Skip Express Mart, Inc. d/b/a H and S Variety Pick-Up / Quick Mart / Skip Express Mart, DAB TB5261 (2020)

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

The Center for Tobacco Products (CTP) began this case by serving the Complaint on Respondent, Skip Express Mart, Inc. d/b/a H and S Variety Pick-Up / Quick Mart / Skip Express 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 impermissibly sold covered tobacco products to minors and failed to verify that covered tobacco product purchasers were 18 years of age or older, thereby violating 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 a civil money penalty of $5,952 against the Respondent for at least five violations of the tobacco regulations within a 36-month period.  Respondent requested a hearing by filing an Answer, which denied all allegations of liability and the appropriateness of the civil money 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.  For the reasons stated below, I grant CTP’s Motion to Impose Sanctions, strike the Respondent’s Answer, and issue an initial decision and default judgment imposing a civil money penalty in the amount of $5,952 against Respondent.  21 C.F.R. § 17.35(c)(3).

I.  Background and Procedural History

As provided in 21 C.F.R. §§ 17.5 and 17.7, CTP served the complaint on Respondent     Skip Express Mart, Inc. b/b/a H and S Variety Pick-Up / Quick Mart / Skip Express Mart by United Parcel Service on June 8, 2020.  See Dkt. Entry No. 1 (Complaint) and Dkt. Entry No. 1b (UPS Delivery Notification).  On June 9, 2020, CTP filed the Complaint on the DAB E-File System.  Dkt. Entry Nos. 1, 1a-1b.  On June 16, 2020, Respondent registered for the DAB E-File system and timely filed its Answer. 

On July 2, 2020, I issued an Acknowledgment and Pre-Hearing Order (APHO) acknowledging receipt of Respondent’s Answer and establishing procedural deadlines for this case.  Dkt. Entry No. 4.  The APHO set a deadline of August 3, 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, pursuant to 21 C.F.R. § 17.23(a).  APHO ¶ 12.  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 the parties to file a joint status report within 30 days, ordered CTP to file its pre-hearing exchange by September 21, 2020, and ordered Respondent to file its pre-hearing exchange by October 13, 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; see also 21 C.F.R. § 17.35.

On July 21, 2020, CTP served a timely Request for Production of Documents on Respondent.  Dkt. Entry No. 7b.  On August 31, 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 be entered compelling Respondent to respond to CTP’s Request for Production of Documents in its entirety.”   Dkt. Entry No. 7 (Motion to Compel Discovery at 1).  On August 31, 2020, CTP also filed an Unopposed Motion to Extend Deadlines requesting that all deadlines be extended thirty days.  Dkt. Entry No. 7c.

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On September 10, 2020, I issued an order giving Respondent until September 28, 2020, to file a response to CTP’s Motion to Compel Discovery.  Dkt. Entry No. 9 [hereinafter “September 10, 2020 Order”].  I also granted CTP’s Motion to extend the parties’ pre-hearing exchange deadlines by 30 days.   Respondent did not file a response to CTP’s Motion to Compel Discovery or otherwise respond to my September 10, 2020 Order.  Therefore, on October 1, 2020, I granted CTP’s motion and ordered Respondent to respond to CTP’s Request for Production of Documents by October 13, 2020.  Dkt. Entry No. 10 (Order Granting Complainant’s Motion to Compel Discovery [hereinafter “October 1, 2020 Order”]).  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.  October 1, 2020 Order at 2. 

On October 16, 2020, CTP filed a Motion to Impose Sanctions stating, “Respondent has not produced documents to CTP in response to its [Request for Production of Documents] . . .”  Dkt. Entry No. 11 (Motion to Impose Sanctions at 2).  CTP requested I strike Respondent’s Answer and issue a default judgment imposing a civil money penalty in the amount of $5,952 against Respondent.  Id.  On October 16, 2020, CTP also filed a Motion to Extend Deadlines.  Dkt. Entry No. 12.  In an October 19, 2020 Order, I gave Respondent until November 3, 2020, to file a response to CTP’s Motion to Impose Sanctions and extended the pre-hearing exchange deadlines by 30 days.  Dkt. Entry No. 13 [hereinafter “October 19, 2020 Order”].  To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or the October 19, 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 or counsel 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 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).

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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 proceeding.  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 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.  Additionally, Respondent did not file a response to CTP’s Motion to Compel Discovery, as required by the regulations and my September 10, 2020 Order.  21 C.F.R. § 17.32(c).  Respondent also failed to comply with the October 1, 2020 Order granting CTP’s Motion to Compel Discovery, which required Respondent to produce documents by October 13, 2020.  Furthermore, Respondent did not respond to CTP’s Motion to Impose Sanctions, again in contravention of the regulations and my October 19, 2020 Order. 

In the absence of any explanation from Respondent, I find no basis to excuse Respondent’s repeated failure to comply with the various orders, judicial directives, 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.  See APHO; September 10, 2020 Order; October 1, 2020 Order; October 19, 2020 Order.  Further, Respondent did not respond to any of CTP’s motions, notwithstanding express instructions and reminders to do so.  APHO ¶¶ 12, 19; September 10, 2020 Order at 2; October 19, 2020 Order at 2.  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 twice, which delayed the hearing.  See September 10, 2020 Order at 2; October 19, 2020 Order at 2.  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, judicial directives, 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. 

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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 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 Skip Express Mart, Inc. d/b/a H and S Variety Pick-Up / Quick Mart / Skip Express Mart, an establishment that sells tobacco products after shipment in interstate commerce and is located at 242 Franklin Street, Mount Olive, North Carolina 28365.  Complaint ¶¶ 7-8.
• On November 26, 2019, Complainant initiated the first civil money penalty (CMP) action, CRD Docket Number T-20-806, FDA Docket Number FDA-2019-H-5529, against Respondent for violations of 21 C.F.R. pt. 1140.  Specifically, Complainant alleged that Respondent sold covered tobacco products to a minor on October 14, 2018, and August 29, 2019.  Complainant also alleged that Respondent failed to verify the age of the person purchasing covered tobacco products by means of photographic identification containing the bearer’s date of birth on August 29, 2019.  Complaint ¶¶ 11-12.
• The first CMP action concluded when an Initial Decision and Default Judgement (CRD Decision TB4774) was entered by an Administrative Law Judge finding Respondent liable for the violations.  Complaint ¶ 12.
• During a subsequent inspection of Respondent’s establishment on March 9, 2020, at approximately 6:16 PM, an FDA-commissioned inspector documented that “a person younger than 18 years of age was able to purchase a package of two Garcia y Vega Game White Grape cigars . . . .”  and “the minor’s identification was not verified before the sale . . . .” 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 distributed or offered for sale in any state in violation of section 387f(d) of the Act or regulations issued under section 387f(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 387f(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).  The Act and regulations prohibit the sale of

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covered tobacco products to any person younger than 18 years of age.1   21 U.S.C. § 387f(d)(5); 21 C.F.R. § 1140.14(b)(1).  The regulations also require retailers to 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).

Taking the above alleged facts as true, 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 October 14, 2018, August 29, 2019, and March 9, 2020.  On August 29, 2019, and March 9, 2020, 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 three violations from the previous CMP action, and an additional two violations on March 9, 2020.  Therefore, Respondent’s actions constitute five violations of law within a 36-month period that merit a civil money penalty. 

CTP has requested a civil money penalty of $5,952, 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 $5,952 is warranted and so order one imposed.

1. On December 20, 2019, the legal age to purchase tobacco products changed to 21.  Further Consolidated Appropriations Act, 2020, Pub. L. 116–94, div. N, title I, subtitle F, § 603(a)(1) (substituting "21 years" for "18 years") and § 603(a)(2) (adding subsection 387f(d)(5), which states “[i]t shall be unlawful for any retailer to sell a tobacco product to any person younger than 21 years of age”).  The corresponding regulations have not been updated yet.  See Id. § 603(b) (authorizing the Secretary to “to update all references to persons younger than 18 years of age in subpart B of part 1140 of title 21, Code of Federal Regulations, and to update the relevant age verification requirements under such part 1140 to require age verification for individuals under the age of 30”).
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