Abu Shehab LLC d/b/a Exxon / Tiger Mart, DAB TB7968 (2024)

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

The Center for Tobacco Products (CTP) began this matter by serving an administrative complaint on Respondent, Abu Shehab LLC d/b/a Exxon / Tiger Mart, at 4101 Concord Pike, Wilmington, Delaware 19803, and by filing a copy of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  The complaint alleges that Exxon / Tiger Mart impermissibly sold regulated tobacco products to underage purchasers and failed to verify, by means of photo identification containing a date of birth, that the purchasers were 21 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. 1140.¹  CTP seeks a $638 civil money penalty

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against Respondent Exxon / Tiger Mart for at least three² violations within a 24-month period.³

During the course of this administrative proceeding, Respondent failed to comply with orders and procedures governing this proceeding and failed to defend this action, which interfered with the speedy, orderly, or fair conduct of this proceeding.  21 C.F.R. § 17.35(a).  Currently, Complainant’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.  For the reasons stated below, CTP’s motion is granted.  Accordingly, I strike Respondent’s Answer and issue this decision of default judgment pursuant to 21 C.F.R. § 17.35(c)(3).

I.    Procedural History

On October 16, 2023, CTP served the complaint on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7.  Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 1 (Complaint), 1b (Proof of Service).  On October 27, 2023, Respondent registered for the Departmental Appeals Board (DAB) E-File system and filed a timely Answer to CTP’s complaint.  CRD Dkt. Entry No. 3 (Answer). 

On October 30, 2023, I issued an Acknowledgment and Pre-Hearing Order (APHO) acknowledging receipt of Respondent’s Answer.  CRD Dkt. Entry No. 4.  The APHO also established deadlines for the parties’ filings and exchanges, including a schedule for discovery.  In the APHO, I directed that a party receiving a discovery request must provide the requested documents within 30 days of the request.  Id. at 3, ¶ 4; see also 21 C.F.R. § 17.23(a).  I also 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.

CRD Dkt. Entry No. 4 at 10, ¶ 21. 

On November 29, 2023, CTP filed a Status Report indicating that the parties had been unable to reach a settlement in this case, and that CTP remained willing to engage in settlement discussions but, absent an executed settlement agreement, CTP intended to proceed to a hearing.  CRD Dkt. Entry No. 6 at 1. 

On January 4, 2024, 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. 7 (Motion to Compel Discovery).  On that same date, CTP also filed a Motion to Extend Deadlines requesting a 30-day extension of “any deadlines, including the January 19, 2024, due date for CTP’s pre-hearing exchange, . . . .”  CRD Dkt. Entry No. 8 at 2.  On January 11, 2024, I issued an Order advising Respondent that it had until January 26, 2024, to file a response to CTP’s Motion to Compel Discovery.  I also warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.”  CRD Dkt. Entry No. 9 at 1-2 (emphasis in original); see also CRD Dkt. Entry No. 4 ¶¶ 20-21; 21 C.F.R. § 17.32(c).  In my Order, I also extended the pre-hearing exchange deadlines.  CRD Dkt. Entry No. 9 at 2.  Respondent failed to respond to CTP’s Motion to Compel Discovery, my January 11, 2024 Order, or otherwise comply with CTP’s Request for Production of Documents. 

On February 15, 2024, I issued an Order Granting Complainant’s Motion to Compel Discovery and ordered Respondent to produce responsive documents to CTP’s Request for Production of Documents by February 26, 2024, or submit a written response to CTP if Respondent did not have any documents to produce by the same date.  I warned:

Failure to comply with this Order 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. 10 at 2 (emphasis in original). 

In the same Order, I also extended the parties’ pre-hearing exchange deadlines.  Id. at 3.

On February 27, 2024, CTP filed its Motion to Impose Sanctions.  CRD Dkt. Entry No. 11.  CTP argues that Respondent had not complied with the APHO, has not provided a response to CTP’s Request for Production of Documents, nor has Respondent complied with my February 15, 2024 Order Granting Complainant’s Motion to Compel Discovery.

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Id. at 1-2.  CTP argued that sanctions against Respondent for its repeated non-compliance are an appropriate remedy.  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 impose a $638 civil money penalty.  Id. at 2.  On February 27, 2024, CTP also filed a Motion to Extend Deadlines.  CRD Dkt. Entry No. 12. 

On March 1, 2024, I issued an Order giving Respondent until March 18, 2024, to file a response to CTP’s Motion to Impose Sanctions.  CRD Dkt. Entry No. 13 at 2.  In my March 1, 2024 Order, I warned Respondent that, “if it fails to timely respond, I may grant CTP’s motion in its entirety.”  Id. (emphasis in original).  The March 1, 2024 Order also extended the parties’ pre-hearing exchange deadlines.  Id. 

To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or the March 1, 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;
(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, Respondent has not complied with:

• 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 15, 2024 Order, when Respondent failed to submit documents responsive to CTP’s Request for Production of Documents by February 26, 2024.

Additionally, 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 11, 2024 Order; and

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• Respondent did not file a response to CTP’s Motion to Impose Sanctions, as permitted by the regulations and my March 1, 2024 Order.

Respondent’s failure to respond to CTP’s motions, to comply with my multiple orders, and to fulfill its discovery obligations suggests that it has abandoned its defense in this case.

In the absence of any explanation from Respondent, I find that Respondent failed to comply with orders and procedures governing this proceeding, failed to defend this action, 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 two of my orders, despite my explicit warnings that its failure could result in sanctions.  CRD Dkt. Entry No. 10 at 2; CRD Dkt. Entry No. 4 ¶ 21.  Nor did Respondent respond to any of CTP’s motions.  CRD Dkt. Entry Nos. 9 at 1-2; 13 at 2.  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); see also KKNJ, Inc. d/b/a Tobacco Hut 12, DAB No. 2678 at 8 (2016) (concluding that “the ALJ [Administrative Law Judge] did not abuse her discretion in sanctioning Respondent’s ongoing failure to comply with the ALJ’s directions by striking Respondent’s answer to the Complaint.”).   

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.

For the purposes of this decision, I assume the facts alleged in the complaint to be true.  Specifically:   

• At approximately 5:45 PM on February 23, 2023, at Respondent’s business establishment, 4101 Concord Pike, Wilmington, Delaware 19803, 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 five Backwoods Sweet Aromatic cigars.  Additionally, Respondent’s staff failed to

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verify, by means of photographic identification containing a date of birth, that the purchaser was 21 years of age or older;⁴

• In a warning letter dated March 23, 2023, CTP informed Respondent of the inspector’s February 23, 2023 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;
• At approximately 6:00 PM on July 26, 2023, at Respondent’s business establishment, 4101 Concord Pike, Wilmington, Delaware 19803, an FDA‑commissioned inspector conducted a subsequent inspection.  During this inspection, a person younger than 21 years of age was able to purchase a Backwoods Honey Bourbon cigar.  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.

These facts establish Respondent Exxon / Tiger Mart’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. Parts 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); see also 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 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.

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Order

For these reasons, I enter default judgment in the amount of $638 against Respondent, Abu Shehab LLC d/b/a Exxon / Tiger Mart.  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  The complaint alleges two violations on February 23, 2023, and two on July 26, 2023.  In accordance with customary practice, CTP counted the violations at the initial inspection as a single violation, and all subsequent violations as separate individual violations.  See 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).

³  CTP did not include violations that occurred outside the relevant timeframe for this complaint.

⁴  The identification violations alleged by CTP on February 23, 2023, and July 26, 2023, are governed by section 906(d) of the Act, which went into effect as of 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, 15.b; see also supra fn.1.