Big Chief Vapor Products LLC d/b/a Big Chief Vapor Products, DAB TB7736 (2024)

INITIAL DECISION AND DEFAULT JUDGMENT

Found:

1. Respondent violated 21 U.S.C. § 301 et seq., specifically 21 U.S.C. § 331(k), as charged in the Complaint.
2. Respondent committed at least one violation as set forth hereinabove.
3. Respondent is hereby assessed a civil penalty in the amount of $19,192. 

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Glossary:

I.     JURISDICTION

H        I have jurisdiction to hear this case pursuant to my appointment by the Secretary of Health and Human Services and my authority under the Administrative Procedure Act (5 U.S.C. §§ 554-556), 5 U.S.C.A. § 3106, 21 U.S.C. § 333(f)(5), 5 C.F.R. §§ 930.201 et seq. and 21 C.F.R. Part 17. ² 

II.     PROCEDURAL BACKGROUND

          The Center for Tobacco Products (CTP/Complainant) filed a Complaint on August 2, 2023, against Big Chief Vapor Products LLC d/b/a Big Chief Vapor Products (Respondent), located at 135 West Genie Street, Chalmette, Louisiana 70043, alleging

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that FDA documented Respondent manufacturing tobacco products and holding them for sale at its establishment. 

There is a presumption Respondent was served with process on August 2, 2023, by United Parcel Service.  Respondent timely filed an answer on September 6, 2023. 

On September 7, 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 October 6, 2023, which was delivered on October 9, 2023.  Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos 6a. (CTP Ex. A), 6b. (CTP. Ex. B).  Respondent had 10 days after receiving CTP’s Request for Production of Documents to file a motion for a protective order (or until October 19, 2023), or 30 days after CTP’s Request for Production of Documents was made (or until November 8, 2023), to provide responsive documents.  21 C.F.R. §§ 17.23(a), (d), 17.28; PHO ¶ 3.  On November 14, 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 December 7, 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 December 22, 2023.  I warned that Respondent’s failure to comply with the procedural rules may result in sanctions, including the issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.  December 7, 2023 Order. 

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III.     STRIKING RESPONDENT’S ANSWER

Pursuant to 21 C.F.R. § 17.35(a), I may sanction a person, including any party or counsel for:  

(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 September 7, 2023 Pre-Hearing Order and further failed to comply with my December 7, 2023 Order Granting Motion to Compel Discovery ordering Respondent to respond.  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). 

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IV.     BURDEN OF PROOF

CTP as the petitioning party has the burden of proof.  21 C.F.R. § 17.33. 

V.     LAW

21 U.S.C. § 301 et seq., specifically 21 U.S.C. § 331(k), 21 U.S.C. § 387b(6)(A), 21 U.S.C. § 387c(a)(6), and 21 U.S.C. § 387j(a)(2)(A).  

VI.     ISSUE

Did Respondent violate 21 U.S.C. § 301 et seq., specifically 21 U.S.C. § 331(k), as alleged in the Complaint?

VII.     DEFAULT

I 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 Notice of Filing filed by CTP on August 3, 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).

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VIII.     ALLEGATIONS

A. Agency’s recitation of facts

CTP alleged that Respondent owns an establishment, doing business under the name Big Chief Vapor Products, located at 135 West Genie Street, Chalmette, Louisiana 70043.  Respondent’s establishment received at least one component that it uses to manufacture its tobacco products from outside of Louisiana. 

CTP’s Complaint alleged that on May 20, 2021, CTP issued a Warning Letter to Respondent, alleging that: 

The new tobacco products that Respondent manufactures, sells, and/or distributes were adulterated and misbranded because they lacked the required FDA marketing authorization order.  

During an inspection of Big Chief Vapor Products conducted on December 10, 2022, an FDA-commissioned inspector observed components used to make e-liquid products that Respondent sells at its establishment. 

Respondent did not submit a premarket tobacco product authorization (PMTA) to FDA for its e-liquid products. 

Respondent’s e-liquid products are “new tobacco products” because they were not commercially marketed in the United States as of February 15, 2007. 

Respondent failed to obtain the required premarket authorization for its new e-liquid products.  

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Respondent’s new e-liquid products do not have a substantial equivalent order or a found exempt order from the Secretary, and they are therefore, misbranded under 21 U.S.C. § 387c(a)(6). 

Respondent’s e-liquid products do not have an order permitting marketing of the new tobacco product (MGO) under 21 U.S.C. § 387j(c)(1)(A)(i), and are therefore adulterated under 21 U.S.C. § 387b(6)(A). 

Respondent’s failure to obtain the required premarket authorization for its new tobacco products causes them to become adulterated and misbranded while they are held for sale after shipment of one or more of their components in interstate commerce, in violation of 21 U.S.C. § 331(k). 

B. Respondent’s recitation of facts

I 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 violated 21 U.S.C. § 301 et seq., specifically 21 U.S.C. § 331(k), 21 U.S.C. § 387b(6)(A), 21 U.S.C. § 387c(a)(6), and 21 U.S.C. § 387j(a)(2)(A), as set forth in the Complaint. 

Therefore, under FDA’s current policy, the violation described in the Complaint, for manufacturing, selling, and/or distributing new tobacco products that were adulterated and misbranded because they lacked the required FDA marketing authorization order,  support the computing of the civil money penalty in the instant case.

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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. § 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

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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. 

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. 

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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 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 301‑7 (2d ed.1997); see also 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 

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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 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. § 301 et seq., specifically 21 U.S.C. § 331(k), on December 10, 2022, for purposes of computing the civil money penalty.

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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. 

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. 

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XV.     CONCLUSION

Respondent manufactured tobacco products and held them for sale at its establishment and so, Respondent is liable for a civil money penalty of $19,192.  See 21 C.F.R. § 17.2. 

WHEREFORE, evidence having read and considered it be and is hereby

ORDERED as follows:

1. I find Respondent has been served with process herein and is subject to this forum.
2. I find Respondent failed to respond to my Order Granting CTP’s Motion to Compel Discovery.
3. 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.
4. I find Respondent’s misconduct warrants striking its answer as a sanction.  
5. I find striking Respondent’s answer leaves the Complaint unanswered.  
6. I find Respondent is in default.
7. I assume the facts alleged in the Complaint to be true.  
8. I find the facts set forth in the Complaint establish liability under the relevant statute.
9. I assess a monetary penalty in the amount of $19,192.

Endnotes

¹  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  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).