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                              Adam May Inc. d/b/a Fast Break / BP, DAB TB4879 (2020)
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Adam May Inc. d/b/a Fast Break / BP, DAB TB4879 (2020)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Civil Remedies Division





Center for Tobacco Products,
	Complainant,
v.
Adam May Inc.
	d/b/a Fast Break / BP,
	Respondent.
Docket No. T-19-4588FDA Docket No. FDA-2019-H-4297Decision No. TB4879February 18, 2020

        
              
    

      ORDER GRANTING COMPLAINANT'S MOTION TO IMPOSE SANCTIONS AND DEFAULT JUDGMENT AND INITIAL DECISION
Found:
Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i), as charged in the Complaint; and
	Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i), as charged in the prior complaint; and
	Respondent committed four violations in a 24-month period as set forth hereinabove; and
	Respondent is hereby assessed a civil penalty in the amount of $2,282.Glossary:
ALJ
	administrative law judge1
CTP/Complainant
	Center for Tobacco Products
FDA
	Food and Drug Administration
FDCA
	Federal Food, Drug, and Cosmetic Act (21 U.S.C.A. Chap. 9)
**Page 2**
HHS
	Department of Health and Human Services
MTIS
	Motion to Impose Sanctions
PHO
	Pre-Hearing Order
Respondent
	Adam May Inc. d/b/a Fast Break / BP
TCA
	The Family Smoking Prevention and Tobacco Control Act, Pub. L. No. 111-31, 123 Stat. 1776 (2009)
I. JURISDICTION
I have jurisdiction to hear this case pursuant to my appointment by the Secretary of Health and Human Services and my authority under the Administrative Procedure Act (5 U.S.C. §§ 554-556), 5 U.S.C.A. § 3106, 21 U.S.C. § 333(f)(5), 5 C.F.R. §§ 930.201 *et seq*. and 21 C.F.R. Part 17.2
II. PROCEDURAL BACKGROUND
On September 19, 2019, the Center for Tobacco Products (CTP/Complainant) filed a Complaint against Adam May Inc. d/b/a Fast Break / BP (Respondent or Fast Break / BP), located at 5710 Mahoning Avenue Northwest, Warren, Ohio 44483. The Complaint alleges that Respondent violated "FDA's tobacco regulations promulgated under Section 906(d) of the Federal Food, Drug, and Cosmetic Act (Act) (21 U.S.C. § 387f(d)) at least four times within a 24-month period." Complaint ¶ 1.
On September 18, 2019, CTP served the Complaint on Respondent by United Parcel Service. On October 6, 2019, Respondent, through counsel, timely filed an Answer. On October 8, 2019, I issued a Pre-Hearing Order (PHO) that set out the deadlines for the parties' submissions in this case, including a November 8, 2019
**Page 3**
deadline to request documents from the opposing party. PHO ¶ 3. The PHO further set forth that, pursuant to 21 C.F.R. § 17.23(a), any documents requested must be provided to the opposing party within 30 days of the request. *Id.* The PHO also instructed that a party may move to compel or for sanctions if requested documents are not received within 30 days. *Id.*
On December 11, 2019, CTP filed a Motion to Compel Discovery requesting an order "compelling Respondent to respond to CTP's Request for Production of Documents in its entirety." *See* Motion to Compel Discovery, at 2. The Motion to Compel Discovery was delivered to Respondent's attorney on November 6, 2019. *See* Motion to Compel Discovery, at 1; *see also* Exhibit B to Motion to Compel Discovery. On December 13, 2019, I issued an Order to Compel Discovery and Order to Show Cause to Respondent. In that Order, I construed CTP's Motion to Compel as a request for an Order to Show Cause, and instructed Respondent to comply with CTP's Request for Production of Documents by December 20, 2019. December 13, 2019 Order, at 1-2. I also warned: "[f]ailure to comply **will result in sanctions,** which may include issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty. 21 C.F.R. § 17.35." *Id*. (emphasis added.) My December 13, 2019 Order, in its entirety, directed the parties as follows:
Respondent shall show cause on or before **December 20, 2019** why default judgment should not be entered against it for failure to comply with the procedural rules and respond to CTP's Request for Production of Documents; and**Page 4**
If Respondent is able to show cause as set forth above, both parties shall file their pre-hearing exchange **no later than January 7, 2020**.December 13, 2019 Order, at 2 (emphasis in original). To date, Respondent has not complied with any of the deadlines that I set out in my December 13, 2019 Order.
On January 3, 2020, CTP filed Complainant's Status Report and Motion to Impose Sanctions (MTIS). CTP argued that sanctions are appropriate because Respondent failed to comply with the provisions of the December 13, 2019 Order. Specifically, CTP advised that as of the date of its filing of the motion, "Respondent ha[d] not produced documents to CTP in response to its [Request for Production of Documents]." MTIS, at 1. CTP also asserted that "Respondent has been provided ample opportunity to respond [fully] to CTP's [Request for Production of Documents], but has not done so." *Id*.at 2. Finally, CTPargued that "[s]anctions against Respondent are an appropriate remedy . . . []" and that "[b]ased on Respondent's pattern of conduct, it is unlikely that more time or additional orders in this proceeding will change the status quo."  *Id*. Accordingly, CTP asked that I sanction Respondent by entering an order "(1) striking the Answer entered by Respondent in this case; and (2) issuing an initial decision and default judgment imposing a civil money penalty in the amount of $2,282 against Respondent." *Id*.
On January 6, 2020, I issued an Order to Show Cause to Respondent directing Respondent to comply with CTP's Request for Production of Documents by January 10, 2020. January 6, 2020 Order, at 1. Again, I warned Respondent that "[f]ailure to comply **will result in sanctions,** which may include issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and
**Page 5**
imposing a civil money penalty. 21 C.F.R. § 17.35." *Id.* at 1 (emphasis added). My January 6, 2020 Order, in its entirety, directed the parties as follows:
Respondent shall show cause on or before **January 10, 2020** why default judgment should not be entered against it for failure to comply with the procedural rules and respond to CTP's Request for Production of Documents; and
	If Respondent is able to show cause as set forth above, both parties shall file their pre-hearing exchange **no later than February 7, 2020**.January 6, 2020 Order, at 2 (emphasis in original). To date, Respondent failed to show cause or otherwise respond to my January 6, 2020 Order. I hereby render my decision.
III. STRIKING RESPONDENT'S ANSWER
Pursuant to 21 C.F.R. § 17.35(a), I may sanction a person, including any party or counsel for:
Failing to comply with an order, subpoena, rule, or procedure governing the proceeding;
	Failing to prosecute or defend an action; or
	Engaging in other misconduct that interferes with the speedy, orderly, or fair conduct of the hearing.When a party "fails to comply with a discovery order," I 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)(3).
Here, Respondent failed to comply with the regulations at 21 C.F.R. § 17.23(a) and my October 8, 2019 PHO, when it failed to provide documents responsive to CTP's Request for Production of Documents within 30 days. As discussed previously, Respondent also failed to comply with two discovery orders. Specifically, Respondent failed to comply with my December 13, 2019 Order, requiring Respondent to:
**Page 6**
(1) produce documents in response to CTP's Request for Production of Documents by December 20, 2019; and (2) show cause why default judgment should not be entered against it for failure to comply with the procedural rules and respond to CTP's Request for Production of Documents. Similarly, Respondent failed to comply with my January 6, 2020 Order, requiring Respondent to: (1) produce documents in response to CTP's Request for Production of Documents by January 10, 2020; and (2) show cause why default judgment should not be entered against it for failure to comply with the procedural rules and respond to CTP's Request for Production of Documents.
In the absence of any explanation from Respondent, I find no basis to excuse Respondent's repeated failure to comply with the regulations and multiple judicial orders in this proceeding. Despite explicit warnings that its failure to comply with the orders could result in sanctions, Respondent did not comply with three orders that I issued in this case. Accordingly, I find that Respondent has failed to comply with orders and procedures governing this proceeding. *See* 21 C.F.R. § 17.35(a)(1).  I also find that Respondent has failed to defend this action, which has interfered with the speedy, orderly, and fair conduct of the hearing. *See* 21 C.F.R. § 17.35(a)(2)-(3). Accordingly, I find that sanctions are appropriate pursuant to 21 C.F.R. § 17.35(a)(1)-(3).
The harshness of the sanctions I impose upon either party must relate to the nature and severity of the misconduct or failure to comply. 21 C.F.R. § 17.35(b). I find and conclude that Respondent's misconduct is sufficiently egregious to warrant striking its Answer and issuing a decision without further proceedings. 21 C.F.R. § 17.35(c)(3); *see* 21 C.F.R. § 17.11(a). Accordingly, I hereby strike Respondent's Answer as a sanction.
**Page 7**
IV. BURDEN OF PROOF
CTP as the petitioning party has the burden of proof. 21 C.F.R. § 17.33.
V. LAW
21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i).
VI. ISSUE
Did Respondent violate 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i), as alleged in the Complaint?
VII. DEFAULT
I find Respondent was properly served with process on September 18, 2019, and is subject to the jurisdiction of this forum, as established by the Notice of Filing filed by CTP on September 20, 2019.
It is Respondent's right to participate in the legal process. Respondent has the right to request a hearing or, in the alternative, waive its right to a hearing. Striking Respondent's Answer leaves the Complaint unanswered. Therefore, I find Respondent waived its right to a hearing pursuant to 21 C.F.R. § 17.11(b).
VIII. ALLEGATIONS
A. Agency's recitation of facts
CTP alleged that Respondent owns an establishment, doing business under the name Fast Break / BP, located at 5710 Mahoning Avenue Northwest, Warren, Ohio 44483. Respondent's establishment receives tobacco products in interstate commerce and holds them for sale after shipment in interstate commerce.
**Page 8**
During an inspection of Fast Break / BP conducted on June 10, 2019, an FDA-commissioned inspector documented the following violations:
Selling a covered tobacco product to a minor, in violation of 21 C.F.R. § 1140.14(b)(1). Specifically, a person younger than 18 years of age was able to purchase a Black & Mild cigar on June 10, 2019, at approximately 4:59 PM; and
	Failing to verify the age of a person purchasing a covered tobacco product by means of photographic identification containing the bearer's date of birth, as required by 21 C.F.R. § 1140.14(b)(2)(i). Specifically, the minor's identification was not verified before the sale, as detailed above, on June 10, 2019, at approximately 4:59 PM.B. Respondent's recitation of facts
As I have stricken Respondent's Answer, I find that Respondent filed no responsive pleading.
IX. PRIOR VIOLATIONS
On October 17, 2018, CTP initiated a previous civil money penalty action, CRD Docket Number T-19-164, FDA Docket Number FDA-2018-H-3912, against Respondent for two3
 violations of 21 C.F.R. pt. 1140 within a 12-month period. CTP alleged those
**Page 9**
violations to have occurred at Respondent's business establishment, 5710 Mahoning Avenue Northwest, Warren, Ohio 44483, on July 30, 2017, and July 27, 2018.
The previous action concluded when an Initial Decision and Default Judgment was entered by an Administrative Law Judge, "finding that all of the violations alleged in the Complaint occurred."
I find and conclude Respondent committed four violations of 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and 21 C.F.R. § 1140.14(b)(2)(i), within a 24‐month period, as set forth in the Complaint.
X. FAMILY SMOKING PREVENTION AND TOBACCO CONTROL ACT
The "relevant statute" in this case is actually a combination of statutes and regulations: The Family Smoking Prevention and Tobacco Control Act, Pub. L. No. 111‐31, 123 Stat. 1776 (2009) (TCA), amended the Food, Drug, and Cosmetic Act (21 U.S.C.A. Chap. 9) (FDCA) and created a new subchapter of that Act that dealt exclusively with tobacco products, (21 U.S.C. §§ 387-387u), and it also modified other parts of the FDCA explicitly to include tobacco products among the regulated products whose misbranding can give rise to civil, and in some cases criminal, liability. The 2009 amendments to the FDCA contained within the TCA also charged the Secretary of Health and Human Services with, among other things, creating regulations to govern tobacco sales. The Secretary's regulations on tobacco products appear in Part 1140 of Title 21, Code of Federal Regulations.
Under the FDCA, "[a] tobacco product shall be deemed to be misbranded if, in the case of any tobacco product sold or offered for sale in any State, it is sold or distributed
**Page 10**
in violation of regulations prescribed under section 387f(d)." 21 U.S.C. § 387c(a)(7)(B) (2012). Section 387a‐1 directed FDA to re-issue, with some modifications, regulations previously passed in 1996. 21 U.S.C. § 387a-1(a) (2012). These regulations were passed pursuant to section 387f(d), which authorizes FDA to promulgate regulations on the sale and distribution of tobacco products; 75 Fed. Reg. 13,225 (Mar. 19, 2010), codified at 21 C.F.R. Part 1140 (2015); 21 U.S.C. § 387f(d)(1) (2012). Accordingly, 21 C.F.R. § 1140.1(b) provides that "failure to comply with any applicable provision in this part in the sale, distribution, and use of cigarettes and smokeless tobacco renders the product misbranded under the act."
Under 21 U.S.C. § 331(k), "[t]he alteration, mutilation, destruction, obliteration, or removal of the whole or any part of the labeling of, or the doing of any other act with respect to, a food, drug, device, tobacco product, or cosmetic, if such act is done while such article is held for sale (whether or not the first sale) after shipment in interstate commerce and results in such article being adulterated or misbranded" is a prohibited act under 21 U.S.C. § 331. Thus, when a retailer such as Respondent misbrands a tobacco product by violating a requirement of 21 C.F.R. Part 1140, that misbranding in turn violates the FDCA, specifically 21 U.S.C. § 331(k). FDA may seek a civil money penalty from "any person who violates a requirement of this chapter which relates to tobacco products." 21 U.S.C. § 333(f)(9)(A) (2012). Penalties are set by 21 U.S.C. § 333 note and 21 C.F.R. § 17.2. Under current FDA policy, the first time FDA finds violations of 21 C.F.R. Part 1140 at an establishment, FDA only counts one violation regardless of the number of specific regulatory requirements that were actually violated,
**Page 11**
but if FDA finds violations on subsequent occasions, it will count violations of specific regulatory requirements individually in computing any civil money penalty sought. This policy is set forth in detail, with examples to illustrate, at *U.S. Food & Drug Admin., Guidance for Industry and FDA Staff, Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers, Responses to Frequently Asked Questions (Revised) (2016), available at* *http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM447310.pdf*, at 13-14. So, for instance, if a retailer sells a tobacco product on a particular occasion to a minor without checking for photographic identification, in violation of 21 C.F.R. § 1140.14(a)(1) and (a)(2)(i), this will count as two separate violations for purposes of computing the civil money penalty, unless it is the first time violations were observed at that particular establishment. This policy of counting violations has been determined by the HHS Departmental Appeals Board to be consistent with the language of the FDCA and its implementing regulations, *see Orton Motor Co. d/b/a Orton's Bagley v. HHS*, 884 F.3d 1205 (D.C. Cir. 2018).
XI. LIABILITY
When a retailer such as Respondent is found to have "misbranded" a tobacco product in interstate commerce, it can be liable to pay a civil money penalty. 21 U.S.C. §§ 331, 333. A retailer facing such a penalty has the right, set out in statute, to a hearing under the Administrative Procedure Act. 21 U.S.C. § 333(f)(5)(A). A retailer can forfeit its rights under the statute and regulations by failing to participate in the process, a failure known as a "default." 21 C.F.R. § 17.11.
**Page 12**
As set forth above, it is Respondent's right to decide whether to participate in the legal process. It is Respondent's right to decide to request a hearing and it is Respondent's right to waive a hearing.
I find Respondent, by failing to respond, waived its right to a hearing.
XII. IMPACT OF RESPONDENT'S DEFAULT
When a Respondent defaults by failing to answer the complaint, or respond to an order to show cause, an ALJ must assume as true all factual allegations in the complaint and issue an initial decision within thirty (30) days of the answer's due date, imposing "the maximum amount of penalties provided for by law for the violations alleged" or "the amount asked for in the complaint, whichever is smaller" if "liability under the relevant statute" is established. 21 C.F.R. § 17.11(a)(1), (2). *But see* 21 C.F.R. § 17.45 (initial decision must state the "appropriate penalty" and take into account aggravating and mitigating circumstances).
Two aspects of Rule 17.11 are important in default cases.
First, the Complainant benefits from a regulatory presumption (the ALJ shall assume that the facts alleged in the complaint are true) that relieves it from having to put on evidence.
The presumption affords a party, for whose benefit the presumption runs, the luxury of not having to produce specific evidence to establish the point at issue. When the predicate evidence is established that triggers the presumption, the further evidentiary gap is filled by the presumption. *See* 1 Weinstein's Federal Evidence § 301.02[1], at 301‐7 (2d ed. 1997); 2 McCormick on Evidence § 342, at 450 (John W. Strong ed., 4th
**Page 13**
ed. 1992); *Routen v. West*, 142 F.3d 1434, 1440 (Fed. Cir. 1998).4
Second, as far as the penalty is concerned, my discretion is limited by the language of the regulation. I may not tailor the penalty to address any extenuation or mitigation, for example, nor, because of notice concerns, may I increase the penalty beyond the smaller of (a) the Complainant's request or (b) the maximum penalty authorized by law.
XIII. LIABILITY UNDER THE RELEVANT STATUTE
Taking the CTP's allegations as set forth in the Complaint as true, the next step is whether the allegations make out "liability under the relevant statute." 21 C.F.R. § 17.11(a).
Based on Respondent's failure to answer I assume all the allegations in the Complaint to be true.
I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1), in that a person younger than 18 years of age was able to purchase covered tobacco products on July 30, 2017, July 27, 2018, and June 10, 2019.
**Page 14**
I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(2)(i), on July 30, 2017, and June 10, 2019, in that 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.
The conduct set forth above on July 30, 2017, July 27, 2018, and June 10, 2019, counts as four violations for purposes of computing the civil money penalty.
XIV. PENALTY
There being liability under the relevant statute, I must now determine the amount of penalty to impose. My discretion regarding a penalty is constrained by regulation. I must impose either the maximum amount permitted by law or the amount requested by the Center, whichever is lower. 21 C.F.R. § 17.11(a)(1), (a)(2).
In terms of specific punishments available, the legislation that provides the basis for assessing civil monetary penalties divides retailers into two categories: those that have "an approved training program" and those that do not. Retailers with an approved program face no more than a warning letter for their first violation; retailers without such a program begin paying monetary penalties with their first. TCA § 103(q)(2), 123 Stat. 1839, *codified at* 21 U.S.C. § 333 note. *See* 21 C.F.R. § 17.2. The FDA has informed the regulated public that "at this time, and until FDA issues regulations setting the standards for an approved training program, all applicable [civil money penalties] will proceed under the reduced penalty schedule." FDA Regulatory Enforcement
**Page 15**
Manual, Aug. 2015, ¶ 5‐8‐1. Because of this reasonable exercise of discretion, the starting point for punishments and the rate at which they mount are clear – the lower and slower schedules.
XV. MITIGATION
It is incumbent upon Respondent to present any factors that could result in mitigation of CTP's proposed penalty. Specifically, it is Respondent's burden to provide mitigating evidence. In a default, Respondent has failed to participate and has failed to present any evidence regarding potential mitigation. Accordingly, I have no reason to mitigate the penalty.
XVI. CONCLUSION
Respondent committed four violations in a 24‐month period and so, Respondent is liable for a civil money penalty of $2,282. *See* 21 C.F.R. § 17.2.
WHEREFORE, evidence having read and considered it be and is hereby ORDERED as follows:
a. I find Respondent has been served with process herein and is subject to this forum.
b. I find Respondent failed to comply with regulations governing this proceeding, specifically 21 C.F.R. § 17.23(a).
c. I find Respondent failed to comply with my October 8, 2019 Pre-Hearing Order, my December 13, 2019 Order to Compel Discovery and Order to Show Cause to Respondent, and my January 6, 2020 Order to Show Cause to Respondent.
d. I find that Respondent failed to defend this action, which has interfered with the speedy, orderly, and fair conduct of the hearing. 21 C.F.R. § 17.35(a)(2)-(3).
**Page 16**
e. I find Respondent's misconduct warrants striking its Answer as a sanction. 21 C.F.R. § 17.35(a) and (c)(3).
f. I hereby **GRANT** CTP's Motion to Impose Sanctions and **STRIKE** Respondent's Answer filed on October 6, 2019 as a sanction, pursuant to 21 C.F.R. § 17.35(a) and (c)(3).
g. I find that striking Respondent's Answer leaves the Complaint unanswered. 21 C.F.R. § 17.11.
h. I find Respondent is in default.
i. I assume the facts alleged in the Complaint to be true. 21 C.F.R. § 17.11.
j. I find the facts set forth in the Complaint establish liability under the relevant statute.
k. I assess a monetary penalty in the amount of $2,282.


          /s/
        Richard C. Goodwin

                      Administrative Law Judge
      1. See 5 C.F.R. § 930.204. back to note 1
                      2. See also Butz v. Economou, 438 U.S. 478, 513 (1978); Marshall v. Jerrico, Inc., 446 U.S. 238 (1980); Fed. Maritime Com'n v. S.C. State Ports Auth., 535 U.S. 743, 744 (2002). back to note 2
                      3. Two violations were documented on July 30, 2017, and one on July 27, 2018. In accordance with customary practice, CTP counted the violations at the initial inspection as a single violation, and all subsequent violations as separate individual violations. back to note 3
                      4. However, when the opposing party puts in proof to the contrary of that provided by the presumption, and that proof meets the requisite level, the presumption disappears. See Tex. Dep't of Cmty. Affairs v. Burdine, 450 U.S. 248, 254–55 (1981); A.C. Aukerman, 960 F.2d at 1037 ("[A] presumption ... completely vanishes upon the introduction of evidence sufficient to support a finding of the nonexistence of the presumed fact."); see also Weinstein's Federal Evidence § 301App. 100, at 301App.–13 (explaining that in the "bursting bubble" theory once the presumption is overcome, then it disappears from the case); 9 Wigmore on Evidence § 2487, at 295–96 (Chadbourn rev. 1981). See generally Charles V. Laughlin, In Support of the Thayer Theory of Presumptions, 52 Mich. L. Rev. 195 (1953); Routen v. West, 142 F.3d 1434, 1440 (Fed. Cir. 1998). back to note 4 Back to top
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