LBR LLC d/b/a Party Shop, DAB TB8434 (2024)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an Administrative Complaint (Complaint) on Respondent, LBR LLC d/b/a Party Shop, at 7381 Highway 84, Mansfield, Louisiana 71052, and by filing a copy of the Complaint with the Civil Remedies Division of the Departmental Appeals Board (DAB). The Complaint seeks a $6,892 civil money penalty from Respondent for violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140,¹ at least five times within a 36-month period.

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The Complaint alleges CTP previously initiated a civil money penalty action against Respondent. The prior action concluded after an Initial Decision and Default Judgment was entered against Respondent for at least three violations of the Act. Specifically, Respondent was found to have sold regulated tobacco products to underage purchasers and failed to verify, by means of photo identification containing a date of birth, that the purchasers were 21 years of age or older. The Complaint further alleges that Respondent subsequently committed two additional violations of the Act. Specifically, Respondent sold regulated tobacco products to a person under 21 years of age and failed to verify, by means of photo identification containing a date of birth, that the purchaser was 21 years of age or older, thereby violating the Act. Therefore, CTP seeks a $6,892 civil money penalty against Respondent for a total of five violations within a 36-month period.²

Respondent timely requested a hearing by filing an Answer, which denied CTP’s allegations in the Complaint. However, during the course of this administrative proceeding, Respondent failed to comply with orders and procedures governing this proceeding and failed to defend this action, 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 comply with CTP’s discovery requests and issue a default judgment against Respondent imposing a civil money penalty in the amount of $6,892 against Respondent. Having considered the entire record, I grant CTP’s Motion to Impose Sanctions. Accordingly, I strike Respondent’s Answer, and issue this default decision pursuant to the provisions of 21 C.F.R. § 17.35(c)(3)

I.     Background and Procedural History

On March 12, 2024, CTP served the Complaint on Respondent, located at 7381 Highway 84, Mansfield, Louisiana 71052, by United Parcel Service, as required by 21 C.F.R. §§ 17.5 and 17.7. Civil Remedies Division (CRD) Docket (Dkt.) Entry No. 1 (Complaint), 1b (Proof of Service). On March 28, 2024, Respondent timely filed its Answer. CRD Dkt. Entry No. 3. In its Answer, Respondent denied the Complaint allegations, and asserted that the store complies with Federal and State laws, the employees are required to take government approved trainings, and that no employee was identified by the inspector at the time of the sale of tobacco products to an underage purchaser. Id.

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On March 29, 2024, 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. The APHO set a deadline of May 6, 2024, for the parties to request documents from the opposing party and explained that a party must provide the requested documents no later than 30 days after the request has been made, pursuant to 21 C.F.R. § 17.23(a). CRD Dkt. Entry No. 4. at ¶ 4. The APHO also stated that a party may file a motion for a protective order within 10 days of receiving a request for the production of document. Id; see also 21 C.F.R. §§ 17.23(d), 17.28. The APHO warned the parties that failure to comply with any order including the APHO may result in sanctions. CRD Dkt. Entry No. 4 at ¶ 21; see also 21 C.F.R. § 17.35. Specifically, the APHO stated:  

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.  

On May 21, 2024, CTP filed a Motion to Compel Discovery stating that CTP’s Request for Production of Documents (RFP) was sent to Respondent on April 16, 2024, and delivered to Respondent’s establishment on April 17, 2024. CRD Dkt. Entry No. 9. CTP further stated that it had not received a response from Respondent regarding its RFP. Id. CTP requested that I issue an order compelling Respondent to respond to the RFP. Id. On May 21, 2024, CTP also filed an Unopposed Motion to Extend Deadlines. CRD Dkt. Entry No. 10.

On May 22, 2024, I issued a Revised Order setting a June 5, 2024 deadline for Respondent to file a response to CTP’s Motion to Compel Discovery, and extending the pre-hearing exchange deadlines by 30 days. CRD Dkt. Entry No. 12; see also21 C.F.R. § 17.32(c). I warned Respondent that I may grant CTP’s Motion to Compel Discovery if Respondent failed to respond. CRD Dkt. Entry No. 12. Respondent did not file a response to CTP’s Motion to Compel Discovery or otherwise respond to the May 22, 2024 Order. Moreover, Respondent failed to file a motion for protective order within 10 days of receiving the RFP. Therefore, on June 6, 2024, I granted CTP’s Motion to Compel Discovery and ordered Respondent to comply with CTP’s RFP by June 21,
2024. CRD Dkt. Entry No. 13. I also warned Respondent that its failure to comply may result in sanctions, including the issuance of a default judgment finding Respondent liable for the violations alleged in the Complaint and imposing a civil money penalty. Id.

On June 25, 2024, CTP filed a Motion to Impose Sanctions stating that Respondent had not produced any documents as ordered. CRD Dkt. Entry No. 14. CTP requested I strike

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Respondent’s Answer and issue an initial decision and default judgment imposing a civil money penalty in the amount of $6,892 against Respondent. Id. On that same date, CTP also filed a Motion to Stay Deadlines. CRD Dkt. Entry No. 15. On June 26, 2024, I issued an Order establishing a deadline of July 17, 2024, for Respondent to file a response to CTP’s Motion to Impose Sanctions, and staying all pre-hearing deadlines in this case, pending resolution of the Motion to Impose Sanctions. CRD Dkt. Entry No. 16. I also warned Respondent that if it failed to respond to the Motion to Impose Sanctions, I may grant the motion in its entirety and impose the requested civil money penalty. Id.

Respondent did not respond to the Motion to Impose Sanctions by the July 17, 2024, deadline established by my June 26, 2024 Order. CTP’s Motion to Impose Sanctions is now ripe for a ruling.

II.     Sanctions

The regulations authorize me to impose sanctions on any 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).

When a party “fails to comply with a discovery order,” I may draw an inference in favor of the opposing party, may prohibit the non-complying party from introducing or relying on evidence related to the discovery request, and may “[s]trike any part of the pleadings or other submissions of the party failing to comply with [the discovery] request.” 21 C.F.R. § 17.35(c). Any sanction “shall reasonably relate to the severity and nature of the failure or misconduct.” 21 C.F.R. § 17.35(b).

During the course of this administrative proceeding, Respondent repeatedly failed to comply with orders and procedures governing this proceeding. Specifically, Respondent failed to comply with the discovery requirements of the applicable regulations and the APHO, both of which require the parties to produce documents within 30 days of a discovery request or to seek a protective order. 21 C.F.R. § 17.23(a); CRD Dkt. Entry No. 4 at ¶ 4. Respondent has not provided the requested documents or requested a protective order. As a result, CTP was forced to file a Motion to Compel Discovery, and after Respondent failed to respond to the Motion to Compel Discovery and my May 22, 2024 Order, I issued an Order Granting Complainant’s Motion to Compel Discovery on June 6, 2024. CRD Dkt. Entry Nos. 9, 12-13. Moreover, Respondent failed to comply with the June 6, 2024 Order, which required Respondent to produce documents to CTP by June

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21, 2024. See CRD Dkt. Entry No. 13. Accordingly, Respondent has failed to fulfill its discovery obligations and to comply with the regulations and orders governing this case. 21 C.F.R. § 17.35(a)(1).

Additionally, Respondent has failed to defend this action. 21 C.F.R. § 17.35(a)(2). Specifically, while Respondent filed an Answer denying the Complaint allegations, Respondent did not file a response to CTP’s Motion to Compel Discovery, as permitted by the regulations and my June 6, 2024 Order, despite the clear warning that I may grant CTP’s motion if Respondent failed to respond. See CRD Dkt. Entry Nos. 9, 13; see also 21 C.F.R. § 17.32(c). Likewise, Respondent did not respond to CTP’s Motion to Impose Sanctions, as permitted by the regulations and my June 26, 2024 Order, despite a warning that I may grant CTP’s motion if Respondent failed to respond. See CRD Dkt. Entry Nos. 14, 16. Respondent’s failure to respond to CTP’s motions and fulfill its discovery obligations suggest that it has abandoned its defense of this case. Respondent’s failure to defend this action is further demonstrated by Respondent’s failure to take any action with regard to this case since its March 28, 2024 Answer.

In the absence of any explanation from Respondent, I find that Respondent failed to comply with orders and procedures governing this proceeding, failed to defend this action, 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.³

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 two of my orders, despite my explicit warnings that its failure could result in sanctions. See CRD Dkt. Entry Nos. 12, 13; see also CRD Dkt. Entry No. 4 at ¶ 21. Additionally, Respondent failed to respond to any of CTP’s motions. See CRD Dkt. Entry Nos. 9, 14. Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding. 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); 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

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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. Pursuant to 21 C.F.R. § 17.11, I assume that the facts alleged in the Complaint (but not its conclusory statements) are true. Specifically:  

• On February 28, 2023, CTP initiated a previous civil money penalty action, CRD Docket Number T-23-1186, FDA Docket Number FDA-2023-H-0639, against Respondent for at least three violations of the Act. CTP alleged those violations to have occurred at Respondent’s business establishment, 7381 Highway 84, Mansfield, Louisiana 71052, on January 9, 2022, and November 21, 2022;
• The previous action concluded when an Initial Decision and Default Judgment was entered by an Administrative Law Judge, “finding that all of the violations alleged in the Complaint occurred”;
• An FDA-commissioned inspector conducted a subsequent inspection on 
  December 31, 2023, at approximately 1:55 PM at Respondent’s business establishment located at 7381 Highway 84, Mansfield, Louisiana 71052. During this inspection, a person younger than 21 years of age was able to purchase a package of two Swisher Sweets Classic Blueberry cigars. Additionally, Respondent’s staff failed to verify, by means of photographic identification containing a date of birth, that the purchaser was 21 years of age or older.⁴

These facts establish Respondent Party Shop’s 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. pt. 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); see also 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 pt.

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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.  

Under 21 C.F.R. § 17.2, a $6,892 civil money penalty is permissible for five violations of the regulations found at 21 C.F.R. pt. 1140 within a 36-month period.

Order

For these reasons, I enter default judgment in the amount of $6,892 against Respondent, LBR LLC d/b/a Party Shop. 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 pt. 1140 of title 21, Code of Federal Regulations, and to update the relevant age verification requirements under such pt. 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 January 9, 2022, two on November 21, 2022, and two on December 31, 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  I note that all filings were sent to the two addresses on file for Respondent. While filings sent to the Respondent’s address at 7381 Highway 84, Mansfield, Louisiana 71052 were returned to sender, suggesting Respondent did not receive filings at this location, filings were also sent to P.O. Box 29171, Shreveport, Louisiana 71149, the address Respondent included in its Answer. CRD Dkt. Entry No. 3; see, e.g. CRD Dkt. Entry Nos. 6, 4 at 13. No filings were returned to sender from this address. I, therefore, presume Respondent was properly notified of all filings.

⁴  The identification violations alleged by CTP on January 9, 2022, November 21, 2022, and December 31, 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(b)(2)(i), which has not been updated to reflect the age change. See Complaint ¶¶ 13.b, 15.b; see also supra fn.1.