Synopsis

The tobacco industry challenged the U.S. Food and Drug Administration’s assessment of a civil monetary penalty, arguing that it is entitled to a jury trial when assessed such a penalty.

Why It Matters for Public Health

This case involves an attempt to have the court declare unconstitutional the portion of the Food, Drug, and Cosmetic Act, as amended by the Tobacco Control Act, that authorizes the FDA to issue civil monetary penalties for tobacco product violations. In a 2024 case, the Supreme Court held that another agency’s administrative process for assessing civil monetary penalties violated the Seventh Amendment of the U.S. Constitution, and that entities assessed such penalties are entitled to challenge them in federal court in a jury trial. Texas Tobacco Barn seeks to apply that holding to the FDA’s process for issuing civil monetary penalties. The FDA may be less likely to impose such penalties if violators have a right to challenge them in a jury trial.

Along with other options like seizures and marketing orders, civil monetary penalties are a critical tool that the FDA uses in its regulation of tobacco products. These penalties can be more effective than less drastic measures, such as warning letters, at getting retailers to comply with the law and to remove products like unauthorized e-cigarettes and e-liquids from shelves.

Background

The Tobacco Control Act authorizes the FDA to issue civil monetary penalties for tobacco product violations, such as sale of unauthorized products. If such a penalty is assessed, a company can appeal the decision to the Departmental Appeals Board, a board within the Department of Health and Human Services. After exhausting this process, a company can seek judicial review in the D.C. Circuit or any other circuit in which the company conducts business.

In 2024, the Supreme Court held in SEC v. Jarkesy that the Securities and Exchange Commission’s administrative process for assessing civil monetary penalties for securities fraud implicated the Seventh Amendment's right to a jury trial. Since Jarkesy, the tobacco industry has sought in multiple courts to have the FDA’s own administrative process declared unconstitutional.

Proceedings

In May 2023, the FDA inspected Texas Tobacco Barn and discovered that it was selling unauthorized e-liquids for use in e-cigarettes. Since the FDA had previously sent the retailer a warning letter requesting that it cease sales of such e-liquids, the agency brought a proceeding against it three months later, seeking a penalty of $19,192. Texas Tobacco Barn appealed to the Departmental Appeals Board, which affirmed the administrative law judge’s decision assessing the penalty.

On April 16, 2025, Texas Tobacco Barn appealed this decision to the Fifth Circuit. On June 30, 2026, the Fifth Circuit vacated the Departmental Appeals Board’s decision, agreeing with Texas Tobacco Barn that the FDA’s adjudication against it violated its Seventh Amendment rights and finding that the FDA had failed to establish that agency adjudications of FDCA violations fall within the public-rights exception.

Litigation Status (Closed)

The Fifth Circuit vacated the Departmental Appeals Board decision against Texas Tobacco Barn on June 30, 2026. The federal government announced its decision not to appeal.