M and A Petro, Inc. d/b/a Citgo / Quik Mart, DAB TB5110 (2020)

ORDER GRANTING COMPLAINANT'S MOTION FOR SANCTIONS AND INITIAL DECISION AND DEFAULT JUDGMENT

The Food and Drug Administration's (FDA) Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint) against Respondent, M and A Petro, Inc. d/b/a Citgo / Quik Mart, alleging that Respondent impermissibly sold covered tobacco products to minors, failed to verify that covered tobacco product purchasers were 18 years of age or older, and opened packages of cigarettes to sell individual cigarettes, 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 $5,705 against Respondent for five violations of the tobacco regulations within a 36-month period.  Respondent requested a hearing by filing an Answer, which denied CTP's allegations.

Currently, CTP's 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

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Respondent's Answer, and issue an initial decision and default judgment imposing a civil money penalty in the amount of $5,705 against Respondent.  21 C.F.R. § 17.35(c)(3).

I.   Background and Procedural History

As provided in 21 C.F.R. §§ 17.5 and 17.7, CTP served the Complaint on Respondent M and A Petro, Inc. d/b/a Citgo / Quik Mart, located at 18321 West 8 Mile Road, Detroit, Michigan 48219, by United Parcel Service, on November 18, 2019.  On December 13, 2019, through counsel, Respondent filed a timely Answer.

On December 17, 2019, I issued an Acknowledgment and Pre-Hearing Order (APHO), acknowledging receipt of Respondent's Answer, concluding the Answer was timely, and establishing procedural deadlines for this case.  The APHO set a deadline of January 24, 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, 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 documents.  Id.; 21 C.F.R. §§ 17.23(d), 17.28.  Additionally, the APHO ordered CTP to file its pre-hearing exchange by March 9, 2020, and Respondent to file its pre-hearing exchange by March 30, 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; see also 21 C.F.R. § 17.35.

On December 26, 2019, CTP served a timely Request for Production of Documents on Respondent.  See 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 December 27, 2019.  See Exhibit B to Motion to Compel Discovery.  On January 30, 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 that I issue an order compelling Respondent to respond to CTP's Request for Production of Documents.

On February 3, 2020, I issued an order setting a February 14, 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.  I warned Respondent that I may grant CTP's Motion to Compel Discovery if Respondent failed to respond.  Respondent failed to file a response to CTP's Motion to Compel Discovery or otherwise respond to the February 3, 2020, order.  Therefore, on February 18, 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 March 3, 2020.  I noted that if Respondent had no responsive documents to produce, then it must submit a written

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response to CTP stating so by the March 3, 2020, deadline.  I also warned Respondent that its failure to comply with the March 3, 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 March 20, 2020, CTP filed a Motion to Impose Sanctions stating that Respondent had not produced documents as ordered.  CTP requested that I strike Respondent's Answer and issue a default judgment imposing a civil money penalty in the amount of $5,705 against Respondent.  On March 24, 2020, I issued an order establishing a deadline of April 6, 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.  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.  To date, Respondent has not filed a response to CTP's Motion to Impose Sanctions or the March 24, 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 repeatedly failed to comply with multiple judicial orders and procedures governing this proceeding.  Respondent also has failed to defend this action.  As such, Respondent 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 discovery requirements of the applicable regulations and my December 17, 2019, 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 also failed to comply with my February 18, 2020, order, which required Respondent to produce documents to CTP by March 3, 2020.  In the absence of any

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explanation from Respondent, I find no basis to excuse Respondent's repeated failure to comply with my orders and the regulations governing this administrative proceeding.  Despite explicit warnings that its failure to comply could result in sanctions, Respondent did not comply with my orders.  Likewise, Respondent failed to defend its action because it did not respond to any of CTP's motions.  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.

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.

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 Citgo / Quik Mart, an establishment that sells tobacco products and is located at 18321 West 8 Mile Road, Detroit, Michigan 48219.  Complaint ¶¶ 7-8.
• On June 21, 2018, CTP initiated a previous civil money penalty action, CRD Docket Number T-18-2640, FDA Docket Number FDA-2018-H-2390, against Respondent for violations of 21 C.F.R. pt. 1140.  Specifically, CTP alleged a violation for selling tobacco products to a minor on January 21, 2018 and May 17, 2018.  CTP also alleged a violation for failing to verify the age of a person with photographic identification on January 21, 2018.  CTP further alleged a violation for opening packages of cigarettes to sell individual cigarettes on May 8, 2018.  Complaint ¶ 11.

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• 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."  Complaint ¶ 12.
• During a subsequent inspection of Respondent's establishment on August 14, 2019, at approximately 6:38 PM, "a person younger than 18 years of age was able to purchase a package of two Swisher Sweets Classic cigars . . . [.]"  Additionally, "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 covered tobacco products to any person younger than 18 years of age.  21 C.F.R. § 1140.14(b)(1).  The regulations also require retailers to verify, by means of photo identification containing a purchaser's date of birth, that no covered tobacco product purchasers are younger than 18 years of age.  21 C.F.R. § 1140.14(b)(2)(i).  The regulations also prohibit retailers from opening any cigarette or smokeless tobacco package to sell or distribute individual cigarettes.  21 C.F.R. § 1140.14(a)(4).

Taking the above-alleged facts as true, Respondent had five violations of regulations found at 21 C.F.R. pt. 1140 within a 36-month period.  Respondent violated the prohibition against selling covered tobacco products to persons younger than 18 years of age, 21 C.F.R. § 1140.14(b)(1), on May 17, 2018, January 21, 2018, and August 14, 2019.  On January 21, 2018, and August 14, 2019, Respondent also violated the requirement that retailers verify, by means of photo identification containing a purchaser's date of birth, that no covered tobacco product purchasers are younger than 18 years of age.  21 C.F.R. § 1140.14(b)(2)(i).  On May 8, 2018, Respondent also violated the prohibition against opening any cigarette or smokeless tobacco package to sell or distribute individual cigarettes.  21 C.F.R. § 1140.14(a)(4).  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 three violations from the previous civil money penalty action and an additional two violations on August 14, 2019.  Therefore, Respondent's actions constitute five violations of law within a 36-month period that merit a civil money penalty.

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CTP has requested a civil money penalty of $5,705, 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 $5,705 is warranted and so order one imposed.