Miami Sun Express, Inc. d/b/a Shell Food Mart, DAB TB5195 (2020)

ORDER GRANTING COMPLAINANT’S MOTION TO IMPOSE SANCTIONS AND INITIAL DECISION AND DEFAULT JUDGMENT

The Food and Drug Administration’s (FDA) Center for Tobacco Products (CTP) began this case by serving an Administrative Complaint (Complaint) on Respondent, Miami Sun Express, Inc. d/b/a Shell Food 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 committed six repeated violations of 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 to impose a No-Tobacco-Sale Order for a period of 30 consecutive calendar days.  Respondent timely requested a hearing by filing an Answer. 

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 respond to 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 Respondent’s Answer, and issue this

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initial decision and default judgment imposing a No-Tobacco-Sale Order against Respondent for a period of 30 consecutive calendar days.  21 C.F.R. § 17.35(c)(3).

I.  Background

On December 20, 2019, CTP served the Complaint on Respondent, Miami Sun Express, Inc. d/b/a Shell Food Mart, located at 195 Northeast 183rd Street, Miami, Florida 33179, by United Parcel Service (UPS), as required by 21 C.F.R. §§ 17.5 and 17.7.  See Complaint and UPS Delivery Notification.  On January 21, 2020, Respondent registered for the DAB E-File system, and timely filed its Answer. 

On January 28, 2020, 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 March 5, 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.  APHO ¶ 12; see also 21 C.F.R. § 17.23(a).  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 April 20, 2020, and Respondent to file its pre-hearing exchange by May 11, 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 (citing 21 C.F.R § 17.35).

On February 24, 2020, 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 February 25, 2020.  See Exhibit B to Motion to Compel Discovery.  On April 1, 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 an order compelling Respondent to respond to CTP’s document request.  Motion to Compel Discovery, at 2.  On April 1, 2020, CTP also filed a Motion to Extend Deadlines, seeking to extend the deadlines set forth in the APHO by 30 days. 

On April 2, 2020, I issued an order setting an April 16, 2020, deadline for Respondent to file a response to CTP’ Motion to Compel Discovery, and extending CTP’s pre-hearing exchange deadlines by 30 days.  Order Setting Respondent’s Deadline to Respond to Complainant’s Motion to Compel Discovery and Extending Pre-Hearing Exchange Deadlines (April 2, 2020, Order), at 2; see also 21 C.F.R. § 17.32(c); APHO ¶ 19.  I warned Respondent that I may grant CTP’s Motion to Compel Discovery if Respondent

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failed to respond.  April 2, 2020, Order, at 2.  Respondent failed to file a response to CTP’s Motion to Compel Discovery or otherwise respond to the April 2, 2020, Order. 

Therefore, on April 20, 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 April 30, 2020.  Order Granting Complainant’s Motion to Compel Discovery (April 20, 2020, Order), at 2.  I instructed that if Respondent had no responsive documents to produce, then it must submit a written response to CTP stating so by the April 30, 2020, deadline.  Id.  I also warned Respondent that its failure to comply with the April 20, 2020, Order might result in sanctions, including the issuance of a default judgment finding Respondent liable for the violations alleged in the Complaint and imposing a No-Tobacco-Sale Order.  Id.

On May 5, 2020, CTP filed a Motion to Impose Sanctions stating that Respondent had not produced documents as ordered.  Motion to Impose Sanctions, at 2.  CTP requested that I strike Respondent’s Answer and issue a default judgment imposing a No-Tobacco-Sale Order for a period of 30 consecutive days against Respondent.  Id.  On that same date, CTP also filed a Motion to Extend Deadlines.  On May 6, 2020, I issued an order establishing a deadline of May 20, 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.  Order Setting Respondent’s Deadline to Respond to Complainant’s Motion to Impose Sanctions and Extending Pre-Hearing Exchange Deadlines (May 6, 2020, Order), at 2.  I warned Respondent that if it failed to respond to the Motion to Impose Sanctions, I may grant the motion and impose the requested 30-day No-Tobacco-Sale Order.  Id.  To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or the May 6, 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).1  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

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“[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 two 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.  Similarly, Respondent failed to comply with the April 20, 2020, Order, which required Respondent to produce documents to CTP by April 30, 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). 

Additionally, Respondent has failed to defend this action.  21 C.F.R. § 17.35(a)(2).  Respondent did not file a response to CTP’s Motion to Compel Discovery, as permitted by the regulations and my April 2, 2020, Order.  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 May 6, 2020, Order.  Respondent’s failure to respond to CTP’s motions and fulfill its discovery obligations suggests that it has abandoned its defense of this case.

In the absence of any explanation from Respondent, I find no basis to excuse Respondent’s repeated failure to comply with the various orders and regulations in this administrative proceeding.  Despite explicit warnings that its failure to comply with the orders could result in sanctions, Respondent did not comply with two orders and corresponding regulations.  See APHO; April 20, 2020, Order.  Likewise, Respondent did not respond to any of CTP’s motions.  See generally, CTP’s Motion to Compel Discovery; Motion to Impose Sanctions.  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.  Notably, Respondent’s failure to comply with the orders, regulations governing discovery, and other procedures in this case necessitated extending the pre-hearing exchange deadlines at least twice, which delayed the hearing process.  See April 2, 2020, Order, at 2; May 6, 2020, Order, at 2. 

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.  21 C.F.R. § 17.35(b), (c)(3).  Here, Respondent failed to comply

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with two of my orders, despite my explicit warnings that its failure could result in sanctions.  APHO ¶ 16; April 20, 2020, Order, at 2.  I specified that those sanctions may include striking its Answer and “issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a no-tobacco-sale order.”  April 20, 2020, Order, at 2.  Respondent also failed to defend this action, despite express reminders of the opportunity in my April 2, 2020, Order and May 6, 2020, Order.  Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.  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 for failing to comply with various 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(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 No-Tobacco-Sale-Order.  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 Shell Food Mart, an establishment that sells tobacco products and is located at 195 Northeast 183rd Street, Miami, Florida, 33179.  Complaint ¶¶ 5-6.
• On May 2, 2017, CTP initiated the first civil money penalty action, CRD Docket Number T-17-3752, FDA Docket Number FDA-2017-H-2537, against Respondent for violations of 21 C.F.R. pt. 1140.  Specifically, CTP alleged violations for selling cigarettes or smokeless tobacco to a minor on February 28, 2016, and December 15, 2016, and a violation for failing to verify the age of a purchaser with photographic identification on February 28, 2016.  Complaint ¶ 9.
• The first civil money penalty action concluded when Respondent “admitted all of the allegations in the Complaint and paid the agreed upon penalty.”  Further,

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• “Respondent expressly waived its right to contest such violations in subsequent actions.”  Complaint ¶ 9.
• On January 31, 2018, CTP initiated the second civil money penalty action, CRD Docket Number T-18-1096, FDA Docket Number FDA-2018-H-0449, against Respondent for violations of 21 C.F.R. pt. 1140.   In addition to the violations alleged in the first civil money penalty action, CTP alleged violations for selling cigarettes or smokeless tobacco to a minor and failing to verify the age of a purchaser with photographic identification on January 13, 2018.  Complaint ¶ 10.
• The second civil money penalty action concluded when Respondent “admitted all of the allegations in the Complaint and paid the agreed upon penalty.”  Further, “Respondent expressly waived its right to contest such violations in subsequent actions.”   Complaint ¶ 10.
• On May 17, 2018, CTP initiated the third civil money penalty action, CRD Docket Number T-18-2239, FDA Docket Number FDA-2018-H-1908, against Respondent for violations of 21 C.F.R. pt. 1140.  In addition to the violations alleged in the second civil money penalty action, CTP alleged violations for selling cigarettes or smokeless tobacco to a minor and  failing to verify the age of a purchaser with photographic identification on March 8, 2018.  Complaint ¶ 11.
• The third civil money penalty action concluded when Respondent “admitted all of the allegations in the Complaint and paid the agreed upon penalty.”  Further, “Respondent expressly waived its right to contest such violations in subsequent actions.”  Complaint ¶ 11.
• During a subsequent inspection of Respondent’s establishment conducted on June 9, 2019, an FDA-commissioned inspector documented that “a person younger than 18 years of age was able to purchase a package of Newport Box cigarettes . . . at approximately 11:14 AM.”  Complaint ¶¶ 6-7. 

These facts establish that Respondent is liable under the Family Smoking Prevention and Tobacco Control Act (Act).  See Act, Pub. L. No. 111-31 (June 22, 2009).  The Act, as amended, 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. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).  The Secretary of the United States 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 cigarettes or smokeless tobacco 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

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identification containing a purchaser’s date of birth, that no cigarette or smokeless tobacco purchasers are younger than 18 years of age.

Taking the above-alleged facts as true, Respondent had two original violations on February 28, 2016, and six repeated2 violations within a 36-month period.  Respondent originally violated the prohibition against selling cigarettes or smokeless tobacco to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a)(1), on February 28, 2016, and repeated those violations on December 15, 2016, January 13, 2018, March 8, 2018, and June 9, 2019.  Respondent also originally violated the requirement that retailers verify, by means of photo identification containing a purchaser’s date of birth, that no cigarette or smokeless tobacco purchasers are younger than 18 years of age, 21 C.F.R. § 1140.14(a)(2)(i), on February 28, 2016, and repeated those violations on January 13, 2018, and March 8, 2018.  When determining the number of violations for a No-Tobacco-Sale Order, Respondent’s violations on February 28, 2016, count as two original violations, and Respondent’s subsequent violations on December 15, 2016, January 13, 2018, March 8, 2018, and June 9, 2019, count as six repeated violations.  Therefore, Respondent’s actions constitute six repeated violations of law within a 36-month period that merit a No-Tobacco-Sale Order.

Under 21 U.S.C. § 333(f)(8), a No-Tobacco-Sale Order is permissible for six repeated violations of the regulations found at 21 C.F.R. pt. 1140.  The Act and regulations do not specify the duration of a No-Tobacco-Sale Order.  However, the Act specifies the factors that must be considered in determining the length of a No-Tobacco-Sale Order:  “the nature, circumstances, extent, and gravity of the violation or violations and, with respect to the violator, ability to pay, effect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other matters as justice may require.”  21 U.S.C. § 333(f)(5)(B).  Although it is not binding, CTP’s guidance document establishes that the maximum period of time for the first No-Tobacco-Sale Order received by a retailer is 30 calendar days.  See Determination of the Period Covered by a No-Tobacco-Sale Order and Compliance with an Order: Guidance for Tobacco Retailers, at 4 (Aug. 2015), http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM460155.pdf.  Consistently, CTP has requested a No-Tobacco-Sale Order against Respondent for a period of 30 consecutive calendar days.  Therefore, I find that a No-Tobacco-Sale Order for a period of 30 consecutive calendar days is warranted and so order one imposed.

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ORDER

For these reasons, I grant Complainant’s Motion to Impose Sanctions, strike Respondent’s Answer, and enter default judgment against Respondent, Miami Sun Express, Inc. d/b/a Shell Food Mart, in the form of a No-Tobacco-Sale Order, for a period of 30 consecutive calendar days.  21 C.F.R. § 17.11(a)(1) and (2).  During this period of time, Respondent shall stop selling cigarettes, cigarette tobacco, roll-your-own tobacco, smokeless tobacco, and covered tobacco products regulated under the Federal Food, Drug, and Cosmetic Act.  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. Under 21 U.S.C. § 333(f)(8), the hearing procedures established by regulations for assessing civil money penalties apply to No-Tobacco-Sale Order cases.
• 2. The term “repeated violations” is defined to mean “at least 5 violations of particular requirements over a 36-month period at a particular retail outlet that constitute a repeated violation . . . .”  See 21 U.S.C. § 333 note.