previously warned Respondent about its conduct, without taking further action, is not enough to characterize Respondent as a serial offender.

In sum, I find that this is Respondent’s first violation resulting in a CMP.  As a result, I conclude that Respondent does not have a significant history of prior violations, which is a mitigating factor that supports a reduction in the proposed penalty amount.

4. 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 new tobacco products that were 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.  As discussed above, I find no merit in Respondent’s arguments that CTP’s alleged failure to provide adequate information is to blame for the violation.

5. Constitutional and Policy Arguments

Respondent devotes much of its pre-hearing brief to arguing that the penalty sought by CTP violates the Eighth Amendment of the Constitution.  R. Br. at 6-9. Respondent also complains about the number of authorized ENDS products in comparison to other tobacco products and argues that that the penalties for selling unauthorized ENDS products are “grossly disproportionate” to the penalties applicable to “actual tobacco products,” such as sales to minors.  R. Final Br. at 2.

Respondent’s arguments are beyond the scope of this proceeding. Since the penalty requested by CTP is authorized by the Act and its implementing regulations, Respondent is essentially asking me to ignore or invalidate the statutory and regulatory penalty provisions on constitutional and policy grounds. However, questions of constitutional law generally cannot be adjudicated in an administrative forum.  See, e.g., Califano v. Sanders, 430 U.S. 99, 109 (1977) (“Constitutional questions obviously are unsuited to resolution in administrative hearing procedures .  .  .  .”).  Moreover, as the presiding officer in this case, I explicitly do “not have not have the authority to find Federal statutes or regulations invalid.”  21 C.F.R. § 17.19(c); see also J. Peaceful, L.C. d/b/a Town Market, DAB No. 2742 at 15 (2016) (“Neither the ALJs nor this Board are empowered to

Page 14

ignore or overturn applicable statutes or regulations.”).  I also note that my review of the penalty is limited to the factors listed in 21 U.S.C. § 333(f)(5)(B), based on the facts and circumstances of this specific case. The statute does not authorize me to consider CTP’s broader enforcement policies and priorities in determining the penalty amount. Therefore, I decline to consider or address Respondent’s constitutional and policy arguments.

6. Penalty Determination

As discussed above, CTP is requesting the maximum penalty permitted by the regulations.  See 45 C.F.R. § 102.3 (2022); 87 Fed. Reg. 15,100, 15,103 (March 17, 2022). By contrast, Respondent argues that a penalty in the amount of $100 is appropriate because the State of Idaho imposes a $100 penalty for the permitless sales of electronic tobacco products (Idaho Code § 39-5708), which Respondent claims is “close[ly] analogous” to the violation at issue here. R. Br. at 7-8; R. Final Br. at 2; CRD Dkt. Entry No. 3a at 7-8.

I am not persuaded by Respondent’s argument that the penalty should be reduced to $100.  As a threshold matter, this case involves a violation of federal law—not Idaho state law.  See Western Spirits, Inc. d/b/a T-Joe’s Steakhouse and Saloon, DAB No. 2844, 2018 WL 1056521, at 4 (Jan. 16, 2018) (“Respondent’s reliance on Wyoming law is misplaced since this case, as the ALJ concluded, is governed by federal law (the Act and its implementing regulations)[,] not state law.”).  Since the penalties for federal tobacco violations are established by the Act and its implementing regulations, Idaho state law has no bearing on the penalty determination in this case.4

Moreover, given the circumstances of the violation, I find that a $100 penalty would not adequately promote compliance with the Act or deter future violations.  Indeed, the Act and its implementing regulations contemplate much higher penalties for the conduct at issue in this case.  See 21 U.S.C. § 333(f)(9); 21 C.F.R. § 17.2; 45 C.F.R. § 102.3.  Since CTP has established Respondent’s liability and demonstrated aggravating circumstances, I find that CTP’s proposed penalty, which is authorized by the regulations, provides a more reasonable starting point for determining an appropriate penalty.

As discussed in more detail above, I have found as mitigating factors that Respondent has no history of prior violations resulting in a CMP and imposing the maximum penalty may negatively impact its continued business operations.  I also note that Respondent did not manufacture the product at issue in this case. 21 U.S.C. § 333(f)(5)(B) (allowing me to consider “such other matters as justice may require”).  On the other hand, as a retailer engaged in the sale of tobacco products, Respondent should have been familiar with the

Page 15

applicable law and known which products it was permitted to sell.  Further, the record shows Respondent continued selling unauthorized ENDS products even after being warned by CTP about the consequences.  In addition, by failing to take accountability for its conduct and attempting to shift the blame to CTP, I find that Respondent has displayed a reckless disregard for its legal obligations as a seller of tobacco products.

After weighing these competing factors, I find that imposing the maximum penalty would be overly punitive and would not serve the interests of justice. At the same time, however, I find that the violation was quite serious and warrants a proportional penalty. Further, given Respondent’s lack of accountability in this case, I am not convinced that a substantial reduction would sufficiently deter future misconduct.  Therefore, I conclude that a relatively modest reduction in the proposed penalty amount is appropriate under the circumstances.

In sum, based on the record evidence, the applicable law, and the aggravating and mitigating factors discussed in this decision, I find that a twenty percent reduction in the penalty proposed by CTP is warranted.  Therefore, I conclude that a reduced penalty of $16,542 is appropriate under 21 U.S.C. §§ 333(f)(5)(B), (f)(5)(C), and (f)(9).

V. Conclusion

For the reasons stated above, I impose a civil money penalty against Respondent, Short Stop MC LLC d/b/a Short Stop Market in the amount of $16,542 for receiving in interstate commerce an ENDS product that lacks the premarketing authorization required under the Act and offering such product for sale. Pursuant to 21 C.F.R. § 17.45(d), this order becomes final and binding upon both parties after 30 days of the date of its issuance.