Title 26 LLC d/b/a Up In Smoke, DAB TB8104 (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, Title 26 LLC d/b/a Up In Smoke, at 3450B Bragg Boulevard, Fayetteville, North Carolina 28303, and by filing a copy of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management. CTP seeks to impose a $2,559 civil money penalty against Respondent Up In Smoke, for four 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 1140¹ , within a 24-month period.

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During the course of this administrative proceeding, Respondent failed to comply with multiple judicial orders and directives 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, 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. Accordingly, I 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 16, 2023, CTP served a Complaint and supporting documents on Respondent, Title 26 LLC d/b/a Up In Smoke by United Parcel Service. Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 1 (Complaint), 1a (Cover Letter), 1b (Proof of Service).

On October 27, 2023, Samantha Roy, Respondent’s representative, registered for the Departmental Appeals Board (DAB) E-Filing System and electronically filed a document captioned “Answer” on behalf of Respondent. CRD Dkt. Entry Nos. 3 (Answer), 3a (Answer). Because the answer form submitted was incomplete, missing specific pages, a letter issued at my direction was sent to Respondent on November 2, 2023. CRD Dkt. Entry No. 4 (By Direction Letter). The By Direction Letter advised Respondent that, pursuant to 21 C.F.R. § 17.9(b), the documents filed did not constitute an answer and it had until November 15, 2023, to file an Amended Answer or the matter will proceed to an Initial Decision and Default Judgment. Id.

On November 13, 2023, Respondent timely filed an Amended Answer to CTP’s Complaint by submitting the requested missing pages. CRD Dkt. Entry Nos. 5-10 (Amended Answer). In its Amended Answer, Respondent admitted to the allegations, asserted some defenses, and requested a reduction of the civil money penalty on the basis that this is its first violation, and that it resulted from an honest mistake. CRD Dkt. Entry Nos. 7-9.

On November 15, 2023, I issued an Acknowledgment and Pre-Hearing Order (APHO) that set deadlines for the parties’ filings and exchanges, including a schedule for discovery. CRD Dkt. Entry No. 11, ¶¶ 1-6. A deadline of December 27, 2023 was established for parties to request documents from the opposing party. The APHO

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explained that a party must provide the requested documents no later than 30 days after the request has been made. 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. 11 ¶ 21.

In addition, the APHO set filing deadlines for pre-hearing exchanges. CTP’s deadline to file its pre-hearing exchange and serve a copy on Respondent was February 9, 2024, and Respondent’s deadline to file its prehearing exchange and serve a copy on CTP was March 1, 2024. Id. ¶ 6.

On December 18, 2023, CTP filed a Notice of Appearance, and on December 20, 2023, a Status Report, and through the latter, advised that the parties have been unable to reach a settlement. CRD Dkt. Entry Nos. 12, 13.

On January 24, 2024, CTP filed a Motion to Compel Discovery, stating that Respondent had not responded to its discovery request as required by the APHO and the regulations. CRD Dkt. Entry No. 14 (Motion to Compel Discovery). As an attachment, CTP included its Request for Production of Documents, which shows that Respondent was served with the Request for Production of Documents as part of the discovery process on December 18, 2023. CRD Dkt. Entry Nos. 14a, 14b (CTP Exhibit A and Exhibit B). Also on January 24, 2024, CTP filed a Motion to Extend Deadlines requesting a 30-day extension of “any deadlines, including the February 9, 2024, due date for CTP’s pre-hearing exchange . . . .” CRD Dkt. Entry No. 15 at 2 (Motion to Extend Deadlines).

On January 24, 2024, I issued an Order advising Respondent that it had until February 9, 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. 16 at 2; see also CRD Dkt. Entry No. 11 ¶¶ 20-21; 21 C.F.R. § 17.32(c). In my Order, I also extended the pre-hearing exchange deadlines. CRD Dkt. Entry No. 16 at 2. Respondent failed to respond to CTP’s Motion to Compel Discovery or my January 24, 2024, Order, and did not 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 (Order Granting Motion to Compel Discovery) and ordered Respondent to produce documents responsive to CTP’s Request for Production of Documents by February 26, 2024. CRD Dkt. Entry No. 18. I also ordered Respondent to notify CTP

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in writing if it did not have documents responsive to CTP’s request. In that Order, I specifically warned Respondent:

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 and imposing a civil money penalty. 21 C.F.R. § 17.35.

Id. at 2. (original emphasis).

On February 27, 2024, CTP filed a Status Report and Motion to Impose Sanctions (Motion to Impose Sanctions). CTP advised that, as of the filing, Respondent had not complied with the APHO or my February 15, 2024, Order Granting CTP’s Motion to Compel Discovery. CRD Dkt. Entry No. 19. CTP argued that sanctions against Respondent for its repeated non-compliance were an appropriate remedy. Id. at 1-2. 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 the requested civil money penalty of $2,559. Id. at 2. On February 27, 2024, CTP contemporaneously filed a Motion to Extend Deadlines. CRD Dkt. Entry No. 20.

On February 29, 2024, I issued an Order giving Respondent until March 15, 2024, to file a response to CTP’s Motion to Impose Sanctions. CRD Dkt. Entry No. 21 at 2. The February 29, 2024, Order also extended the parties’ pre-hearing exchange deadlines. Id. CTP’s deadline was extended to April 10, 2024, and Respondent’s deadline was extended to May 1, 2024. Id. I warned Respondent that if it failed to file a response, “I may grant CTP’s motion in its entirety,” pursuant to 21 C.F.R. § 17.35. Id. at 2 (original emphasis).

Subsequently, on March 22, 2024, I issued an Order staying all deadlines, including the April 10, 2024, and May 1, 2024, prehearing exchange deadlines, pending resolution of CTP’s Motion to Impose Sanctions.² CRD Dkt. Entry No. 22.

To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or the February 29, 2024, Order.

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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:  

• 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 it 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 February 15, 2024, Order; and
• Respondent did not file a response to CTP’s Motion to Impose Sanctions, as permitted by the regulations and my February 29, 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 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 procedural rule (21 C.F.R. § 17.23(a)), and two of my orders, despite numerous explicit warnings that its failure to do so could result in sanctions. See CRD Dkt. Entry No. 18 at 2; see also

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CRD Dkt. Entry No. 11 ¶ 21. Respondent also failed to respond to any of CTP’s motions. CRD Dkt. Entry Nos. 14; 19.

Respondent’s repeated failures interfered with the speedy, orderly, or fair conduct of this proceeding. In fact, after initially admitting to the violations alleged in the Complaint and asserting some defenses, 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); 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, pursuant to the provisions of 21 C.F.R. § 17.11(a). Specifically, CTP alleges the following facts in its complaint:  

• On March 1, 2022, CTP initiated a previous civil money penalty action, CRD Docket Number T-22-65, FDA Docket Number FDA-2022-H-0238, against Respondent for two violations of the Act. CTP alleged those violations to have occurred at Respondent’s business establishment, 3450-B Bragg Boulevard, Fayetteville, North Carolina 28303, on November 5, 2021;
• The previous action concluded when an Initial Decision and Default Judgment was entered by an Administrative Law Judge, “finding that all of the violations alleged in the Complaint occurred”;
• At approximately 4:02 PM on July 26, 2023, at Respondent’s business establishment, 3450-B Bragg Boulevard, Fayetteville, North Carolina 28303, an FDA‑commissioned inspector conducted to verify, by means of photographic identification containing a date of birth, that the purchaser was 21 years of age or older.³

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These facts establish Respondent Up In Smoke’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 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 $2,559 civil money penalty is permissible under 21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $2,559 against Respondent, Title 26 LLC d/b/a Up In Smoke. 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  21 C.F.R. § 17.19(b)(17) grants a presiding officer authority to “waive, suspend, or modify any rule in this part if the presiding officer determines that no party will be prejudiced, the ends of justice will be served, and the action in in accordance with law; . . . .”

³  The identification violations alleged by CTP on November 5, 2021, 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.