Ash's Tobacconist Inc. d/b/a Ash's Wicker Park Tobacconist, DAB TB5230 (2020)

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, Ash’s Tobacconist Inc. d/b/a Ash’s Wicker Park Tobacconist, 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 sold covered tobacco products to minors, failed to verify that a purchaser was of sufficient age, and used a self-service display in a non-exempt facility, 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 $11,410 for at least six violations within a 48-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. 

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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 comply with CTP’s discovery requests and issue a default judgment against Respondent.  As discussed below, during the course of this administrative proceeding, Respondent failed to comply with orders and procedures and failed to defend this action, 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 grant CTP’s Motion to Impose Sanctions, strike Respondent’s Answer, and issue an Initial Decision and Default Judgment imposing a civil money penalty in the amount of $11,410 against Respondent.

I.  Background and Procedural History

On September 17, 2019, CTP served the Complaint on Respondent, located at 1923 West Division Street, Chicago, Illinois 60622, by United Parcel Service (UPS), pursuant to 21 C.F.R. §§ 17.5 and 17.7.  Docket Entry Nos. 1 (Complaint), 1b (UPS Delivery Notification).  Respondent timely answered CTP’s Complaint on October 7, 2019.  Docket Entry No. 3 (Answer). 

On October 28, 2019, I issued an Acknowledgment and Pre-Hearing Order (APHO) that set procedural deadlines for the parties in this case, including a schedule for discovery.  Docket Entry No. 4.  The APHO set a deadline of November 29, 2019, for the parties to request documents from the opposing party and explained that a party must provide the requested documents within 30 days of the request.  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 January 13, 2020, and Respondent to file its pre-hearing exchange by February 3, 2020.  APHO ¶ 4a-4b.  Further, the APHO warned the parties as follows: 

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. 

On November 11, 2019, CTP served a timely Request for Production of Documents on Respondent.  Docket Entry Nos. 7a-7c.  Respondent did not file a motion for a protective order within 10 days of receiving the Request for Production of Documents.  On December 16, 2019, CTP filed a Motion to Compel Discovery asserting that Respondent had not responded to its discovery request and requesting an order compelling

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Respondent to respond to CTP’s document requests.  Docket Entry Nos. 7, 7a-7c.  On December 16, 2019, CTP also filed a Motion to Extend Deadlines, requesting an extension of the pre-hearing deadlines.  Docket Entry No. 8. 

On December 19, 2019, I issued an Order setting a January 15, 2020, deadline for Respondent to file a response to CTP’s Motion to Compel Discovery and extending the parties’ pre-hearing exchange deadlines by 30 days.  Docket Entry No. 9 (December 19, 2019, Order); see also 21 C.F.R. § 17.32(c); APHO ¶ 19.  I warned Respondent that I may grant CTP’s Motion to Compel Discovery in its entirety if Respondent failed to respond to the motion.  Respondent failed to submit a response to CTP’s Motion to Compel, the December 19, 2019, Order, or otherwise respond to CTP’s Request for Production of Documents. 

Therefore, on February 6, 2020, I issued an order within which I granted CTP’s Motion to Compel Discovery and directed Respondent to produce documents responsive to CTP’s Request for Production of Documents by February 21, 2020.  Docket Entry No. 10 (Order Granting Complaint’s Motion to Compel [hereinafter “February 6, 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 February 21, 2020, deadline.  Id.  I also warned that:

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.

Id. at 1-2.  In the same order, I also extended the parties’ pre-hearing exchange deadlines.  Id. at 2.

On February 27, 2020, CTP filed a Motion to Impose Sanctions, stating that Respondent neither produced documents as ordered nor filed a written response stating that it did not have any documents to produce.  Docket Entry No. 11 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 and issue a default judgment imposing a civil money penalty in the amount of $11,410 against Respondent.  Id. at 2-3.On February 27, 2020, CTP also filed a Motion to Extend Deadlines.  Docket Entry No. 12. 

On February 28, 2020, I issued an order giving Respondent until March 13, 2020, to file a response to CTP’s Motion to Impose Sanctions.  Docket Entry No. 13 (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 “February 28, 2020, Order”]) at 2.  I warned Respondent that if it failed to respond timely to the Motion

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to Impose Sanctions, I may grant the motion.  Id.  In my February 28, 2020, Order, I also extended the pre-hearing deadlines.  Id. 

On March 31, 2020, I stayed all deadlines in this matter due to circumstances associated with the COVID-19 pandemic.1  Docket Entry 14. (March 31, 2020, Order).  On July 24, 2020, I issued an order lifting the stay and resetting the deadlines in this case.2  I explained the following to the parties:

Since Respondent’s initial deadline to respond to CTP’s Motion to Impose Sanctions was near the cusp of the beginning of the COVID-19 pandemic’s impact in the United States, pursuant to 21 C.F.R. § 17.32(c), I hereby fix a new August 10, 2020 deadline for Respondent to respond to CTP’s motion.  Respondent is warned that if it fails to timely respond, I may grant CTP’s motion in its entirety. 

Docket Entry No. 15 (Order Lifting Stay, Resetting Respondent’s Deadline to File a Response to Complainant’s Motion to Impose Sanctions and Extending Deadlines [hereinafter “July 24, 2020, Order”]) at 1 (emphasis in original).  In the same Order, I also extended the parties’ pre-hearing exchange deadlines.  Id. at 2.

To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions, the February 28, 2020, Order, or the July 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.

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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 orders and procedures governing this case and failed to defend this action, which 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 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 February 6, 2020, Order, which required Respondent to produce documents to CTP by February 21, 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 the December 19, 2019, 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, the February 28, 2020, Order, and the July 24, 2020, Order.  Respondent’s failure to respond to CTP’s motions, to comply with multiple orders, and to 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 administrative orders and regulations governing this proceeding.  Despite explicit warnings that its failure to comply could result in sanctions, Respondent did not comply with three orders that I issued in this case and the regulation governing discovery in these proceedings.  APHO ¶ 12; February 6, 2020, Order; and 21 C.F.R. § 17.23(a).  Likewise, despite explicit reminders, Respondent did not respond to any of CTP’s motions.  December 19, 2019, Order; February 28, 2020, Order; July 24, 2020, Order; see generally, 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 orders and regulations governing discovery and other procedures in this case necessitated

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extending the pre-hearing exchange deadlines three times, which delayed the hearing process.  December 19, 2019, Order at 2; February 6, 2020, Order at 2; February 28, 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 with several of my orders and regulations, despite my explicit warnings that its failure could result in sanctions.  APHO ¶ 12, 16; February 6, 2020, Order at 2; 21 C.F.R. § 17.23(a).  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 civil money penalty.”  February 6, 2020, Order at 2; see APHO ¶ 16.  Respondent also failed to defend this action, despite an express reminder of the opportunity in my December 19, 2019, Order, February 28, 2020, Order, and July 24, 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 [Administrative Law Judge (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 Ash’s Wicker Park Tobacconist, an establishment that sells tobacco products and is located at 1923 West Division Street, Chicago, Illinois 60622.  Complaint ¶¶ 7-8.

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• On November 6, 2018, CTP initiated a previous civil money penalty action, CRD Docket Number T-19-416, FDA Docket Number FDA-2018-H-4209, against Respondent for violations of 21 C.F.R. pt. 1140.  Specifically, CTP alleged three violations for selling covered tobacco products to minors on September 11, 2016, September 21, 2017, and August 8, 2018, one violation for failing to verify the age of the covered tobacco product purchaser on August 8, 2018, and one violation for using a self-service display in a non-exempt facility on August 8, 2018.  Complaint ¶ 11. 
• The previous action concluded when an Initial Decision and Default Judgment was entered by an ALJ, “finding that all of the violations alleged in the Complaint occurred.”  Complaint ¶ 12 (citing CRD Decision No. TB3397).
• During a subsequent inspection of Respondent’s establishment conducted on May 29, 2019, an FDA-commissioned inspector documented that “a person younger than 18 years of age was able to purchase a JUUL Fruit Medley e-liquid product . . . at approximately 12:40 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).  Additionally, the regulations prohibit the use of a self-service display in a facility where a person younger than 18 years of age is present or permitted to enter.  21 C.F.R. § 1140.16(c).

Taking the above-alleged facts as true, Respondent had six violations of the regulations found at 21 C.F.R. pt. 1140 within a 48-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 September 11, 2016, September 21, 2017, August 8, 2018, and May 29, 2019.  On August 8, 2018, 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).  Further, on August 8, 2018, Respondent violated the prohibition against using a self-service display in a facility where a person younger than 18 years of age is permitted to enter.  21 C.F.R. § 1140.16(c).  All violations observed

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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 five violations from the previous civil money penalty action and one additional violation on May 29, 2019.  Therefore, Respondent’s actions constitute six violations of law within a 48-month period that merit a civil money penalty.

CTP has requested a civil money penalty of $11,410, 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 $11,410 is warranted and so order one imposed.

• 1. Due to such circumstances, the March 31, 2020, Order staying this case was issued only by electronic means, through DAB E-File. Docket Entry No. 14.
• 2. Along with the July 24, 2020, Order lifting the stay, a copy of the March 31, 2020, Order imposing the stay was mailed to Respondent’s address.  Docket Entry Nos. 15, 15a.