Amani LLC d/b/a 5 Star Grocery, DAB TB7840 (2024)

ORDER GRANTING COMPLAINANT’S MOTION TO IMPOSE SANCTIONS AND INITIAL DECISION AND DEFAULT JUDGMENT

On October 27, 2023, the Center for Tobacco Products (CTP) served a Complaint on Amani LLC d/b/a 5 Star Grocery (Respondent), at 5004 West Center Street, Milwaukee, Wisconsin 53210, and filed a copy of the Complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management. CTP seeks to impose a $19,192 civil money penalty against Respondent for impermissibly receiving in interstate commerce an electronic nicotine delivery system (ENDS) product lacking the required premarketing authorization and offering such product for sale, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq.

On November 27, 2023, Respondent, through its authorized representative, filed a timely Answer to CTP’s Complaint. However, over the past several months since filing its Answer, Respondent failed to comply with multiple judicial orders and directives, and

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failed to defend its case, which interfered with the speedy, orderly, or fair conduct of this proceeding. 21 C.F.R. § 17.35(a).

Currently, CTP’s Status Report and Motion to Impose Sanctions (Motion to Impose Sanctions) is pending before me. CTP’s Motion to Impose Sanctions requests that I strike Respondent’s Answer as a sanction for failing to respond to CTP’s discovery requests and issue a default judgment against Respondent. After carefully considering the entire record, I grant CTP’s Motion to Impose Sanctions, strike Respondent’s Answer, and issue this default decision, pursuant to the provisions of 21 C.F.R. § 17.35(c)(3).

I. Procedural History

On October 27, 2023, CTP served an Administrative Complaint on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. See Civil Remedies Division (CRD) Docket (Dkt.) Entry No. 1b. On November 27, 2023, Ibrahim Jaraba electronically filed two documents: a notice of authorized representation, and an undated and unsigned Answer. CRD Dkt. Entry Nos. 3-3a. In its Answer, Respondent denied the allegations, asserted defenses, and contested the civil money penalty. See CRD Dkt. Entry No. 3a.

On November 28, 2023, I issued an Acknowledgment and Pre-Hearing Order (APHO) in this case. CRD Dkt. Entry No. 4. The APHO 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. CRD Dkt. Entry 4 (APHO) ¶ 4; see also 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 ¶ 21.

On January 3, 2024, CTP filed a Joint Status Report indicating that the parties were unable to reach a settlement in this case, and, absent an executed settlement agreement, intended to proceed to a hearing. CRD Dkt. Entry No. 5.

On January 17, 2024, CTP filed a Motion to Compel Discovery, asserting that Respondent had not responded to CTP’s discovery request as required by the APHO and the regulations. CRD Dkt. Entry No. 6 at 2. On that same date, CTP also filed an Unopposed Motion to Extend Deadlines requesting a 30-day extension of “any deadlines,

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including the February 26, 2024 due date for CTP’s pre-hearing exchange . . . .” CRD Dkt. Entry No. 7 at 2. On January 17, 2024, I issued an Order advising Respondent that it had until January 31, 2024, to file a response to CTP’s Motion to Compel Discovery. CRD Dkt. Entry No. 8 at 2. I also warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.” Id.; see also APHO ¶¶ 20-21; 21 C.F.R. § 17.32(c). In my Order, I also extended the pre‑hearing exchange deadlines. CRD Dkt. Entry No. 8 at 2. Respondent failed to respond to CTP’s Motion to Compel Discovery, my January 17, 2024 Order, or otherwise comply with CTP’s Request for Production of Documents.

On February 2, 2024, I issued an Order granting CTP’s Motion to Compel Discovery and ordered Respondent to produce responsive documents to CTP’s Request for Production of Documents by February 9, 2024. I warned:

Failure to [comply] may result in sanctions, including the issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint....

CRD Dkt. Entry No. 9 at 1-2 (emphasis added).

On February 12, 2024, CTP filed a Status Report and Motion to Impose Sanctions. CRD Dkt. Entry No. 10. CTP advised that Respondent had not complied with the APHO or my February 2, 2024 Order Granting CTP’s Motion to Compel. Id. at 1-2. CTP argues that sanctions against Respondent for its repeated non-compliance are an appropriate remedy. Specifically, CTP asks that I strike Respondent’s Answer as a sanction and issue an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a $19,192 civil money penalty. Id. at 2. On February 12, 2024, CTP also filed a Motion to Extend Deadlines. CRD Dkt. Entry No. 11.

On February 12, 2024, I issued an Order giving Respondent until February 29, 2024, to file a response to CTP’s Motion to Impose Sanctions. CRD Dkt. Entry No. 12 at 2. The February 12, 2024 Order also extended the parties’ pre-hearing exchange deadlines. Id. at 2.

To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or the February 12, 2024 Order.

II. Striking Respondent’s Answer

I may sanction a party for:

(1) Failing to comply with an order, subpoena, rule, or procedure governing the proceeding;

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(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.R. § 17.35(a).

Respondent failed to comply with multiple judicial orders and directives. Specifically:

• the regulation at 21 C.F.R. § 17.23(a) and paragraph 4 of the APHO, when Respondent failed to respond to CTP’s Request for Production of Documents within 30 days; and
• my February 2, 2024 Order, when it failed to submit documents responsive to CTP’s Request for Production of Documents by February 9, 2024.

I also find that Respondent failed to defend this action. 21 C.F.R. § 17.35(a)(2). Specifically:

• Respondent did not file a response to CTP’s Motion to Compel Discovery, as permitted by the regulations and my January 17, 2024 Order; and
• Respondent did not file a response to CTP’s Motion to Impose Sanctions, as permitted by the regulations and my February 12, 2024 Order.

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 a regulatory requirement and judicial orders, despite my explicit warnings that its failure could result in sanctions. See, e.g., CRD Dkt. Entry No. 9 at 1-2; see also APHO 21. Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding. I find that Respondent’s actions are sufficiently egregious to warrant striking its Answer and issuing a decision by default, without further proceedings. 21 C.F.R. § 17.35(b), (c)(3).

III. 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). Accordingly, I must determine whether the allegations in the Complaint establish violations of the Act.

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For the purposes of this decision, I assume the facts alleged in the Complaint to be true, pursuant to the provisions of 21 C.F.R. § 17.11(a). Specifically:

• Respondent receives tobacco products in interstate commerce including an Elfbar Watermelon Cantaloupe Honeydew ENDS product (“Respondent’s ENDS product”) and delivers or proffers delivery of such tobacco product for pay or otherwise. Complaint 14.
• Respondent’s ENDS product is a “new tobacco product” because it was not commercially marketed in the United States as of February 15, 2007. Complaint ¶ 16.
• Respondent’s ENDS product does not have a Marketing Granted Order in effect under 21 U.S.C. § 387j(c)(1)(A)(i) and it is, therefore, adulterated under 21 U.S.C. § 387b(6)(A). Complaint 17.
• Neither a substantial equivalence (SE) report nor an abbreviated report has been submitted for Respondent’s ENDS product and it is, therefore, misbranded under 21 U.S.C.§ 387c(a)(6). Complaint 18.
• In a warning letter dated June 8, 2023, CTP informed Respondent that the new tobacco products that Respondent sells and/or distributes are adulterated and misbranded because the tobacco products lack the required FDA marketing authorization. Complaint 20.
• On August 24, 2023, an FDA-commissioned inspector conducted an inspection. During the inspection, the inspector observed an Elfbar Watermelon Cantaloupe Honeydew ENDS product for sale at Respondent’s establishment. Complaint 15.

These facts establish that Respondent is liable under the Act. The Act prohibits the receipt in interstate commerce of any tobacco product that is adulterated or misbranded and the delivery or proffered delivery thereof for pay or otherwise. 21 U.S.C. § 331(c). A tobacco product is adulterated if it has not obtained the required premarket authorization. 21 U.S.C. § 387b(6)(A). Under 21 U.S.C. § 387j(a)(2)(A), premarket authorization is required for a “new tobacco product.” A “new tobacco product” is defined as any tobacco product that was not commercially marketed in the United States as of February 15, 2007, or any modification of a tobacco product where the modified product was commercially marketed in the United States after February 15, 2007. 21 U.S.C. § 387j(a)(1). Respondent’s ENDS product was not commercially marketed in the United States as of February 15, 2007, and Respondent’s ENDS product did not have an order permitting marketing of a new tobacco product under

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21 U.S.C. § 387j(c)(1)(A)(i). Thus, Respondent’s ENDS product lacked the required premarketing authorization and is adulterated. 21 U.S.C. § 387b(6)(A).

A “new tobacco product” is exempt from this premarket authorization requirement only if there is a substantial equivalence or a found exempt order in effect for such product. 21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A). Neither an SE report nor an abbreviated report was submitted for Respondent’s ENDS product making it misbranded under 21 U.S.C. § 387c(a)(6). As a result, Respondent impermissibly offered for sale a misbranded ENDS product, under the provisions of 21 U.S.C. § 331(c). See also 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).

Taking the above alleged facts as true, on August 24, 2023, Respondent violated the prohibition against receiving and offering for sale a new tobacco product that was adulterated and misbranded because the ENDS product lacked the required FDA marketing authorization order, substantially equivalent order, or a found exempt order. 21 U.S.C. § 331(c); see also 21 U.S.C. § 387b(6)(A), 21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A).

CTP has requested a civil money penalty of $19,192, which is a permissible penalty under 21 C.F.R. § 17.2 and 21 U.S.C. § 333(f)(9)(A). See also 45 C.F.R. § 102.3. Therefore, I find that a civil money penalty of $19,192 is warranted and order one imposed.

Order

For these reasons, I enter default judgment in the amount of $19,192 against Respondent, Amani LLC d/b/a 5 Star Grocery. 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.