Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

Minmax Corporation
d/b/a Amera,

Respondent.

Docket No. T-19-330
FDA Docket No. FDA-2018-H-4103

Decision No. TB4091

Date: July 17, 2019

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Minmax Corporation d/b/a Amera, at 2200 West Allegheny
Avenue, Philadelphia, Pennsylvania 19132, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management. CTP seeks an
$11,182 civil money penalty against Respondent for a total of seven violations of 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, within a 48-month period. The complaint
alleges that a previous civil money penalty action concluded after Respondent admitted to
five violations of the regulations. The complaint further alleges that Respondent
subsequently sold regulated tobacco products to a minor and failed to verify, by means of
photo identification containing a date of birth, that the purchaser was 18 years of age or
older, thereby violating the Act and its implementing regulations an additional two times.
Respondent timely answered CTP’s complaint; however during the course of these
administrative proceedings, Respondent failed to comply with orders and procedures
governing this proceeding and failed to defend its actions, 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 strike Respondent’s Answer and issue this decision
of default judgment, assessing a civil money penalty of $11,182 against Respondent for
seven violations within a forty-eight month period.

I. Procedural History

On October 31, 2019, CTP served the complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. Respondent, through counsel, timely
filed an Answer. On December 19, 2018, I issued an Acknowledgement and Pre-Hearing
Order (APHO) that set deadlines for filings and exchanges, including a schedule for
discovery. I directed that a party receiving a Request for Production of Documents must
provide the requested documents within 30 days of the request. APHO § 12; see

21 C.F.R. § 17.23(a).

On February 21, 2019, CTP filed a Motion to Compel Discovery asserting that
Respondent did not provide documents responsive to its Request for Production of
Documents as required by my APHO and regulations. By Order of February 26, 2019, I
informed Respondent of its deadline to file a response to CTP’s Motion to Compel
Discovery, and warned that if Respondent failed to respond, “I may grant CTP’s motion
in its entirety.” See also 21 C.F.R. § 17.32(c); APHO § 19. Respondent did not respond.

On March 14, 2019, I issued an Order to Compel Discovery in which I granted CTP’s
motion and ordered Respondent to produce documents responsive to CTP’s Request for
Production of Documents by March 29, 2019. I warned Respondent that:

[F]ailure to comply may result in sanctions, which may
include striking its filings and issuing an Initial Decision and
Default Judgment finding Respondent liable for the violations
listed in the Complaint and imposing a civil money penalty.
21 CFR. § 17.35.

March 14, 2019, Order to Compel Discovery (emphasis in original).

On May 30, 2019, CTP filed a Motion to Impose Sanctions. CTP advised that
Respondent did not produce responsive documents in compliance with my Order to
Compel Discovery. By Order of May 30, 2019, I informed Respondent of its deadline to
file a response to CTP’s Motion to Impose Sanctions. I warned Respondent that if it
failed to file a response, I may “grant CTP’s Motion to Impose Sanctions in its
entirety.” May 30, 2019, Order (emphasis in original). Respondent did not respond.
Il. Striking Respondent’s Answer
I may sanction a 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.

21 C.F. § 17.35(a).

Respondent failed to comply with the following orders and procedures governing this
proceeding:

e Respondent failed to comply with 21 C.F.R. § 17.23(a) and paragraph 12 of my
APHO, when Respondent failed to respond to CTP’s Request for Production of
Documents within 30 days; and

e Respondent failed to comply with my March 14, 2019 Order to Compel
Discovery, when it failed to produce documents responsive to CTP’s Request for
Production of Documents by March 29, 2019.

Respondent also failed to defend its action despite my February 26, 2019 and May 30,
2019 orders informing Respondent of such opportunities and warning of consequences.

I find that Respondent failed to comply with orders and procedures governing this
proceeding, failed to defend its case, and, as a result, interfered with the speedy, orderly,
or fair conduct of this proceeding. I conclude that Respondent’s conduct establishes a
basis for sanctions pursuant to 21 C.F.R. § 17.35, and that sanctions are warranted.

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). Here, Respondent failed to
comply with two of my orders, despite my explicit warnings that its failure could result in
sanctions. I specified that those sanctions “may include striking its filings and issuing an
Initial Decision and Default Judgment finding Respondent liable for the violations listed
in the Complaint and imposing a civil money penalty.” March 14, 2019, Order to
Compel Discovery. Respondent also failed to defend its actions, despite my orders
expressly reminding Respondent of the opportunity. Respondent’s repeated misconduct
interfered with the speedy, orderly, or fair conduct of this proceeding.
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).
Accordingly, I strike Respondent’s Answer.

Ill. Default Decision

Striking Respondent’s Answer leaves the complaint unanswered. As such, I am required
to “assume the facts alleged in the complaint to be true,” and, if those facts establish
liability under the Act, issue an initial decision by default imposing a civil money
penalty. 21 C.F.R. § 17.11(a). Accordingly, I must determine whether the allegations in
the complaint establish violations of the Act.

CTP alleges the following facts in its complaint:

e¢ On March 8, 2018, CTP initiated a previous civil money penalty action, CRD
Docket Number T-18-1544, FDA Docket Number FDA-2018-H-0992, against
Respondent for violations of 21 C.F.R. pt. 1140, five! of which occurred within
the 48-month period relevant in the current complaint. CTP alleged those
violations to have occurred at Respondent’s business establishment located at
2200 West Allegheny Avenue, Philadelphia, Pennsylvania 19132, on April 21,
2016, May 31, 2017, and February 10, 2018;

e The previous action concluded when Respondent admitted the allegations
contained in the complaint issued by CTP, and paid the agreed upon monetary
penalty in settlement of that claim. Further, “Respondent expressly waived its
right to contest such violations in subsequent actions”;

e At approximately 12:14 PM on August 10, 2018, at Respondent’s business
establishment located at 2200 West Allegheny Avenue, Philadelphia,
Pennsylvania 19132, an FDA-commissioned inspector documented Respondent’s
staff selling a package of Newport Box 100s cigarettes to a person younger than
18 years of age. The inspector also documented that staff failed to verify, by
means of photographic identification containing a date of birth, that the purchaser
was 18 years of age or older.

These facts establish Respondent Amera’s liability under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded

' Two violations were identified on April 21, 2016, two on May 31, 2017, and two on
February 10, 2018. See also CRD Docket Number T-17-5271; FDA Docket Number
FDA-2017-H-4208. In accordance with FDA policy, CTP counted the violations
identified during the initial inspection as a single violation and all violations identified
during subsequent inspections individually.
if sold or distributed in violation of regulations issued under section 906(d) of the Act.

21 U.S.C. § 387£(d); see also 21 U.S.C. § 387¢(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 also

21 U.S.C. § 387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010); 81 Fed. Reg.
28,974, 28,975-76 (May 10, 2016). Under 21 C.F.R. § 1140.14(a)(1),” no retailer may
sell regulated tobacco products to any person younger than 18 years of age. Under

21 C.F.R. § 1140.14(a)(2)(), retailers must verify, by means of photographic
identification containing a purchaser’s date of birth, that no regulated tobacco product
purchasers are younger than 18 years of age.

An $11,182 civil money penalty is permissible under 21 C.F.R. § 17.2, for seven
violations of the regulations found at 21 C.F.R. pt. 1140 within a 48-month period.

Order

For these reasons, I enter default judgment in the amount of $11,182 against Respondent
Minmax Corporation d/b/a Amera. Pursuant to 21 C.F.R. § 17.11(b), this order becomes
final and binding upon both parties after 30 days of the date of its issuance.

/s/
Margaret G. Brakebusch
Administrative Law Judge

> On August 8, 2016, the citations to certain tobacco violations changed. For more
information see: https://federalregister.gov/a/2016-10685.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

Oasis Express, Inc.
d/b/a Oasis Express,

Respondent.

Docket No. T-19-71
FDA Docket No. FDA-2018-H-3794

Decision No. TB4068

Date: July 11, 2019

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Oasis Express, Inc. d/b/a Oasis Express, at 1401 Pinehurst
Road, Dunedin, Florida 34698, and by filing a copy of the complaint with the Food and
Drug Administration’s (FDA) Division of Dockets Management. CTP seeks to impose
an $11,182 civil money penalty against Respondent for a total of six violations within a
48-month period. The complaint alleges that a previous civil money penalty action
concluded after Respondent admitted to five violations of 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. The complaint also alleges that Respondent subsequently sold a regulated
tobacco product to a minor thereby further violating the Act and its implementing
regulations.

Respondent timely answered CTP’s complaint; however during the course of these
administrative proceedings, Respondent failed to comply with orders and procedures
governing this proceeding and failed to defend its actions, 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 strike Respondent’s Answer, issue this decision of
default judgment, and assess a civil money penalty of $11,182 against Respondent.

I. Procedural History

On October 10, 2018, CTP served the complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. Respondent timely filed an Answer
dated December 3, 2018, denying the allegations in the complaint. On December 11,
2018, I issued an Acknowledgement and Pre-Hearing Order (APHO) that set deadlines
for filings, including a schedule for discovery. I directed that a party receiving a Request
for Production of Documents must provide the requested documents within 30 days of
the request. APHO § 12; see 21 C.F.R. § 17.23(a).

On February 7, 2019, CTP filed a Motion to Compel Discovery asserting that Respondent
did not provide any of the requested documents as required by my APHO and
regulations. By Order of February 8, 2019, I informed Respondent of its deadline to file
a response to CTP’s Motion to Compel Discovery, and warned that if Respondent failed
to respond, “I may grant CTP’s motion in its entirety.” See also 21 C.F.R. § 17.32(c);
APHO § 19. Respondent did not respond.

On April 23, 2019, I issued an Amended Order to Compel Discovery! in which I granted
CTP’s motion and ordered Respondent to produce documents responsive to CTP’s
Request for Production of Documents by May 10, 2019. I warned Respondent that:

[F]ailure to comply may result in sanctions, which may
include striking its filings and issuing an Initial Decision and
Default Judgment finding Respondent liable for the violations
listed in the Complaint and imposing a civil money penalty.
21 CFR. § 17.35.

April 23, 2019, Amended Order to Compel Discovery (emphasis in original).

On May 16, 2019, CTP filed a Renewed Motion to Impose Sanctions. CTP advised that
Respondent did not produce responsive documents in compliance with my Amended
Order to Compel Discovery. By Order of May 17, 2019, I informed Respondent that it
had until May 31, 2019, to file a response to CTP’s Motion to Impose Sanctions and I
warned Respondent that if it failed to file a response, I may grant CTP’s motion. On
May 17, 2019, a letter was also issued at my direction reiterating the deadline for

' The Amended Order to Compel Discovery cured a defect of service in the initial Order
to Compel Discovery dated February 26, 2019.
Respondent to file a response to CTP’s motion and again warned Respondent that if it
failed to file a response, I may “grant CTP’s Renewed Motion to Impose Sanctions in
its entirety.” May 17, 2019, Letter By Direction of the Administrative Law Judge
(emphasis in original). The letter specified that the consequences of such a ruling may
include “finding Respondent liable for the violations listed in the Complaint and
imposing a civil money penalty.” Jd.

Il. Striking Respondent’s Answer
I may sanction a 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.

21 C.F. § 17.35(a).

Respondent failed to comply with the following orders and procedures governing this
proceeding:

e Respondent failed to comply with 21 C.F.R. § 17.23(a) and paragraph 12 of my
APHO, when Respondent failed to respond to CTP’s Request for Production of
Documents within 30 days; and

e Respondent failed to comply with my April 23, 2019 Amended Order to Compel
Discovery, when it failed to produce documents responsive to CTP’s Request for
Production of Documents by May 10, 2019.

Respondent also failed to defend its action despite my February 8 and May 17, 2019
orders and May 17, 2019 letter informing Respondent of such opportunities and warning
of consequences.

I find that Respondent failed to comply with orders and procedures governing this
proceeding, failed to defend its case, and, as a result, interfered with the speedy, orderly,
or fair conduct of this proceeding. I conclude that Respondent’s conduct establishes a
basis for sanctions pursuant to 21 C.F.R. § 17.35, and that sanctions are warranted.

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). Here, Respondent failed to
comply with two of my orders, despite my explicit warnings that its failure could result in
sanctions. I specified that those sanctions “may include striking its filings and issuing an
Initial Decision and Default Judgment finding Respondent liable for the violations listed
in the Complaint and imposing a civil money penalty.” April 23, 2019, Amended Order
to Compel Discovery. Respondent also failed to defend its actions, despite my orders and
directive expressly reminding Respondent of the opportunity. Respondent’s repeated
misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.

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).
Accordingly, I strike Respondent’s Answer. 21 C.F.R. § 17.35(c)(3).

Ill. Default Decision

Striking Respondent’s Answer leaves the complaint unanswered. Therefore, I am
required to issue an initial decision by default, provided that the complaint is sufficient to
justify a penalty. 21 C.F.R. § 17.11(a). Pursuant to 21 C.F.R. § 17.11(a), 1am required
to “assume the facts alleged in the complaint 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:

¢ On December 18, 2017, CTP initiated a previous civil money penalty action, CRD
Docket Number T-18-681, FDA Docket Number FDA-2017-H-6894, against
Respondent for violations of 21 C.F.R. pt. 1140, five? of which occurred within
the 48-month period relevant in the current complaint. CTP alleged those
violations to have occurred at Respondent’s business establishment located at
1401 Pinehurst Road, Dunedin, Florida 34698, on November 21, 2014, May 21,
2016, March 13, 2017, and December 5, 2017;

e The previous action concluded when Respondent admitted the allegations
contained in the complaint issued by CTP, and paid the agreed upon monetary
penalty in settlement of that claim. Further, “Respondent expressly waived its
right to contest such violations in subsequent actions”;

e At approximately 2:49 PM on July 22, 2018, at Respondent’s business
establishment located at 1401 Pinehurst Road, Dunedin, Florida 34698, an

2 Two violations were identified on November 21, 2014, two on May 21, 2016, one on
March 13, 2017, and one on December 5, 2017. In accordance with FDA policy, CTP
counted the violations identified during the initial inspection as a single violation and all
violations identified during subsequent inspections individually. See also CRD Docket
Number T-17-5099, FDA Docket Number FDA-2017-H-4013; CRD Docket Number
T-17-1060, FDA Docket Number FDA-2016-H-4183.
FDA-commissioned inspector documented Respondent’s staff selling a blu Polar
Mint electronic nicotine delivery system (ENDS) product to a person younger than
18 years of age.

These facts establish Respondent Oasis Express’ liability 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. § 387f(d); see also 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 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). Under 21 C.F.R. § 1140.14(a)(1) and (b)(1),3 no
retailer may sell regulated tobacco products to any person younger than 18 years of age.
Under 21 C.F.R. § 1140.14(a)(2)(i), retailers must verify, by means of photographic
identification containing a purchaser’s date of birth, that no regulated tobacco product
purchasers are younger than 18 years of age.

An $11,182 civil money penalty is permissible under 21 C.F.R. § 17.2, for six violations
of the regulations found at 21 C.F.R. pt. 1140 within a 48-month period.

Order

For these reasons, I enter default judgment in the amount of $11,182 against Respondent
Oasis Express, Inc. d/b/a Oasis Express. Pursuant to 21 C.F.R. § 17.11(b), this order
becomes final and binding upon both parties after 30 days of the date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge

3 On August 8, 2016, the citations to certain tobacco violations changed. For more
information see: https://federalregister.gov/a/2016-10685.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2018-H-3745)

Complainant,
v.

Shanaz Enterprises, Inc.
d/b/a USA Food Store,

Respondent.
Docket No. T-19-36
Decision No. TB4043
Date: July 10, 2019
INITIAL DECISION

The Center for Tobacco Products (“CTP”), of the United States Food and Drug
Administration (“FDA”), seeks a civil money penalty against Respondent, Shanaz
Enterprises, Inc. d/b/a USA Food Store, for violations of the Federal Food, Drug, and
Cosmetic Act (“Act”), 21 U.S.C. § 301 et seg., and its implementing regulations, 21
C.F.R. pt. 1140. CTP alleges that USA Food Store violated the Act by impermissibly
selling covered tobacco products to minors and failing to verify, by means of photo
identification containing a date of birth, that the purchasers were 18 years of age or older.
Therefore, CTP seeks a $559 civil money penalty against Respondent USA Food Store
for three violations of the Act within a 24-month period. For the reasons set forth in this
decision, I find that USA Food Store violated the Act as CTP alleged and impose a $559
civil money penalty against Respondent.
Procedural History

CTP began this matter by serving an administrative complaint on Respondent, Shanaz
Enterprises, Inc. d/b/a USA Food Store, at 8071 Southwest 7th Place, North Lauderdale,
Florida 33068, and by filing a copy of the complaint with the FDA’s Division of Dockets
Management.

On November 2, 2018', Respondent timely filed an answer denying the allegations in the
complaint and pleading no contest. Answer § 1. On November 21, 2018, I issued an
Acknowledgment and Pre-Hearing Order (“APHO”) that set out the deadlines for the
parties’ submissions in this case, and informal briefs for the parties to complete and
submit. December 12, 2018, CTP filed a Joint Status Report stating, “[t]he parties have
been unable to reach a settlement in this case. CTP remains willing to engage in
settlement discussions but, absent an executed settlement agreement, intends to proceed
to a hearing.”

On February 12, 2019, CTP timely filed its pre-hearing exchange. CTP’s exchange
included an Informal Brief of Complainant (“CTP Br.”), a list of proposed witnesses and
exhibits, and 18 numbered exhibits (“CTP Ex. 1- Ex. 18”). CTP’s exhibits included
written direct testimonies of two witnesses, both FDA-commissioned officers: Inspector
Elie Joseph’s declaration (“CTP Ex. 3”), and Inspector Krystle Kirkland-Mobley’s
declaration (“CTP Ex. 4”). Respondent did not submit proposed exhibits or witness
testimony.

On April 5, 2019, I held a prehearing telephone conference call with the parties. During
the call, I explained my role as an impartial Administrative Law Judge. I determined that
Respondent is proceeding without an attorney. We discussed Respondent’s Answer, and
CTP’s pre-hearing exchanges and witness testimony. I noted that Respondent did not
submit proposed exhibits or witness testimony. Respondent communicated that he did
not have video footage of the violations or additional evidence to submit. I explained that
the purpose of a formal hearing is to allow for the cross-examination and re-direct of any
witnesses who have provided sworn testimony in exchanges.

I apprised Respondent of CTP’s two proposed witnesses and asked whether he wished to
cross-examine them. Respondent declined to cross-examine CTP’s proposed witnesses.
The parties agreed to waive a hearing and to a decision based on the documents in the
record. I explained that the parties could file supplementary briefs with additional
arguments for my consideration, by a date certain. I noted that this was not an
opportunity to present any new evidence that a party did not submit by the pre-hearing
exchange deadlines.

' This was the postmark date.
On that same day, I issued a Briefing Order Admitting Evidence and Waiving Hearing.
As Respondent did not object to CTP’s proposed exhibits marked as CTP Ex. 1 to CTP
Ex. 18, | admitted those exhibits into the record. Finally, I advised the parties that they
had until May 8, 2019, to file supplemental briefs. Neither party submitted a
supplemental brief. As the briefing period has passed, I find that the record is complete,
and render my decision.

Issues

1. Whether Respondent sold covered tobacco products to minors and failed to verify
the age of the purchasers on February 24, 2018, and July 15, 2018, in violation of
21 C.F.R. § 1140.14(b)(1) and 21 C.F.R. § 1140.14(b)(2)(i).

2. Whether the civil money penalty of $559 that CTP seeks is an appropriate amount,
considering any aggravating or mitigating factors, pursuant to the provisions of 21
C.F.R. § 17.33(a).

Applicable Regulations

The Act prohibits the misbranding of tobacco products held for sale after shipment in
interstate commerce. 21 U.S.C. § 331(k). The FDA and its agency, CTP, may seek the
imposition of remedies against any person who violates the Act’s requirements as they
relate to the sale of tobacco products. 21 U.S.C. § 333(f)(9). Under 21 C.F.R.

§ 1140.14(b)(1), no retailer may sell covered tobacco products to any person younger
than 18 years of age. Under 21 C.F.R. § 1140.14(b)(2)(i), retailers must verify, by means
of photographic identification containing a purchaser’s date of birth, that no covered
tobacco product purchasers are younger than 18 years of age.

The Act establishes factors that a presiding officer must consider in determining the civil
money penalty amount. The presiding officer must “take into account the nature,
circumstances, extent, and gravity of the violation or violations and, with respect to the
violator, ability to pay, effect on ability to continue to do business, any history of prior
such violations, the degree of culpability, and such other matters as justice may require.”
21 U.S.C. § 333(£)(5)(B).

Analysis
I. Violations

In considering the first issue of whether violations of 21 C.F.R. § 1140.14(b)(1) and 21
C.F.R. § 1140.14(b)(2)(i) occurred on February 24, 2018, and July 15, 2018, I note that
Respondent denied the allegations. Answer § 1. However, Respondent further stated that
he is pleading “no contest” and leaving the decision “up to the Judge.” Jd. A no-contest
plea is not available under the applicable guidelines. While not technically an admission
of the violations under the applicable guidelines, I see it as Respondent conceding the
violations without admitting culpability or presenting a defense. Since Respondent did
not submit any other evidence to rebut CTP’s allegations, Respondent’s no contest plea
leads me to conclude that the violations likely occurred.

The Complaint states that FDA commissioned inspectors conducted inspections of USA
Food Store, at 8071 Southwest 7th Place, North Lauderdale, Florida 33068, on February
24, 2018, and July 15, 2018. The evidence offered by CTP, which includes the Joseph
and Kirkland-Mobley declarations, corroborate the allegations in the Complaint. CTP
Exs. 3, 4. Specifically, CTP alleges the following violations in its Complaint, which the
declarations corroborate:

e At approximately 10:15 AM on February 24, 2018, at Respondent’s business
establishment, at 8071 Southwest 7th Place, North Lauderdale, Florida 33068, an
FDA-commissioned inspector documented Respondent’s staff selling a Black &
Mild cigar to a person younger than 18 years of age. The inspector also
documented that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older.
Complaint § 11; CTP Ex. 3 9§ 7-9; CTP Br. at 5-7.

e Ina warning letter dated April 5, 2018, CTP informed Respondent of the
inspector’s February 24, 2018 documented violations, and that such actions violate
federal law. The letter further warned that Respondent’s failure to correct its
violations could result in a civil money penalty or other regulatory action.
Complaint §§ 11-12; CTP Ex. 1.

e At approximately 12:17 PM on July 15, 2018, at Respondent’s business
establishment, at 8071 Southwest 7th Place, North Lauderdale, Florida 33068, an
FDA-commissioned inspector documented Respondent’s staff selling a Black &
Mild cigar to a person younger than 18 years of age. The inspector also
documented that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older.
Complaint § 9; CTP Ex. 4 § 7-9; CTP Br. at 7-9.

In addition to the April 5, 2018 warning letter, on February 28, 2018, CTP issued a
Notice of Compliance Check Inspection to Respondent about the February 24, 2018
inspection. Complaint § 12; CTP Br. at 7. CTP provided a copy of the notice as part of
its exchange. CTP Ex. 10. On July 18, 2018, CTP issued a Notice of Compliance Check
Inspection to Respondent about the July 15, 2018 inspection. Complaint § 10; CTP Br. at
9; CTP Ex. 17.

As previously mentioned, Respondent both denied and pled no contest to these violations.
Answer § 1. Respondent stated that the owner was not present at the time of the alleged
violations, the employee denied the violations, and Respondent did not see any evidence
of the violation when he reviewed the camera. Jd. Respondent also stated that he is
pleading “no contest” and leaving the decision “up to the Judge.” Jd. As a defense,
Respondent asserts that if his employee had made the impermissible sale, he should have
gotten “the tickets at that time.” Answer § 2. Finally, Respondent asserted that he
always trains his employees not to sell tobacco to anyone without ID. Id.

Respondent’s assertion about issuing the tickets at the time of the sale seems to imply
that Respondent does not believe that it received timely notice about the violations. I find
that the warning letter and the Notices of Compliance Check Inspections provided
Respondent with adequate notice of the violations. See CTP Exs. 1, 10, 17. Ihave also
considered Respondent’s comments about holding employees responsible for the
violation. However, the Board has indicated that employees are acting in the course of
their employment when making these sales and “[t]he mere fact that Respondent
instructed its clerks not to sell to minors is . . . an inadequate defense because the
[business is] obligated to ensure that its policies are enforced and effective.” TOH, Inc.
d/b/a Ridgeville Serv. Ctr., DAB No. 2668, at 17-18 (2015) (citation omitted).

Based on the evidence in the record and Respondent’s Answer, | find that Respondent
sold covered tobacco products, specifically, Black & Mild cigars, to minors, and failed to
verify the age of the purchasers on February 24, 2018, and July 15, 2018, in violation of
21 C.F.R. § 1140.14(b)(1) and 21 C.F.R. § 1140.14(b)(2)(i). CTP counts all violations
observed during the initial failed inspection 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). Therefore, Respondent’s actions constitute three violations of the
Act within a 24-month period. I find Respondent liable for all of the violations alleged in
the complaint. Accordingly, the only issue remaining before me is whether the civil
money penalty of $559 that CTP seeks is an appropriate amount.

Il. Appropriateness of the Civil Money Penalty of $559

After considering the factors under the applicable statute, I find that the civil money
penalty of $559 that CTP seeks against Respondent, for at least three violations of the Act
and its implementing regulations over a 24-month period, is an appropriate amount.
When determining an appropriate penalty, the presiding officer must evaluate any
circumstances that mitigate or aggravate the violation. 21 C.F.R. § 17.34. As noted
above, under the applicable statute, I must “take into account the nature, circumstances,
extent, and gravity of the violation or violations and, with respect to the violator, ability
to pay, effect on ability to continue to do business, any history of prior such violations,
the degree of culpability, and such other matters as justice may require.” 21 U.S.C.

§ 333(£)(5)(B).

a. Nature, Circumstances, Extent and Gravity of the Violations

I have found that Respondent committed at least three violations of the Act within a 24-
month period. Respondent pleads no contest to the allegation that on February 24, 2018,
its employee sold a covered tobacco product to a minor and failed to verify the age of the
purchaser. Answer § 1. As I mentioned previously, despite a warning letter from CTP,
on July 15, 2018, once again, Respondent failed to comply with the Act and regulations.
This repeated inability of Respondent to comply with federal tobacco regulations within
24-month period demonstrates these violations are serious in nature and a civil monetary
penalty is appropriate.

b. Respondent’s Ability to Pay

Respondent checked a box in its Answer indicating that the penalty of $559 is too high
and stated, “[a]nything [you] can do for the civil penalty . . . will be appreciate[d]
thanks.” Answer § 3. However, Respondent has not provided any evidence that it does
not have the ability to pay the $559 penalty. As a result, there is no evidence in the
written record to establish an inability to pay the penalty.

c. Effect on Ability to do Business

Similarly, Respondent has not presented any evidence regarding the effect of the civil
money penalty on its ability to do business. Absent evidence in the record to the
contrary, I find that the $559 penalty will not have a substantial effect on Respondent’s
ability to do business.

d. History of Prior Violations

Respondent is a repeat violator of FDA tobacco regulations prohibiting the sale of
covered tobacco products to minors. As mentioned previously, Respondent sold a
covered tobacco product to a minor and failed to verify the age of the purchaser on
February 24, 2018, in violation of 21 C.F.R. § 1140.14(b)(1) and 21 C.F.R.

§ 1140.14(b)(2)G). On April 5, 2018, CTP issued a warning letter about these violations.
Despite the warning letter, on July 15, 2018, Respondent again sold a covered tobacco
product to a minor and failed to verify the age of the purchaser. Respondent’s repeated
inability to comply with FDA tobacco regulations supports the imposition of a civil
money penalty.

e. Degree of Culpability

The record shows that Respondent sold covered tobacco products to minors in violation
of 21 C.F.R. § 1140.14(b)(1) on February 24, 2018, and July 15, 2018. The record shows
that on those same dates, Respondent failed to verify the identification of the purchasers,
in violation of 21 C.F.R. § 1140.14(b)(2)(i). Based on Respondent’s written Answer
regarding the current and previous violations and the evidence in the record, I find
Respondent fully culpable for three violations of the Act and its implementing regulations
within a 24-month period.

f. Additional Mitigating Factors

After reviewing Respondent’s Answer, I do not find any additional mitigating factors. In
addition to pleading no contest, Respondent stated that he did not see evidence of the
sales when he reviewed the video tape and that he did not save the video clips. Answer
41. Ipreviously noted that during the April 5, 2019 prehearing conference, Respondent
blamed his employees for the violation. Respondent argued that it should not be
responsible for its employees’ mistakes, especially after it provided its employees with
training. As noted above, employers are liable for their employees’ actions and the fact
that Respondent trained its clerks not to sell to minors is not an adequate defense. TOH,
Inc. d/b/a Ridgeville Serv. Ctr, DAB No. 2668, at 17-18 (2015) (citation omitted).

Within four months of the April 5, 2018 Warning Letter concerning the February 24,
2018 violations, Respondent violated the Act again by selling a covered tobacco product
to a minor and failing to verify the age of the purchaser on July 15, 2018. I do not find
that Respondent took any corrective actions that I may consider as mitigating factors.

I find no basis to reduce the penalty. Accordingly, I find a civil money penalty amount of
$559 to be appropriate, under the provisions of 21 U.S.C. § 333(f)(5)(B) and 21 U.S.C.

§ 333(f)(9).
Conclusion

Pursuant to 21 C.F.R. § 17.45, | impose a civil money penalty of $559 against
Respondent, Shanaz Enterprises, Inc. d/b/a USA Food Store, for three violations of the
Act, 21 U.S.C. § 301 et. seq., within a 24-month period. Pursuant to 21 C.F.R.

§ 17.45(d), this decision becomes final and binding upon both parties after 30 days of the
date of its issuance.

/s/
Margaret G. Brakebusch
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Center for Tobacco Products,

(FDA No. FDA-2018-R-1430)
Complainant,

v.

1701 Express, Inc.
d/b/a Citgo,

Respondent.
Docket No. T-18-1877
Decision No. TB4019

Date: June 27, 2019

INITIAL DECISION

I impose a No-Tobacco-Sale Order (NTSO) against Respondent, 1701 Express,
Inc. d/b/a Citgo, for a period of 30 consecutive calendar days based on
Respondent’s repeated violations of federal tobacco regulations over a period of
36 months.

I. Background

I held an in-person hearing in this case, by telephone, on February 14, 2019. At
the hearing, I received into evidence exhibits offered by the Center for Tobacco
Products (CTP) that it identified as CTP Exhibit (Ex.) 1-CTP Ex. 14. Transcript
(Tr.) 5-6. I received into evidence exhibits offered by Respondent that it identified
as R. Ex. 1-R. Ex. 10. Tr. 5.
II. Issues, Findings of Fact and Conclusions of Law
A. Issues

The issues presently before me are whether Respondent committed violations of
federal tobacco regulations and whether an NTSO of 30 consecutive calendar
days’ duration is a reasonable remedy.

B. Findings of Fact and Conclusions of Law

CTP asserts that I should impose an NTSO against Respondent pursuant to the
authority conferred by the Federal Food, Drug, and Cosmetic Act (Act) and
implementing regulations at Part 21 of the Code of Federal Regulations (C.F.R.).
The Act prohibits the misbranding of tobacco products while they are held for sale
after shipment in interstate commerce. 21 U.S.C. § 331(k). The Food and Drug
Administration (FDA) and its agency, CTP, may seek the imposition of remedies
against any person who violates the Act’s requirements as they relate to the sale of
tobacco products. 21 U.S.C. § 331(f)(9). The sale of tobacco products to an
individual who is under the age of 18 and the failure to verify the photographic
identification of an individual who is not over the age of 26 are violations of
implementing regulations. 21 C.F.R. § 1140.14(a)(1), (a)(2)().!

Remedies may consist of civil money penalties and NTSOs. NTSOs are
authorized at 21 U.S.C. § 333(f)(8). The section allows for the imposition of an
NTSO against a person who has committed “repeated violations” of restrictions on
the sale of tobacco products. The term “repeated violations” is defined to mean
“at least 5 violations of particular requirements over a 36-month period at a
particular retail outlet... .” 21 U.S.C. § 333 note.

The Act establishes factors that must be considered in deciding on the length of an
NTSO, but it does not identify specific NTSO time periods:

In determining the . . . period to be covered by a no-tobacco-sale
order, the Secretary shall take into account the nature,
circumstances, extent, and gravity of the . . . violations and, with
respect to the violator, . . . effect on ability to continue to do
business, any history of prior such violations, the degree of
culpability, and such other matters as justice may require... .

' On August 8, 2016, the citations to certain tobacco violations changed. For
more information see: https://federalregister.gov/a/2016-10685.

21 U.S.C. § 333(f)(5)(B); see also Kat Party Store, Inc. d/b/a Mr. Grocer Liquor
Store, DAB TB509, at 2 (2016).

CTP developed policy guidelines that establish maximum NTSO durations. Fora
first NTSO, CTP recommends that the maximum duration be 30 calendar days.
See Determination of the Period Covered by a No-Tobacco-Sale Order and
Compliance with an Order: Guidance for Tobacco Retailers, at 4 (Aug. 2015)
available at http://www.fda.gov/media/93328/download. CTP’s policy is to, in
general, seek the maximum duration for an NTSO established by the guidelines. It
explains its rationale for establishing these recommended maximum NTSO
durations as follows:

First, if there are grounds for imposing an NTSO, the retailer has
already engaged in repeated violations of the law and regulations
restricting the sale and distribution of tobacco products, and therefore
has a prior history of violations. Second, the restrictions codified in
part 1140 [of the regulations] are intended to protect the public health,
especially children and adolescents, and FDA therefore considers
repeated violations of these restrictions to be very serious. Nearly 9
out of 10 adult daily smokers smoked their first cigarette by age 18
(87 percent). If the current trajectory of smoking rates continues, 5.6
million children alive today will die prematurely as a result of
smoking. Third, FDA believes that imposing NTSOs where the
periods of time gradually increase, starting with a maximum of 30
days and then a maximum of 6 months before issuing an order
permanently prohibiting the sale of tobacco products, strikes an
appropriate balance between considerations related to the number,
extent, and gravity of the violations on one hand, and the retailer’s
ability to continue to do business on the other hand. The increasing
periods of time for which FDA intends to impose NTSOs are also
consistent with the scheme of increasing [civil money penalties]... .

Id. (citations omitted).

CTP’s guidelines are not written as regulations and are not, therefore, binding as a
matter of law. But, they are persuasive, and I accord CTP deference in view of its
expertise in administering the Act and implementing regulations. I find especially
persuasive the guidelines’ reliance on statistics showing the terrible consequences
of smoking on our population and the strong linkage between tobacco addiction
and commencement of smoking at an early age.

lam mindful also that an NTSO may have a profound effect on a retailer’s
business and even on that retailer’s ability to stay in business. However, this
remedy is reserved only for the most egregious offenders — individuals and entities
that have repeatedly violated the law despite the imposition against them of
escalating civil money penalties — and is necessary if for no other reason than to
protect the public against these offenders’ inability to comply with law and
regulations governing tobacco sales. Generally speaking, the need to protect the
public outweighs the adverse effects that an NTSO may have on an individual
retailer’s business, especially in light of the fact that imposition of this remedy is
reserved only for those retailers who demonstrate indifference to the requirements
of law.

Respondent is a repeated violator of law and regulations governing the sale of
tobacco products to minors. Respondent admitted to multiple violations occurring
between March 15, 2015 and January 14, 2017. These violations include:
unlawfully selling tobacco products to a minor on March 15, 2015; two additional
unlawful sales on March 26, 2016 and January 14, 2017; failing to verify a
purchaser’s age by means of photographic identification on March 15, 2015; and
two additional failures to verify age by means of photographic identification on
March 26, 2016 and January 14, 2017. CTP Exs. 1-4. These admitted violations
are administratively final and may not be challenged by Respondent.

The sale of tobacco products that triggered this case occurred on September 28,
2017. On this occasion, an inspector, Hiram Harris, accompanied a minor
purchaser to Respondent’s establishment. CTP Ex. 5, at 97. Mr. Harris testified
that he verified that the minor possessed identification establishing her age to be
less than 18 years and that she had no tobacco products in her possession prior to
entering Respondent’s establishment. Jd. He testified that he entered the
establishment after the minor entered and observed one of Respondent’s
employees selling a package of cigarettes to her. Jd. at § 8. He averred that he did
not see the employee check the minor’s identification. Jd. As corroboration for
Mr. Harris’ testimony, CTP offered photographs of the cigarettes that the minor
allegedly purchased. CTP Ex. 9; CTP Ex. 10.

Respondent does not deny selling cigarettes to the minor purchaser. It contends,
however, that the purchaser misrepresented her age to Respondent’s employee,
thus duping the employee into making a prohibited sale. As proof for this
assertion Respondent offered an excerpt of an audio tape that allegedly records the
transaction at issue. R. Ex. 9.

I find Respondent’s evidence to be unpersuasive. The tape excerpt records the
employee asking someone whether he/she is 18, followed by a brief period of
silence, and the employee’s verbal statement: “‘you good.” R. Ex. 9 at 9:14:38-
9:15:01. There is nothing on the tape proving that the minor purchaser
affirmatively represented her age to be 18. Moreover, even if the minor had done
so, that did not relieve the employee of his duty to request the purchaser’s
identification and to verify the purchaser’s age from the identification. Had the
clerk done so the purchaser’s actual age (16 in this case) would have been evident.
See CTP Ex. 6.

I find Mr. Harris’ testimony to be credible and I find that, coupled with the
photographic evidence offered by CTP, his testimony establishes that Respondent
violated tobacco sales regulations on September 28, 2017. The unlawful sale on
that date coupled with the failure by Respondent’s employee to verify the
purchaser’s age amount to two more repeated violations in addition to the four
previous and administratively final repeated violations. The evidence establishes
that Respondent committed at least six repeated violations of tobacco sales
regulations during the period beginning March 15, 2015 (original violations) and
continuing through September 28, 2017.

I find imposition of an NTSO of 30 consecutive calendar days against Respondent
to be reasonable. It is evident that multiple civil money penalties have not
deterred Respondent from continuing to sell tobacco products in violation of law.

I impose the remedy because something other than a civil money penalty plainly is
needed here. Moreover, I do so because, if for no other reason, the public needs to
be insulated from Respondent’s business practices for a reasonable period of time.

Respondent argues that an NTSO should not be imposed against it because, it
asserts, Mr. Harris was less than credible in his testimony and the minor
affirmatively misrepresented her age when she asked to purchase cigarettes from
Respondent’s employee. These arguments serve as no basis to mitigate the
remedy. As I have found, Mr. Harris’ testimony is credible. Respondent offered
no persuasive evidence to rebut it. Moreover, Respondent did not prove that the
minor purchaser misrepresented her age and, as I have explained, Respondent’s
employee was legally required to verify the minor’s age simply by requesting that
she show identification to him. Indeed, his failure to do so constitutes a violation
of the tobacco sale regulations.

__/s/
Steven T. Kessel
Administrative Law Judge


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

Center for Tobacco Products,
Complainant,
v.
E Market LLC
d/b/a EZ Market,

Respondent.

FDA Docket No. FDA-2019-H-0164
CRD Docket No. T-19-1130

Decision No. TB3994
Date: June 24, 2019

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 committed three violations in a 24-month period as set forth
hereinabove.
3) Respondent is hereby assessed a civil penalty in the amount of $559.
Glossary:
ALJ administrative law judge!
CMP civil money penalty
CTP/Complainant enter for Tobacco Products
DJ Default Judgment
FDCA Federal Food, Drug, and Cosmetic Act (21 U.S.C.A.
Chap. 9)

' See 5 C.F.R. § 930.204.
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 E Market LLC d/b/a EZ Market

TCA The Family Smoking Prevention and Tobacco Control

Act, Pub. L. No. 111-31, 123 Stat. 1776 (2009)(TCA)

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(£)(5), 5 CER. §§ 930.201 et
seq. and 21 C.F.R. Part 17.7
Il. PROCEDURAL BACKGROUND

The Center for Tobacco Products (CTP/Complainant) filed a Complaint on
January 15, 2019 against E Market LLC d/b/a EZ Market (Respondent or EZ Market), at
35 East Main Street, Waterbury, Connecticut 06702 alleging that FDA documented three
violations within a 24-month period.

Respondent did not file an answer to the Complaint by the regulatory deadline.
On February 26, 2019, CTP filed a motion requesting a default judgment be entered

against Respondent for failing to file an answer. Respondent was ordered to show cause,

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
USS. 743, 744 (2002).
no later than March 5, 2019, why a default judgment should not be entered in favor of
CTP.

On March 4, 2019, Respondent filed a response which I accepted as its answer to
CTP’s Complaint. On March 7, 2019, I issued a pre-hearing order that set forth deadlines
for parties’ submissions, including an April 8, 2019 deadline to request documents from
the opposing party. The order 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.

On May 3, 2019, CTP filed a Motion to Compel Discovery. The motion stated
that Respondent did not respond to CTP’s Request for Production of Documents, and
requested an order be entered against Respondent compelling Respondent to respond to
CTP’s request in its entirety. On May 30, 2019, I granted CTP’s Motion to Compel

Discovery and ordered Respondent to show cause, no later than June 10, 2019, why a

default judgment should not be entered in favor of CTP. To date, Respondent has not
filed a response to my May 30, 2019 order.
Ill. SANCTIONS
Pursuant to 21 C.F.R. § 17.35(a), I may sanction a 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.
Here, Respondent failed to comply with my March 7, 2019 pre-hearing order
which ordered a party receiving a discovery request to provide the requested documents
no later than 30 days after the request was made. Respondent also failed to respond to
my May 30, 2019 Order to Show Cause. Respondent’s failure to comply with my orders
and procedures governing this proceeding constitutes misconduct that has interfered with
the speedy, orderly, and fair conduct of this proceeding. 21 C.F.R. § 17.35(a)(1), (a)(3).
Accordingly, I find that sanctions are appropriate under 21 C.F.R. § 17.35.

The harshness of the sanctions I impose upon either party must relate to the nature
and severity of the misconduct or failure. 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 default judgment without further proceeding. 21 C.F.R. §§ 17.35(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.
Vv. LAW
21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and 21 C.F.R.
§ 1140.14(b)(2)().
VI. ISSUE
Did Respondent violate 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 alleged in the Complaint?
VII. DEFAULT
I find Respondent was served with the Complaint and is subject to the jurisdiction
of this forum, as established by the Notice of Filing filed by CTP on January 16, 2019.
Striking Respondent’s answer leaves the Complaint unanswered. Pursuant to 21
C.F.R. § 17.11(a), 1am required to “assume the facts alleged in the complaint to be true”
and, if those facts establish liability, I must issue an initial decision and impose a civil
money penalty.
Vill. ALLEGATIONS
A. Agency’s recitation of facts
CTP alleged that Respondent owns an establishment, doing business under the
name EZ Market, located at 35 East Main Street, Waterbury, Connecticut 06702.
Respondent's establishment receives tobacco products in interstate commerce and holds
them for sale after shipment in interstate commerce.
CTP’s Complaint alleged that on May 24, 2018, CTP issued a Warning Letter to
Respondent, alleging that Respondent committed the following violations:
a. Selling covered tobacco products 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 package of two Garcia y Vega Game Mango cigars on March 27,
2018, at approximately 11:37 AM; and
b. Failing to verify the age of a person purchasing covered tobacco products 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 March 27,
2018, at approximately 11:37 AM.

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 EZ Market conducted on September 14, 2018, an
FDA-commissioned inspector documented the following violations:

a. Selling covered tobacco products 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 package of three Dutch Masters cigars on September 14, 2018, at
approximately 9:20 AM; and

b. Failing to verify the age of a person purchasing covered tobacco products 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 September
14, 2018, at approximately 9:20 AM.

B. Respondent’s recitation of facts

I have struck Respondent’s answer from the record, therefore, there are no
responsive pleadings for me to consider and I assume those allegations set forth in the

Complaint to be true. 21 C.F.R. § 17.11(a).
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. I find and conclude Respondent committed three 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.
IX. 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
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. § 387£(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,
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/RulesRegulations Guidance/U

CM447310.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).
X. 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.
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.
10

I find Respondent, by failing to respond, waived its right to a hearing.
XI. 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) 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
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).3

3 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
11

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.

XII. 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 March 27, 2018 and September 14, 2018.

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.

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

§ 301 App.100, at 301 App.—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, Jn Support
of the Thayer Theory of Presumptions, 52 Mich. L.Rev. 195 (1953); Routen v. West, 142
F.3d 1434, 1440 (Fed. Cir. 1998).
12

§ 1140.14(b)(2)G) 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 covered tobacco product purchasers are younger than 18 years of age.

The conduct set forth above on March 27, 2018 and September 14, 2018 counts as
three violations for purposes of computing the civil money penalty.

XIII. 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 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.
13

XIV. 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.
XV. CONCLUSION
Respondent committed three violations in a 24-month period and so, Respondent
is liable for a civil money penalty of $559. 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 my March 7, 2019 Pre-hearing
Order and failed to respond to my May 30, 2019 Order to Show Cause.
c. I find Respondent is in default.
d. I assume the facts alleged in the Complaint to be true.
e. I find the facts set forth in the Complaint establish liability under the
relevant statute.
f. Lassess a monetary penalty in the amount of $559.
/s/

Richard C. Goodwin
U.S. Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

Albany Market, LLC
d/b/a Albany Market,

Respondent.

Docket No. T-18-3468
FDA No. FDA-2018-H-3455

Decision No. TB3984

Date: June 24, 2019

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an Administrative
Complaint on Respondent, Albany Market, LLC d/b/a Albany Market, at 1307 North
Albany Avenue, Tampa, Florida 33607, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Albany Market impermissibly sold covered tobacco products to a
minor, 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. The complaint also
alleges that Respondent previously sold cigarettes or smokeless tobacco and covered
tobacco products to minors and failed to verify, by means of photo identification
containing a date of birth, that one of the purchasers was 18 years of age or older. The
complaint further alleges that Respondent Albany Market previously admitted to at least
four violations of regulations found at 21 C.F.R. pt. 1140 and, therefore, CTP seeks a
$5,591 civil money penalty against Respondent Albany Market for at least five violations
within a 36-month period.
During the course of these administrative proceedings, Respondent failed to comply with
orders and procedures governing this proceeding and failed to defend its actions, 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 strike Respondent’s
Answer and issue this decision of default judgment, for the reasons discussed below.

I. Procedural History

On September 13, 2018, CTP served the complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. On October 15, 2018, Respondent
timely filed an Answer to CTP’s complaint. On October 19, 2018, I issued an
Acknowledgement and Pre-Hearing Order (APHO) that set deadlines for the parties’
filings and exchanges, including a schedule for discovery. I directed that a party
receiving a discovery request must provide the requested documents within 30 days of
the request. APHO § 12; see 21 C.F.R. § 17.23(a). I warned:

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 March 13, 2019, CTP filed its pre-hearing exchange and supporting documents. To
date, Respondent has not filed a pre-hearing exchange.

On April 10, 2019, I issued an Order Scheduling a Pre-Hearing Conference, noting:
“[CTP] has submitted its pre-hearing exchange and the time for Respondent to submit its
pre-hearing exchange has expired.” To resolve certain issues, I ordered both parties to
appear for a pre-hearing telephone conference on May 9, 2019, at 11:00 AM.
Respondent failed to appear for the pre-hearing telephone conference, as ordered.

On May 9, 2019, I issued an Order to Show Cause due to Respondent’s failure to comply
with my Order Scheduling a Pre-Hearing Conference. I informed both parties that
Respondent had until May 30, 2019 to show cause for its failure to comply with my
Order Scheduling a Pre-Hearing Conference. 21 C.F.R. § 17.35(a).

I stated:
I warn Respondent that failure to do so may result in

sanctions, including striking Respondent’s Answer and
issuing an Initial Decision and Default Judgment finding
Respondent liable for the violations listed in the Complaint and
imposing a civil money penalty.

May 9, 2019 Order to Show Cause. (emphasis in original).
Respondent failed to respond to my Order to Show Cause.
IL. Striking Respondent’s Answer

I may sanction a 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.

21 C.F. § 17.35(a).

Respondent failed to comply with the following orders and procedures governing this
proceeding:

e Respondent failed to comply with 21 C.F.R. § 17.23(a) and paragraph 4 of my
October 19, 2018 APHO, when it failed to file a pre-hearing exchange.

e Respondent failed to comply with my April 10, 2019 Order Scheduling a Pre-
Hearing Conference, when it failed to appear for the pre-hearing telephone
conference on May 9, 2019.

e Respondent failed to comply with my May 9, 2019 Order to Show Cause, when it
failed to show cause for its failure to comply with my Order Scheduling a Pre-
Hearing Conference.

I find that Respondent failed to comply with orders and procedures governing this
proceeding, failed to defend its case, and, as a result, interfered with the speedy, orderly,
and fair conduct of this proceeding. I conclude that Respondent’s conduct establishes a
basis for sanctions, pursuant to 21 C.F.R. § 17.35, and that sanctions are warranted.

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). Here, Respondent failed to
comply with three of my orders, despite my explicit and repeated warnings that its failure
could result in sanctions. I specified that those sanctions may include striking its Answer
and “issuing an Initial Decision and Default Judgment finding Respondent liable for the
violations listed in the Complaint and imposing a civil money penalty.” May 9, 2019
Order to Show Cause. Respondent also failed to defend its actions, despite my express
reminders of the opportunity. After timely filing its Answer on October 15, 2018,
Respondent has not taken any further action in this matter. Respondent’s repeated failure
to comply with orders and failure to defend this action interfered with the speedy,
orderly, or fair conduct of this proceeding. 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). Accordingly, I strike Respondent’s Answer.
21 C.F.R. § 17.35(c)(3).

Ill. Default Decision

Striking Respondent’s Answer leaves the complaint unanswered. Therefore, I am
required to issue an initial decision by default, provided that the complaint is sufficient to
justify a penalty. 21 C.F.R. § 17.11(a). Pursuant to 21 C.F.R. § 17.11(a), lam required
to “assume the facts alleged in the complaint 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:

¢ On March 6, 2018, CTP initiated a previous civil money penalty action, CRD
Docket Number T-18-1520, FDA Docket Number FDA-2018-H-0957,! against
Respondent for four violations of 21 C.F.R. pt. 1140 within a 36-month period.
CTP alleged those violations to have occurred at Respondent’s business
establishment located at 1307 North Albany Avenue, Tampa, Florida 33607, on
February 7, 2018,? November 18, 2017, and April 24, 2017;

e The previous action concluded when Respondent admitted the allegations
contained in the Complaint issued by CTP, and paid the agreed upon monetary
penalty in settlement of that claim. Further, “Respondent expressly waived its
right to contest such violations in subsequent actions”;

e At approximately 2:43 PM on June 17, 2018, at Respondent’s business
establishment located at 1307 North Albany Avenue, Tampa, Florida 33607, an
FDA-commissioned inspector documented Respondent’s staff selling a package of
two White Owl Sweets cigars to a person younger than 18 years of age.

1 See also FDA Docket Number FDA-2017-H-6683, CRD Docket Number T-18-534, for
an earlier civil money penalty action.

2 Two violations were documented on February 7, 2018.
These facts establish Respondent Albany Market’s liability 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. § 387f(d); see 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 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). Under 21 C.F.R. § 1140.14(a)(1) and 21 C.F.R.
§ 1140.14(b)(1), no retailer may sell cigarettes or smokeless tobacco and covered tobacco
products to any person younger than 18 years of age. Under 21 C.F.R.

§ 1140.14(a)(2)(i), retailers must verify, by means of photographic identification
containing a purchaser’s date of birth, that no cigarette or smokeless tobacco purchasers
are younger than 18 years of age.

Under 21 C.F.R. § 17.2, a $5,591 civil money penalty is permissible for at least five
violations of the regulations found at 21 C.F.R. pt. 1140 within a 36-month period.

Order

For these reasons, I enter default judgment in the amount of $5,591 against Respondent
Albany Market, LLC d/b/a Albany Market. Pursuant to 21 C.F.R. § 17.11(b), this order
becomes final and binding upon both parties after 30 days of the date of its issuance.

/s/
Mary M. Kunz
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2018-H-4385)

Complainant,
v.

Last Call Liquor and Cellular, LLC
d/b/a Last Call / Lackland Quick Shop,

Respondent.
Docket No. T-19-566
Decision No. TB3964

Date: June 13, 2019

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Last Call Liquor and Cellular, LLC d/b/a Last Call / Lackland
Quick Shop, located at 10649 Lackland Road, Saint Louis, Missouri 63114, and by filing
a copy of the complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The complaint alleges that Last Call / Lackland Quick Shop
impermissibly sold covered tobacco products to minors and failed to verify, by means of
photo identification containing a date of birth, that the 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, 21 C.F.R. pt. 1140. CTP seeks to impose a
$559 civil money penalty against Respondent Last Call / Lackland Quick Shop for three
violations within a 24-month period.

During the course of this administrative proceeding, Respondent has failed to comply
with two separate judicial orders and failed to prosecute its case. See 21 C.F.R.
§ 17.35(a). Accordingly, pursuant to 21 C.F.R. §§ 17.35(a)(1), (2), I strike Respondent’s
Answer and issue this decision of default judgment.

I. Procedural History

CTP began this matter by serving an administrative complaint, seeking a $559 civil
money penalty, on Respondent Last Call Liquor and Cellular, LLC d/b/a Last Call /
Lackland Quick Shop on November 20, 2018. Respondent filed an Answer to CTP’s
complaint on December 14, 2018. I issued an Acknowledgment and Prehearing Order
(APHO) on December 27, 2018, that set deadlines for parties’ submissions, including the
January 28, 2019 deadline to request that the opposing party provide copies of documents
relevant to this case. Additionally, the APHO stated that a party receiving such a request
must provide the requested documents no later than 30 days after the request. On January
28, 2019, CTP served Respondent with its Request for Production of Documents.

On March 6, 2019, CTP filed a Motion to Compel Discovery, indicating that Respondent
did not respond to its request for documents within the time limit. See 21 C.F.R.

§ 17.23(a). On the same date, CTP also filed a Motion to Extend Deadlines requesting
that its pre-hearing exchange deadline be extended for 30 days. In a March 7, 2019 letter
issued by my direction, Respondent was given until March 22, 2019, to file a response to
CTP’s Motion to Compel Discovery. Additionally, on March 7, 2019, I issued an Order
extending all pre-hearing exchange deadlines. Respondent did not file an objection to
CTP’s Motion to Compel Discovery.

On March 26, 2019, I granted CTP’s Motion to Compel Discovery and extended the pre-
hearing exchange deadlines. The Order Granting CTP’s Motion to Compel Discovery
allowed Respondent until April 10, 2019 to comply with CTP’s discovery request. CTP
subsequently filed a Status Report and Motion to Impose Sanctions, on April 17, 2019,
indicating that Respondent had not responded to its Request for Production of
Documents. On the same date, CTP also filed a Motion to Extend Deadlines, requesting
that any deadlines be extended by 30 days. In an April 17, 2019 letter issued by my
direction, Respondent was allowed until May 3, 2019 to respond to CTP’s Motion to
Impose Sanctions. Additionally, in the April 17, 2019 letter, I granted CTP’s Motion to
Extend Deadlines. To date, Respondent has not filed a response to CTP’s Motion to
Impose Sanctions.

Il. Striking Respondent’s Answer
Pursuant to 21 C.F.R. § 17.35(a), I may sanction a party for:

() 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.

Here, Respondent failed to:

¢ Comply with my December 27, 2018 Acknowledgment and Pre-Hearing Order
that set deadlines for parties’ submissions, including the January 28, 2019 deadline
to request that the opposing party provide copies of documents relevant to this
case;

¢ Comply with my March 26, 2019 Order Granting CTP’s Motion to Compel
Discovery; and

e Prosecute or defend its case.

I find that Respondent failed to comply with two judicial orders and failed to defend its
actions, which has interfered with the speedy, orderly, or fair conduct of this proceeding.
21 C.F.R. § 17.35(a). I conclude that Respondent’s conduct establishes a basis for
sanctions pursuant to 21 C.F.R. § 17.35 and that sanctions are warranted.

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). Here, Respondent failed to
comply with two orders, despite having been warned in both the APHO and the Order
Granting CTP’s Motion to Compel Discovery that failure to comply could result in
sanctions including issuance of an Initial Decision and Default Judgment.

Additionally, Respondent has not communicated with the Court since December 14,
2018. I note that Respondent did not take the opportunity to respond to two separate
letters issued by my direction on March 7, 2019, and April 17, 2019. I find that
Respondent’s failure to comply is sufficient to warrant striking its Answer and issuing a
decision by default, without further proceedings. 21 C.F.R. §§ 17.35(b), (c)(3).
Accordingly, I strike Respondent’s Answer, and issue this Initial Decision and Default
Judgment, assuming the facts alleged in CTP’s complaint to be true. 21 C.F.R.

§§ 17.35(c)(3), 17.11(a).

Ill. Default Decision

Striking Respondent’s Answer leaves the complaint unanswered. Therefore, I am
required to issue an Initial Decision by default if the complaint is sufficient to justify a
penalty. 21 C.F.R. § 17.11(a). Accordingly, I must determine whether the allegations in
the complaint establish violations of the Act.
For purposes of this decision, I assume the facts alleged in the complaint are true and
conclude the default judgment is merited based on the allegations of the Complaint and
the sanctions imposed on Respondent for failure to comply with the orders. 21 C.F.R.

§ 17.11. Specifically:

e At approximately 2:39 p.m. on November 21, 2017, at Respondent’s business
establishment, 10649 Lackland Road, Saint Louis, Missouri 63114, an
FDA-commissioned inspector documented Respondent’s staff selling a package of
two Swisher Sweets cigars to a person younger than 18 years of age. The
inspector also documented that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or

older;

e Ina warning letter dated December

14, 2017, CTP informed Respondent of the

inspector’s November 21, 2017 documented violations, and that such actions
violate federal law. The letter further warned that Respondent’s failure to correct
its violations could result in a civil money penalty or other regulatory action;

e At approximately 10:07 a.m. on August 26, 2018, at Respondent’s business
establishment, 10649 Lackland Road, Saint Louis, Missouri 63114, an
FDA-commissioned inspector documented Respondent’s staff selling a package of
two Swisher Sweets cigars to a person younger than 18 years of age. The

inspector also documented that sta

f failed to verify, by means of photographic

identification containing a date of birth, that the purchaser was 18 years of age or

older.

These facts establish Respondent Last Cal

1/ Lackland Quick Shop’s liability 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 d

istributed in violation of regulations issued

under section 906(d) of the Act. 21 U.S.C. § 387f(d); see 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. 114

0 under section 906(d) of the Act. 21 U.S.C.

§ 387a-1; see 21 U.S.C. § 387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010).

Under 21 C.F.R. § 1140.14(b)(1), no retai

ler may sell covered tobacco products to any

person younger than 18 years of age. Und

ler 21 C.F.R. § 1140.14(b)(2)(i), retailers must

verify, by means of photographic identification containing a purchaser’s date of birth,
that no covered tobacco product purchasers are younger than 18 years of age.

Order

For these reasons, | enter default judgment in the amount of $559 against Respondent
Last Call Liquor and Cellular, LLC d/b/a Last Call / Lackland Quick Shop. Pursuant to
21 C.F.R. § 17.11(b), this order becomes final and binding upon both parties after 30
days of the date of its issuance.

/s/
Mary M. Kunz
Administrative Law Judge