Uptown Candy and Grocery Corp. d/b/a Uptown Candy Store, DAB TB5191 (2020)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an Administrative Complaint (Complaint) on Respondent, Uptown Candy and Grocery Corp. d/b/a Uptown Candy Store, at 4700B White Plains Road B, Bronx, New York 10470, and by filing a copy of the Complaint with the Civil Remedies Division of the Departmental Appeals Board (DAB).  The Complaint alleges that Respondent impermissibly sold regulated tobacco products to minors and failed to verify, by means of photo identification containing a date of birth, that the purchasers were 18 years of age or older, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140.  CTP seeks a $570 civil money penalty against Respondent for three1 violations within a 24-month period.  Respondent timely requested a hearing by filing an Answer, which denied the allegations in the Complaint.

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As discussed below, throughout the administrative process, Respondent failed to comply with judicial orders and procedures governing this proceeding and failed to defend its action.  I, therefore, strike Respondent’s Answer, issue this decision of default judgment, and impose a $570 civil money penalty against Respondent.

I.  Background and Procedural History

On September 10, 2019, CTP served the Complaint on Respondent, at 4700B White Plains Road B, Bronx, New York 10470, by United Parcel Service, as required by 21 C.F.R. §§ 17.5 and 17.7.  On October 8, 2019, Respondent registered for the DAB E-File system and timely filed its Answer.  In its Answer, Respondent denied the allegations in the Complaint stating that Respondent neither sold tobacco products to minors on December 23, 2018, or July 21, 2019, nor failed to verify the age of the purchasers.  In its defense, Respondent alleged that: (1) Respondent passed an inspection by the New York City Consumer Affairs on July 15, 2019; and (2) the CTP’s description of the clerk does not match any of Respondent’s employees as no one at the establishment has a beard or wears glasses.

On October 10, 2019, I issued an Acknowledgment and Pre-Hearing Order (APHO), acknowledging receipt of Respondent’s Answer and establishing procedural deadlines for this case.  The APHO set a 30-day deadline for the parties to file a joint status report regarding the status of settlement negotiations, and a deadline of November 12, 2019, for the parties to request documents from the opposing party, explaining that a party must provide the requested documents no later than 30 days after the request has been made, pursuant to 21 C.F.R. § 17.23(a).  APHO ¶¶ 3, 12.  The APHO also contained a provision that required each party to file its pre-hearing exchange.  The APHO ordered CTP to file its pre-hearing exchange by December 31, 2019, and Respondent to file its pre-hearing exchange by January 21, 2020.  APHO ¶ 4.  The provision further required each party’s exchange to consist of a pre-hearing brief, a list of proposed exhibits, a copy of each proposed exhibit, a list of proposed witnesses, complete written direct testimony of any proposed witness, a copy of any prior written statement by any proposed witness, and any other mitigating or aggravating evidence.  Id. ¶¶ 4-10.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).  The APHO was served on Respondent via DAB E-File.  APHO, at 10.

On November 12, 2019, CTP, with Respondent’s authorization, filed a Joint Status Report stating the parties were unable to reach a settlement in this case and intended to proceed to a hearing.  On December 20, 2019, CTP filed a Motion to Compel Discovery stating that CTP’s Request for Production of Documents (RFP) was sent to Respondent on November 12, 2019.  CTP further stated that it had not received a response from

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Respondent regarding its RFP.  CTP requested that I issue an order compelling Respondent to respond to the RFP.  On that same date, CTP also filed a Motion to Extend Deadlines and an Amended Motion to Extend Deadlines.  On December 20, 2019, I issued an Order setting a January 6, 2020 deadline for Respondent to file a response to CTP’s Motion to Compel Discovery, and extending the pre-hearing exchange deadlines by 30 days.  See 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.  The December 20, 2019 Order was served on Respondent via DAB E-File.  See December 20, 2019 Order, at 3.  Initially, it appeared that Respondent did not file a response to CTP’s Motion to Compel Discovery or otherwise respond to the December 20, 2019 Order.  Therefore, on January 9, 2020, I granted CTP’s Motion to Compel Discovery and ordered Respondent to comply with CTP’s RFP by January 17, 2020.  The January 9, 2020 Order was served on Respondent via DAB E-File.  See January 9, 2020 Order, at 3.  However, on January 16, 2020, CTP filed a Status Update, indicating that the requested documents were in CTP’s mailroom on December 20, 2019, and Respondent had complied with the January 9, 2020 Order.

On January 30, 2020, CTP timely filed its pre-hearing exchange, consisting of a pre-hearing brief, witness and exhibit list, and CTP Exhibits 1-20.  Respondent failed to file its pre-hearing exchange by the February 20, 2020 deadline established by my December 20, 2019 Order.  On February 26, 2020, I issued an Order Scheduling Pre-Hearing Conference setting a telephone pre-hearing conference for March 10, 2020, at 1:00 PM Eastern Time.  See 21 C.F.R. § 17.21(a), (c).  The parties were directed to call in to the conference using the telephone number and passcode provided in the February 26, 2020 Order.  The February 26, 2020 Order was served on Respondent via DAB E-File.  See February 26, 2020 Order, at 3. 

On March 10, 2020, I held a pre-hearing conference.  Representatives for CTP appeared on the call, but Respondent neither appeared at the pre-hearing conference call nor provided any response to the February 26, 2020 Order. 

On March 10, 2020, I issued an Order to Show Cause directing Respondent by March 17, 2020, to show cause for its failure to comply with my February 26, 2020 Order and failure to defend its action.  I warned Respondent that failure to show cause may result in sanctions including the issuance of a default judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.  The March 10, 2020 Order was served on Respondent via DAB E-File.  See March 10, 2020 Order, at 2.  Respondent did not respond to the March 10, 2020 Order to Show Cause for its failure to comply with the February 26, 2020 Order and failure to defend its action. 

Because of the possibility that the failure to comply with orders and failure to defend its action on the part of Respondent was due to complications from the COVID-19 pandemic, on April 17, 2020, I issued a Status Report Order directing the parties to

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initiate contact to discuss their respective positions and file a joint status report by May 18, 2020.  The April 17, 2020 Order was served on Respondent via DAB E-File.  See April 17, 2020 Order, at 2.  On May 18, 2020, CTP filed a Status Report, indicating that it attempted to contact Respondent on April 23, 2020 and May 11, 2020, but was unable to reach Respondent.  

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).  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 repeatedly failed to comply with orders and procedures governing this proceeding and failed to defend its action.  21 C.F.R. § 17.35(a)(1) and (2).  Specifically, Respondent failed to timely 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.  21 C.F.R. § 17.23(a); APHO ¶ 12.  CTP sent its RFP to Respondent on November 12, 2019, meaning that Respondent had until December 12, 2019, to produce responsive documents.  See 21 C.F.R. § 17.23(a).  Respondent, however, failed to timely respond to CTP’s RFP. 

Respondent also failed to comply with the exchange requirements of the applicable regulations providing that, “[a]t least 30 days before the hearing, or by such other time as is specified by the presiding officer,2 the parties shall exchange witness lists, copies of prior written statements of proposed witnesses, and copies of proposed hearing exhibits, including written testimony.”  21 C.F.R § 17.25(a).  Respondent also failed to comply with my APHO, as modified by my December 20, 2019 Order, requiring Respondent to file a pre-hearing exchange by February 20, 2020.  APHO ¶¶ 4-10; December 20, 2019 Order, at 2.  Respondent had notice of the requirement to file its pre-hearing exchange by the February 20, 2020, deadline, yet failed to do so.

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Respondent also failed to comply with my February 26, 2020, March 10, 2020, and April 17, 2020 Orders.  Specifically, Respondent failed to appear at the pre-hearing conference call scheduled by the February 26, 2020 Order.  See 21 C.F.R. § 17.21(a), (c).  Respondent had notice of the pre-hearing conference scheduled for March 10, 2020, yet failed to call in.  Respondent’s failure to appear for the pre-hearing conference call is compounded by its failure to comply with my March 10, 2020 Order, which afforded Respondent until March 17, 2020 to show cause for its failure to comply with my February 26, 2020 Order to appear at the pre-hearing conference and failure to defend its action.  The March 10, 2020 Order also cautioned that Respondent’s failure to do so may result in sanctions including the issuance of a default judgment against Respondent and imposing a civil money penalty.  Despite this clear warning, Respondent still failed to respond to the March 10, 2020 Order to Show Cause.  Respondent further failed to comply with my April 17, 2020, Status Report Order and disregarded my directive to initiate contact with CTP and file a joint status report. 

In the absence of any explanation from Respondent, I find no basis to excuse Respondent’s repeated failure to comply with the judicial orders in this proceeding and failure to defend its action.  Respondent did not comply with at least four orders and procedures governing this proceeding.  See APHO; February 26, 2020 Order; March 10, 2020 Order; April 17, 2020 Order; see also 21 C.F.R. § 17.35(a)(1).  Respondent’s failure to respond to CTP’s Motion to Compel Discovery, submit its pre-hearing exchange, appear at the pre-hearing conference call, show cause for its failure to defend, and initiate contact with CTP and file a joint status report, all suggest that it has abandoned its defense of this case.  21 C.F.R. § 17.35(a)(2).  Accordingly, I find that Respondent failed to comply with orders and procedures governing this proceeding and failed to defend its action, thereby authorizing the imposition of sanctions under the provisions of 21 C.F.R. § 17.35(a). 

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.  Id.  As the Departmental Appeals Board has recognized in a similar case involving a party’s failure to comply with judicial orders, this conduct is sufficiently egregious to warrant striking Respondent’s Answer and issuing an initial decision by default.  Joshua Ranjit Inc. d/b/a 7-Eleven 10326, DAB No. 2758 (2017)(concluding that “the ALJ acted within his authority under the regulations and did not abuse his discretion in striking Respondent’s Answer as a sanction for Respondent’s failure to respond to the ALJ’s orders.”); see also 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”); Action Convenience Service Inc. d/b/a Marathon 113, CRD No. TB2472 (2018) (striking Respondent’s filings and issuing a default judgment as a sanction for Respondent’s failure to appear at the pre-hearing conference call, failure to

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show cause, and failure to participate in the hearing process); Whistlin’ Jack Lodge, Inc. d/b/a Whistlin’ Jack Lodge, CRD No. TB1715 (2017) (striking Respondent’s answer and issuing a default judgment as a sanction for Respondent’s failure to appear at two scheduled pre-hearing conferences).   Therefore, pursuant to 21 C.F.R. § 17.35(a) and (b), I strike Respondent’s Answer for failing to comply with judicial orders and procedures governing this proceeding and for failing to defend its action.

III.  Default Decision

Striking Respondent’s Answer leaves the Complaint unanswered.  Pursuant to 21 C.F.R. § 17.11, I assume that the facts alleged in the Complaint (but not its conclusory statements) are true.  Specifically:

• At approximately 4:56 PM on December 23, 2018, at Respondent’s business establishment, 4700B White Plains Road, Bronx, New York 10470, an FDA‑commissioned inspector conducted an inspection.  During this inspection, a person younger than 18 years of age was able to purchase a package of four Show Cigarillos Sweet cigars.  Additionally, Respondent’s staff failed to verify, by means of photographic identification containing a date of birth, that the purchaser was 18 years of age or older;
• In a warning letter dated March 7, 2019, CTP informed Respondent of the inspector’s December 23, 2018 documented violations, and that such actions violate federal law.  The letter further warned that Respondent’s failure to correct its violations could result in a civil money penalty or other regulatory action;
• At approximately 3:03 PM on July 21, 2019, at Respondent’s business establishment, 4700B White Plains Road, Bronx, New York 10470, an FDA‑commissioned inspector conducted an inspection.  During this inspection, a person younger than 18 years of age was able to purchase a Black & Mild cigar.  Additionally, Respondent’s staff failed to verify, by means of photographic identification containing a date of birth, that the purchaser was 18 years of age or older.

These facts establish Respondent Uptown Candy Store’s liability under the Act.  The Act prohibits misbranding of a regulated tobacco product.  21 U.S.C. § 331(k).  A regulated tobacco product is misbranded if sold or distributed in violation of regulations issued under section 906(d) of the Act.  21 U.S.C. § 387f(d); see also 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).  Under 21 C.F.R. § 1140.14(b)(1), no retailer may sell regulated tobacco products to any person younger

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than 18 years of age.  Under 21 C.F.R. § 1140.14(b)(2)(i), retailers must verify, by means of photographic identification containing a purchaser’s date of birth, that no regulated tobacco product purchasers are younger than 18 years of age.

Under 21 C.F.R. § 17.2, a $570 civil money penalty is permissible for three violations of the regulations found at 21 C.F.R. pt. 1140, within a 24-month period.

Order

For these reasons, I enter default judgment in the amount of $570 against Respondent, Uptown Candy and Grocery Corp. d/b/a Uptown Candy Store.  Pursuant to 21 C.F.R. § 17.11(b), this Order becomes final and binding upon both parties after 30 days of the date of its issuance.

• 1. The Complaint alleges two violations on December 23, 2018, and two on July 21, 2019.  In accordance with customary practice, CTP counted the violations at the initial inspection as a single violation, and all subsequent violations as separate individual violations.  See 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).
• 2. “Presiding officer” is defined as “an administrative law judge qualified under 5 U.S.C. 3105.”  21 C.F.R. § 17.3(c).