Rocking R Investments Inc. d/b/a RB’s Western Package, DAB TB7902 (2024)

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

On April 19, 2023, the Center for Tobacco Products (CTP) served an Administrative Complaint on Respondent, Rocking R Investments Inc. d/b/a RB’s Western Package, at 24 West School Street, Bonne Terre, Missouri 63628, and filed a copy of the Complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  CTP seeks to impose a $638 civil money penalty against Respondent for three 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. Part 1140,¹ within a 24-month period.

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Respondent filed an Answer to the Complaint in this matter.  However, during the course of this administrative proceeding, Respondent failed to comply with multiple judicial orders and directives and 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 April 19, 2023, CTP served an Administrative Complaint on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7.  CRD Docket (Dkt.) Entry No. 1b.  On May 19, 2023, Respondent timely filed an Answer to CTP’s Complaint.  CRD Dkt. Entry No. 3.  In its Answer, Respondent admitted the allegations and stated that the civil money penalty the Center for Tobacco Products (CTP) seeks is appropriate.  Id.

On May 23, 2023, an Acknowledgment and Status Report Order (ASRO) issued setting a deadline for the parties to submit a joint status report regarding the status of the case not later than July 24, 2023.  CRD Dkt. Entry No. 4.  On July 20, 2023, CTP filed the joint status report indicating that the parties had agreed to settle this matter.  CRD Dkt. Entry No. 6.  CTP also indicated that a Notice of Settlement Agreement would be filed after Respondent fulfills the terms of the agreement.  Id.

There were no further updates after the parties’ Joint Status Report.  Thus, I issued an Acknowledgment and Pre-Hearing Order (APHO) on August 17, 2023.  The APHO set deadlines for the parties’ filings and exchanges, including a schedule for discovery.  The APHO informed that a party receiving a discovery request must provide the requested documents within 30 days of the request.  CRD Dkt. Entry No. 7; APHO 4; see also 21 C.F.R. § 17.23(a).  The APHO warned:

I may impose sanctions including, but not limited to, dismissal of the complaint or answer, if a party fails to comply with any

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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 September 18, 2023, in compliance with the APHO 3, CTP timely filed a second joint status report.  CRD Dkt. Entry No. 8.  The status report indicated that the parties reached a settlement agreement; however, Respondent did not fulfill the terms of the settlement agreement.  Id.  CTP stated that it will file a Notice of Settlement Agreement once Respondent fulfills the terms of the agreement.  Id.

On October 20, 2023, CTP filed a Motion to Compel Discovery, asserting that Respondent had not responded to its discovery request, as required by the APHO and the regulations.  CRD Dkt. Entry No. 9.  On that same date, CTP also filed a Motion to Extend Deadlines requesting a 30-day extension of “any deadlines, including the November 7, 2023 due date for CTP’s pre-hearing exchange . . . .”  CRD Dkt. Entry No. 10 at 2.

On October 23, 2023, I issued an Order advising Respondent that it had until November 7, 2023, to file a response to CTP’s Motion to Compel Discovery.  CRD Dkt. Entry No. 11.  I also warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.”  Id. at 2 (emphasis in the original); see also APHO 20-21; 21 C.F.R. § 17.32(c).  In my Order, I also extended the pre‑hearing exchange deadlines.  Id.  Respondent failed to respond to either CTP’s Motion to Compel Discovery or my October 23, 2023 Order, or otherwise comply with CTP’s Request for Production of Documents.

On November 20, 2023, 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 November 30, 2023.  I warned:

. . . [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 C.F.R. § 17.35.

CRD Dkt. Entry No. 12 at 2 (emphasis in the original).

On December 1, 2023, CTP filed a Status Report and Motion to Impose Sanctions.  CRD Dkt. Entry No. 14.  CTP advised that Respondent had not complied with the APHO or my November 20, 2023 Order Granting CTP’s Motion to Compel.  Id. at 1-2.  CTP argued that sanctions against Respondent for its repeated non-compliance are an

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appropriate remedy.  Id.  Specifically, CTP asked 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 $638 civil money penalty.  Id. at 2.  On December 1, 2023, CTP also filed a Motion to Extend Deadlines.  CRD Dkt. Entry No. 15.

On December 5, 2023, I issued an Order giving Respondent until December 20, 2023, to file a response to CTP’s Motion to Impose Sanctions.  CRD Dkt. Entry No. 16.  The December 5, 2023 Order also extended the parties’ pre-hearing exchange deadlines and warned Respondent that if it:

  … fails to respond, I may grant CTP’s Motion to Impose Sanctions and impose the requested civil money penalty amount of $638, pursuant to 21 C.F.R. § 17.35.

Id.  at 2-3.

On December 21, 2023, I issued an Order to Stay Pre-Hearing Exchange deadlines pending further processing of this case.  CRD Dkt. Entry No. 17.  On February 26, 2024, I issued a By Direction Letter which provided both parties an opportunity to issue a status report regarding the status of settlement negotiations.  CRD Dkt. Entry No. 19.  Parties were given until March 7, 2024, to file a status report.  Id.  I warned that if there were no further developments with settlement negotiations, CTP’s Motion to Impose Sanctions and impose the requested civil money penalty may be granted.  Id.

On March 6, 2024, CTP filed a Status Report indicating that Respondent has still not fulfilled the terms of the settlement agreement and was unable to reach Respondent.  CRD Dkt. Entry No. 20.

To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or the December 5, 2023, 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;
(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.

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21 C.F.R. § 17.35(a).

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

• Respondent failed to comply with 21 C.F.R. § 17.23(a) and paragraph 4 of my APHO, when Respondent failed to respond to CTP’s Request for Production of Documents within 30 days; and
• Respondent failed to comply with my Order Granting Motion to Compel when it failed to produce documents responsive to CTP’s Request for Production of Documents by November 30, 2023.

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 October 23, 2023, Order; and
• Respondent did not file a response to CTP’s Motion to Impose Sanctions, as permitted by the regulations and my December 5, 2023, 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 regulatory requirements and two judicial orders, despite my explicit warnings that its failure to do so could result in sanctions.  See CRD Dkt. Entry No. 12 at 2 and CRD Dkt. Entry No. 16 at 2-3; see also APHO 21.  Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.  In fact, after initially admitting all of the violations alleged in the Complaint, Respondent has not participated in this action in any meaningful fashion since filing its Answer.  Accordingly, 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).  Pursuant to 21 C.F.R. § 17.11(a), I am 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.

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Accordingly, I must determine whether the allegations in the complaint establish violations of the Act.

Specifically, CTP alleges the following facts in its complaint:

• At approximately 11:56 AM on January 20, 2022, at Respondent’s business establishment, 24 West School Street, Bonne Terre, Missouri 63628, an FDA‑commissioned inspector conducted an inspection.  During this inspection, a person younger than 21 years of age was able to purchase a package of two Swisher Sweets Classic Grape cigars.
• In a warning letter dated February 24, 2022, CTP informed Respondent of the inspector’s January 20, 2022 documented violation, and that such an action violates federal law.  The letter further warned that Respondent’s failure to correct its violation could result in a civil money penalty or other regulatory action;
• At approximately 9:38 AM on January 12, 2023, at Respondent’s business establishment, 24 West School Street, Bonne Terre, Missouri 63628, an FDA‑comissioned inspector conducted a subsequent inspection.  During this inspection, a person younger than 21 years of age was able to purchase a package of two White Owl Vanilla cigars.  Additionally, Respondent’s staff failed to verify, by means of photographic identification containing a date of birth, that the purchaser was 21 years of age or older. ²

These facts establish Respondent RB’s Western Package’s liability under the Act.  The Act prohibits misbranding of a regulated tobacco product.  21 U.S.C. § 331(k).  A regulated 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 issued the regulations at 21 C.F.R. Part 1140 under section 906(d) of the Act.  21 U.S.C. § 387a-1; see 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); 21 U.S.C. § 387f (note) (directing the Secretary to change references to persons younger than 18 to younger than 21, and to change the age verification requirements from individuals under the age of 26 to under the age of 30, in 21 C.F.R. subpart B of part 1140).  Under section 906(d)(5) of the Act, no retailer may sell regulated tobacco products to any person younger than 21 years of age and retailers must verify, by means of photographic identification containing a

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purchaser’s date of birth, that no regulated tobacco product purchasers are younger than 21 years of age.

A $638 civil money penalty is permissible under 21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $638 against Respondent, Rocking R Investments Inc. d/b/a RB’s Western Package.  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.

Endnotes

¹ On December 20, 2019, the Act was amended by the Further Consolidated Appropriations Act, 2020,  (Pub. L. No. 116–94, § 603(a)-(b)), to raise the federal minimum age for sale of tobacco products to 21, and directed the Secretary of the U.S. Department of Health and Human Services (Secretary) to “update all references to persons younger than 18 years of age in subpart B of part 1140 of title 21, Code of Federal Regulations, and to update the relevant age verification requirements under such part 1140 to require age verification for individuals under the age of 30.”  21 U.S.C. § 387f (note).

² I note that the identification violation alleged by CTP on January 12, 2023, is governed by section 906(d) of the Act, which went into effect on December 20, 2019, although CTP cites 21 C.F.R. § 1140.14(b)(2)(i), which has not been updated to reflect the age change.  See Complaint 13.b; see also supra fn. 1.