E-Cig Vape Lounge LLP d/b/a E-Cig Vape Lounge, DAB TB7969 (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 the First Amended Administrative Complaint (amended complaint) on Respondent, E-Cig Vape Lounge LLP d/b/a E-Cig Vape Lounge,¹ at 9430 36th Avenue North, Minneapolis, Minnesota

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55427,² and by filing a copy of the amended complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  The amended complaint alleges that E-Cig Vape Lounge is a manufacturer and retailer of new tobacco products that lack the required premarketing authorization, thereby violating the Federal Food, Drug, and Cosmetic Act (Act).  CTP seeks a $19,192 civil money penalty against Respondent E-Cig Vape Lounge.

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.  Accordingly, pursuant to 21 C.F.R. § 17.35(c)(3), I strike Respondent’s Answer and issue this decision of default judgment.

I.    Procedural History

On October 23, 2023, CTP, via an email correspondence, forwarded to the Departmental Appeals Board (DAB), Civil Remedies Division, a copy of Respondent’s timely filed

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Answer, dated October 20, 2023, and a copy of the postmarked envelope in which Respondent’s Answer was enclosed.  See CRD Dkt. Entry Nos. 7-8.  Subsequently, on that same date, CRD staff uploaded Respondent’s Answer, and the email correspondence from CTP to the case record in DAB ACTS.  Id.  Respondent’s Answer was signed by Mr. Thomas Navarro, who purported to be an “Authorized Third Party Agent” for Respondent.  See CRD Dkt. Entry No. 7 at 1.  Respondent’s Answer also indicated that Mr. Navarro signed Respondent’s Answer care of “Lucio Carrera, Co-Owner (Respondent).”  Id.  However, Lucio Carrera did not sign the Answer.  See id.  The address listed on the Answer for Respondent is 9430 36th Avenue North, New Hope, Minnesota 55427, the same address listed on the amended complaint for Respondent’s establishment.  See CRD Dkt. Entry No. 7 at 1; see also CRD Dkt. Entry No. 4 ¶ 14.

On October 26, 2023, I issued an Acknowledgment and Pre-Hearing Order (APHO) in this case.³  CRD Dkt. Entry No. 9.  The APHO instructed the parties to either register for DAB E-File and request access to the case in the DAB E-File system by November 14, 2023, or file a written request (by mail) for a waiver of the requirement to file electronically.  See id ¶ 2.  The APHO also set deadlines for the parties’ filings and exchanges, including a schedule for discovery.  Id. ¶ 4, 6.  In the APHO, I directed that a party receiving a discovery request must provide the requested documents within 30 days of the request.  Id. ¶ 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 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. 9 ¶ 21. 

On November 21, 2023, CTP filed a Joint Status Report stating that “[t]he parties intend to engage in further settlement discussions.  CTP will notify the Departmental Appeals Board if the parties agree to a settlement and Respondent fulfills the terms of the settlement agreement.”  CRD Dkt. Entry No. 10 at 1.

On January 2, 2024, CTP filed Complainant’s Motion to Compel Discovery, asserting that Respondent had not responded to its discovery request as required by the APHO and

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the regulations.⁴  CRD Dkt. Entry No. 11 (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 16, 2024 due date for CTP’s pre-hearing exchange, . . . .”  CRD Dkt. Entry No. 12 at 2.  On January 4, 2024, I issued an Order advising Respondent that it had until January 18, 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. 13 at 1-2 (emphasis in original); see also CRD Dkt. Entry No. 9 ¶¶ 20-21; 21 C.F.R. § 17.32(c).  In my Order, I also extended the pre-hearing exchange deadlines.  CRD Dkt. Entry No. 13 at 2.  Respondent failed to respond to CTP’s Motion to Compel Discovery, my January 4, 2024 Order, or otherwise comply with CTP’s Request for Production of Documents. 

On January 25, 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 1, 2024.  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. 14 at 2 (emphasis in original). 

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

On February 5, 2024, I issued an Order disclosing to the parties that the Civil Remedies Division was informed that the Medicare Operations Division (MOD), within the Departmental Appeals Board, discovered that Respondent, or its purported representative, mistakenly filed Respondent’s Answer, and an attachment,⁵ in the DAB E-File system under MOD case M-24-90.  See CRD Dkt. Entry Nos. 18, 15.  The Order informed the parties that it was not clear to CRD how the erroneous filing occurred, but indicated that

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on February 1, 2024, Respondent’s erroneous filing was removed from the MOD case, and CRD staff subsequently uploaded Respondent’s Answer and the attachment to the correct case file in the DAB E-File system, T-23-3700.  Id. at 1. 

In light of Respondent’s erroneous filing and the new information in the administrative record, I provided CTP with an opportunity to review the documents, and indicate whether or not it intended to pursue this matter as originally charged in the amended complaint.  Id.  CTP was given until February 26, 2024 to review the filings and file a response.  Id. at 1-2.  Additionally, my February 5, 2024 Order instructed Mr. Thomas Navarro to file a Notice of Appearance if he intended to represent Respondent in this case.  Id. at 2.  Lastly, my February 5, 2024 Order advised Respondent that if it was still unable to successfully locate its case in the DAB E-File system, Respondent, or its authorized Representative, may contact the attorney advisor assisting me with this case for assistance.  Id.  The February 5, 2024 Order also provided the direct contact information for the attorney advisor assisting me with this case.  Id.  To date, neither Respondent, or anyone acting on its behalf, has contacted the Civil Remedies Division regarding this case. 

On February 6, 2024, CTP filed a timely Response to my February 5, 2024 Order, stating that CTP “has reviewed the filings and intends to pursue this matter as originally charged in the [a]mended [c]omplaint.”  CRD Dkt. Entry No. 21.  On that same date, CTP also forwarded, via email correspondence, a copy of the Medicare Appeals Council’s February 2, 2024 Order, explaining that the Council determined that according to the applicable regulation, the matter should have been filed with the Departmental Appeals Board, Civil Remedies Division, and not the Medicare Appeals Council.  See CRD Dkt. Entry Nos. 19-20. 

On February 7, 2024, I issued an Order vacating the stay imposed by my February 5, 2024 Order, and reinstated the proceedings of this matter.  See CRD Dkt. Entry No. 22 at 1.

On February 8, 2024, CTP filed its Motion to Impose Sanctions.  CRD Dkt. Entry No. 23.  CTP advised that Respondent had not complied with the APHO or my January 25, 2024 Order Granting Complainant’s Motion to Compel Discovery.  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 $19,192 civil money penalty.  Id. at 3.  On February 8, 2024, CTP also filed a Motion to Extend Deadlines.  CRD Dkt. Entry No. 24. 

On February 21, 2024, I issued an Order giving Respondent until March 6, 2024 to file a response to CTP’s Motion to Impose Sanctions.  CRD Dkt. Entry No. 25 at 2.  In my February 21, 2024 Order, I warned Respondent that, “if it fails to timely respond, I may

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grant CTP’s motion in its entirety.”  Id.  The February 21, 2024 Order also extended the parties’ pre-hearing exchange deadlines.  Id. 

On March 29, 2024, I issued an Order advising the parties that their respective pre-hearing exchange deadlines would hereby held in abeyance pending resolution of CTP’s Motion to Impose Sanctions.  See CRD Dkt. Entry No. 26 at 1.

To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or the February 21, 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 January 25, 2024 Order, when it failed to submit documents responsive to CTP’s Request for Production of Documents by February 1, 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 4, 2024 Order; and
• Respondent did not file a response to CTP’s Motion to Impose Sanctions, as permitted by the regulations and my February 21, 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.

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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. 14 at 2; CRD Dkt. Entry No. 9 ¶ 21.  Nor did Respondent respond to any of CTP’s motions.  CRD Dkt. Entry Nos. 13 at 1-2; 25 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 amended complaint unanswered.  Therefore, I am required to issue an initial decision by default, provided that the amended 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 amended complaint to be true.  Specifically:   

• Respondent manufactures tobacco products and holds them for sale at its establishment that does business under the name of E-Cig Vape Lounge and is located at 9430 36th Avenue North, New Hope, Minnesota 55427.
• Respondent receives at least one component that it uses to manufacture its tobacco products from outside of Minnesota.
• In a warning letter dated November 18, 2021, CTP informed Respondent 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;
• On July 15, 2023, at Respondent’s business establishment, 9430 36th Avenue North, New Hope, Minnesota 55427, an FDA‑commissioned inspector conducted

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an inspection.  During this inspection, the inspector observed Respondent’s e-liquid products, including its Vanilla Bean e-liquid product, available for sale at Respondent’s establishment.

• Respondent’s e-liquid products, including its Vanilla Bean e-liquid product, are “new tobacco products” because they were not commercially marketed in the United States as of February 15, 2007.
• Respondent did not submit a premarket tobacco product application for its new e-liquid products.
• Respondent failed to obtain the required premarket authorization for its new e-liquid products.
• Respondent’s new e-liquid products do not have a substantially equivalent order or a found exempt order from the Secretary.

The Act prohibits adulterating or misbranding a regulated tobacco product.  21 U.S.C. § 331(k).  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 did not submit a PMTA for its e-liquid products.  Respondent’s failure to obtain the required premarket authorization for its new tobacco products while such products are held for sale after shipment in interstate commerce results in such products being adulterated.  21 U.S.C. § 387b(6)(A).  A “new tobacco product” is exempt from this premarket authorization requirement only if the Secretary has issued a substantial equivalence report or a found exempt order for such product.  21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A).  Neither a substantial equivalence report nor an exempt order report has been submitted for Respondent’s new e-liquid products.  As a result, Respondent’s tobacco products are misbranded, under the provisions of 21 U.S.C. § 387c(a)(6); 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).  These facts establish Respondent’s liability under the Act.

A $19,192 money penalty is permissible under 21 C.F.R. § 17.2 and 21 U.S.C. § 333(f)(9)(A); see also 45 C.F.R. § 102.3.

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Order

For these reasons, I enter default judgment in the amount of $19,192 against Respondent, E-Cig Vape Lounge LLP d/b/a E-Cig Vape Lounge.  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  Respondent’s corporate name has been variously cited as ECig Vape Lounge LLP, E-Cig Vape Lounge LLC, and ECig Vape Lounge LLC.  See Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 7 at 1, 15 at 1, 2, 6.  There is no indication in this record that these names do not reflect the same corporate entity.  In fact, in a form completed by the “Authorized Third Party Agent” for Respondent, two different version of the corporate name are used.  CRD Dkt, Entry 15 at 2, 6.  As a result, the decision uses the version of the name used in the complaint filed by CTP.  CRD Dkt. Entry No. 1.

²  On September 29, 2023, CTP filed the initial Administrative Complaint (first complaint), Cover Letter, Proof of Service and Notice of Filing in this matter.  See CRD Dkt. Entry Nos. 1-1b.  Due to a discrepancy with regard to the state of Respondent’s address, as indicated on CTP’s first complaint, Cover Letter, Proof of Service and Notice of Filing, on October 5, 2023, I issued an Order to File Proof of Service.  Compare CRD Dkt. Entry Nos. 1, 1a, 1b, 2; CRD Dkt. Entry No. 3.  The Order to File Proof of Service instructed CTP to, “submit documentation demonstrating that it properly served the [first] [c]omplaint on the Respondent in accordance with 21 C.F.R. § 17.7, by October 19, 2023.”  In the alternative, I permitted CTP to either “withdraw the [first] [c]omplaint or file an Amended Complaint and evidence of valid service, consistent with 21 C.F.R.      §§ 17.5(c) and 17.7.”  The October 5, 2023 Order also stayed this proceeding pending resolution of the service of process issue.  CRD Dkt. Entry No. 3 at 1-2.  On October 12, 2023, CTP filed its Response to Order to File Proof of Service and Notice of Filing, the amended complaint, Cover Letter to the amended complaint, CTP Exhibit 1, the United Parcel Service (UPS) Next Day Air shipment label, CTP Exhibit 2, the UPS Delivery Notification, and CTP Exhibit 3, a copy of a print out from the United States Postal Service website indicating that New Hope, Minnesota is considered an alternative city name for Minneapolis, Minnesota.  See CRD Dkt. Entry Nos. 4-5c.  On October 17, 2023, I issued an Order finding that CTP had properly served the amended complaint on Respondent in accordance with 21 C.F.R. § 17.7, and lifted the stay imposed.  See CRD Dkt. Entry No. 6.

³  The APHO and all subsequent orders and notices were sent to both Respondent and Mr. Navarro by U.S. Mail at 9430 36th Avenue North New Hope, MN 55427.  While Mr. Navarro listed an address of 2017 Parrot Drive #1 San Mateo, CA 94402, he did not file a Notice of Entry of Appearance nor did he register for DAB E-file, as required by the APHO .  CRD Dkt. Entry No. 9 ¶¶ 1, 2.  As a result, mail was sent only to the address listed for Respondent’s retail establishment.

⁴  On November 27, 2023, UPS delivered CTP’s Request for Production of Documents to Respondent’s retail establishment, located at 9430 36th Avenue, Minneapolis, Minnesota, which was then signed by someone identified by UPS as “Carrera.”  CRD Dkt. Entry No. 11 at 1.

⁵  The attachment to the Answer included a form from the Department of Health and Human Services, Food and Drug Administration, entitled Registration and Listing for Owners and Operators of Domestic Deemed Tobacco Product Establishments.  In that form was a confirmation statement from the Authorized 3rd Party Agent, Mr. Navarro, dated October 10, 2023, that ECig Vape Lounge LLC was out of business.  CRD Dkt. Entry No. 15 at 6-7. This attachment was not included with the original answer received from CTP on October 23, 2020.