DIY Vapor Supply LLC d/b/a DIY Vapor Supply, DAB TB8312 (2024)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative complaint on Respondent, DIY Vapor Supply LLC d/b/a DIY Vapor Supply, at 2571 Dixie Highway, Waterford, Michigan 48328, and by filing a copy of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management. The complaint alleges that Respondent is a manufacturer and retailer of new tobacco products that lack the premarketing authorization required under the Federal Food, Drug, and Cosmetic Act (Act). CTP seeks a $19,192 civil money penalty against Respondent DIY Vapor Supply for failure to obtain the required premarket authorization for Respondent’s new tobacco product, causing it to become adulterated and misbranded while it was held for sale after shipment of one or more of its components in interstate commerce, in violation of 21 U.S.C. § 331(k) of the Act.

During the course of this administrative proceeding, Respondent failed to comply with orders and procedures governing this proceeding and failed to defend its action, which interfered with the speedy, orderly, or fair conduct of this proceeding. 21 C.F.R. § 17.35(a). Accordingly, pursuant to 21 C.F.R.

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§ 17.35, I strike Respondent’s Answer and issue this decision of default judgment.

I. Procedural History

On August 10, 2023, CTP served the complaint on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. See Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 1, 1b. On September 8, 2023, Mr. Mark Dennis, an employee and authorized representative of Respondent at the time, registered for the Departmental Appeals Board (DAB) E-File system, and filed a timely “Request for extension of time to file an Answer.” CRD Dkt. Entry No. 3. On September 11, 2023, I granted Respondent’s Request for extension of time to file an Answer. CRD Dkt. Entry No. 4. On October 9, 2023, Mr. Dennis timely filed Respondent’s Answer to CTP’s complaint. CRD Dkt. Entry No. 5. In its Answer, while Respondent checked both the admit and deny boxes, in the narrative Respondent admitted all of the allegations alleged in the complaint, asserted a defense, and stated that the penalty amount was too high. Based on Respondent’s representations, on October 12, 2023, I issued an Acknowledgment and Status Report Order instructing the parties to file a joint status report by December 11, 2023. See CRD Dkt. Entry No. 6 at 1-2. On December 11, 2023, CTP filed a Joint Status Report, authorized by Respondent, indicating that:

The parties intend[ed] to engage in further settlement discussions. CTP [would] 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. 7 at 1.

After receiving no further indication that the parties had reached a settlement, on January 12, 2024, I issued a Pre-Hearing Order establishing requirements governing this proceeding, including deadlines for the parties to file their respective pre-hearing exchanges and requirements for appearing at the pre-hearing conference. In the January 12, 2024 Pre-Hearing Order, I warned that:

In accordance with 21 C.F.R. § 17.35, failure to appear at the pre-hearing conference or failure to otherwise comply with this Order may result in sanctions, including, but not limited to, dismissing the Complaint, striking the Answer, or issuing a decision against the opposing party.

CRD Dkt. Entry No. 8 ¶ 16 (emphasis in original).

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In the Pre-Hearing Order, I further 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.

CRD Dkt. Entry No. 8 ¶ 21.

On January 24, 2024, CTP received Respondent’s Request for Production of Documents (Respondent’s Request). See CRD Dkt. Entry No. 12 at 1. On February 5, 2024, CTP filed a Motion for a Protective Order concerning Respondent’s Request. CRD Dkt. Entry No. 10. On February 5, 2024, I issued an Order informing the parties that Respondent had 15 days from receipt of CTP’s memorandum in support of its Motion for a Protective Order to file a response specifying why CTP should produce the requested documents. See CRD Dkt. Entry No. 11 at 2. According to the Certificate of Service filed with CTP’s Memorandum in Support of Complainant’s Motion for a Protective Order (CTP’s Memo), CTP’s Memo was served on Respondent on February 23, 2024. See CRD Dkt. Entry No. 12 at 7. Therefore, Respondent’s response was due by March 11, 2024. 21 C.F.R. § 17.32(c).

Respondent did not file a response, nor challenge CTP’s Motion for a Protective Order. Therefore, on March 12, 2024, I granted CTP’s Motion for a Protective Order. CRD Dkt. Entry No. 13. The March 12, 2024 Protective Order also extended the parties’ deadlines for filing their respective pre-hearing exchanges to March 25, 2024 for CTP, and April 8, 2024 for Respondent. Id. at 4; see 21 C.F.R. § 17.25(a).

CTP timely filed its pre-hearing exchange including a pre-hearing brief and 14 proposed exhibits. See CRD Dkt. Entry Nos. 14-14o. Respondent did not file its pre-hearing exchange, as required. Respondent did not provide any explanation for its failure to file its pre-hearing exchange.

On April 29, 2024, I issued an Order Scheduling Pre-Hearing Conference, in which I ordered the parties to appear at a video pre-hearing conference on May 16, 2024, at 2:00 PM Eastern Time. CRD Dkt. Entry No. 17.

On May 6, 2024, in response to an email correspondence from Mr. Dennis, indicating that he was no longer employed by Respondent, the attorney advisor assigned to this case emailed Mr. Tim Hall, the owner of Respondent’s establishment, informing Mr. Hall of the scheduled video pre-hearing conference. See CRD Dkt. Entry No. 18. The attorney advisor also provided Mr. Hall with information for accessing the case in the DAB ACTS

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system, and offered to provide Mr. Hall with further assistance. Id. Mr. Hall did not respond to the attorney advisor’s email correspondence. However, soon after the attorney advisor’s email correspondence was sent to Mr. Hall, Mr. Hall requested and was granted full access to the case in DAB ACTS.

On May 16, 2024, I held the video pre-hearing conference as scheduled. Counsel for CTP appeared at the video pre-hearing conference. However, Respondent neither appeared at the video pre-hearing conference as ordered, nor did Respondent provide any response to the Order Scheduling Pre-Hearing Conference.

On May 20, 2024, I issued an Order allowing Respondent until May 28, 2024 to show cause for its failure to appear at the May 16, 2024 video pre-hearing conference and its failure to defend this case. In the May 20, 2024 Order, I also warned Respondent that failure to show cause for its failure to comply with my April 29, 2024 Order Scheduling Pre-Hearing Conference:

[M]ay 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.

CRD Dkt. Entry No. 19 at 1-2 (emphasis in original).

The May 20, 2024 Order to Show Cause was served on Respondent via U.S. Mail and DAB E-File. See id. at 2.

To date, Respondent has not filed its pre-hearing exchange as required by the January 12, 2024 Pre-Hearing Order, and Respondent did not appear at the May 16, 2024 video pre-hearing conference as ordered in my April 29, 2024 Order Scheduling Pre-Hearing Conference. In addition, Respondent has not responded to my May 20, 2024 Order to Show Cause.

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).

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Here, Respondent failed to:

• Comply with my January 12, 2024 Pre-Hearing Order when it failed to file its pre-hearing exchange by April 8, 2024; and
• Comply with my April 29, 2024 Order Scheduling Pre-Hearing Conference when it failed to appear at the May 16, 2024 video pre-hearing conference.

I find that Respondent failed to comply with orders and procedures governing this proceeding and failed to defend its action, which has interfered with the speedy, orderly, or fair conduct of this proceeding. 21 C.F.R. § 17.35(a). 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 reasonably relate to the nature and severity of the misconduct or failure to comply. 21 C.F.R. § 17.35(b). Here, Respondent repeatedly failed to comply with multiple orders, despite my warnings that its failure could result in sanctions. CRD Dkt. Entry No. 8 ¶ 21; CRD Dkt. Entry No. 19 at 1-2. I explicitly warned Respondent that those sanctions may include “issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty. . . . .” CRD Dkt. Entry No. 19 at 1-2 (emphasis in original); see also CRD Dkt. Entry No. 8 ¶ 21. Respondent also failed to defend its action, despite my order providing the opportunity. CRD Dkt. Entry No. 19. Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.

I find that Respondent’s misconduct is sufficient to warrant striking its Answer and issuing a decision by default, without further proceedings. 21 C.F.R. § 17.35(b), (c)(3), (d), (e); 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.”). Accordingly, I strike Respondent’s Answer, and issue this Initial Decision and Default Judgment. 21 C.F.R. §§ 17.35, 17.11(a).

II. 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:

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• Respondent manufactures tobacco products and holds them for sale at its establishment that does business under the name of DIY Vapor Supply and is located at 2571 Dixie Highway, Waterford, Michigan 48328.
• Respondent receives at least one component that it uses to manufacture its tobacco products from outside of Michigan.
• In a warning letter dated April 23, 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 June 10, 2023, at Respondent’s business establishment, an FDA commissioned inspector conducted an inspection. During this inspection, the inspector observed Respondent’s Black River Scarlet Ivy MXVG 6mg 30ml e-liquid product available for sale at Respondent’s establishment.
• Respondent’s e-liquid product is a “new tobacco product” because it was not commercially marketed in the United States as of February 15, 2007.
• Respondent did not submit a premarket tobacco product application (PMTA) for its new e-liquid product.
• Respondent failed to obtain the required premarket authorization for its new e-liquid product.
• Respondent’s new e-liquid product does 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 product. Respondent’s failure to obtain the required premarket authorization for its new tobacco product 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

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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 product. As a result, Respondent’s tobacco product is 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.

Order

For these reasons, I enter default judgment in the amount of $19,192 against Respondent, DIY Vapor Supply LLC d/b/a DIY Vapor Supply. 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.