5414 Wyalusing Food Market 1 Inc. d/b/a 54 and Wyalusing Food Market, DAB TB5076 (2020)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an Administrative Complaint (Complaint) on Respondent, 5414 Wyalusing Food Market 1 Inc. d/b/a 54 and Wyalusing Food Market, at 5414 Wyalusing Avenue, Philadelphia, Pennsylvania 19131, and by filing a copy of the Complaint with the Civil Remedies Division of the Departmental Appeals Board (DAB).  The Complaint seeks a $5,705 civil money penalty from Respondent for 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, at least five times within a 36-month period. 

The Complaint alleges CTP previously initiated a civil money penalty action against Respondent.  The prior action concluded after Respondent admitted to three violations of the Act.  Specifically, Respondent admitted that it sold regulated tobacco products to minors and failed to verify, by means of photo identification containing a date of birth, that a purchaser was 18 years of age or older.  The Complaint further alleges that Respondent subsequently committed two additional violations of the Act.  Specifically, Respondent sold regulated tobacco products to a minor and failed to verify, by means of photo identification containing a date of birth, that the purchaser was 18 years of age or older, thereby violating the Act.  Therefore, CTP seeks a $5,705 civil money penalty

Page 2

against Respondent for a total of five violations within a 36-month period.  Respondent timely requested a hearing by filing an Answer, which denied Complaint allegations.

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 imposing a civil money penalty in the amount of $5,705 against Respondent.  As discussed below, throughout the administrative process, Respondent failed to comply with judicial orders and procedures governing this proceeding, failed to defend this action, and engaged in a pattern of misconduct that has interfered with the speedy, orderly, and fair conduct of the hearing.  I, therefore, grant CTP’s Motion to Impose Sanctions, strike Respondent’s Answer, issue this decision of default judgment, and impose a $5,705 civil money penalty against Respondent.

I.  Background and Procedural History

On October 16, 2019, CTP served the Complaint on Respondent, located at 5414 Wyalusing Avenue, Philadelphia, Pennsylvania 19131, by United Parcel Service, as required by 21 C.F.R. §§ 17.5 and 17.7.  On November 6, 2019, Respondent registered for the DAB E-File system and timely filed its Answer and three video files.  In its Answer, Respondent denied the Complaint allegations stating that video files show that Respondent did not sell tobacco products to a minor at the time of the inspection at issue. 

On November 12, 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 deadline of December 19, 2019, 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, pursuant to 21 C.F.R. § 17.23(a).  APHO ¶ 12.  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 document.  Id.  See also 21 C.F.R. §§ 17.23(d), 17.28.  The APHO warned the parties that failure to comply with any order including the APHO may result in sanctions.  APHO ¶ 16; see also 21 C.F.R. § 17.35.

On December 18, 2019, Respondent filed three video files that appeared to be identical to the video files filed along with Respondent’s Answer.  On January 23, 2020, CTP filed a Motion to Compel Discovery stating that CTP’s Request for Production of Documents (RFP) was sent to Respondent on December 9, 2019, and delivered to Respondent’s establishment on December 10, 2019.  CTP further stated that it had not received a response from Respondent regarding its RFP.  CTP noted that although Respondent refiled three video files previously submitted with Respondent’s Answer, CTP received no new documents in response to its RFP.  CTP requested that I issue an order

Page 3

compelling Respondent to respond to the RFP.  On January 23, 2020, CTP also filed a Motion to Extend Deadlines. 

On January 28, 2020, I issued an Order setting a February 12, 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.  Respondent did not file a response to CTP’s Motion to Compel Discovery or otherwise respond to the January 28, 2020 Order.  Moreover, Respondent failed to file a motion for protective order within 10 days of receiving the RFP.  Therefore, on February 19, 2020, I granted CTP’s Motion to Compel Discovery and ordered Respondent to comply with CTP’s RFP by February 25, 2020.  I noted that if Respondent had no responsive documents to produce, then it must submit a written response to CTP stating so by the February 25, 2020, deadline.  I also warned Respondent that its failure to comply with the January 9, 2020, Order may result in sanctions, including the issuance of a default judgment finding Respondent liable for the violations alleged in the Complaint and imposing a civil money penalty. 

On February 27, 2020, CTP filed a Motion to Impose Sanctions stating that Respondent had not produced any documents as ordered.  CTP requested I strike Respondent’s answer and issue an initial decision and default judgment imposing a civil money penalty in the amount of $5,705 against Respondent.  On that same date, CTP also filed a Motion to Extend Deadlines.  On February 28, 2020, I issued an Order establishing a deadline of March 13, 2020, for Respondent to file a response to CTP’s Motion to Impose Sanctions, scheduling a telephone status conference to clarify the parties’ positions with respect to the pending Motion to Impose Sanctions for March 9, 2020, and further extending the pre-hearing exchange deadlines by 30 days.  The February 28, 2020, Order directed the parties to call in to the conference using the telephone number and passcode provided in the Order.  I also warned Respondent that if it failed to respond to the Motion to Impose Sanctions, I may grant the motion in its entirety and impose the requested civil money penalty.  On March 6, 2020, and March 9, 2020, the parties were reminded about the status conference call via e-mail. 

On March 9, 2020, I held the status conference call as scheduled.  Representatives for CTP appeared on the call, but Respondent neither appeared at the status conference call as ordered nor provided any response to the February 28, 2020, Order.  On March 10, 2020, I issued an Order to Show Cause directing Respondent by March 16, 2020, to show cause for its failure to comply with my February 28, 2020, Order and failure to defend this case.  I warned Respondent that failure to show cause may result in sanctions. 

Respondent did not respond to the Motion to Impose Sanctions by the March 13, 2020, deadline established by my February 28, 2020, Order.  Similarly, Respondent has not responded to my Order to Show Cause by the March 16, 2020, deadline, and thus, failed

Page 4

to show cause for its failure to comply with the February 28, 2020, Order and failure to defend this case.  Indeed, Respondent has been silent since resubmission of its video on December 18, 2019.  On March 23, 2020, I issued an Order Suspending Pre-Hearing Exchange Deadlines pending resolution of CTP’s Motion to Impose Sanctions.  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 repeatedly failed to comply with at least four 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.  As a result, CTP was forced to file a Motion to Compel Discovery, and after Respondent failed to respond to the Motion to Compel Discovery and my January 28, 2020, Order, I issued an Order Granting Complainant’s Motion to Compel Discovery on February 19, 2020.  Respondent failed to comply with the February 19, 2020, Order, which required Respondent to produce documents to CTP by February 25, 2020.  Respondent did not produce any documents or indicate that it did not have any responsive documents by the deadline.  Accordingly, 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). 

Respondent also failed to comply with my February 28, 2020, and March 10, 2020, Orders.  Specifically, Respondent failed to appear at the status conference call scheduled by the February 28, 2020, Order.  Respondent had notice of the status conference scheduled for March 9, 2020, and was sent two e-mail reminders about the status

Page 5

conference on March 6, 2020, and March 9, 2020, yet failed to call in.  Respondent’s failure to appear for the status conference call is further compounded by its failure to comply with my March 10, 2020, Order, which afforded Respondent until March 16, 2020, to show cause for its failure to comply with my February 28, 2020, Order, and failure to defend this case.  The March 10, 2020, Order cautioned that Respondent’s failure to show cause may result in sanctions.  Despite this clear warning, Respondent still failed to respond to the March 10, 2020, Order to Show Cause. 

Additionally, Respondent has failed to defend this action.  21 C.F.R. § 17.35(a)(2).  While Respondent filed an Answer denying the Complaint allegations and twice submitted video files, I do not find Respondent’s actions sufficient to overcome the provisions of 21 C.F.R. § 17.35(a)(2).  Respondent’s apparent assumption that its mere submission of video files precludes any adherence to regulatory authority or administrative procedures lacks merit.  Respondent did not file a response to CTP’s Motion to Compel Discovery, as permitted by the regulations and my January 28, 2020, Order, despite the clear warning that I may grant CTP’s motion if Respondent failed to respond.  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 February 28, 2020, Order, despite a warning that I may grant CTP’s motion if Respondent failed to respond.  Respondent’s failure to respond to CTP’s motions and fulfill its discovery obligations suggest that it has abandoned its defense of this case.  Respondent’s failure to defend this action is further demonstrated by Respondent’s failure to take any action with regard to this case since December 18, 2019.  Indeed, Respondent has not participated in the defense of this action in any meaningful fashion after resubmission of its video files. 

In the absence of any explanation from Respondent, I find no basis to excuse Respondent’s repeated failure to comply with the judicial orders and regulations in this proceeding.  Despite explicit warnings that its failure to comply with the orders could result in sanctions, Respondent did not comply with four orders and corresponding regulations.  See 21 C.F.R. § 17.23(a); APHO ¶¶ 12, 16; February 19, 2020, Order, at 3; February 28, 2020, at 3; March 10, 2020, Order, at 1.  It also appears that Respondent may have abandoned its defense of this case given its failure to respond to CTP’s motions, fulfill its discovery obligations, appear at the status conference call, or show cause for its failure to defend.  Indeed, Respondent’s unresponsiveness necessitated extending the pre-hearing exchange deadlines at least twice, which delayed the hearing process.  See January 28, 2020 Order, at 2; February 28, 2020 Order, at 3.  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.  

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

Page 6

further proceedings.  21 C.F.R. § 17.35(b), (c)(3).  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.  See, e.g., 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”).  Therefore, pursuant to 21 C.F.R. § 17.35(a), (b) and (c)(3), I grant CTP’s Motion to Impose Sanctions, and strike Respondent’s Answer for failing to comply with judicial 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, I assume that the facts alleged in the Complaint (but not its conclusory statements) are true.  Specifically:

• On August 30, 2018, CTP initiated a previous civil money penalty action, CRD Docket Number T-18-3351, FDA Docket Number FDA-2018-H-3301, against Respondent for three1 violations of the Act within a 24-month period.  CTP alleged those violations to have occurred at Respondent’s business establishment, 5414 Wyalusing Avenue, Philadelphia, Pennsylvania 19131, on August 25, 2017, and June 20, 2018; 
• The previous action concluded when Respondent admitted the allegations contained in the Complaint issued by CTP, and paid the agreed upon monetary penalty in settlement of that claim.  Further, “Respondent expressly waived its right to contest such violations in subsequent actions;”
• An FDA-commissioned inspector conducted a subsequent inspection on July 19, 2019, at approximately 10:48 AM at Respondent’s business establishment located at 5414 Wyalusing Avenue, Philadelphia, Pennsylvania 19131.  During this inspection, a person younger than 18 years of age was able to purchase a package of Carnival Menthol 100’s cigarettes.  Additionally, Respondent’s staff failed to

Page 7

• 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 54 and Wyalusing Food Market’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(a)(1), no retailer may sell regulated tobacco products to any person younger than 18 years of age.  Under 21 C.F.R. § 1140.14(a)(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 $5,705 civil money penalty is permissible for five violations of the regulations found at 21 C.F.R. pt. 1140 within a 36-month period.

Order

For these reasons, I enter default judgment in the amount of $5,705 against Respondent, 5414 Wyalusing Food Market 1 Inc. d/b/a 54 and Wyalusing Food Market.  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 one violation was committed on August 25, 2017, and two on June 20, 2018.