A divided panel of the U.S. Court of Appeals for the Fifth Circuit vacated a $19,192 civil penalty imposed by the U.S. Department of Health and Human Services against Texas-based vape retailer Texas Tobacco Barn, ruling that the company was entitled to a jury trial under the Seventh Amendment. The case involved the sale of unauthorized vaping products, with the court finding that HHS could not impose civil monetary penalties through an administrative proceeding without affording the company the opportunity for a jury trial, citing recent U.S. Supreme Court precedent on agency enforcement actions. The court rejected the company’s separate challenge to FDA’s authority to regulate vaping products, leaving that framework intact.
The 2-1 decision sends the case back and could have broader implications for how federal agencies pursue civil penalties in tobacco and vaping enforcement cases. The majority concluded that such monetary penalties are analogous to traditional legal claims historically decided by juries and do not fall within the narrow “public rights” exception that allows agency adjudication without a jury. The dissenting judge argued the administrative process was constitutionally permissible because the enforcement action lacked a close common-law analogue.
