Sublime Plus Inc. d/b/a City Mini Mart, DAB TB5280 (2021)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative complaint (Complaint) on Respondent, Sublime Plus Inc. d/b/a City Mini Mart, at 150 Belmont Avenue, Springfield, Massachusetts 01108, and by filing a copy of the Complaint with the Civil Remedies Division (CRD) of the Departmental Appeals Board (DAB).  The Complaint alleges that Respondent 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 at 21 C.F.R. pt. 1140.  Therefore, CTP seeks an $11,410 civil money penalty from Respondent City Mini Mart for at least seven1 violations within a 48-month period. 

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Respondent timely answered CTP’s Complaint, however during the course of these administrative proceedings, Respondent failed to comply with orders and procedures governing this proceeding and failed to defend its action, which interfered with the speedy, orderly, or fair conduct of this proceeding.  21 C.F.R. § 17.35(a).  Accordingly, pursuant to 21 C.F.R. § 17.35(c)(3), I strike Respondent’s Answer and issue this decision of default judgment. 

I.   Procedural History

On September 17, 2019, CTP served the Complaint on Respondent, located at 150 Belmont Avenue, Springfield, Massachusetts 01108, by United Parcel Service, as required by 21 C.F.R. §§ 17.5 and 17.7.  CRD Docket (Dkt.) Entry No. 1b (Proof of Service).  Respondent filed a timely Answer.  In its Answer, Respondent denied the allegations in the Complaint.  Dkt. Entry No. 3 (Answer).

On November 1, 2019, I issued an Acknowledgment and Prehearing Order (APHO), acknowledging receipt of Respondent’s Answer and establishing procedural deadlines for this case.  Dkt. Entry No. 4 (APHO).  The APHO set deadlines for the parties’ filings and exchanges, including a schedule for discovery.  I directed that a party receiving a discovery request must provide the requested documents within 30 days of the request.  APHO ¶ 12; see also 21 C.F.R. § 17.23(a).  I 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; see also 21 C.F.R. § 17.35.

On January 16, 2020, CTP filed a Motion to Compel Discovery, asserting that Respondent did not respond to its discovery request as required by my APHO and regulations.  Dkt. Entry No. 8 (Motion to Compel Discovery).  On that same date, CTP also filed a Motion to Extend Deadlines requesting a 30-day extension of “any deadlines, including the January 21, 2020, due date for CTP’s pre-hearing exchange . . . .”  Dkt. Entry No. 7 (Motion to Extend Deadlines). 

On January 17, 2020, CTP filed an Unopposed Motion to Extend Deadlines and Notice of Pending Settlement.  Dkt. Entry No. 9 (First Unopposed Motion).  On January 21, 2020, I issued an Order Granting Motion to Extend Deadlines, which extended CTP’s pre-hearing exchange deadline to February 20, 2020, and Respondent’s pre-hearing exchange deadline to March 11, 2020.  Dkt. Entry No. 10.

On February 18, 2020, CTP filed a Motion to Extend Deadlines and Notice of Pending Settlement (Motion to Extend).  Dkt. Entry No. 11.  On February 18, 2020, I issued an order granting CTP’s motion, extending CTP’s pre-hearing exchange deadline to March 23, 2020 and Respondent’s deadline to April 10, 2020 for filing its exchange.  Dkt. Entry

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No. 12.  In the Order, I advised the parties that “[n]o further extensions will be granted.”  Id. at 2 (original emphasis).

On March 23, 2020, CTP timely filed its pre-hearing exchange, consisting of its Informal Brief, a list of proposed witnesses and exhibits, and 15 proposed exhibits (CTP Exs. 1-15).  Dkt. Entry Nos. 13-13p.  

Due to circumstances surrounding the COVID-19 pandemic, I stayed this case on March 27, 2020.  Dkt. Entry No. 14.  However, on June 22, 2020, I lifted the stay and gave Respondent until July 6, 2020 to file its pre-hearing exchange.  Dkt. Entry No. 15.  In the Order, I also scheduled a pre-hearing telephone conference (PHC) to be held on July 21, 2020, at 11:00 AM Eastern Time.  The purpose of the PHC was to resolve outstanding issues and to set this case for a hearing.  Id.  To date, Respondent has not filed a pre-hearing exchange.

On July 21, 2020, I held the pre-hearing conference in this case.  At the scheduled time, counsel for CTP and Respondent’s counsel appeared to participate at the conference.  During the conference, we discussed the parties’ exchange and witnesses.  As Respondent through counsel did not submit the written direct testimony of any witnesses, I limited the testimony at a hearing to the cross-examination and re-direct of CTP’s witness, Inspector Erin Ramos.  See Dkt. Entry No. 16.  (August 13, 2020 Order).  By Order dated August 13, 2020, I scheduled an in-person telephone hearing to be held on August 27, 2020, at 11:00 AM Eastern Time.  Id.  

On August 27, 2020, I convened the telephone hearing.  Counsel for CTP appeared to participate, with its witness for cross-examination by Respondent.  Respondent’s counsel did not appear or otherwise provide a response to the August 13, 2020 Order.

On August 28, 2020, I issued an Order to Show Cause for Failure to Appear at the Hearing, directing Respondent by September 11, 2020 to show cause for its failure to appear at the August 27, 2020 hearing.  Dkt. Entry No. 17 (Order to Show Cause).  I warned Respondent “[f]ailure to [show cause] 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.

By letter dated September 16, 20202 , and received in the Civil Remedies Division on September 25, 2020, Respondent’s counsel filed a response to the Order to Show Cause (Respondent’s Response).  Dkt. Entry No. 18.  In its response, Respondent through counsel stated, in part:

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. . . I failed by excusable neglect and inadvertence to appear for the hearing on August 27, 2020 . . . I called Mr. Ford and Attorney Svonkin to settle the matter prior to the date I had calendared for the hearing, August 31, 2020
. . . My practice has been compromised by Covid 19 pandemic issues, and I am moving my office which was necessitated by financial concerns . . . .

Id.  On October 2, 2020, a letter by my direction was issued, giving CTP until October 19, 2020 to advise of the status of any settlement in this matter and to file any reply to Respondent’s OSC response.  Dkt. Entry No. 19.  On October 19, 2020, CTP filed a second Unopposed Motion to Extend Deadlines and Notice of Pending Settlement.  Dkt. Entry No. 20.  Among other things, CTP asserted:

. . . CTP understands that payment is forthcoming from Respondent, due no later than December 30, 2020.  Accordingly, CTP respectfully requests that all deadlines in this case be extended for seventy-three (73) days, so that Respondent can pay the agreed-upon civil money penalty, and CTP can process the payment.  As a result, CTP is requesting that the case remain open until December 31, 2020 . . . .

Id.  On October 23, 2020, I issued an Order granting the motion for an extension.  Dkt. Entry No. 21.  In part, the Order granting the second Unopposed Motion directed:

. . . By December 31, 2020, the parties will advise this office whether a settlement has been finalized or, in the alternative, CTP will file its Notice of Settlement Agreement.  In the event a settlement has not been finalized, I will proceed in deciding this case.  No further extensions will be granted.

Id. (original emphasis).  On December 31, 2020, CTP filed a Status Report, informing this office “that payment has not yet been received, and that settlement has not been finalized.”  Dkt. Entry No. 22.  Subsequently, on January 12, 2021 an email was sent to CTP counsel by this office requesting the status of this case since its December 31, 2020 filing.  On January 13, 2021, by email transmission, CTP informed this office:

. . . CTP communicated with Respondent’s Counsel.  He said his client is back in the country and he will speak to him regarding payment.  He hopes to get the payment sent tomorrow.

Dkt. Entry No. 23.  To date, a Notice of Settlement Agreement has not been filed by CTP as to settlement and payment of a civil money penalty by Respondent.

First and foremost, with regard to Respondent’s response to my August 28, 2020 Order to Show Cause, I find that the response was not timely filed.  Respondent had until September 11, 2020 to submit a response to the Order to Show Cause.  See Dkt. Entry

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No. 17.  Review of the envelope used to mail the response shows a postmark date of September 16, 2020.  Dkt. Entry No. 18, at 5.  Respondent never requested that I extend the deadline for submitting its response.  And while Respondent offered an explanation for not appearing at the August 27, 2020 hearing, Respondent did not provide a reason for filing its response to my Order to Show Cause five days after the established deadline.

The regulations at 21 C.F.R. § 17.35(f) provide:

The presiding officer may refuse to consider any . . . response . . . or other document that is not filed in a timely fashion or in compliance with the rules of this part.

As discussed above, I find that Respondent’s response to the August 28, 2020 Order to Show Cause was not timely filed.

However assuming, arguendo, that I find good cause for Respondent’s untimely submission of its Order to Show Cause response, I do not find that Respondent has shown good cause for failing to appear at the hearing as scheduled.  There is no apparent reason why Respondent’s counsel could not have requested that I reschedule the hearing pending finalization of the purported settlement agreement.  Further, if Respondent’s counsel was under the assumption, albeit mistakenly, that a pending settlement would automatically pause these proceedings, that issue could have been noted in either or both of the two Unopposed Motions to Extend Deadlines filed by CTP.  It would have been in Respondent’s best interest for its counsel to advise this Court of its position at the pre-hearing telephone conference.  Instead, Respondent’s counsel said nothing.  In fact, it was not until after counsel received the Order to Show Cause that it communicated with this office and filed a response regarding its failure to appear at the hearing. 

Although not defined by the regulations, good cause must mean something more than a simple error or omission.  Good cause would normally constitute some event or events beyond Respondent’s ability to control that acted to prevent Respondent from taking a required action, which, in this case, would be to either appear at the hearing or request it be rescheduled.  Here, Respondent asserts “I failed by excusable neglect and inadvertence to appear for the hearing on August 27, 2020.”  Dkt. Entry No. 18.  Neglect regarding the process does not constitute a good cause basis for his failure to appear at the hearing or otherwise respond to any of my previous orders and directives.   

II.   Striking Respondent’s Answer

Pursuant to 21 C.F.R. § 17.35(a), I may sanction a party for:

(1)      Failing to comply with an order, subpoena, rule, or procedure governing the proceeding;

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(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).

Respondent has demonstrated a pattern of noncompliance throughout these proceedings.  As noted earlier, an APHO was issued on November 1, 2019.  In that document, Respondent was notified that a party receiving a request for production of documents must provide the requested documents no later than 30 days after the request has been made.  APHO ¶ 12 (emphasis added).  In that Order, Respondent was also notified that after CTP’s exchange, it shall file its pre-hearing exchange and serve its exchange on CTP.  APHO ¶ 4 (emphasis added).  Respondent was warned that sanctions may be imposed for failure to comply with any order.  APHO ¶ 16.  Respondent did not file any response to the request for production of documents by CTP within the 30 days specified in the APHO.  It was only in response to my Order to Show Cause for Failure to Appear that Respondent filed a responsive document.

Respondent failed to comply with the following orders, rules, or procedures governing this proceeding:

• Respondent failed to comply with 21 C.F.R. § 17.23(a) and paragraph 12 of my November 1, 2019 APHO, when Respondent failed to respond to CTP’s request for production of documents within 30 days;
• Respondent failed to file its pre-hearing exchange by July 6, 2020 as ordered by my June 22, 2020 Order;
• Respondent failed to appear at the August 27, 2020 telephone hearing and failed to demonstrate good cause for the failure to appear; and
• Respondent failed to comply with my August 28, 2020 Order, when it failed to timely submit a response to my Order to Show Cause for Failure to Appear at Hearing.

I find that Respondent has failed to comply with orders and procedures governing this proceeding, has failed to defend its actions, and, as a result, has interfered with the speedy, orderly, and fair conduct of this proceeding.  I conclude that Respondent’s conduct establishes a basis for sanctions pursuant to 21 C.F.R. § 17.35, and that sanctions are warranted.

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).  Here, Respondent failed to comply with my orders, despite my explicit warning that its failure could result in sanctions and I specified that those sanctions may include “striking Respondent’s Answer

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and issuing an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing the $11,410 civil money penalty CTP seeks.”  Respondent also failed to defend its action by failing to appear at the scheduled hearing.  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).  Accordingly, I strike Respondent’s Answer, and issue this Initial Decision and Default Judgment, assuming the facts alleged in CTP’s complaint to be true.  21 C.F.R. §§ 17.35(c)(3), 17.11(a). 

III.   Default Decision

Striking Respondent’s answer leaves the Complaint unanswered.  Therefore, I am required to issue an initial decision by default, provided that the complaint is sufficient to justify a penalty.  21 C.F.R. § 17.11(a).  Accordingly, I must first determine whether the allegations in the Complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true (but not its conclusory statements) and I conclude that default judgment is merited based on the allegations of the Complaint.  21 C.F.R. § 17.11.  Specifically:

• On October 2, 2018, CTP initiated a previous civil money penalty action, CRD Docket Number T-19-11, FDA Docket Number FDA-2018-H-3707, against Respondent for at least five violations3 of the Act.  CTP alleged those violations to have occurred at Respondent’s business establishment located at 150 Belmont Avenue, Springfield, Massachusetts 01108, on December 30, 2015, September 2, 2017, and July 5, 2018;
• The previous action concluded when an Initial Decision and Default Judgment was entered by an Administrative Law Judge, “finding that all of the violations alleged in the Complaint occurred”;
• An FDA-commissioned inspector conducted a subsequent inspection on June 12, 2019, at approximately 4:46 PM at Respondent’s business establishment located at 150 Belmont Avenue, Springfield, Massachusetts 01108.  During this inspection, a person younger than 18 years of age was able to purchase a package of two Garcia y Vega Game Leaf Wild Berry cigars.  Additionally, Respondent’s staff failed to

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• 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 City Mini 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 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 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) and § 1140.14(b)(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) and § 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.

An $11,410 civil money penalty is permissible under 21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $11,410 against Respondent Sublime Plus Inc. d/b/a City Mini Mart.  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. CTP did not include violations that occurred outside the relevant timeframe for this Complaint.
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2. I note that Respondent’s response is dated September 16, 2020, approximately five days after the established deadline for submission of its response to my Order to Show Cause.
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3. The complaint alleges two violations were committed on December 30, 2015, two on September 2, 2017, and two on July 5, 2018.  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 Servs., 884 F.3d 1205 (D.C. Cir. 2018).
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