Suhail Brothers, Inc. d/b/a Bath General Store and Market, DAB TB8186

ORDER IMPOSING SANCTIONS AND
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint) against Respondent, Suhail Brothers, Inc. d/b/a Bath General Store and Market, 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 that Respondent impermissibly received in interstate commerce, an electronic nicotine delivery system (ENDS) product lacking the required premarketing authorization and offering such product for sale, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq. CTP seeks a civil money penalty of $19,192.

Respondent filed a timely Answer to CTP’s Complaint. However, during the course of this administrative proceeding, Respondent failed to comply with orders and procedures governing this proceeding and failed to defend its actions, which interfered with the

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speedy, orderly, or fair conduct of this proceeding. 21 C.F.R. § 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 October 27, 2023, CTP served the Complaint on Respondent, located at 502 Carteret Street, Bath, North Carolina 27808, 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 (UPS Delivery Notification). On November 21, 2023, Respondent registered for the DAB E-File system and timely filed its Answer.¹ CRD Dkt. Entry No. 3.

On November 30, 2023, I issued an Acknowledgment and Pre-Hearing Order (APHO) acknowledging receipt of Respondent’s Answer and establishing procedural deadlines for this case. CRD Dkt. Entry No. 4. Among other things, the APHO ordered CTP to file its pre-hearing exchange by February 20, 2024, and Respondent to file its pre-hearing exchange by March 11, 2024. Id. ¶ 6a, 6b. Further, the APHO warned the parties 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 this hearing.” Id. ¶ 21, citing 21 C.F.R. § 17.35.

CTP timely filed its pre-hearing exchange, consisting of a pre-hearing brief, a list of proposed witnesses and exhibits, and nine proposed exhibits (CTP Exhibits (Exs.) 1-9), including the written direct testimony of two proposed witnesses, CTP Regulatory Counsel Loretta Chi (CTP Ex. 1), and Inspector John J. Simmons (CTP Ex. 2). Respondent did not file a pre-hearing exchange.

On March 13, 2024, I issued an Order Scheduling Pre-Hearing Conference (PHC). CRD Dkt. Entry No. 7 (PHC Order). I informed the parties that the PHC was scheduled for Wednesday, April 3, 2024 at 2:00 PM Eastern Time, and provided the procedures to attend the telephone conference. Id. On April 3, 2024, I held a pre-hearing conference as scheduled. Counsel for CTP appeared at the pre-hearing conference. However, Respondent’s representative failed to appear as ordered.

On April 5, 2024, I issued an Order to Show Cause for Failure to Appear (OSC), giving Respondent until April 22, 2024 to show cause for its failure to appear at the pre-hearing conference. CRD Dkt. Entry No. 8. I warned that failure to respond to the OSC “may result in sanctions, including the issuance of an Initial Decision and Default Judgment 

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finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.” Id. at 1. To date, Respondent has failed to respond to the OSC.

II. Striking Respondent’s Answer

I may sanction a party for:  

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 paragraph 6.b of my November 30, 2023 APHO when it failed to file its pre-hearing exchange by March 11, 2024;
• Respondent failed to comply with my March 13, 2024 Order Scheduling Pre-Hearing Conference, requiring the parties to appear at the pre-hearing conference; and
• Respondent failed to comply with my April 5, 2024 OSC requiring it to show cause for its failure to appear at the pre-hearing conference.

Respondent also failed to defend its action. 21 C.F.R. § 17.35(a)(2). Specifically:  

• Respondent failed to file a pre-hearing exchange as directed by my APHO;
• Respondent failed to appear at the pre-hearing conference; and
• Respondent failed to respond to my OSC.

This leads me to conclude that Respondent has abandoned its defense of this case.

In the absence of any explanation from Respondent, I find no basis to excuse Respondent’s repeated failure to comply with various orders in this administrative proceeding. Despite explicit warnings that failure to comply with my Orders could result in sanctions, Respondent did not comply with three Orders. See CRD Dkt. Entry Nos. 4 ¶ 21; 8 at 1. Accordingly, I find that Respondent failed to comply with orders and procedures governing this proceeding, failed to defend its case, and, as a result, engaged in a pattern of misconduct that interfered with the speedy, orderly, and fair conduct of the hearing.

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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). I find that Respondent’s actions are sufficiently egregious and 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). 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 Bath General Store and Market, located at 502 Carteret Street, Bath, North Carolina 27808. The establishment receives tobacco products, including an Elfbar Blue Cotton Candy electronic nicotine delivery system (ENDS) product (Respondent’s ENDS product), in interstate commerce and delivers or proffers delivery of these products for pay or otherwise. Complaint ¶¶ 13-14.
• In a Warning Letter dated May 25, 2023, CTP informed Respondent that the new tobacco products that Respondent sells and/or distributes are adulterated and misbranded because they lack the required FDA marketing authorization. The Warning Letter also stated that if Respondent failed to correct these violations, regulatory action by the FDA or a civil money penalty action could occur and that it is Respondent’s responsibility to comply with the law. Complaint¶¶ 20-21.
• On August 14, 2023, an FDA-commissioned inspector conducted an inspection of Respondent’s establishment. During this inspection, the inspector observed an Elfbar Blue Cotton Candy ENDS product for sale at Respondent’s establishment. Complaint¶ 15.  
• Respondent’s ENDS product is a “new tobacco product” because it was not commercially marketed in the United States as of February 15, 2007.Complaint ¶ 16.

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• Respondent’s ENDS product does not have a Marketing Granted Order (MGO) in effect. Complaint¶ 17.
• Neither a substantially equivalent (SE) report nor an abbreviated report has been submitted for Respondent’s ENDS product. Complaint ¶ 18.

These facts establish that Respondent is liable under the Act. The Act prohibits the receipt in interstate commerce of any tobacco product that is adulterated or misbranded and the delivery or proffered delivery of any tobacco product that is adulterated or misbranded for pay or otherwise. 21 U.S.C. § 331(c); see also 21 U.S.C. § 321(b). Premarket authorization from the FDA is required for all “new tobacco products.” 21 U.S.C. § 387j(a)(2)(A). 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). A “new tobacco product” is required to have premarket review with a Marketing Granted Order (MGO) unless it has a substantial equivalence or substantial equivalence exemption order (found-exempt order) in effect for such product. 21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A). A new tobacco product is adulterated if it has not obtained the required premarket authorization. 21 U.S.C. § 387b(6)(A). A new tobacco product for which a “notice or other information respecting it was not provided as required” under the substantial equivalence or substantial equivalence pathway is misbranded.  21 U.S.C. § 387c(a)(6).

Taking the above alleged facts as true, Respondent violated the prohibition against receiving and offering for sale a new tobacco product that was adulterated and misbranded. 21 U.S.C. § 331(c). On August 14, 2023, Respondent offered for sale an ENDS product that was adulterated because it lacked the required FDA marketing authorization and was not exempt from this requirement. 21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A). Under 21 U.S.C. § 387c(a)(6), Respondent’s ENDS product is also misbranded because it has no substantially equivalent determination as required by 21 U.S.C. § 387e(j). 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 U.S.C. § 333(f)(9)(A) and 21 C.F.R. § 17.2. Therefore, I find that a civil money penalty of $19,192 is warranted and so order one imposed.

Endnotes

¹ In its Answer, Respondent admitted to the allegation of having the ENDS product for sale.