Saf Crown LLC d/b/a Crown Corner Mart, DAB TB4444 (2019)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving the Complaint on Respondent, Saf Crown LLC d/b/a Crown Corner Mart, and filing a copy of the Complaint with the Civil Remedies Division (CRD) of the Departmental Appeals Board (DAB).  The Complaint alleges that Respondent impermissibly sold cigarettes to minors and failed to verify that the cigarette purchasers were of sufficient age, thereby violating 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 of $570 against Respondent for three violations within a 24-month period. 

Respondent timely requested a hearing by filing an Answer, which denied liability. 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, strike Respondent’s Answer, and issue an Initial Decision and Default Judgment imposing a civil money penalty in the amount of $570 against Respondent.  21 C.F.R. § 17.35(c)(3).

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I. Background

As provided in 21 C.F.R. §§ 17.5 and 17.7, CTP served the Complaint on Respondent Crown Corner Mart, located at 4201 Erdman Avenue, Baltimore, Maryland 21213, by United Parcel Service on February 25, 2019.  Dkt. Entry Nos. 1 and 1b, Complaint and Proof of Service. Respondent registered for the DAB Electronic Case Filing (DAB E-File) system, and on March 27, 2019, timely filed its Answer to the Complaint.  Dkt. Entry No. 3, Answer.

On March 28, 2019, I issued an Acknowledgment and Pre-hearing Order (APHO) acknowledging receipt of Respondent’s Answer and establishing procedural deadlines for this case.  Dkt. Entry No. 4, APHO.  The APHO contained a provision that required each party to file its pre-hearing exchange. The APHO ordered CTP to file its pre-hearing exchange by June 18, 2019, and Respondent, after reviewing CTP’s exchange, to file its pre-hearing exchange by July 9, 2019. Id. ¶  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.”  Id. ¶ 16; see also 21 C.F.R. § 17.35.  The APHO was served on Respondent via DAB E-File.  Dkt. Entry No. 4, at 10.

On June 3, 2019, CTP filed a Motion to Compel along with a Motion to Extend Deadlines, seeking to extend the deadlines set forth in the APHO by 30 days.  Dkt. Entry No. 8, Motion to Extend Deadlines.  On June 4, 2019, I granted the motion and issued an Order extending CTP’s pre-hearing exchange deadline to July 18, 2019, and Respondent’s pre-hearing exchange deadline to August 8, 2019.  Dkt. Entry No. 9, June 4, 2019 Order.  The June 4, 2019 Order was served on Respondent via DAB E-File.  Id. at 3.

On July 1, 2019, CTP filed a Motion to Impose Sanctions along with a second Motion to Extend Deadlines, seeking to extend the deadlines set forth in the June 4, 2019 Order by 30 days.1 Dkt. Entry No. 12, Motion to Extend Deadlines.  On July 2, 2019, I issued an order extending CTP’s pre-hearing exchange deadline to August 19, 2019, and Respondent’s pre-hearing exchange deadline to September 9, 2019.  Dkt. Entry No. 13, July 2, 2019 Order.  The July 2, 2019 Order was served on Respondent via DAB E-File.  Id. at 3.

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On August 19, 2019, CTP timely filed its pre-hearing exchange. Dkt. Entry Nos. 18-18t.  Respondent, however, neither filed its pre-hearing exchange by the September 9, 2019 deadline nor requested an extension of time to file its pre-hearing exchange. Respondent did not even contact the CRD, although the APHO clearly provided the name of, and contact information for, the staff attorney assisting me with the case.  See Dkt. Entry No. 4, APHO, at 1.

On September 12, 2019, I issued an Order to Show Cause stating that, to date, I had not received Respondent’s pre-hearing exchange.  Dkt. Entry No. 19, Order to Show Cause, at 1. The September 12, 2019 Order also stated that Respondent’s failure to file its pre-hearing exchange indicated that Respondent may have abandoned its request for a hearing. Id.The Order to Show Cause directed Respondent that it had until September 18, 2019 to file a pre-hearing exchange and show cause for failure to timely file, or file a pre-hearing brief stating it had no proposed witnesses, documents, or other evidence to offer as proof in support of its defenses and legal arguments by.  Id. at 1-2.  The Order to Show Cause warned Respondent that if it failed to respond by September 18, 2019, I would dismiss the hearing request and enter an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a $570 civil money penalty.  Id.  The September 12, 2019 Order was served on Respondent via DAB E-File.  Id. at 2.  To date, Respondent has not filed its pre-hearing exchange or responded in any other way to the September 12, 2019 Order to Show Cause. 

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 judicial orders and procedures. As such, Respondent has failed to defend this action, which has interfered with the speedy, orderly, and fair conduct of this proceeding.  21 C.F.R. § 17.35(a).  Specifically, Respondent failed to comply with the exchange requirements of the applicable regulations providing that, “[a]t least 30 days before the hearing, or by

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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 March 28, 2019 APHO, as modified by my June 4, 2019 and July 2, 2019 Orders, requiring Respondent to file a pre-hearing exchange by September 9, 2019.  See Dkt. Entry No. 4, APHO ¶ 4; Dkt. Entry No. 9, June 4, 2019 Order, at 2; Dkt. Entry No. 13, July 2, 2019 Order, at 3.  Respondent had notice of the requirement to file its pre-hearing exchange by the September 9, 2019 deadline, yet failed to do so.

Respondent’s failure to comply with the governing regulations and the APHO is further compounded by its failure to comply with my September 12, 2019 Order to Show Cause, which afforded Respondent until September 18, 2019 to show cause, and cautioned that Respondent’s failure to do so may result in dismissal of the hearing request and issuance of a default judgment for CTP.  See Dkt. Entry No. 19, Order to Show Cause, at 1-2.  Despite this clear warning, Respondent still failed to respond to the Order to Show Cause.   

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 at least two orders that I issued in this case. 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.3 As the DAB 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, at 8 (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.”). 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, 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.

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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 Crown Corner Mart, an establishment that sells tobacco products and is located at 4201 Erdman Avenue, Baltimore, Maryland 21213.  Dkt. Entry No. 1, Complaint ¶¶ 5-6.
• During an inspection of Respondent’s establishment on March 5, 2018, at approximately 12:15 PM, “a person younger than 18 years of age was able to purchase a package of Newport Box cigarettes . . .” and “the minor’s identification was not verified before the sale . . . .”  Dkt. Entry No. 1, Complaint ¶ 9.
• On April 19, 2018, CTP issued a Warning Letter to Respondent regarding the documented violations from March 5, 2018.  The letter explained 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 Food and Drug Administration or a civil money penalty action could occur and that Respondent is responsible for complying with the law.  Dkt. Entry No. 1, Complaint ¶¶ 9-10.
• During a subsequent inspection of Respondent’s establishment on November 21, 2018, at approximately 1:18 PM, “a person younger than 18 years of age was able to purchase a package of Newport Box cigarettes . . .” and “the minor’s identification was not verified before the sale . . . .”  Dkt. Entry No. 1, Complaint ¶ 7.

These facts establish Respondent Crown Corner Mart’s liability under the Act. The Act prohibits misbranding of a tobacco product.  21 U.S.C. § 331(k). A 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).  The regulations prohibit the sale of cigarettes to any person younger than 18 years of age.  21 C.F.R. § 1140.14(a)(1). The regulations also require retailers to verify, by means of photographic identification containing the

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purchaser’s date of birth, that no cigarette purchasers are younger than 18 years of age.  21 C.F.R. § 1140.14(a)(2)(i).

Taking the above-alleged facts as true, Respondent violated the prohibition against selling cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a)(1), on March 5, 2018 and November 21, 2018.  On those same dates, Respondent also violated the requirement that retailers verify, by means of photo identification containing a purchaser’s date of birth, that no cigarette purchasers are younger than 18 years of age.  21 C.F.R. § 1140.14(a)(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). Therefore, Respondent’s actions constitute three violations of law within a 24-month period that merit a civil money penalty.

CTP has requested a civil money penalty of $570, 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 $570 is warranted and so order one imposed.

• 1. CTP’s Motion to Impose Sanctions was rendered moot by my Order issued on July 23, 2019. See Dkt. Entry No. 17, Order.
• 2. “Presiding officer” is defined as “an administrative law judge qualified under 5 U.S.C. 3105.” 21 C.F.R. § 17.3(c).
• 3. Notably, Respondent’s failure to timely respond to CTP’s Request for Production of Documents served on April 29, 2019 (see Dkt. Entry No. 7a) and comply with my Order Granting Complainant’s Motion to Compel issued on June 20, 2019 (see Dkt. Entry No. 10) necessitated extending the pre-hearing exchange deadlines twice, which delayed the hearing. See June 4, 2019 Order and July 2, 2019 Order.