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                              Lsemy LLC d/b/a Trinidad Market and Deli, DAB TB5254 (2020)
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Lsemy LLC d/b/a Trinidad Market and Deli, DAB TB5254 (2020)








  
  
    

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





Center for Tobacco Products,
	Complainant,
v.
Lsemy LLC
	d/b/a Trinidad Market and Deli,
	Respondent.
Docket No. T-20-1081FDA Docket No. FDA-2019-H-5896Decision No. TB5254October 30, 2020

        
              
    

      INITIAL DECISION AND DEFAULT JUDGMENT
Found:
1) Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and 21 C.F.R. § 1140.14(b)(2)(i) as charged in the Complaint; and
	2) Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(a)(1), 21 C.F.R. § 1140.14(a)(2)(i), 21 C.F.R. § 1140.14(b)(1), and 21 C.F.R. § 1140.14(b)(2)(i), as charged in the prior complaint; and
	3) Respondent committed seven violations in a 48-month period as set forth hereinabove.
	4) Respondent is hereby assessed a civil penalty in the amount of $11,410.
Glossary:
ALJ
	administrative law judge1
CMP
	civil money penalty
CTP/Complainant
	Center for Tobacco Products
**Page 2**
DJ
	Default Judgment
FDCA
	Federal Food, Drug, and Cosmetic Act (21 U.S.C.A. Chap. 9)
DN
	UPS Delivery Notification
FDA
	Food and Drug Administration
HHS
	Dept. of Health and Human Services
OSC
	Order Granting Motion for Default and Order to Show Cause to Respondent
POS
	UPS Proof of Service
SOP
	Service of Process
Respondent
	Lsemy LLC d/b/a Trinidad Market and Deli
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
The Center for Tobacco Products (CTP/Complainant) filed a Complaint on December 20, 2019, against Lsemy LLC d/b/a Trinidad Market and Deli (Respondent or Trinidad Market and Deli), at 1322 Florida Avenue Northeast, Washington, DC 20002, alleging that FDA documented at least seven violations within a 48-month period.
Trinidad Market and Deli was served with process on December 19, 2019 by United Parcel Service.  Respondent through counsel filed an Answer on January 17,
**Page 3**
2020.  On January 21, 2020, I issued a Pre-Hearing Order (PHO) setting a schedule for filings and procedures.  Pursuant to my APHO, CTP served Respondent's counsel with a Request for Production of Documents on February 4, 2020.
On March 27, 2020, CTP filed its Motion to Compel Discovery averring Respondent failed to comply with its request for production of documents.  On April 1, 2020, in response to the COVID-19 pandemic, I stayed this case until further notice.
On July 6, 2020, I issued an Order lifting the stay entered on April 1, 2020.  My July 6, 2020 Order also granted CTP's Motion to Compel Discovery3
 and giving Respondent until July 21, 2020 to ". . . comply with CTP's Request for Productions of Documents."  I further warned Respondent "[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."  In the Order, I also extended the simultaneous pre-hearing exchange deadlines.  Respondent did not respond to my July 6, 2020 Order by the deadline established.
Following issuance of my July 6, 2020 Order, and expiration of the July 21, 2020 response deadline, this office became aware of the existence of a discrepancy between the email address provided by Respondent's counsel in his Notice of Appearance and the email address registered in the DAB E-File System (DAB E-File).  Apparently, all attempted notifications to counsel "bounced back" from the email address registered in
**Page 4**
DAB E-File.  On March 27, 2020, Workneh R. Churnet, Respondent's counsel, was contacted by this office, advised of the situation and asked to verify and correct the email information in DAB E-File.  On July 7, 2020, as the result of the issuance and uploading of my July 6, 2020 Order to DAB E-File, an attempt to contact Mr. Churnet was made by this office.  A voicemail message was left advising Mr. Churnet of the most recent occurrence, and requesting a return call.
On September 4, 2020, I issued an Order giving Respondent's counsel until September 11, 2020 to verify and correct the email information in DAB E-File.4
  My Order also directed Respondent, not later than September 21, 2020, to:
Show cause why default judgment should not be entered for failure to comply with the procedural rules; and
	Respond to CTP's Request for Production.The Order also extended the simultaneous pre-hearing exchange deadline.
To date, Respondent's counsel has failed to respond.
Pursuant to 21 C.F.R. § 17.35(a), I may sanction a person, including 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
**Page 5**
(3) Engaging in other misconduct that interferes with the speedy, orderly, or fair conduct of the hearing.
In this case, Respondent failed to comply with my orders and procedures governing this proceeding.
III.  STRIKING RESPONDENT'S ANSWER
Respondent failed to comply with my January 21, 2020 PHO and failed to comply with my July 6, 2020 and September 4, 2020 Orders.  In fact, Respondent's counsel has not made any contact with this Court since Respondent's January 17, 2020 Answer.
Due to Respondent's noncompliance, I am striking Respondent's Answer, issuing this default decision, and assuming the facts alleged in CTP's Complaint to be true.  21 C.F.R. §§ 17.35(c)(3), 17.11(a).  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).  Respondent failed to comply with my January 21, 2020 PHO and my July 6, 2020 and September 4, 2020 Orders.
I find and conclude Respondent's repeated failure to comply with my orders is sufficiently egregious to warrant striking Respondent's Answer and issuing a decision without further proceedings.  21 C.F.R. §§ 17.35(b), (c)(3), 17.11(a).
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 1140.14(b)(2)(i).
**Page 6**
VI.  ISSUE
Did Respondent violate 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and 1140.14(b)(2)(i) as alleged in the Complaint?
VII.  DEFAULT
I find Respondent was served and is subject to the jurisdiction of this forum, as established by the UPS Delivery Notification and Notice of Filing filed by CTP.
Striking Respondent's Answer leaves the Complaint unanswered.
My July 6, 2020 and September 4, 2020 Orders are incorporated herein by reference.  My Orders instructed Respondent to comply with CTP's request for document production on or before close of business on July 21, 2020 and September 21, 2020, respectively, Respondent failed to file any pleading in response or otherwise comply with my July 6, 2020 and September 4, 2020 Orders.
Pursuant to 21 C.F.R. § 17.35(c)(3), I struck Respondent's Answer as a sanction.
It is Respondent's right to participate in the legal process.
It is Respondent's right to request a hearing or to waive a hearing.
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 Trinidad Market and Deli, located at 1322 Florida Avenue Northeast, Washington,
**Page 7**
DC 20002.  Respondent's establishment receives tobacco products in interstate commerce and holds them for sale after shipment in interstate commerce.
During an inspection of Trinidad Market and Deli conducted on October 6, 2019, an FDA-commissioned inspector documented the following violations:
a. Selling a 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 Apple cigar on October 6, 2019, at approximately 1:08 PM; and
b. Failing to verify the age of a person purchasing a 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 October 6, 2019, at approximately 1:08 PM.
B. Respondent's recitation of facts
I struck Respondent's pA wer filed on January 17, 2020.
Accordingly, Respondent filed no responsive pleadings that I may consider.
IX.  PRIOR VIOLATIONS
On March 5, 2019, CTP initiated a previous civil money penalty action, CRD Docket Number T-19-1856, FDA Docket Number FDA-2019-H-1012 (*see also*CRD Docket Number T-16-1615, FDA Docket Number FDA-2016-H-2420), against Respondent for five5
 violations of 21 C.F.R. pt. 1140 within a 36-month period.  CTP
**Page 8**
alleged those violations to have occurred at Respondent's business establishment, 1322 Florida Avenue Northeast, Washington, DC 20002, on February 9, 2016, July 12, 2017, and October 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 seven 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 48‐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
**Page 9**
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 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. § 387 a-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
**Page 10**
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, 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 CMP.  21 U.S.C. §§ 331, 333.
**Page 11**
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.
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.
In that I have stricken Respondent's answer from the record as a sanction for failing to respond to my orders and directives, I find Respondent has failed to answer the Complaint and, therefore, has 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 a OSC, 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
**Page 12**
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 ed. 1992); *Routen v. West*, 142 F.3d 1434, 1440 (Fed. Cir. 1998).6
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).
**Page 13**
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(a)(1) and 1140.14(b)(1) in that  persons younger than 18 years of age were able to purchase regulated tobacco products on February 9, 2016, July 12, 2017, October 27, 2018, and October 6, 2019.
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(a)(2)(i) and 1140.14(b)(2)(i) on those same dates in that Respondent also violated the requirement that retailers verify, by means of photo identification containing a purchaser's date of birth, that no regulated tobacco product purchasers are younger than 18 years of age.
The conduct set forth above on February 9, 2016, July 12, 2017, October 27, 2018, and October 6, 2019 counts as seven 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
**Page 14**
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 CMPs will proceed under the reduced penalty schedule."  FDA Regulatory Enforcement 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
Because Respondent is found to be in default I am required to impose the maximum amount of penalties provided for by law for the violations alleged.  Therefore, no mitigation is considered.
XVI.  CONCLUSION
Respondent committed seven violations in a 48‐month period and so, Respondent is liable for a civil money penalty of $11,410.  *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.
**Page 15**
b. I find Respondent failed to respond to my July 6, 2020 and September 4, 2020 Orders.
	c. I strike Respondent's Answer filed on January 17, 2020 as a sanction pursuant to 21 C.F.R. § 17.35(c)(3).
	d. I find Respondent is in default.
	e. I assume the facts alleged in the Complaint to be true.
	f. I find the facts set forth in the Complaint establish liability under the relevant statute.
	g. I assess a monetary penalty in the amount of $11,410.


          /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 at 513 (1978); Marshall v. Jerrico, Inc., 446 U.S. 238 (1980); Federal Maritime Com'n v. South Carolina State Ports Authority, 535 U.S. 743, 744 (2002). back to note 2
                      3. In my Order, I stated "[b]ecause Respondent has failed to comply with the procedural rules, I will construe CTP's motion as a request for an Order to Show Cause and will instruct Respondent to comply with CTP's Request for Production of Documents . . . ." back to note 3
                      4. The September 4, 2020 Order was sent by U.S. Mail to Mr. Churnet's address of record, and by email transmission to the email address identified in Mr. Churnet's Notice of Appearance. back to note 4
                      5. Two violations were documented on February 9, 2016, two on July 12, 2017, and two on October 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 5
                      6. 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 Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 254–55, 101 S.Ct. 1089, 1094–95, 67 L.Ed.2d 207 (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 6 Back to top
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