Mike's Food and Fuel, Inc. d/b/a Citgo, DAB TB4493 (2019)

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

The Center for Tobacco Products CTP began this case by serving a Complaint on Respondent, Mike’s Food and Fuel, Inc. d/b/a Citgo, and filing a copy of the Complaint with the Civil Remedies Division of the Departmental Appeals Board.  Docket Entry No. 1. The Complaint alleges that Respondent’s staff impermissibly sold covered tobacco products to minors and failed to verify that 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, 21 C.F.R. pt. 1140.  CTP seeks a civil money penalty of $5,705 for at least five violations within a 36-month period.

Respondent timely requested a hearing by filing an Answer, which admitted the allegations of liability, but raised defenses, and contested the amount of the requested penalty.  As discussed below, during the course of this administrative proceeding, Respondent failed to comply with orders and procedures and failed to defend this action,

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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 an Initial Decision and Default Judgment imposing a civil money penalty in the amount of $5,705 against Respondent.

I. Background and Procedural History

On April 12, 2019, CTP served the Complaint on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7.  Docket Entry No. 1b.  Respondent timely answered CTP’s Complaint on May 9, 2019.  Docket Entry Nos. 3-5.  On May 16, 2019, I issued an Acknowledgment and Pre-Hearing Order (APHO) that set deadlines for the parties’ pre-hearing 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 21 C.F.R. § 17.23(a). I warned:

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. 21 C.F.R. § 17.35.

APHO ¶ 16.

In accordance with the deadlines set forth in the APHO, CTP served Respondent with its Request for Production of Documents on June 10, 2019.  Docket Entry No. 9b.  Respondent did not file a motion for a protective order within 10 days of receiving the Request for Production of Documents.  On July 23, 2019, CTP filed a Motion to Compel Discovery asserting that Respondent had not responded to its discovery request.  Docket Entry Nos. 9, 9a, 9b.  On July 23, 2019, CTP also requested an extension of the pre-hearing deadlines.  Docket Entry No. 10.  On July 24, 2019, I issued an Order, which advised Respondent that it had until August 7, 2019, to file a response to CTP’s Motion to Compel Discovery.  Docket Entry No. 11; see also 21 C.F.R. § 17.32(c); APHO ¶ 19.  My Order also granted CTP’s Motion to Extend Deadlines.  Docket Entry No. 11.  Respondent failed to submit a response to CTP’s Motion to Compel or the July 24, 2019 Order, or otherwise respond to CTP’s Request for Production of Documents.

On August 14, 2019, I issued an Order Granting [CTP’s] Motion to Compel and ordering Respondent to produce documents responsive to CTP’s Request for Production of Documents by August 30, 2019.  Docket Entry No. 12 (August 14, 2019 Order).  I noted that if Respondent had no responsive documents to produce, then it must submit a written response to CTP stating so by the August 30, 2019 deadline.  I also warned that:

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Failure to comply with this Order 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.

August 14, 2019, Order, at 1-2.  In the same Order, I also extended the parties’ pre-hearing exchange deadlines.  Id. at 2.

On September 10, 2019, CTP filed a Status Report and Motion to Impose Sanctions.  Docket Entry No. 13 (Motion to Impose Sanctions).  CTP advised that Respondent had not complied with my August 14, 2019 Order requiring Respondent to produce documents responsive to CTP’s Request for Production of Documents by August 30, 2019.  Id. at 2.CTP argued that sanctions against Respondent for its repeated non-compliance are an appropriate remedy.  Id.  Specifically, CTP asked that I strike Respondent’s Answer as a sanction and issue an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.  Id.  On September 10, 2019, CTP also filed a Motion to Extend Deadlines.  Docket Entry No. 14. 

On September 11, 2019, I issued an order giving Respondent until September 26, 2019, to file a response to CTP’s Motion to Impose Sanctions.  Docket Entry No. 15 (Order Setting Respondent’s Deadline to File a Response to Complainant’s Motion to Impose Sanctions and Granting Complainant’s Motion to Extend Deadlines [hereinafter “September 11, 2019 Order”]).  In my September 11, 2019 Order, I also extended the pre-hearing deadlines.  Id.  To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or my September 11, 2019 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

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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 orders and procedures governing this case.  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 discovery requirements of the applicable regulations and my 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.

Additionally, Respondent did not file a response to CTP’s Motion to Compel Discovery, as required by the regulations and my July 24, 2019 Order.  21 C.F.R. § 17.32(c).  Respondent also failed to comply with the August 14, 2019 Order, which required Respondent to produce documents by August 30, 2019.  Furthermore, Respondent did not respond to CTP’s Motion to Impose Sanctions, in contravention of the regulations and my September 11, 2019 Order.

In the absence of any explanation from Respondent, I find no basis to excuse Respondent’s repeated failure to comply with the various administrative 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 that I issued in this case.  APHO; July 24, 2019 Order; August 14, 2019 Order; and September 11, 2019 Order.  Likewise, Respondent 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.  Notably, Respondent’s failure to comply with orders and regulations governing discovery and other procedures in this case necessitated extending the pre-hearing exchange deadlines three times, which delayed the hearing.  July 24, 2019 Order at 2; August 14, 2019 Order at 2; and September 11, 2019 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 with several of my orders, despite my explicit warnings that its failure could result in sanctions.  APHO ¶ 16; August 14, 2019 Order at 2; see also July 24, 2019 Order at 2; September 11, 2019 Order at 2.  I specified that those sanctions may include striking its Answer and “issuance of an Initial Decision and Default Judgment finding Respondent

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liable for the violations listed in the Complaint and imposing a civil money penalty.”  August 14, 2019 Order at 2. 

Respondent also failed to defend this action, despite an express reminder of the opportunity in my September 11, 2019 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 numerous 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 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, an establishment that sells tobacco products and is located at 4702 West Gandy Boulevard, Tampa, Florida 33611.  Complaint ¶¶ 7-8.
• On November 2, 2018, CTP initiated a previous civil money penalty action, CRD Docket Number T-19-379, FDA Docket Number FDA-2018-H-4160 (see also CRD Docket Number T-18-349, FDA Docket Number FDA-2017-H-6412), against Respondent for violations of 21 C.F.R. pt. 1140 within a 24-month period.  Specifically, CTP alleged violations for selling covered tobacco products to a minor on the following dates:  February 4, 2017, August 3, 2017, and August 15, 2018.  CTP also alleged violations for failing to verify the age of a person with photographic identification on each of the following dates:  February 4, 2017, and August 3, 2017.  Complaint ¶ 11.
• The previous action concluded when Respondent “admitted all of the allegations in the Complaint and paid the agreed upon penalty.”  Further, “Respondent

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expressly waived its right to contest such violations in subsequent actions.”  Complaint ¶ 12.

• During a subsequent inspection of Respondent’s establishment conducted on January 11, 2019, an FDA-commissioned inspector documented that “a person younger than 18 years of age was able to purchase a JUUL Classic Tobacco e-liquid product . . . at approximately 5:16 PM.”  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 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 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).  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 photographic identification containing the purchaser’s date of birth, that no covered tobacco product purchaser is younger than 18 years of age.  21 C.F.R. § 1140.14(b)(2)(i).  

Taking the above alleged facts as true, Respondent had five violations of the 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 February 4, 2017, August 3, 2017, August 15, 2018, and January 11, 2019.  On February 4, 2017 and August 3, 2017, 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).  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 four violations from the previous civil money penalty action and one additional violation on January 11, 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.