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                              Stop "N" Save, Inc. d/b/a Cheap Way, DAB TB7406 (2023)
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Stop "N" Save, Inc. d/b/a Cheap Way, DAB TB7406 (2023)








  
  
    

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





Center for Tobacco Products,Complainantv.Stop "N" Save, Inc.d/b/a Cheap Way,Respondent
Docket No. T-23-3006FDA Docket No. FDA-2023-H-2996Decision No. TB7406December 20, 2023

        
              
    

      INITIAL DECISION AND DEFAULT JUDGMENTFound:1) Respondent violated 21 U.S.C. § 331, specifically 906(d)(5) of the Federal Food, Drug and Cosmetic Act (Act) (21 U.S.C. § 387f(d)(5)), and 21 C.F.R. § 1140.14(a)(2)(i) as modified by the Act, as charged in the Complaint.2) Respondent committed at least three violations in a 24-month period as set forth hereinabove.3) Respondent is hereby assessed a civil penalty in the amount of $638.**Page 2**Glossary:ALJadministrative law judge1CMPcivil money penaltyCTP/ComplainantCenter for Tobacco ProductsDJDefault JudgmentFDCAFederal Food, Drug, and Cosmetic Act (21 U.S.C.A. Chap. 9)DNUPS Delivery NotificationFDAFood and Drug AdministrationHHSDept. of Health and Human ServicesOSCOrder to Show CausePOSUPS Proof of ServiceSOPService of ProcessRespondentStop “N” Save, Inc. d/b/a Cheap WayTCAThe Family Smoking Prevention and Tobacco Control Act, Pub. L. No. 111-31, 123 Stat. 1776 (2009)I.      JURISDICTIONI 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 17.2II.     PROCEDURAL BACKGROUNDThe Center for Tobacco Products (CTP/Complainant) filed a Complaint on July 25, 2023, against Stop “N” Save, Inc. d/b/a Cheap Way (Respondent or Cheap**Page 3**Way), located at 1715 Leesburg Road, Columbia, South Carolina 29209, alleging that FDA documented at least three3 violations within a 24-month period.Respondent was served with process on July 24, 2023, by United Parcel Service Next Day Air.  Respondent timely filed an answer on August 16, 2023.On August 18, 2023, I issued a Pre-Hearing Order (PHO) in which I set a schedule for exchanges of evidence and argument.  Pursuant to that order, CTP sent Respondent a Request for Production of Documents on September 21, 2023, which was delivered on September 22, 2023.  Respondent had 10 days after receiving CTP’s Request for Production of Documents to file a motion for a protective order (or until October 2, 2023), or 30 days after CTP’s Request for Production of Documents was made (or until October 23, 2023), to provide responsive documents.  21 C.F.R. §§ 17.23(a), (d), 17.28; PHO ¶ 3.  On October 27, 2023, CTP filed a Motion to Compel Discovery in which CTP averred that Respondent failed to respond to its Request for Production of Documents in its entirety.On October 31, 2023, I issued an Order Granting CTP’s Motion to Compel Discovery and ordered Respondent to comply with CTP’s Request for Production of Documents by November 13, 2023.  I explained that if Respondent failed to comply with the procedural rules in responding to CTP’s Request for Production of Documents, its failure to do so may result in sanctions, including the issuance of an Initial Decision and**Page 4**Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.  October 31, 2023 Order.III.    STRIKING RESPONDENT’S ANSWERPursuant 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(3) Engaging in other misconduct that interferes with the speedy, orderly, or fair conduct of the hearingHere, Respondent failed to comply with my August 18, 2023 Pre-Hearing Order and further failed to comply with my October 31, 2023 Order Granting Motion to Compel Discovery ordering Respondent to respond.  Respondent further failed to comply with my November 17, 2023 Order complying Respondent to respond to CTP’s Motion to Impose Sanctions.  Respondent has failed to comply with my orders and procedures governing this proceeding and failed to defend its actions.  Respondent’s misconduct has interfered with the speedy, orderly, or fair conduct of this proceeding.  21 C.F.R. § 17.35(a).  I find sanctions are appropriate pursuant to 21 C.F.R. § 17.35(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).  I find and conclude that Respondent’s misconduct is sufficient to warrant striking the answer and issuing a decision without further proceedings.  21 C.F.R. § 17.35(c); *see* 21 C.F.R. § 17.11(a).**Page 5**IV.   BURDEN OF PROOFCTP as the petitioning party has the burden of proof.  21 C.F.R. § 17.33.V.     LAW21 U.S.C. § 331, specifically 906(d)(5) of Act, and specifically 21 C.F.R. § 1140.14 (a)(2)(i) ad modified by the Act.VI.   ISSUEDid Respondent violate 21 U.S.C. § 331, specifically 906(d)(5) of the Act, and specifically 21 C.F.R. § 1140.14 (a)(2)(i) as modified by the Act, as alleged in the Complaint?VII.   DEFAULTI find Respondent was served which Respondent has failed to rebut, and that Respondent is subject to the jurisdiction of this forum, as established by the United States Postal Delivery Notification and Notice of Filing filed by CTP on July 26, 2023, and by Respondent’s Answer seeking relief.Striking Respondent’s Answer leaves the Complaint unanswered.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).**Page 6**VIII.    ALLEGATIONSA. Agency’s recitation of factsCTP alleged that Respondent owns an establishment, doing business under the name Cheap Way, located at 1715 Leesburg Road, Columbia, South Carolina 29209.  Respondent’s establishment received tobacco products in interstate commerce and held them for sale after shipment in interstate commerce.CTP’s Complaint alleged that on November 1, 2022, CTP issued a Warning Letter to Respondent, alleging that Respondent committed the following violation:Selling tobacco products to a person under 21 years of age, in violation of section 906(d)(5).  Specifically, a person younger than 21 years of age was able to purchase a package of two White Owl Silver cigars on October 23, 2022, at approximately 5:54 PM;Because no opportunity for a  hearing was provided before the warning letter was issued, Respondent had a right to challenge the allegations in the warning letter in the instant case.  *See* *Orton Motor Co. d/b/a Orton’s Bagley v. HHS*, 884 F.3d 1205 (D.C. Cir. 2018).Further, during an inspection of Cheap Way conducted on April 26, 2023, an FDA-commissioned inspector documented the following violations:Selling tobacco products to a person under 21 years of age, in violation of section 906(d)(5) of the Act.  Specifically, a person younger than 21 years of**Page 7**age was able to purchase a package Marlboro cigarettes on April 26, 2023, at approximately 6:07 PM; andFailing to verify the age of a person purchasing tobacco products by means of photographic identification containing the bearer's date of birth, as required by 21 C.F.R. § 1140.14(a)(2)(i).  Specifically, the underage purchaser’s age not verified before the sale, as detailed above, on April 26, 2023, at approximately 6:07 PM.B. Respondent’s recitation of factsI struck Respondent’s Answer from the record.  21 C.F.R. § 17.35(a).  Accordingly, Respondent filed no responsive pleadings that I may consider.I find and conclude Respondent committed at least three violations of 21 U.S.C. § 331, specifically section 906(d)(5) of the Act, and 21 C.F.R. § 1140.14(a)(2)(i), as modified by the Act, within a 24-month period as set forth in the Complaint.Therefore, under FDA’s current policy, the violations described in the Complaint count as three violations for purposes of computing the civil money penalty in the instant case.IX.     FAMILY SMOKING PREVENTION AND TOBACCO CONTROL ACTThe “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**Page 8**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 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,**Page 9**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, 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/Rules RegulationsGuidance/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**Page 10**identification, in violation of section 906(d)(5) of the Act, 4 and subpart B of part 1140 of title 21, Code of Federal Regulations, 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).X.      LIABILITYWhen 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.  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 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.I find Respondent, by failing to respond, waived its right to a hearing.XI.    IMPACT OF RESPONDENT’S DEFAULTWhen a Respondent defaults by failing to answer the Complaint, or respond to an Order, 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) and (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**Page 12**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).5Second, 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.XII.   LIABILITY UNDER THE RELEVANT STATUTETaking 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 answer being stricken, 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**Page 13**section 906(d)(5) of the Act, in that a person younger than 21 years of age was able to purchase regulated tobacco products on October 3, 2022, and April 26, 2023.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), as modified by section 906(d)(5) of the Act, on April 26, 2023, 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 purchaser is younger than 21 years of age.The conduct set forth above on October 3, 2022, and April 26, 2023 counts as three violations for purposes of computing the civil money penalty.XIII.   PENALTYThere 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**Page 14**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.XIV.    MITIGATIONIt 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.XV.    CONCLUSIONRespondent committed at least three violations in a 24-month period and so, Respondent is liable for a civil money penalty of $638.  *See*21 C.F.R. § 17.2.WHEREFORE, evidence having read and considered it be and is hereby ORDERED as follows:I find Respondent has been served with process herein and is subject to this forum.I find Respondent failed to follow the procedures in my Pre-Hearing Order.I find Respondent failed to respond to my Order October 31, 2023 Order Granting CTP’s Motion to Compel Discovery.I find Respondent failed to respond to November 17, 2023 Order to file a response to the Motion to Impose Sanctions.**Page 15**I find Respondent failed to comply with my orders and procedures governing this proceeding and failed to defend its actions, constituting misconduct that has interfered with the speedy, orderly, or fair conduct of this proceeding.I find Respondent’s misconduct warrants striking its answer as a sanction.I find striking Respondent’s answer leaves the Complaint unanswered.I find Respondent is in default.I assume the facts alleged in the Complaint to be true.I find the facts set forth in the Complaint establish liability under the relevant statute.I assess a monetary penalty in the amount of $638.Endnotes1  *See* 5 C.F.R. § 930.204.2  *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).3  CTP did not include violations that occurred outside the relevant timeframe for this complaint.4  On December 20, 2019, the Act was amended by the Further Consolidated Appropriations Act, 2020, Pub. L. No. 116–94, § 603(a)-(b), to raise the federal minimum age for sale of tobacco products to 21, and directed the Secretary of the U.S. Department of Health and Human Services 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.”  21 U.S.C. § 387f (note).  Prior to December 20, 2019, the sale of regulated tobacco products was only prohibited to any person younger than 18 years of age, 21 C.F.R. § 1140.14(a)(1), (b)(1), and retailers were only required to verify, by means of photographic identification containing a purchaser’s date of birth, that no regulated tobacco product purchasers were younger than 18 years of age, 21 C.F.R. § 1140.14(a)(2)(i), (b)(2)(i).5  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).
  
          /s/
        Richard C. Goodwin

                      Administrative Law Judge Back to top
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