M.M Fowler, Inc.d/b/a Family Fare/BP, DAB TB5275 (2021)

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), Complainant, filed an Administrative Complaint (Complaint) on Respondent, M. M. Fowler, Inc. d/b/a Family Fare / BP, alleging facts and legal authority sufficient to justify imposing a No-Tobacco-Sale Order against Respondent for a period of 30 consecutive calendar days.  Respondent timely requested a hearing by submitting an Answer.  However, as discussed below, Respondent failed to comply with judicial orders governing this proceeding and failed to defend this action, despite being given multiple opportunities to participate.  I, therefore, strike Respondent’s filings, issue this decision of default judgment, and impose a No-Tobacco-Sale Order against Respondent for a period of 30 consecutive calendar days.

I. Background

As provided for in 21 C.F.R. §§ 17.5 and 17.7, CTP served the Complaint on Respondent, who is located at 4700 West Market Street, Greensboro, North Carolina

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27407, by United Parcel Service (UPS), on March 12, 2020.  On April 9, 2020, Respondent, who had registered for the DAB Electronic Filing System (DAB E-File), timely submitted its Answer to the Civil Remedies Division (CRD).  Respondent admitted the alleged violations and offered several documents to mitigate the 30-day No-Tobacco-Sale Order, including an IRS income statement, the Family Fare Franchise Agreement, and “Responsible Selling” training completion certificates for seven of its employees.

On April 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 June 4, 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 21 C.F.R. § 17.23(a).  The APHO also contained a provision that required each party to file its pre-hearing exchange.  The APHO ordered CTP to file its pre-hearing exchange by July 20, 2020, and Respondent to file its pre-hearing exchange by August 10, 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).  The APHO was served on Respondent via DAB E-File.1

On May 8, 2020, CRD was notified by email that Respondent was seeking translation assistance of the APHO and all documents going forward.  Dkt. Entry Nos. 8-10 (email correspondence between CTP, CRD and Respondent).  Respondent confirmed that translation of the APHO and all subsequent documents into Mandarin Chinese was being requested.  Dkt. Entry No. 9.  On May 26, 2020, CTP filed a Joint Status Report (JSR) reporting that the parties were unable to reach settlement and planned to proceed to a

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hearing.2  On May 28, 2020, Chinese translation copies of the APHO and JSR were released to the parties.

On July 6, 2020, CTP filed a Motion to Compel Discovery with two exhibits, requesting an order to compel Respondent to respond to its Request for Production of Documents (RFP).  On that same date, CTP also filed an Unopposed Motion to Extend Deadlines, seeking to extend the deadlines set forth in the APHO by 30 days.  On July 16, 2020, I issued an Order allowing Respondent until July 30, 2020 to file a response to CTP’s Motion to Compel Discovery and extended CTP’s pre-hearing exchange deadline to August 19, 2020, and Respondent’s pre-hearing exchange deadline to September 9, 2020.  Chinese translation copies of my July 16, 2020 Order, CTP’s Motion to Compel Discovery, Unopposed Motion to Extend Deadlines, and RFP were released to the parties on that same date.  Respondent did not submit any response.

On August 18, 2020, I issued an Order Granting Motion to Compel, directing Respondent to comply with CTP’s RFP by September 4, 2020.  I warned Respondent that “[f]ailure to do so may result in sanctions, including the issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint.”  A Chinese translation copy of the August 18, 2020 Order was released on that same date.  Respondent did not submit any response.

On September 10, 2020, CTP filed a Status Report and Motion to Impose Sanctions.  In its motion, CTP states that “Respondent has not produced any documents to CTP in response to its RFP.”  The motion requests that I impose sanctions by striking the Answer entered by Respondent in this case and issuing an initial decision and default judgment imposing a 30 consecutive day No-Tobacco-Sale Order against Respondent.  CTP also filed an Unopposed Motion to Extend Deadlines. 

On September 15, 2020, I issued an Order allowing Respondent until October 2, 2020 to file a response to CTP’s Status Report and Motion to Impose Sanctions.  CTP’s Motion to Impose Sanctions would remain pending, pursuant to 21 C.F.R. § 17.32(c), to allow Respondent an opportunity to file a response.  I also granted CTP’s Unopposed Motion to Extend Deadlines, and again extended pre-hearing exchange deadlines for both parties.  Chinese translation copies of CTP’s Status Report and Motion to Impose Sanctions and Unopposed Motion to Extend Deadlines were released to the parties on that same date.  However, a review of the record did not establish that Respondent was provided a translated copy of the September 15, 2020 Order.

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On November 12, 2020, pursuant to 21 C.F.R. § 17.19(b) and to ensure that Respondent was accorded all due process, I issued an Amended Order, extending Respondent’s deadline to file a response to CTP’s Motion to Impose Sanctions until November 27, 2020, and again extended pre-hearing exchange deadlines for both parties.  Respondent was warned that failing to timely respond may result in CTP’s motion being granted in its entirety.  A Chinese translation of the November 12, 2020 Amended Order was released to the parties on that same date.  To date, Respondent has not submitted a response to either my Amended Order or CTP’s Motion to Impose Sanctions.

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).3  When a party “fails to comply with a discovery order,” I may, among other actions, “[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 failed to comply with at least three 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.  Respondent failed to comply with my August 18, 2020 Order Granting Motion to Compel, which directed Respondent to comply with CTP’s RFP by September 4, 2020.  Respondent did not produce any documents or indicate that it did not have any responsive documents.  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, subsequent to my July 16, 2020 Order.  21 C.F.R. § 17.32(c).  Likewise, Respondent did not file a

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response to CTP’s Motion to Impose Sanctions, subsequent to my November 12, 2020 Amended Order.  Respondent’s failure to respond to CTP’s motions and fulfill its discovery obligations establishes that it has abandoned its defense of this case.  Chinese translations of the APHO, the August 18, 2020 Order Granting Motion to Compel, and the November 12, 2020 Amended Order were released to the parties on May 28, 2020, August 18, 2020, and November 12, 2020, respectively.  Thus, Respondent received ample notice of the consequences of a failure to timely respond.  Despite these warnings, Respondent has not participated in the defense of this action in any meaningful fashion since filing its Answer.

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 three orders and corresponding regulations.  See APHO; August 18, 2020 Order; November 12, 2020 Amended Order.  Likewise, Respondent did not respond to any of CTP’s motions.  See generally, CTP’s Motion to Compel Discovery and 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 July 16, 2020 Order at 2; August 18, 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).  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., Joshua Ranjit Inc. d/b/a 7-Eleven 10326, DAB No. 2758 (2017) (concluding that “the ALJ acted within his authority under the regulations and did not abuse his discretion in striking Respondent’s Answer as a sanction for Respondent’s failure to respond to the ALJ’s orders.”); 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 strike Respondent’s Answer for failing to comply with judicial orders governing this proceeding and for failing to defend this action.

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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.  Family Smoking Prevention and Tobacco Control Act (Act), Pub. L. No. 111-31 (June 22, 2009).  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 Family Fare / BP, an establishment that sells tobacco products and is located at 4700 West Market Street, Greensboro, North Carolina 27407.  Complaint ¶ 5.
• On July 10, 2017, CTP initiated the first civil money penalty action, CRD Docket Number T-17-5168, FDA Docket Number FDA-2017-H-4088, against Respondent for violations of 21 C.F.R. pt. 1140.  Specifically, CTP alleged violations for selling covered tobacco products to a minor on September 24, 2016 and February 25, 2017, and a violation for failing to verify the age of a purchaser with photographic identification on September 24, 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, “Respondent expressly waived its right to contest such violations in subsequent actions.”  Complaint ¶ 9.
• On December 14, 2017, CTP initiated the second civil money penalty action, CRD Docket Number T-18-647, FDA Docket Number FDA-2017-H-6850, 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 covered tobacco products to a minor and failing to verify the age of a purchaser with photographic identification on December 2, 2017.  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 February 4, 2019, CTP initiated the third civil money penalty action, CRD Docket Number T-19-1427, FDA Docket Number FDA-2019-H-0512, against

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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 covered tobacco products to a minor and failing to verify the age of a purchaser with photographic identification on November 4, 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 August 13, 2019, an FDA-commissioned inspector documented that “a person younger than 18 years of age was able to purchase a JUUL Mint e-liquid product . . . at approximately 3:46 PM.”  Additionally, CTP alleged a violation for selling covered tobacco products to a minor and failing to verify the age of a purchaser with photographic identification on August 13, 2019.  Complaint ¶ 6.

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; 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(b)(1), no retailer may sell covered tobacco products to any person younger than 18 years of age.  Under 21 C.F.R. § 1140.14(b)(2)(i), retailers must verify, by means of photographic identification containing a purchaser’s date of birth, that no covered tobacco products purchasers are younger than 18 years of age.

Taking the above-alleged facts as true, Respondent had two original violations on September 24, 2016, and seven repeated4 violations within a 36-month period.  Respondent originally 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 September 24, 2016, and repeated those violations on February 25, 2017, December 2, 2017, November 4, 2018, and August 13, 2019.  Respondent also originally violated the requirement that retailers verify, by means of photo identification containing a purchaser’s date of birth, that no covered tobacco products purchasers are younger than 18 years of age, 21 C.F.R. § 1140.14(b)(2)(i), on September 24, 2016, and repeated those violations on December 2, 2017, November 4, 2018, and August 13, 2019.  When determining the number of

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violations for a No-Tobacco-Sale Order, Respondent’s violations on September 24, 2016, count as two original violations, and Respondent’s subsequent violations on February 25, 2017, December 2, 2017, November 4, 2018, and August 13, 2019, count as seven repeated violations.  Therefore, Respondent’s actions constitute seven repeated violations of law within a 36-month period.

Under 21 U.S.C. § 333(f)(8), a No-Tobacco-Sale Order is permissible for seven 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.  Consistent with this guidance, CTP has requested a No-Tobacco-Sale Order against Respondent for a period of 30 consecutive calendar days.  Given the lack of participation in the defense of this action in any meaningful fashion by Respondent since filing its Answer, I find that a No-Tobacco-Sale Order for a period of 30 consecutive calendar days is warranted and so order one imposed.

ORDER

For the above reasons, I enter default judgment against Respondent, M. M. Fowler, Inc. d/b/a Family Fare / BP, 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. The APHO lists a physical address that is different from the address listed in the Complaint for the Respondent.  However, the APHO was served by DAB E-File.  All DAB CRD correspondence contain instructions on how to access and register for DAB E-File and my orders state that “Any party that uses DAB E-File consents to be served with documents electronically through DAB E-File.”  Dkt. Entry Nos. 2 at 4 (GEP), 6 at 2 (APHO); see also Dkt. Entry No. 2 at 1-2, 8 (GEP served by U.S. Mail at Respondent’s address).  Therefore, because Respondent had registered for DAB E-File, it is deemed to have been served electronically at the DAB E-File email address provided at the time of DAB E-File registration.
• 2. CTP served the JSR and RFP via UPS on the Respondent at a different physical address than the address at which the Complaint was served.  JSR at 3.  CTP provided no explanation for this.  Regardless, Respondent, by registering for DAB E-File, has consented to be served electronically.  Supra, n. 1.
• 3. 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.
• 4. 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.