Ahmed Saeed Bin Saeed d/b/a Smoke Shop 'N' More, DAB TB5219 (2020)

ORDER GRANTING COMPLAINANT’S MOTION TO IMPOSE SANCTIONS AND INITIAL DECISION AND DEFAULT JUDGMENT

The Food and Drug Administration’s (FDA) Center for Tobacco Products (CTP) began this case by serving an Administrative Complaint (Complaint) on Respondent, Ahmed Saeed Bin Saeed d/b/a Smoke Shop ‘N’ More, and filing a copy of the Complaint with the Civil Remedies Division (CRD) of the Departmental Appeals Board (DAB).  The Complaint alleges that Respondent committed at least six violations of the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, Cigarettes and Smokeless Tobacco, 21 C.F.R. pt. 1140.  CTP seeks a civil money penalty (CMP) in the amount of $11,410 from Respondent.  Respondent timely requested a hearing by filing an Answer. 

Currently, Complainant’s Status Report and Motion to Impose Sanctions (Motion to Impose Sanctions) is pending before me.  CTP’s Motion to Impose Sanctions requests that I strike Respondent’s Answer as a sanction for failing to comply with CTP’s discovery requests and issue a default judgment against Respondent.  For the reasons stated below, I grant CTP’s Motion to Impose Sanctions, strike the Respondent’s

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Answer, and issue an initial decision and default judgment imposing a civil money penalty in the amount of $11,410 against Respondent.  21 C.F.R. § 17.35(c)(3).

I.     Background

On January 6, 2020, CTP served the Complaint on Respondent, Ahmed Saeed Bin Saeed d/b/a Smoke Shop ‘N’ More, located at 1306 West Texas Street, Fairfield, California 94533, by United Parcel Service (UPS), as required by 21 C.F.R. §§ 17.5 and 17.7.  See Docket Entry No. 1 (Complaint) and Docket Entry No. 1b (UPS Delivery Notification).  On January 16, 2020, Respondent registered for the DAB E-File system, and timely filed its Answer.  Docket Entry No. 3.

On January 17, 2020, I issued an Acknowledgment and Pre-Hearing Order (APHO) acknowledging receipt of Respondent’s Answer and establishing procedural deadlines for this case.  Docket Entry No. 4.  The APHO set a deadline of February 27, 2020, for the parties to request documents from the opposing party and explained that a party must provide the requested documents no later than 30 days after the request has been made.  APHO ¶ 12; see also 21 C.F.R. § 17.23(a).  The APHO also stated that a party may file a motion for a protective order within 10 days of receiving a request for the production of documents.  Id.; 21 C.F.R. §§ 17.23(d), 17.28.  Additionally, the APHO ordered CTP to file its pre-hearing exchange by April 13, 2020, and Respondent to file its pre-hearing exchange by May 4, 2020.  APHO ¶ 4.  Further, the APHO warned the parties that “I may impose sanctions including, but not limited to, dismissal of the complaint or answer, if a party fails to comply with any order (including this order), fails to prosecute or defend its case, or engages in misconduct that interferes with the speedy, orderly, or fair conduct of the hearing.”  APHO ¶ 16 (citing 21 C.F.R § 17.35).

On January 30, 2020, CTP served a timely Request for Production of Documents on Respondent.  See Docket Entry No. 7a (Exhibit A to Motion to Compel Discovery).  Respondent did not file a motion for protective order within 10 days of receiving the Request for Production of Documents on January 31, 2020.  See Docket Entry No. 7b (Exhibit B to Motion to Compel Discovery).  On March 9, 2020, CTP filed a Motion to Compel Discovery stating that it had not received a response to its Request for Production of Documents and requesting an order compelling Respondent to respond to CTP’s document request.  Docket Entry No. 7 (Motion to Compel Discovery, at 2).  On March 9, 2020, CTP also filed a Motion to Extend Deadlines, seeking to extend the deadlines set forth in the APHO by 30 days.  Docket Entry No. 8 (CTP’s First Motion to Extend Deadlines).

On March 10, 2020, I issued an order setting a March 24, 2020, deadline for Respondent to file a response to CTP’s Motion to Compel Discovery and extending the parties’ pre-hearing exchange deadlines by 30 days.  Docket Entry No. 9 (Order Setting Respondent’s

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Deadline to Respond to Complainant’s Motion to Compel Discovery and Extending Pre-Hearing Exchange Deadlines (March 10, 2020, Order), at 2); see also 21 C.F.R. § 17.32(c); APHO ¶ 19.  I warned Respondent that I may grant CTP’s Motion to Compel Discovery if Respondent failed to respond.  March 10, 2020, Order, at 2.  Respondent failed to file a response to CTP’s Motion to Compel Discovery or otherwise respond to the March 10, 2020, Order. 

Therefore, on March 27, 2020, I issued an Order Granting Complainant’s Motion to Compel Discovery and ordered Respondent to produce documents responsive to CTP’s Request for Production of Documents by April 10, 2020.  Docket Entry No. 10 (Order Granting Complainant’s Motion to Compel Discovery (March 27, 2020, Order), at 2).  I instructed that if Respondent had no responsive documents to produce, then it must submit a written response to CTP stating so by the March 27, 2020, deadline.  Id.  I also warned Respondent that its “[f]ailure to comply with this Order may result in sanctions, including the issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.”  Id.

On April 6, 2020, Respondent filed a response my Order Granting Complainant’s Motion to Compel Discovery.  Docket Entry No. 11 (hereinafter “Respondent’s April 6, 2020, Response”).  The response stated that, due to the COVID-19 pandemic, Respondent has “closed down my store for 2 weeks . . .  so it is very hard for me to get any proof.”  Id.  On April 29, 2020, CTP filed a Motion to Extend Deadlines.  Docket Entry No. 14 (CTP’s Second Motion to Extend Deadlines).  In its motion, CTP requested that I extend “all deadlines set forth in the Administrative Law Judge’s March 10, 2020 and March 27, 2020 Orders by sixty (60) days.”  Id. at 1.  CTP requested the extension to give Respondent additional time to access documents responsive to CTP’s Request for Production of Documents.  Id.

On April 30, 2020, I issued an Order Granting Complainant’s Motion to Extend Deadlines and ordered Respondent to supplement its discovery response by producing additional documents responsive to CTP’s Request for Production of Documents by June 9, 2020.  Docket Entry No. 15.  Order Granting Complainant’s Motion to Extend Deadlines (April 30, 2020, Order), at 2.  I also instructed that if Respondent had no responsive documents to produce, then it must submit a written response to CTP stating so by the June 9, 2020, deadline.  Id.  I warned Respondent again that its failure to comply with this Order may result in sanctions, including the issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.  Id.  I also extended the parties’ pre-hearing exchange deadlines.  Id.

On June 24, 2020, CTP filed a Motion to Impose Sanctions stating that Respondent had not produced documents as ordered and had not filed a written response stating that it did not have any additional documents.  Docket Entry No. 16 (Motion to Impose Sanctions,

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at 2-3).  CTP requested that I strike Respondent’s Answer and issue a default judgment imposing a civil money penalty in the amount of $11,410 against Respondent.  Id.  On that same date, CTP also filed a Motion to Extend Deadlines.  Docket Entry No. 17 (CTP’s Third Motion to Extend Deadlines).  On June 25, 2020, I issued an order establishing a deadline of July 10, 2020, for Respondent to file a response to CTP’s Motion to Impose Sanctions and further extending the pre-hearing exchange deadlines by 30 days.  Docket Entry No. 18 (Order Setting Respondent’s Deadline to Respond to Complainant’s Motion to Impose Sanctions and Extending Pre-Hearing Exchange Deadlines (June 25, 2020, Order), at 2).  I warned Respondent that if it failed to respond to the Motion to Impose Sanctions, I may grant the motion and impose the requested civil money penalty of $11,410.  Id.  On July 31, 2020, I issued an order extending the parties’ pre-hearing exchange deadlines pending resolution of CTP’s Motion to Impose Sanctions.  Docket Entry No. 19.  To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or the June 25, 2020, Order.  CTP’s Motion to Impose Sanctions is now ripe for a ruling.

II.     Sanctions

The regulations authorize me to impose sanctions on any party for:

(1) Failing to comply with an order, subpoena, rule, or procedure governing the proceeding;
(2) Failing to prosecute or defend an action; or
(3) Engaging in other misconduct that interferes with the speedy, orderly, or fair conduct of the hearing. 

21 C.F.R. § 17.35(a).  When a party “fails to comply with a discovery order,” I may draw an inference in favor of the opposing party, may prohibit the non-complying party from introducing or relying on evidence related to the discovery request, and may “[s]trike any part of the pleadings or other submissions of the party failing to comply with [the discovery] request.”  21 C.F.R. § 17.35(c).  Any sanction “shall reasonably relate to the severity and nature of the failure or misconduct.”  21 C.F.R. § 17.35(b).

I conclude that sanctions against Respondent are warranted.  During the course of this administrative proceeding, Respondent failed to comply with at least two orders and procedures governing this proceeding.  Specifically, Respondent failed to comply with the discovery requirements of the applicable regulations and the APHO, both of which require the parties to produce documents within 30 days of a discovery request or to seek a protective order.  21 C.F.R. § 17.23(a); APHO ¶ 12.  Respondent has not provided the requested documents or requested a protective order.  Similarly, Respondent failed to comply with the April 30, 2020, Order, which required Respondent to produce documents to CTP by June 9, 2020.  Respondent did not produce any documents or indicate that it did not have any responsive documents by the deadline.  Accordingly,

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Respondent has failed to fulfill its discovery obligations and to comply with the regulations and orders governing this case.  21 C.F.R. § 17.35(a)(1). 

Additionally, Respondent has failed to defend this action.  21 C.F.R. § 17.35(a)(2).  Respondent did not file a response to CTP’s Motion to Compel Discovery, as permitted by the regulations and my March 10, 2020, Order.  21 C.F.R. § 17.32(c).  Likewise, Respondent did not respond to CTP’s Motion to Impose Sanctions, as permitted by the regulations and my June 25, 2020, Order.  Respondent’s failure to respond to CTP’s motions and fulfill its discovery obligations suggests that it has abandoned its defense of this case.

In the absence of any explanation from Respondent, I find no basis to excuse Respondent’s repeated failure to comply with the various orders and regulations in this administrative proceeding.  Despite explicit warnings that its failure to comply with the orders could result in sanctions, Respondent did not comply with two orders and corresponding regulations.  See APHO; April 30, 2020, Order.  Likewise, Respondent did not respond to any of CTP’s motions.  See generally, CTP’s Motion to Compel Discovery; Motion to Impose Sanctions.  Although Respondent’s April 6, 2020, Response attached two pictures that appear to be a timely response to my order granting CTP’s Motion to Compel discovery and responsive to CTP’s Request for Production of Documents, Respondent stated that it had closed down the store for two weeks due to the COVID-19 pandemic and it was difficult to obtain proof.  See Respondent’s April 6, 2020, Response.  Therefore, I gave Respondent additional time to respond to CTP’s Request for Production of Documents.  April 30, 2020, Order, at 2.  However, Respondent failed to supplement its discovery response or otherwise respond to the April 30, 2020, Order.  Respondent did not request an extension or indicate that additional documents were not available.  Accordingly, I find that Respondent failed to comply with orders and procedures governing this proceeding, failed to defend its case, and, as a result, engaged in a pattern of misconduct that interfered with the speedy, orderly, and fair conduct of the hearing.  Notably, Respondent’s failure to comply with the orders, regulations governing discovery, and other procedures in this case necessitated extending the pre-hearing exchange deadlines at least three times, which delayed the hearing process.  See March 10, 2020, Order, at 2; April 30, 2020, Order, at 2; July 31, Order, at 2. 

The harshness of the sanctions I impose must relate to the nature and severity of the misconduct or failure to comply.  21 C.F.R. § 17.35(b).  I find that Respondent’s actions are sufficient to warrant striking its Answer and issuing a decision by default, without further proceedings.  21 C.F.R. § 17.35(b), (c)(3).  Here, Respondent failed to comply with two of my orders, despite my explicit warnings that its failure could result in sanctions.  APHO ¶ 16; April 30, 2020, Order, at 2.  I specified that those sanctions may include “issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.”  April 30,

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2020, Order, at 2.  Respondent also failed to defend this action, despite express reminders of the opportunity in my April 30, 2020, Order and June 25, 2020, Order.  Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.  As the Departmental Appeals Board has recognized in a similar case involving a party’s failure to comply with discovery orders, this conduct is sufficiently egregious to warrant striking Respondent’s Answer and issuing an initial decision by default.  See, e.g., KKNJ, Inc. d/b/a Tobacco Hut 12, DAB No. 2678, at 10 (2016)(concluding that “the ALJ did not abuse her discretion in sanctioning Respondent’s ongoing failure to comply with the ALJ’s directions by striking Respondent’s answer to the Complaint”).  Therefore, pursuant to 21 C.F.R. § 17.35(a) and (c)(3), I grant CTP’s Motion to Impose Sanctions, and strike Respondent’s Answer for failing to comply with various orders and procedures governing this proceeding, failing to defend this action, and engaging in a pattern of misconduct that has interfered with the speedy, orderly, and fair conduct of the hearing. 

III.     Default Decision

Striking Respondent’s Answer leaves the Complaint unanswered.  Pursuant to 21 C.F.R. § 17.11(a), I am required to “assume the facts alleged in the [C]omplaint to be true” and, if those facts establish liability under the Act, issue a default judgment and impose a civil money penalty.  Accordingly, I must determine whether the allegations in the Complaint establish violations of the Act. 

Specifically, CTP alleges the following facts in its Complaint:

• Respondent owns Smoke Shop ‘N’ More, an establishment that sells tobacco products and is located at 1306 West Texas Street, Fairfield, California 94533.  Complaint ¶¶ 7-8.
• During an inspection of Respondent’s establishment on December 10, 2015, at approximately 2:59 PM, an FDA-commissioned inspector documented that “a person younger than 18 years of age was able to purchase a package of Camel Blue cigarettes . . . [.]”  The inspector also documented that “the minor’s identification was not verified before the sale . . . .”  Complaint ¶ 11.
• On December 29, 2015, CTP issued a Warning Letter to Respondent regarding the documented violations from December 10, 2015.  The letter explained that the documented violations constituted violations of regulations, and that the named violations were not necessarily intended to be an exhaustive list of all violations at the establishment.  The Warning Letter also stated that if Respondent failed to correct the violations, regulatory action by the FDA or a civil money penalty action could occur and that Respondent is responsible for complying with the law.  Complaint ¶¶ 11-12.

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• On February 14, 2019, CTP initiated a previous CMP action, CRD Docket Number T-19-1589, FDA Docket Number FDA-2019-H-0703, against Respondent for violations of 21 C.F.R. pt. 1140.  Specifically, CTP alleged one violation for selling tobacco products to a minor and a second violation for failing to verify the age of a person with photographic identification on each of the following dates:  March 21, 2018, and November 14, 2018.  Complaint ¶ 13. 
• The previous action concluded when Respondent “admitted all of the allegations in the Complaint and paid the agreed upon penalty.”  Further, “Respondent expressly waived its right to contest such violations in subsequent actions.”   Complaint ¶ 14.
• During a subsequent inspection of Respondent’s establishment conducted on October 23, 2019, at approximately 11:00 AM, an FDA-commissioned inspector documented that “a person younger than 18 years of age was able to purchase a myblu Intense Mint-Sation e-liquid product . . . [.]  The inspector also documented that “the minor’s identification was not verified before the sale . . . .”  Complaint ¶ 9.   

These facts establish that Respondent is liable under the Act.  The Act prohibits misbranding of a tobacco product.  21 U.S.C. § 331(k).  A tobacco product is misbranded if distributed or offered for sale in any state in violation of regulations issued under section 906(d) of the Act.  21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).  The Secretary of the U.S. Department of Health and Human Services issued the regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act.  21 U.S.C. § 387a-1; see also 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010); 81 Fed. Reg. 28,974, 28,975-76 (May 10, 2016).  The regulations prohibit the sale of cigarettes or covered tobacco products to any person younger than 18 years of age.  21 C.F.R. § 1140.14(a)(1) and 21 C.F.R. § 1140.14(b)(1).1  The regulations also require retailers to verify, by means of photographic identification containing the purchaser’s date of birth, that no cigarette or covered tobacco product purchaser is younger than 18 years of age.  21 C.F.R. § 1140.14(a)(2)(i) and 21 C.F.R. § 1140.14(b)(2)(i). 

Taking the above-alleged facts as true, Respondent had six violations of regulations found at 21 C.F.R. pt. 1140 within a 48-month period.  Respondent violated the prohibition against selling cigarettes or covered tobacco products to persons younger than 18 years of age on December 10, 2015, March 21, 2018, November 14, 2018, and October 23, 2019.  21 C.F.R. § 1140.14(a)(1) and 21 C.F.R. § 1140.14(b)(1).  On those same dates, Respondent also violated the requirement that retailers verify, by means of

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photo identification containing a purchaser’s date of birth, that no cigarette or covered tobacco product purchasers are younger than 18 years of age.  21 C.F.R. § 1140.14(a)(2)(i) and 21 C.F.R. § 1140.14(b)(2)(i).  All violations observed during the initial failed inspection are counted as a single violation, and each separate violation observed during subsequent failed inspections count as a discrete violation. Orton Motor, Inc., d/b/a Orton’s Bagley v. U.S. Dep’t of Health & Human Serv.,884 F.3d 1205 (D.C. Cir. 2018).  Accordingly, Respondent had one violation on December 10, 2015, three violations from the previous CMP action, and an additional two violations on October 23, 2019.  Therefore, Respondent’s actions constitute six violations of law within a 48-month period that merit a civil money penalty. 

CTP has requested a civil money penalty of $11,410, which is a permissible penalty under the regulations.  21 C.F.R. §§ 17.2, 17.11; see also 45 C.F.R. § 102.3.  Therefore, I find that a civil money penalty of $11,410 is warranted and so order one imposed.

• 1.  Effective August 8, 2016, the regulations were recodified without any substantive changes.  81 Fed. Reg. 28,973, 28,974, 29,103 (May 10, 2016), https://federalregister.gov/a/2016-10685.