Drive Thru Vapors, LLC, DAB No. 3168 (2025)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Drive Thru Vapors, LLC, (Respondent) appeals the initial decision of an Administrative Law Judge (ALJ) imposing a $19,192 civil money penalty the Food and Drug Administration’s (FDA) Center for Tobacco Products (CTP) sought for violating the Federal Food, Drug, and Cosmetic Act by offering for sale in interstate commerce new tobacco products without the required FDA premarket authorization.  Drive Thru Vapors, LLC, DAB No. TB8280 (2024) (ALJ Decision).

As before the ALJ, Respondent does not dispute having sold tobacco “e-liquid” vaping products without premarket authorization that Respondent made from other e-liquids obtained in interstate commerce, as the ALJ found, but argues that the law’s restrictions apply in this case only to the e-liquid products it made, which it sold only at its store and not in interstate commerce.  Respondent does not allege or identify any error in the ALJ Decision.  Respondent also argues that the Supreme Court’s 2024 decision in Securities and Exchange Commission v. Jarkesy, 144 S. Ct. 2117 (2024), requires dismissal of CTP’s complaint against Respondent.  For the reasons explained below we conclude that Respondent’s arguments show no error in the ALJ’s decision, which we affirm.

Background¹

I. Legal background

To protect public health, the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. Chapter 9 (§§ 301-399, as amended), restricts the sale, distribution, and use of tobacco products and authorizes the FDA, through CTP, to enforce those restrictions by levying civil money penalties (CMPs) against persons and entities that violate those restrictions.  See 21 U.S.C. §§ 301, 321, 331, 333, 387, 387 note, 387a-387g.  “Tobacco product,” with exceptions not applicable here, “means any product made or derived from tobacco, or

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containing nicotine from any source, that is intended for human consumption, including any component, part, or accessory of a tobacco product.”  Id. § 321(rr)(1).  The FDCA requires FDA authorization for all “new tobacco products” – those not sold in the U.S. as of February 15, 2007, such as the e-liquids Respondent sold and the ones it used to make the e-liquid it sold – and provides alternate routes for obtaining that approval.  21 U.S.C. § 387j(a)(1), (a)(2)(A).

The FDCA provides for CMPs against “any person who violates a requirement of [the Act] which relates to tobacco products.”  21 U.S.C. § 333(f)(9)(A).  The FDCA authorized the Secretary of the Department of Health and Human Services to issue regulations restricting the sale and distribution of tobacco products and to establish CTP within the FDA.  21 U.S.C. §§ 387a(e), 387f(d).  Regulations concerning CMPs, and hearings to appeal them, in 21 C.F.R. Part 17, establish a schedule of maximum CMP amounts adjusted periodically for inflation.  21 C.F.R. § 17.2 (citing 45 C.F.R. § 102.3 (table)).  As of March 17, 2022, the maximum amount for a single violation is $19,192.  45 C.F.R. § 102.3 (table) (2022); 87 Fed. Reg. 15,100-01, 103 (Mar. 17, 2022).

The FDCA provision that CTP alleged Respondent violated, section 331(k), prohibits “the doing of any . . . act” with respect to food, drug, and cosmetic articles, including tobacco products, “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.”  21 U.S.C. § 331(k).

A new tobacco product is “adulterated or misbranded” if it is sold in interstate commerce without FDA authorization, which FDA may grant in three ways.  First, FDA may issue a Marketing Granted Order (MGO) after finding, upon review of a premarket tobacco product application (PMTA), that marketing the new tobacco product would be “appropriate for the protection of the public health.”  21 U.S.C. § 387j(a)(2)(A)(i), (b), (c)(1)(A)(i), (2)(A).²  Second, FDA may issue a Substantial Equivalence (SE) order based on a report from the applicant showing that the new tobacco product is “substantially equivalent” to a tobacco product that is either not “new” under the FDCA or that the FDA has already found to be “substantially equivalent,” and, third, FDA may grant a request for an exemption from the SE order requirement.  Id. §§ 387j(a)(2)(A), 387e(j)(1), 3(A); see also 21 C.F.R. § 1107.1.³

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CTP levies CMPs by serving a complaint on the respondent stating the allegations and the CMP it seeks to impose; the respondent may appeal by requesting a hearing before an ALJ.  21 C.F.R. §§ 17.3(c), 17.5, 17.7, 17.9, 17.19.  The ALJ conducts “a hearing on the record to determine whether the respondent is liable for a [CMP] and, if so, the appropriate amount of any such [CMP] considering any aggravating or mitigating factors.”  Id. § 17.33(a).  Before the ALJ, CTP “must prove respondent’s liability and the appropriateness of the penalty under the applicable statute,” and respondent has the burden to prove “any affirmative defenses and any mitigating factors,” “by a preponderance of the evidence.”  Id. § 17.33(b)-(c).  The ALJ issues an “initial decision” including findings of fact as to whether the allegations in the complaint are true and constitute violations of the law, whether any affirmative defenses have merit, and the appropriate amount of any CMP considering any mitigating or aggravating factors.  Id. § 17.45.

Either party may appeal the ALJ’s initial decision to the Board.  Id. § 17.47(a).  A notice of appeal “must identify specific exceptions to the initial decision, must support each exception with citations to the record, and must explain the basis for each exception.”  Id. § 17.47(c).  The Board “will consider only those issues raised before the presiding officer [i.e., the ALJ], except that the appellee may make any argument based on the record in support of the initial decision or decision granting summary decision.”  Id. § 17.47(g).  The Board may decline to review, affirm, or reverse the initial decision, “or increase, reduce, reverse, or remand any [CMP] determined” by the ALJ.  Id. § 17.47(j).

II. Background of the CTP Complaint, ALJ proceedings

CTP served on Respondent an Administrative Complaint for CMP (Complaint) on June 8, 2023.  CRD E-File Docket Entry Nos. 1, 1b.  Based on the observations of an FDA-commissioned inspector who visited Respondent’s establishment on March 18, 2023, CTP alleged that Respondent held for sale new tobacco products – e‑liquid vaping products – that lacked FDA authorization and that Respondent made from e-liquids obtained in interstate commerce, in violation of 21 U.S.C. § 331(k).  Complaint at 4-6.

The Complaint also reported that CTP had sent a “Warning Letter” on July 7, 2022, notifying Respondent that it sold new tobacco e-liquid products that were adulterated and misbranded because they lacked the required FDA marketing authorization order.  Complaint at 4-5; CMS Ex. 8 (Warning Letter).  The Complaint sought a CMP of $19,192 and provided instructions for answering the Complaint and requesting a hearing.  Complaint at 6-7.

Respondent requested an ALJ hearing and filed an answer.  Before the ALJ, CTP filed a pre-hearing brief and 13 proposed exhibits (CTP Exs. 1-13), including the written direct

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testimony of two proposed witnesses, and the ALJ admitted CTP’s exhibits absent objection from Respondent.  ALJ Decision at 3-4.  Respondent filed a pre‑hearing brief and proposed one witness, its owner, and stated that his testimony was contained in the pre-hearing brief but did not include written direct testimony (in the form of a written declaration signed under penalty of perjury) as required by the ALJ’s pre-hearing order setting procedures.  Id.; R. Witness List.  Respondent did not subsequently file a motion to submit untimely proposed written direct testimony as the ALJ had permitted in the pre‑hearing conference.  ALJ Decision at 5.  The ALJ ruled that a hearing was not necessary as Respondent did not seek to cross-examine CTP’s witnesses.  Id.

During the pre-hearing conference, the parties agreed that the issues to be addressed were whether Respondent violated 21 U.S.C. § 331(k) of the Act as alleged in the Complaint and, if so, whether the CMP CTP sought is appropriate considering any aggravating and mitigating factors.  ALJ Decision at 3-4.

The ALJ Decision

Before the ALJ, Respondent did not dispute the facts CTP alleged in the Complaint, and the ALJ rejected Respondent’s legal arguments.

The ALJ found that Respondent either admitted or did not deny the facts CTP alleged in the Complaint:  that Respondent had received CTP’s July 8, 2022 Warning Letter, that the FDA-commissioned inspector inspected its establishment on March 18, 2023, that Respondent “offered new tobacco products for sale” there on that date consisting of e‑liquids it made from e-liquids and other “component part[s] . . .  shipped in interstate commerce” (liquid nicotine, vegetable glycerin, and propylene glycol) and that “there is no FDA marketing granting order (MGO) authorizing Respondent’s new tobacco products, nor have the products been found to be either substantially equivalent (SE) or otherwise exempt from the premarket authorization requirement.”  ALJ Decision at 7-8 (citing R. Pre-H’g Br.; CTP Ex. 1, at 4-5 (Decl. of CTP Senior Regulatory Counsel); CTP Ex. 2, at 2 (Inspection Report); CTP Ex. 3, at 3 (inspection photographs of e-Liquid manufacturing components); CTP Exs. 4, 6-7 (more inspection photographs)).  Respondent used those e-liquids and other components to prepare e-liquids of various flavors at customers’ requests.  See ALJ Decision at 8 (“All of the components pictured in [inspection photographs] are being held for the purpose of selling a customized new tobacco product ordered by a customer,” which contained “merely smaller amounts of the components poured from the larger bottles seen” in the photographs that “traveled in interstate commerce.”).

The ALJ rejected Respondent’s argument that the requirement for FDA approval of new tobacco products “held for sale” (and attendant CMPs for violations) did not extend to the component parts it obtained in interstate commerce and used to make the e‑liquids; Respondent contended (and contends) that the only tobacco products it held for sale were

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the new tobacco products it made from those component parts and sold only at its store and not in interstate commerce.  ALJ Decision at 7 (citing R. Pre-H’g Br. at 10).  The ALJ cited the language and legislative history of the FDCA’s new tobacco provisions, and the Supreme Court’s holding in United States v. Sullivan, 332 U.S. 689 (1948), as showing the inclusive purpose of the FDCA and its tobacco provisions (we discuss the ALJ’s holdings in greater detail below).  The ALJ also found that Respondent’s not having pursued the “SE” or “SE exemption” pathways did not provide any basis to reverse the CMP, noting that section 331(k) sanctions acts that result in a tobacco product being adulterated or misbranded.  ALJ Decision at 9-10 (citing R. Pre-H’g Br., at 5, 10‑11); see also supra at 2 n.2 & n.3.

The ALJ thus concluded that “Respondent’s failure to obtain the required premarket authorization for its new tobacco products caused [them] to become adulterated and misbranded while they are held for sale after shipment of one or more of their components in interstate commerce, in violation of 21 U.S.C. § 331(k).”  Id. at 10.⁴

The ALJ next concluded that the $19,192 CMP, “the maximum penalty amount” for a single violation, was “appropriate . . . consider[ing] any aggravating or mitigating circumstance and the factors listed in the Act” that the ALJ must “take into account.”  ALJ Decision at 10-11.  We address the ALJ’s conclusions further below.

Respondent timely appealed the ALJ Decision to the Board, and CTP timely submitted a memorandum in opposition to Respondent’s appeal.  R. Notice of Appeal & Attached Brief (R. Br.); CTP Mem. in Opp’n to R. Appeal (CTP Br.).  Respondent did not file a reply brief as permitted by regulation.  21 C.F.R. § 17.47(e).

Standard of Review

The Board’s standard of review on a disputed issue of fact is whether the ALJ’s decision is supported by substantial evidence on the whole record, and the standard of review on a disputed issue of law is whether the decision is erroneous.  21 C.F.R. § 17.47(k).

Analysis

Respondent’s request for Board review does not address or specifically allege any error in the ALJ Decision.  Instead, Respondent offers two arguments:  that under Jarkesy, “the [ALJ] has no constitutional authority to adjudicate a [CMP] and the complaint must be

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dismissed,” and, as before the ALJ, that “the tobacco control act statutes do not authorize enforcement here,” because, Respondent maintains, it held no new tobacco products for sale in interstate commerce.  R. Br. at 1, 4-7 (emphasis, capitalizing omitted).  We address the latter argument first and conclude that these arguments demonstrate no error in the ALJ Decision, which is supported by substantial evidence and is not legally erroneous.

I. We affirm the ALJ Initial Decision because Respondent’s appeal identifies no factual or legal error.

A. Respondent does not dispute the ALJ’s factual findings, which are supported by substantial evidence on the whole record.

IRespondent does not dispute any facts in the ALJ Decision, i.e., that it received the CTP Warning Letter, that the FDA-commissioned inspector visited Respondent’s store on March 18, 2023 as alleged, and that Respondent had new tobacco products (e-liquids and other component parts of its finished product) that are sold in interstate commerce that it combined to make e-liquid vaping products it sold at its establishment.

Specifically, the ALJ found Respondent “does not dispute that Inspector Carter conducted an inspection of Respondent’s establishment on March 18, 2023,” and that Respondent-

admits that it offered new tobacco products for sale on March 18, 2023, that its new tobacco products were not commercially marketed in the United States as of February 15, 2007, and that there is no FDA marketing granting order (MGO) authorizing Respondent’s new tobacco products, nor have the products been found to be either substantially equivalent (SE) or otherwise exempt from the premarket authorization requirement.

ALJ Decision at 6-7; see R. Pre-H’g Br. at 4 (“It is true that Respondent was offering for sale on the date in question certain ‘new tobacco products’ that it manufactured and that there was no FDA marketing authorization order in place.”), 5 (“True that the products at issue in the inspection were ‘new tobacco products’ without a marketing authorization order, and had not been found to be SE or otherwise exempt from the premarketing authorization requirement.”).  The ALJ also found that the inspector “observed that Respondent’s establishment had e-liquid product[s] available for sale and observed an employee of the establishment manufacture an e-liquid product for a customer.”  ALJ Decision at 7.

Respondent does not dispute or challenge these findings, which accurately reflect the record.  Absent allegations that substantial evidence on the whole record does not support the ALJ’s factual findings, we sustain the ALJ’s findings, which we conclude are

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supported by the record.  See 21 C.F.R. § 17.47(c) (“The notice [of appeal] must identify specific exceptions to the initial decision,” – the ALJ Decision, per section 17.45 – and “must support each exception with citations to the record, and must explain the basis for each exception.”).

B. Respondent has not shown or alleged any error of law in the ALJ Decision, which is not legally erroneous.

1. Respondent “held for sale” in interstate commerce new tobacco products that lacked FDA approval or authorization for sale.

Respondent repeats its legal argument from before the ALJ, essentially that it sold e‑liquid products only at its store and not in interstate commerce, and that it did not hold for sale the e‑liquids and other components obtained through interstate commerce from which it made the e-liquid products it sold, as required for the FDCA’s sanctions on adulterated or misbranded tobacco products to apply.  See R. Br. at 5-8.  Respondent argued below that:

the “new tobacco product” lacking an MGO to which CTP’s allegations pertain are Respondent’s finished e-liquids. Those e-liquids do not exist as “new tobacco products” until they are manufactured.  They are not “held for sale” until they are manufactured.  And once manufactured and “held for sale,” CTP alleges no obliteration or moderation of the labels nor that any other predicate “act” is performed upon them.

ALJ Decision at 7 (quoting R. Pre-H’g Br. at 10).  The ALJ summarized Respondent’s argument as “there is no allegation that the finished e-liquid products it manufactured are sold outside of Texas,” where Respondent’s establishment is located, “and the provisions of Section 331(k) do not apply to the component parts of the e-liquid products, even though they traveled in interstate commerce, because they are not ‘held for sale’.”  Id.

Respondent also repeats its argument that its e‑liquid products could not have been “misbranded” because Respondent never sought approval for them through the SE or SE exemption pathway.  R. Br. at 7.  Respondent argues CTP erred in “claim[ing] that Respondent’s e-liquids are ‘misbranded’ under 21 U.S.C. § 387c(a)(6) . . . because Respondent’s e‑liquids were never eligible for any SE or SE exemption consideration” and that “CTP acknowledges this because it alleges that Respondent was required to seek premarket review through the PMTA pathway, not file an SE report.”  Id. at 7; see R. Pre-H’g Br. at 10-11.

The ALJ rejected these arguments.  The ALJ first concluded that Respondent indeed “held for sale” after shipment in interstate commerce (section 331(k)) “the component parts observed and photographed during the inspection on March 18, 2023” – “the liquid

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nicotine, vegetable glycerin, and propylene glycol pictured” in the inspector’s photographs – from which Respondent made the e-liquids it sold.  ALJ Decision at 7-8 (internal quote marks omitted).  The ALJ cited CTP’s unchallenged evidence that the components seen during the inspection were manufactured in California, Arizona, and Florida, and the Ninth Circuit’s holding in Baker v. United States, 932 F.2d 813 (9th Cir. 1991), that “wholly intrastate manufactures and sales of” the articles covered by the FDCA, in that case drug components, “are covered by 21 U.S.C. § 331(k) as long as an ingredient used in the final product travelled in interstate commerce.”  ALJ Decision at 8 (citing CTP Pre-H’g Br. at 5); 932 F.2d at 816.  Respondent on appeal does not address or dispute the evidence the ALJ cited.

In rejecting Respondent’s argument that it “held for sale” only the e-liquids it sold exclusively at its store and not in interstate commerce, the ALJ noted that those e-liquids were “merely smaller amounts of the components poured from the larger bottles seen in CTP Ex. 4 at 2, 4, 6,” the inspector’s photographs, and found it “difficult to view the larger components, that traveled in interstate commerce, as not being ‘held for sale’ in this case.”  Id. at 8 (citing CTP Ex. 2 at 2-3 ¶ 8 (Inspector’s Decl.)).  As support the ALJ cited Congress’s statements in the Family Smoking Prevention and Tobacco Control Act, which added the “new tobacco” provisions to the FDCA in 2009, that “[i]t is in the public interest for Congress to enact legislation that provides the Food and Drug Administration with the authority to regulate tobacco products” and “is also essential that manufacturers, prior to marketing such products, be required to demonstrate that such products will meet a series of rigorous criteria, and will benefit the health of the population as a whole . . . .”  Id. at 8-9 (citing Pub. L. No. 111-31, § 2(12), (36), 123 Stat. 1776 (2009)).

The ALJ also cited the Supreme Court’s statement in United States v. Sullivan, 332 U.S. 689 (1948), that the words “while such article is held for sale after shipment in interstate commerce” in section 331(k) “apparently were designed to fill this gap and to extend the Act’s coverage to every article that had gone through interstate commerce until it finally reached the ultimate consumer,” and the Court’s observation about the law’s “purpose to insure federal protection until the very moment the articles passed into the hands of the consumer by way of an intrastate transaction . . . .”  Id. at 9 (quoting 332 U.S. at 696-97).

The ALJ also found unavailing Respondent’s argument its tobacco products could not have been “misbranded” because it did not seek approval via the SE or SE exemption pathways.  ALJ Decision at 9.  As the ALJ noted, however, section 331(k) is worded disjunctively and a tobacco product need only be “adulterated or misbranded” to be covered, and Respondent has not disputed that it lacked an MGO, meaning they did not receive FDA approval for sale via the PMTA pathway, and Respondent has not disputed “that there is no FDA marketing granting order (MGO) authorizing Respondent’s new tobacco products.”  Id. at 7, 9-10.

On appeal, Respondent presents essentially the same arguments the ALJ rejected:

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Section § 331(k) requires . . .  another “act,” performed upon (as relevant here) a “tobacco product” “while such article is held for sale after shipment in interstate commerce.”  But the “new tobacco product” lacking an MGO to which CTP’s allegations pertain are Respondent’s finished e-liquids [that] do not exist as “new tobacco products” until they are manufactured.  They are not “held for sale” until they are manufactured. And once manufactured and “held for sale,” CTP alleges no . . . predicate “act” is performed upon them.  Nor are Respondent’s finished e‑liquids shipped in interstate commerce; Respondent only sold the e-liquids he manufactured to customers in store and never shipped them out of Texas.

R. Br. at 6-7; compare ALJ Decision at 7 (quoting R. Pre-H’g Br. at 10), supra.

Respondent does not cite or address the ALJ Decision or the ALJ’s reasons, and authorities cited, for concluding that Respondent indeed “held for sale” the component e‑liquids obtained in interstate commerce and used in the e-vaping liquids Respondent sold.  Respondent provides no basis for the Board to find the ALJ’s legal conclusions erroneous, as required in an appeal.  The regulations governing appeals of ALJ decisions require more than repeating rejected arguments before new adjudicators in hopes of a different result.  To that end, an appeal of an ALJ decision “must identify specific exceptions” to that decision and “must support each exception with citations to the record, and must explain the basis for each exception.”  21 C.F.R. § 17.47(c); see 60 Fed. Reg. 38,612, 38,622 (July 27, 1995) (“Section 17.47(c) has been changed to clarify that in the notice of appeal the appellant must identify and support specific exceptions [to the ALJ Decision] with citations to the record and explain the basis for the exceptions.”).  The appeal guidelines Respondent received with the ALJ Decision accordingly cite that requirement and advise, “The Board expects that the basis for each challenge to a finding or conclusion in the ALJ decision will be set forth in a separate paragraph or section, and that the accompanying arguments will be concisely stated.”  Guidelines -- Appellate Review of Decisions of Administrative Law Judges in Food and Drug Administration Tobacco Products Cases, CRD E-File Docket Entry No. 35b, at 3-4.⁵

Absent a showing, or any allegation, of legal error in the ALJ’s analysis, which we find persuasive, rejecting Respondent’s argument and concluding that Respondent “held for sale” the e‑liquid components obtained in interstate commerce, we affirm the ALJ’s analysis.⁶  See, e.g., Carolina Cigar of Delray, LLC, DAB No. 3134, at 10 (2024)

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(affirming ALJ decision where “Respondent has not alleged or attempted to show that the ALJ’s key findings and conclusions are unsupported by substantial evidence or legally erroneous”).

Respondent also does not dispute that it did not pursue the SE or SE exemption pathways for its products, rendering them misbranded to the extent they contained new tobacco components obtained in interstate commerce.  In any event, Respondent does not address the ALJ’s point that section 331(k)’s disjunctive wording sanctions acts that result in a tobacco product becoming adulterated “or” misbranded, authorizing CTP enforcement regardless of which approval or exemption pathway Respondent had sought.  ALJ Decision at 9-10.

We find the ALJ’s analyses sound and agree that “[i]t is not credible that Congress intended to allow an entity whose application to market a new tobacco product was not approved to then market that product anyway by purchasing the components necessary to create the finished product through interstate commerce and selling the finished product intrastate to the public.”  Id. at 9.

We thus affirm the ALJ’s conclusion that “Respondent’s failure to obtain the required premarket authorization for its new tobacco products caused such new tobacco products to become adulterated and misbranded while they are held for sale after shipment of one or more of their components in interstate commerce, in violation of 21 U.S.C. § 331(k).”  ALJ Decision at 10.

2. Respondent’s Jarkesy argument provides no basis to reverse the ALJ Decision.

We next conclude that Respondent’s argument based on Jarkesy provides no basis to reverse the ALJ Decision.  Jarkesy arose from “an enforcement action” by the Securities and Exchange Commission (SEC) pursuant to the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.  Jarkesy, 144 S. Ct. at 2124-26.  The SEC brought the enforcement action seeking CMPs from an investment advisor company and its individual manager for alleged securities fraud, and the SEC elected to proceed before an ALJ, rather than by jury trial, which the Securities and Exchange Act of 1934 also permitted.  Id. at 2124-25, 2139-40.  The Supreme Court heard the case to address the question of “whether the Seventh Amendment permits the SEC to compel respondents to defend themselves before the agency rather than before a jury in federal

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court,” and concluded that “[t]he Seventh Amendment . . . applies and a jury is required.”  Id. at 2125, 2127.  Respondent argues that Jarkesy “makes it clear that the FDA cannot impose civil penalties in excess of $20 on Respondent (or anyone else) through proceedings in its administrative courts.”  R. Br. at 2.

We reject Respondent’s attempts to equate this case with Jarkesy.  This case concerns a separate, distinct statutory and regulatory scheme (the FDCA as amended and its implementing regulations) as administered by the United States Department of Health and Human Services.

The Court held that the “SEC’s antifraud provisions replicate common law fraud, and it is well established that common law claims must be heard by a jury.”  Jarkesy, 144 S. Ct. at 2127.  The Court did not hold that every agency’s attempt to impose and enforce CMPs necessarily is, like the SEC’s action, “a common law suit in all but name” that “must be adjudicated in Article III courts.”  Id. at 2136.  On the contrary, the Court acknowledged the long-established “public rights exception,” under which “Congress may assign [a] matter for decision to an agency without a jury, consistent with the Seventh Amendment,” and extensively discussed the Court’s precedents applying that exception.  Id. at 2131-34.  We recognize, but do not decide – as the Supreme Court did not decide – the potential applicability of that exception to the FDCA and its implementing regulations concerning imposition and enforcement of CMPs for violations of the FDCA’s restriction on the sale of tobacco products including new tobacco products such as the nicotine e-liquids at issue here.  We cannot anticipate how federal courts may apply the reasoning of Jarkesy in different circumstances.

In any event, as CTP argues, we see no authority for the Board to ignore or decline to apply any part of the FDCA or its implementing regulations by extrapolation from the that decision.  CTP Br. at 8-10.  The regulations deny the ALJ the authority to find federal statutes or regulations invalid, and grant no authority to decline to apply them, so the ALJ did not err legally in applying the statute and regulations to find Respondent liable for violating section 331(k) by holding for sale covered tobacco products that lacked FDA authorization or approval, which was not rendered erroneous by Jarkesy.  21 C.F.R. § 17.19(c) (ALJ “does not have the authority to find Federal statutes or regulations invalid”).  “Neither the ALJs nor this Board are empowered to ignore or overturn applicable statutes or regulations.”  J. Peaceful, L.C., DAB No. 2742, at 15 (2016); see also Zoom Mini Mart, Inc., DAB No. 2894, at 17 (2018) (“we are not allowed to ignore or overturn” the conclusion the ALJ reached “by following the applicable authority found” in the FDCA); Fady Fayad, M.D., DAB No. 2266, at 14 (2009) (“The Board has consistently held that ALJs may not declare a statute or regulation to be unconstitutional and refuse to apply or follow the statute or regulation on that basis.”), aff’d, 803 F. Supp. 2d 699 (E.D. Mich. 2011).

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Respondent also argues that post-Jarkesy, ALJs and the Board Members must reverse FDCA CMPs notwithstanding 21 C.F.R. § 17.19(c) because “the oath of office federal employees take . . . provides that government employees must ‘support and defend’ the U.S. Constitution and ‘bear true faith and allegiance’ to it.”  R. Br. at 5 n.1 (citing 5 U.S.C. § 3331).  Respondent, however, has not provided any authority (judicial precedent, legislative history), nor are we aware of any, concluding that the oath of office compels or permits federal agency adjudicators to decline to apply or follow an applicable statute and regulations based on a Court decision that, pointedly, did not involve, address, or consider that statute or regulations.

Accordingly, we deny Respondent’s request to reverse the ALJ Decision based on Jarkesy.⁷

C. Respondent has not alleged or shown any error in the ALJ’s determination that the CMP is appropriate, which we affirm.

Respondent presented no exceptions to the ALJ’s conclusion that the $19,192 CMP that CTP sought was “appropriate . . . consider[ing] any aggravating or mitigating circumstance and the factors listed in the Act” that the ALJ must “take into account.”  ALJ Decision at 10-12; 21 C.F.R. § 17.45(b)(3) (“If the respondent is liable for penalties or assessments,” the ALJ determines “the appropriate amount of any such penalties or assessments, considering any mitigating or aggravating factors that he or she finds in the case.”).  Those factors are “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).

Addressing those factors, the ALJ found Respondent had not documented inability to pay the CMP; had indicated that e-liquid products were only 10% of its business; had received a warning letter from CTP, showing history and culpability; and that the record showed no additional mitigating factors.  ALJ Decision at 11-12 (citing 21 U.S.C. § 333(f)(5)(B)).  Respondent does not allege or “identify specific exceptions” to the ALJ’s findings.  21 C.F.R. § 17.47(c).  Respondent, as noted, contests its liability on legal grounds and has not, either here or below, addressed the consequences attendant upon the ALJ’s conclusion that Respondent was liable for violating section 331(k).  Absent any exceptions to the ALJ’s analysis, which we find sound, we affirm the ALJ’s determination that the $19,192 CTP sought is appropriate for that violation.

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Conclusion

For the foregoing reasons, we affirm the ALJ Decision.

Endnotes

¹ The facts stated here are taken from the Initial Decision and the administrative record.  We make no new findings of fact, and the facts stated are undisputed.

² CTP called this approval the “premarket tobacco product application (PMTA) pathway . . . through which FDA reviews a PMTA and issues an order permitting marketing of the new tobacco product (MGO) . . . upon a finding that the product is appropriate for the protection of the public health.”  Complaint at 3; ALJ Decision at 9-10.

³ CTP called these alternatives to the PMTA pathway the “substantial equivalence (SE) pathway” and the “SE exemption pathway.”  Complaint at 3-4.  Respondent reported that its PMTA for the e-liquids it sold had been denied, and that it had never sought approval via the SE/SE exemption pathways.  ALJ Decision at 9-11 (citing R. Pre-H’g Br. at 5, 10-13).

⁴ The ALJ also rejected Respondent’s argument that “the Complaint is not valid because Respondent believes that the Complaint was not signed by an attorney within FDA’s Office of the Chief Counsel.”  ALJ Decision at 10 (citing Complaint at 7, and 21 C.F.R. § 17.5 (complaints to be “signed by the Office of the Chief Counsel attorney,” except a CMP “action against retailers of tobacco products [which] may be signed by any Agency employee designated by the Chief Counsel”).  The ALJ noted the Complaint is signed by “an attorney within FDA’s Office of the Chief Counsel,” and Respondent did not appeal the ALJ’s finding.

⁵ The Guidelines are publicly available at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/fda-tobacco-decision-review/index.html?language=en.

⁶ To the extent Respondent suggests there was no violation because it did not manufacture the component e-liquids it used in its products, that argument also shows no error in the conclusion that those components were “held for sale” under section 331(k).  See R. Br. at 6-7 (the e-liquids Respondent sells “do not exist as ‘new tobacco products’ until they are manufactured.  They are not “held for sale” until they are manufactured.”); R. Pre-H’g Br. at 10 (“Those e-liquids do not exist as “new tobacco products” until they are manufactured.  They are not “held for sale” until they are manufactured.”).  Section 331(k) contains no requirement to have manufactured an adulterated or misbranded product held for sale and instead covers “the doing of any other act with respect to” such product.  21 U.S.C. § 331(k).  Nor do CTP’s complaint and briefing to the ALJ refer to any such requirement.

⁷ CTP argues that Respondent’s Jarkesy argument “is not properly before the Board” because “the Board’s review on appeal is limited to issues raised before the ALJ below” and “Respondent did not raise this matter before the ALJ.”  CTP Br. at 9 (citing 21 C.F.R. § 17.47(g)).  We reject Respondent’s argument for the reasons discussed and note that Jarkesy was decided June 27, 2024, while the ALJ set an extended deadline of May 24, 2024, for the parties to file their final arguments.  Order Regarding Final Arguments (Apr. 22, 2024), CRD E-File Docket Entry No. 33.