Uptown on North LLC d/b/a Uptown on North, DAB TB8151 (2024)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint) against Respondent, Uptown on North LLC d/b/a Uptown on North, alleging facts and legal authority sufficient to justify imposing a civil money penalty of $19,192. CTP began this case by serving a Complaint on Respondent and filing a copy of the Complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management. The Complaint alleges Respondent impermissibly offered adulterated and misbranded tobacco products for sale, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, Cigarettes and Smokeless Tobacco, 21 C.F.R. pt. 1140. CTP seeks a civil money penalty of $19,192.

During the course of these administrative proceedings, Respondent failed to comply with orders and procedures governing this proceeding and failed to defend its actions, which interfered with the speedy, orderly, or fair conduct of this proceeding. 21 C.F.R.

Page 2

§ 17.35(a). 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 September 25, 2023, CTP served the Complaint on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. Respondent timely filed its Answer to CTP’s Complaint on October 12, 2023 where Respondent admitted the allegations.

On October 26, 2023, I issued an Acknowledgement and Status Report Order (ASRO) that set a deadline for the filing of a joint status report for December 22, 2023. I directed that if the parties wished to proceed to a hearing, I would issue a pre-hearing order establishing procedural deadlines.

On December 22, 2023, CTP filed a Status Report asserting that the parties were unable to reach a settlement and that CTP attempted to contact Respondent to discuss the filing of a Joint Status Report but CTP was unable to obtain consent.

On December 26, 2023, I issued a Pre-Hearing Order (PHO) that set requirements governing this proceeding, including deadlines for parties’ filing and exchanges. I warned that:

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.

PHO ¶ 21.

On January 26, 2024, CTP filed a Status Report asserting that the parties were again unable to reach a settlement and that CTP attempted to contact Respondent to discuss the filing of a Joint Status Report but CTP was unable to obtain consent.

On February 13, 2024, CTP filed a Motion to Compel Discovery asserting that Respondent had not responded to its discovery request as required in the PHO. On that same date, CTP also filed a Motion to Extend Deadlines requesting that the deadlines, be extended thirty (30) days. On February 13, 2024, I issued an Order to Compel Discovery where I informed Respondent that it had until February 23, 2024, to file a response to CTP’s Motion to Compel Discovery, and warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.” February 13, 2024 Order; see also

Page 3

21 C.F.R. § 17.32(c). Respondent did not respond.

On March 27, 2024, I issued an Order Granting CTP’s Motion to Compel Discovery in which I ordered Respondent to produce documents responsive to CTP’s discovery request by April 8, 2024. I warned Respondent that:

[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.

March 27, 2024 Order Granting Motion to Compel (emphasis in original).

On April 12, 2024, CTP filed a Motion to Impose Sanctions. CTP advised that Respondent did not produce responsive documents in compliance with my March 27, 2024 Order Granting Motion to Compel. In my April 18, 2024 Order, I informed Respondent that it had until April 28, 2024, to file a response to CTP’s Motion to Impose Sanctions and warned Respondent that if it failed to file a response, “I may grant CTP’s motion in its entirety.” Respondent did not respond.

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 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 PHO, when Respondent failed to respond to CTP’s Request for Production of Documents within 30 days; and
• Respondent failed to comply with my February 13, 2024 Order to Compel Discovery, when it failed to submit the documents responsive to CTP’s Request for Production of Documents by February 23, 2024.
• Respondent failed to defend its action despite my March 27, 2024 Order informing Respondent of such opportunity and warning of consequences.

Page 4

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, or 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 regulation governing this proceeding. Respondent failed to comply with two of my orders, despite my explicit warnings that its failure could result in sanctions. I specified that those sanctions “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.” Respondent also failed to defend its actions, despite my orders expressly reminding Respondent of the opportunity. Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.

I find that Respondent’s actions are sufficient to warrant striking its Answer and issuing a decision by default, without further proceedings. 21 C.F.R. § 17.35(b), (c)(3). Accordingly, I strike Respondent’s Answer, and issue this Initial Decision and Default Judgment, assuming the facts alleged in CTP’s Complaint to be true. 21 C.F.R. §§ 17.35(c)(3), 17.11(a).

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 [C]omplaint to be true” and, if those facts establish liability under the Act, issue a default judgment and impose a civil money penalty. Accordingly, I must determine whether the allegations in the Complaint establish violations of the Act.

Specifically, CTP alleges the following facts in its Complaint:  

• Respondent owns an establishment that does business under the name Uptown on North and is located at 4534 West North Avenue, Milwaukee, Wisconsin 53208. ¶ 14.
• Respondent’s establishment receives tobacco products in interstate commerce, including an Elfbar Watermelon Jolly Candy Ice ENDS product (hereinafter “Respondent’s ENDS product”), and delivers or proffers delivery of such tobacco product for pay or otherwise. ¶ 15.

Page 5

• In a warning letter dated June 13, 2023, CTP informed Respondent, among other things, that the new tobacco products that Respondent sells, and/or distributes were adulterated and misbranded because they lacked the required FDA marketing authorization order. ¶ 21.
• On August 30, 2023, at Respondent’s business establishment, 4534 West North Avenue, Milwaukee, Wisconsin 53208, an FDA-commissioned inspector conducted an inspection. During this inspection, the inspector observed Respondent’s Elfbar Watermelon Jolly Candy Ice ENDS product available for sale at Respondent’s establishment. ¶ 16.
• Respondent’s e-liquid product, including Elfbar Watermelon Jolly Candy Ice ENDS product, is a “new tobacco product” because it was not commercially marketed in the United States as of February 15, 2007. ¶ 17.
• Respondent’s ENDS product does not have an MGO 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). ¶ 18.
• Neither an 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). ¶ 19.
• Respondent received the adulterated and misbranded ENDS product in interstate commerce and delivered or proffered delivery thereof for pay or otherwise, in violation of 21 U.S.C. § 331(c). ¶ 20.

These facts establish that Respondent is liable under the Act. The Act prohibits adulterating or misbranding of a 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 obtain premarket authorization for its tobacco product application (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).

Page 6

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). Respondent’s e-liquid products do not have an order permitting marketing of a new tobacco product under 21 U.S.C. § 387j(c)(1)(A)(i). Neither a substantial equivalence (SE) report nor an abbreviated report has been submitted for Respondent’s e-liquid products making them misbranded under 21 U.S.C. § 387c(a)(6). 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.

Taking the above alleged facts as true, Respondent violated the prohibition against selling and/or distributing tobacco products on August 30, 2023 that were adulterated because they lacked the required FDA marketing authorization order and misbranded because they did not obtain a substantially equivalent order, or a found exempt order. 21 U.S.C. § 387b(6)(A), 21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A). Therefore, Respondent’s actions constitute violations of law that merit a civil money penalty.

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 so I order one imposed.