A and D Convenience Store, Inc. d/b/a Krauszer’s Food and Liquors, DAB TB8388 (2024)

ORDER GRANTING CTP’S MOTION TO IMPOSE SANCTIONS AND INITIAL DECISION AND DEFAULT JUDGMENT

On December 19, 2023, the Center for Tobacco Products (CTP) served an Administrative Complaint on Respondent, A and D Convenience Store, Inc. d/b/a Krauszer’s Food and Liquors, at 200 North Broadway, South Amboy, New Jersey 08879, and filed a copy of the Complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management. CTP seeks to impose a $6,397 civil money penalty against Respondent for five 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 1140,¹ within a 36-month period.

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Respondent filed an Answer in this matter but has failed to comply with multiple judicial orders and directives and failed to defend its case, 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, strike Respondent’s Answer, and issue this decision of default, pursuant to the provisions of 21 C.F.R. § 17.35(c)(3).

I. Procedural History

On December 19, 2023, CTP served an Administrative 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 No. 1b. On January 18, 2024, Respondent’s counsel filed a Notice of Appearance and a timely Answer to CTP’s Initial Complaint. See CRD Dkt. Entry Nos. 3, 3a. In its Answer, Respondent denied the allegations, asserted some defenses, and stated that the civil money penalty was too high. See CRD Dkt. Entry No. 3a.

On January 22, 2024, I issued an Acknowledgment and Pre-Hearing Order (APHO). The APHO set deadlines for the parties’ filings and exchanges, including a schedule for discovery. The APHO required that a party receiving a discovery request must provide the requested documents within 30 days of the request. CRD Dkt. Entry No. 4; APHO ¶ 4; see also 21 C.F.R. § 17.23(a). The APHO 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.

APHO ¶ 21.

On February 22, 2024, in compliance with the APHO, CTP timely filed a status report. See CRD Dkt. Entry No. 6; APHO ¶ 3. The status report indicated that Respondent’s previous debt had been discharged, that the parties had been unable to reach a settlement, and that CTP attempted to contact Respondent to discuss the filing of the joint status report but CTP was unable to reach Respondent. Id.

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On March 29, 2024, CTP filed a Motion to Compel Discovery, asserting that Respondent had not responded to its discovery request as required by the APHO and the regulations. CRD Dkt. Entry No. 8 (Motion to Compel Discovery). On that same date, CTP also filed an Unopposed Motion to Extend Deadlines requesting a 30-day extension of “any deadlines, including the April 15, 2024 due date for CTP’s pre-hearing exchange . . . .” CRD Dkt. Entry No. 7 at 2 (Unopposed Motion to Extend Deadlines).

On April 2, 2024, I issued an Order informing Respondent that it had until April 15, 2024, to file a response to CTP’s Motion to Compel Discovery. CRD Dkt. Entry No. 9. I also warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.” Id. at 1; see also APHO ¶¶ 20-21; 21 C.F.R. § 17.32(c). In my Order, I also extended the pre‑hearing exchange deadlines. CRD Dkt. Entry No. 9 at 2. Respondent failed to respond to CTP’s Motion to Compel Discovery or my April 2, 2024 Order, or otherwise comply with CTP’s Request for Production of Documents.

On April 18, 2024, I issued an Order granting CTP’s Motion to Compel Discovery and ordered Respondent to produce responsive documents to CTP’s Request for Production of Documents by April 26, 2024. I warned:

Failure to [comply] 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.

CRD Dkt. Entry No. 10 at 1 (emphasis in the original).

On April 29, 2024, CTP filed a Motion to Stay Deadlines. CRD Dkt. Entry No. 11. CTP stated that it attempted to contact Respondent to discuss the case but was unable to reach Respondent, that it was contemporaneously filing a Motion to Impose Sanctions, and that it respectfully requested “any deadlines including the May 15, 2024, due date of CTP’s pre-hearing exchange, be stayed, pending resolution of CTP’s Motion to Impose Sanctions . . . and that if the Motion to Impose Sanctions is granted, a pre-hearing exchange will be moot.” Id.

On May 1, 2024, CTP filed a Status Report and Motion to Impose Sanctions. CRD Dkt. Entry No. 12. CTP advised that Respondent had not complied with the APHO or my April 18, 2024 Order Granting CTP’s Motion to Compel. 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 imposing a $6,397 civil money penalty. Id. at 2.

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On May 6, 2024, I issued an Order giving Respondent until May 16, 2024, to file a response to CTP’s Motion to Impose Sanctions. CRD Dkt. Entry No. 13. The May 16, 2024 Order also stayed the parties’ pre-hearing exchange deadlines. Id. at 2. To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or my May 6, 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 failed to comply with 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
• Respondent failed to comply with my Order Granting CTP’s Motion to Compel when it failed to produce documents responsive to CTP’s Request for Production of Documents by April 26, 2024.

I also find that 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 April 2, 2024, Order; and
• Respondent did not file a response to CTP’s Motion to Impose Sanctions, as permitted by the regulations and my May 6, 2024, Order .

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, 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.

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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). Here, Respondent failed to comply with regulatory requirements and two judicial orders, despite my explicit warnings that its failure to do so could result in sanctions. See CRD Dkt. Entry No. 10 at 1; see also APHO ¶ 21. Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding. In fact, after initially admitting all the violations alleged in the Complaint, 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).

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:

• On April 10, 2023, CTP initiated a previous civil money penalty action, CRD Docket Number T-23-1714, FDA Docket Number FDA-2023-H-1352, against Respondent for at least three violations² of the Act. CTP alleged those violations to have occurred at Respondent’s business establishment, 200 North Broadway, South Amboy, New Jersey 08879, on May 7, 2022 and January 6, 2023;
• The previous action concluded when Respondent admitted the allegations contained in the Complaint issued by CTP and paid the agreed upon monetary penalty in settlement of that claim. Further, “Respondent expressly waived its right to contest such violations in subsequent actions”;
• At approximately 9:46 AM on October 9, 2023, at Respondent’s business establishment, 200 North Broadway, South Amboy, New Jersey 08879, an FDA-commissioned inspector conducted a subsequent inspection. During the inspection, a person younger than 21 years of age was able to purchase a package of Marlboro cigarettes. Additionally, Respondent’s staff failed to verify, by means of

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photographic identification containing a date of birth, that the purchaser was 21 years of age or older;³

These facts establish Respondent Krauszer’s Food and Liquors’ 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 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); 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 $6,397 civil money penalty is permissible under 21 C.F.R. § 17.2.

ORDER

For these reasons, I enter default judgment in the amount of $6,397 against Respondent, A and D Convenience Store, Inc. d/b/a Krauszer’s Food and Liquors. 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 The complaint alleges two violations were committed on May 7, 2022, and two violations on January 6, 2023. In accordance with customary practice, CTP counted the violations at the initial inspection as a single violation, and all subsequent violations as separate individual violations. See Orton Motor, Inc. d/b/a Orton’s Bagley v. U.S. Dep’t of Health & Human Serv., 884 F.3d 1205 (D.C. Cir. 2018).

³ The identification violations alleged by CTP on May 7, 2022, January 6, 2023, and October 9, 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(a)(2)(i), which has not been updated to reflect the age change. See Complaint ¶¶ 13.b, 15.b.; see also supra fn.1.