Civil Penalties and the Rule of Law: A Wake-Up Call for FDA Oversight

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Key Points:

• Court Rebuke: Texas federal judge rules FDA’s civil penalty process for tobacco products violates the Seventh Amendment.

• Vapor Lab Win: $20,678 fine dismissed; FDA barred from pursuing future administrative CMPs against the shop.

• Unequal Enforcement: Vapor Lab never cited for sales to minors, yet fined heavily – while repeat offenders elsewhere paid as little as $709.

• Regulatory Dysfunction: FDA has authorized only 39 e-cigarette products, rejecting nearly 99 percent of reviewed applications.

• Broader Impact: Ruling highlights calls for reform and a functional, science-based pathway for tobacco harm reduction.

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On August 1, the U.S. District Court for the Northern District of Texas ruled in favor of Wulferic, LLC (doing business as Vapor Lab) in its lawsuit against the U.S. Food and Drug Administration over the agency’s use of civil money penalties (CMPs). While this ruling is a win for small business owners struggling to stay afloat in the tobacco harm reduction space, it’s even more indicative of a federal regulatory system in urgent need of reform.

In 2024, the FDA filed an administrative complaint seeking a $20,678 penalty against Vapor Lab for selling unauthorized e-liquid products. This action followed a 2021 warning letter. Vapor Lab challenged the penalty, arguing that the FDA’s process violated its Seventh Amendment right to a jury trial – relying heavily on the U.S. Supreme Court’s recent decision in SEC v. Jarkesy.

The Court agreed. It ruled that it had jurisdiction to hear the case and found that FDA’s CMP scheme closely resembled a traditional lawsuit, which requires a jury trial. It also determined that the so-called “public rights” exception – used to justify agency adjudication without a jury – did not apply in this context. As a result, the Court declared that the FDA’s CMP scheme for tobacco products violates the Seventh Amendment, and that the agency’s enforcement action against Vapor Lab was unconstitutional.

The Court issued a permanent injunction, ordering the Department of Health and Human Services (HHS) to dismiss the CMP against Vapor Lab with prejudice, and barring the FDA from pursuing any future CMPs against Vapor Lab through administrative proceedings. Importantly, the ruling applies only to Vapor Lab – not to other manufacturers or retailers.

This decision comes amidst a growing backlog and dysfunction in the FDA’s regulation of novel tobacco products. Since gaining authority to regulate tobacco in 2009, and extending that authority to e-cigarettes in 2016, the FDA has required all manufacturers to submit premarket tobacco product applications (PMTAs) in order to legally sell their products. These applications were due by September 2020. Since then, FDA has denied nearly 99 percent of the applications it has reviewed, effectively eliminating almost the entire legal e-cigarette market.

Vapor Lab is not a major manufacturer. It’s a small vape shop located in a Texas strip mall, with a long-standing presence in the local community. The shop has hundreds of positive Google reviews, some dating back nearly a decade. Customers praise the knowledgeable staff and the variety of products. What drew the FDA’s ire was the shop’s practice of making custom e-liquids for customers in-store. Vapor Lab did not sell products online, and the only basis for an “interstate commerce” violation cited in the CMP was the use of components sourced from outside Texas.

Despite issuing a warning letter in 2021, the FDA didn’t conduct an inspection until 2024 – three years later – at which point it imposed a fine of over $20,000.

But the situation gets worse. The FDA routinely performs compliance checks where minors are used to attempt purchases of age-restricted products. Since 2012, FDA has conducted 186 such inspections in Henderson, Texas, where Vapor Lab is located. Vapor Lab was never cited in any of them, nor is there any record of it ever selling to minors. Meanwhile, other retailers have been caught multiple times selling to underage buyers and received far lighter penalties. For instance, one convenience store in Henderson was issued a warning letter in February 2024 for selling cigarettes to a minor – and then cited again in 2025 for the same offense. That store received a CMP of just $709 in March 2025.

This blatant inconsistency highlights the broader failure of the FDA’s approach to regulating e-cigarettes. To date, only 39 e-cigarette products have been authorized for legal sale – an embarrassingly small number for a country where more than 20 million adults used e-cigarettes in 2023.

The FDA also continues to ignore adult demand. Vapor Lab boasts a 4.7-star rating based on 267 Google reviews. The storefront clearly displays “Must Be 21” signage and enforces ID checks. This is not a rogue operation – it’s a responsible, age-restricted retailer serving adult consumers.

While this ruling may offer hope for the 139 other small retailers who have been issued CMPs, it ultimately underscores a deeper truth: the FDA has failed to develop a workable, science-based regulatory pathway for tobacco harm reduction. The question now is whether lawmakers and courts will continue to step in where the agency has failed.

Nothing in this analysis is intended to influence the passage of legislation, and it does not necessarily represent the views of Tobacco Harm Reduction 101.