Carl Nulsen d/b/a La Pemex, DAB TB8396

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 (Complaint) on Respondent, Carl Nulsen, d/b/a La Pemex, at 1100 North Meridian Avenue, Oklahoma City, Oklahoma 73107, and by filing a copy of the Complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management. The Complaint alleges that La Pemex 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.

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 speedy, orderly, or fair conduct of this proceeding. 21 C.F.R. § 17.35(a). Accordingly, pursuant to 21 

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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

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on November 24, 2023, CTP served the Complaint on Respondent by United Parcel Service. On December 26, 2023, a person by the name of Jesús Gabela sent an email to CTP requesting an extension of time to file an answer. Civil Remedies Division (CRD) Docket (Dkt.) Entry No. 4. On January 5, 2024, CTP forwarded the email to the Departmental Appeals Board. CRD Dkt. Entry No. 3. On January 8, 2024, an order was issued granting Respondent’s request for an extension of time to file an answer. CRD Dkt. Entry No. 5. Respondent was given until January 25, 2024, to file an answer. Id.

On January 24, 2024, Respondent filed a timely Answer to CTP’s Complaint and admitted to all of the allegations, but believed the penalty was too high. CRD Dkt. Entry Nos. 6, 7. On February 5, 2024, I issued an Acknowledgement and Pre-Hearing Order (APHO) that set deadlines for the parties’ filings and exchanges, including a schedule for discovery. CRD Dkt. Entry No. 8. I directed that a party receiving a discovery request must provide the requested documents within 30 days of the request. APHO ¶ 4; see also 21 C.F.R. § 17.23(a). The APHO warned:  

APHO ¶ 21.

On March 4, 2024, in compliance with the APHO ¶ 3, CTP timely filed its status report. CRD Dkt. Entry No. 9. The status report indicated the parties were unable to reach a settlement and that CTP was unable to reach Respondent to file a Joint Status Report. Id.

On April 3, 2024, CTP filed a Motion to Compel Discovery, asserting that Respondent did not respond to its discovery request as required by my APHO and regulations. CRD Dkt. Entry No. 10. On the same date, CTP also filed a Motion to Extend Deadlines requesting a 30-day extension of “any deadlines, including the April 22, 2024 due date for CTP’s pre-hearing exchange . . . .” CRD Dkt. Entry No. 11 at 2.

On April 11, 2024, I issued an Order advising Respondent that it had until April 30, 2024, to file a response to CTP’s Motion to Compel Discovery. CRD Dkt. Entry No. 12. I also warned that if Respondent failed to respond, “I may grant CTP’s motion in its 

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entirety.” Id. at 2 (emphasis in the original); see also APHO ¶¶ 20-21; 21 C.F.R. § 17.32(c). In my Order, I also extended the pre-hearing exchange deadlines. Id. Respondent failed to respond to either CTP’s Motion to Compel Discovery or my April 11, 2024 Order, or otherwise comply with CTP’s Request for Production of Documents. 
On May 6, 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 May 23, 2024. I warned Respondent that:  

CRD Dkt. Entry No. 13 at 1-2 (emphasis in original).

On June 13, 2024, CTP filed a Status Report and Motion to Impose Sanctions. CRD Dkt. Entry No. 14. CTP advised that Respondent had not complied with the APHO or my May 6, 2024, Order Granting CTP’s Motion to Compel Discovery. Id. at 1-2. CTP argued that sanctions against Respondent for its repeated non-compliance are an appropriate remedy. Id. at 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 a $ 19,192 civil money penalty. Id. On June 13, 2024, CTP also filed a Motion to Stay Deadlines. CRD Dkt. Entry No. 15.

On June 20, 2024, I issued an Order staying the pre-hearing exchange deadlines and giving Respondent until July 8, 2024, to file a response to CTP’s Motion to Impose Sanctions. CRD Dkt. Entry No. 16. The June 20, 2024 Order also warned Respondent that if it “fails to file a response, I may grant CTP’s Motion to Impose Sanctions in its entirety.” Id. at 2-3 (emphasis in original)

II. Striking Respondent’s Answer

I may sanction a party for:  

21 C.F.R. § 17.35(a).

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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 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 Motion to Compel when it failed to produce documents responsive to CTP’s Request for Production of Documents by May 23, 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 11, 2024, Order; and
• Respondent did not file a response to CTP’s Motion to Impose Sanctions, as permitted by the regulations and my June 20, 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, 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 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. 13 at 2 and CRD Dkt. Entry No. 16 at 2-3; 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 of 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, pursuant to
21 C.F.R. § 17.11(a), I am required to “assume the facts alleged in the Complaint 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.

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Specifically, CTP alleges the following facts in its Complaint:  

• Respondent owns La Pemex, located at 1100 North Meridian Avenue, Oklahoma City, Oklahoma 73107. The establishment receives tobacco products, including an Elfbar Mandarin Lime ENDS product (Respondent’s ENDS product), in interstate commerce and delivers or proffers delivery of these products for pay or otherwise;
• In a Warning Letter dated June 13, 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;
• On August 15, 2023, an FDA-commissioned inspector conducted an inspection of Respondent’s establishment. During this inspection, the inspector observed an Elfbar Mandarin Lime ENDS product for sale at Respondent’s establishment;
• Respondent’s ENDS product is a “new tobacco product” because it was not commercially marketed in the United States as of February 15, 2007;
• Respondent’s ENDS product does not have a Marketing Granted Order (MGO) in effect;
• Neither a substantially equivalent (SE) report nor an abbreviated report has been submitted for Respondent’s ENDS product. 

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).

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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 15, 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.

ORDER

For these reasons, I enter default judgment in the amount of $19,192 against Respondent Carl Nulsen d/b/a La Pemex. 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.