Azaam Petro, Inc. d/b/a Crown, DAB TB4671 (2019)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative complaint on Respondent, Azaam Petro, Inc. d/b/a Crown, at 5101 York Road, Baltimore, Maryland 21212, and by filing a copy of the complaint with the Food and Drug Administration's (FDA) Division of Dockets Management. The complaint seeks a $5,705 civil money penalty from Respondent Crown for 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, at least five times within a 36-month period.

The complaint alleges CTP previously initiated a civil money penalty action against Respondent Crown. The prior action concluded after Respondent Crown admitted to at least three violations of the Act. Specifically, Respondent admitted that it sold regulated tobacco products to minors and failed to verify, by means of photo identification containing a date of birth, that a purchaser was 18 years of age or older. The complaint further alleges that Respondent Crown subsequently committed two additional violations of the Act. Specifically, that Respondent sold regulated tobacco products to a minor and

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failed to verify, by means of photo identification containing a date of birth, that the purchaser was 18 years of age or older, thereby violating the Act. Therefore, CTP seeks a $5,705 civil money penalty against Respondent Crown for a total of five violations within a 36-month period.

I. Background and Procedural History

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on April 24, 2019, CTP served the complaint on Respondent Crown by United Parcel Service. On May 6, 2019, Respondent timely filed an answer. On May 15, 2019, I issued an Acknowledgment and Pre-Hearing Order (APHO) acknowledging receipt of Respondent's answer and establishing procedural deadlines for this case. The APHO contained a provision that set out instructions regarding a party's request for production of documents. That provision states, in part, that a party had until June 21, 2019, to request that the other party provide copies of documents relevant to this case. APHO ¶ 12. The order also stated that a party receiving such a request 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). Id.

On May 22, 2019, CTP served its Request for Production of Documents on Respondent. On June 12, 2019, CTP filed an Unopposed Motion to Extend Deadlines and Notice of Pending Settlement. In a June 14, 2019 order, I granted CTP's motion, extending the pre-hearing exchange deadlines by 30 days. On August 15, 2019, CTP filed a Motion to Compel Discovery stating it has not received a response to its Request for Production of Documents and requesting "an order be entered compelling Respondent to respond to CTP's Request for Production of Documents in its entirety." 1 On August 15, 2019, CTP also filed a Motion to Extend Deadlines.

In an August 22, 2019 order, I granted CTP's Motion to Extend Deadlines and I gave Respondent until September 6, 2019, to file a response to CTP's Motion to Compel Discovery. Respondent failed to file any response to CTP's Motion to Compel Discovery. Although Respondent did not file a response to CTP's Motion to Compel Discovery, it did file a letter on September 12, 2019 titled "Answer sheet to request for hearing." However, Respondent's September 12, 2019, did not address the contentions in CTP's Motion to Compel or otherwise respond to the directives in my August 22, 2019 order. Rather, Respondent's letter addressed the violations in the Complaint, provided defenses to the violations and requested a lower penalty. See Docket Entry No. 13.

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Therefore, in a September 12, 2019 order, I granted CTP's motion and ordered Respondent to comply with CTP's Request for Production of Documents by October 12, 2019. I also extended the parties' pre-hearing exchange deadlines by 30 days. I warned Respondent that a failure to comply might 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.

On October 29, 2019, CTP filed Complainant's Status Report and Motion to Impose Sanctions (Motion to Impose Sanctions) stating, "Respondent did not respond to CTP's Motion to Compel[.]" Motion to Impose Sanctions at 1. CTP requested I strike Respondent's answer and issue a default judgment imposing a civil money penalty in the amount of $5,705 against Respondent. Id. at 2. On November 1, 2019, I gave Respondent until November 19, 2019, to file a response to CTP's Motion to Impose Sanctions. I also extended the parties' pre-hearing exchange deadlines by 30 days and on November 26, 2019, I extended the parties' pre-hearing exchange deadlines a fourth time sua sponte. To date, Respondent has failed to file any response to CTP's Motion to Impose Sanctions.

The issue before me is whether CTP's proposed sanction – striking Respondent's Answer and issuing default judgment – is the appropriate one. The harshness of the sanctions I impose upon either party must relate to the nature and severity of the misconduct or failure to comply. See 21 C.F.R. § 17.35(b). Respondent failed to comply with my May 15, 2019 APHO and Respondent failed to comply with my September 12, 2019 order to comply with CTP's Request for Production of Documents. This conduct is sufficiently egregious to warrant striking Respondent's answer and issuing an initial decision by default. Therefore, pursuant to 21 C.F.R. § 17.35, I grant CTP's Motion to Impose Sanctions, and strike Respondent's answer for failing to comply with two judicial directions.

II. Default Decision

Striking Respondent's answer leaves the complaint unanswered. Pursuant to 21 C.F.R. § 17.11, I assume that the facts alleged in the complaint (but not its conclusory statements) are true. Specifically:

• On April 18, 2018, CTP initiated a previous civil money penalty action, CRD Docket Number T-18-1955, FDA Docket Number FDA-2018-H-1530, against Respondent for at least three violations2 of the Act. CTP alleged those violations to have occurred at Respondent's business establishment, 5101 York Road, Baltimore, Maryland 21212, on July 12, 2017, and April 2, 2018;

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• The previous action concluded when Respondent admitted the allegations contained in the Complaint issued by CTP, and paid the agreed upon monetary penalty in settlement of that claim. Further, "Respondent expressly waived its right to contest such violations in subsequent actions";
• An FDA-commissioned inspector conducted a subsequent inspection on January 25, 2019, at approximately 12:07 PM at Respondent's business establishment located at 5101 York Road, Baltimore, Maryland 21212. During this inspection, a person younger than 18 years of age was able to purchase a package of Newport Box cigarettes. Additionally, Respondent's staff failed to 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 Crown's liability under the Act. The Act prohibits misbranding of a regulated tobacco product. 21 U.S.C. § 331(k). A regulated 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). Under 21 C.F.R. § 1140.14(a)(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), 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.

Under 21 C.F.R. § 17.2, a $5,705 civil money penalty is permissible for five violations of the regulations found at 21 C.F.R. pt. 1140 within a 36-month period.

Order

For these reasons, I enter default judgment in the amount of $5,705 against Respondent Azaam Petro, Inc. d/b/a Crown. 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 asserts in its Motion to Compel that "CTP and Respondent agreed to settle the matter on May 23, 2019, prior to the discovery due date." CTP further asserts that "CTP has not received payment nor has Respondent signed an Acknowledgment Form the violations contained in the Complaint." Motion to Compel Discovery at 2 n.1.
• 2. The complaint alleges one violation was committed on July 12, 2017, and two on April 2, 2018.