Point Pleasant Associates Inc. d/b/a Sun Petro / Snack and Go, DAB TB8662 (2024)

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

On February 9, 2024, the Center for Tobacco Products (CTP) began this matter by serving an administrative complaint on Respondent, Point Pleasant Associates Inc. d/b/a Sun Petro / Snack and Go, at 101 West Absecon Boulevard, Absecon, New Jersey 08201, and by filing a copy of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  The complaint alleges that Sun Petro / Snack and Go impermissibly received in interstate commerce an electronic nicotine delivery system (ENDS) product that lacks the premarketing authorization required under the Federal Food, Drug, and Cosmetic Act (Act) and offered such product for sale.  CTP seeks a $20,678 civil money penalty against Respondent Sun Petro / Snack and Go.

Respondent submitted an Answer to the complaint in this matter, but subsequently 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

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C.F.R. § 17.35(a).  Currently, Complainant’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.  For the reasons stated below, CTP’s motion is granted.  Accordingly, I strike Respondent’s Answer and issue this decision of default judgment pursuant to 21 C.F.R. § 17.35(c)(3).

I. Procedural History

On February 9, 2024, CTP served the complaint on Respondent by United States Postal Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7.  Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 1, 1b.  On March 5, 2024, Pankaj Maknoor, the purported attorney for Respondent, served Respondent’s Answer to CTP’s complaint on CTP by mail.  CRD Dkt. Entry No. 3.  On March 11, 2024, CTP forwarded, via email, Respondent’s timely Answer to the Departmental Appeals Board (DAB), CRD.  See CRD Dkt. Entry No. 3a. On that same date, the attorney advisor previously assisting me with this case uploaded Respondent’s Answer and the email correspondence to the case file in the DAB ACTS electronic filing system.  Id.

On March 12, 2024, I issued an Acknowledgment and Pre-Hearing Order (APHO) acknowledging receipt of Respondent’s Answer.  CRD Dkt. Entry No. 4.  The APHO established deadlines for the parties’ filings and exchanges, including a schedule for discovery, and specifically instructed the parties that, moving forward, the filing and service of all documents should conform with the requirements of paragraph 2 of the APHO.  Id. at ¶¶ 1-6, fn. 1.  In the APHO, I directed that a party receiving a discovery request must provide the requested documents within 30 days of the request.  Id. at 4, ¶ 4; see also 21 C.F.R. § 17.23(a).  I also 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.

CRD Dkt. Entry No. 4 at 12, ¶ 21.

On April 12, 2024, CTP filed a Status Report indicating that the parties had been unable to reach a settlement in this case, and that CTP remained willing to engage in settlement discussions, but, absent an executed settlement agreement, CTP intended to proceed to a hearing.  CRD Dkt. Entry No. 5 at 1.

On May 20, 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.

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CRD Dkt. Entry No. 6 (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 June 3, 2024, due date for CTP’s pre-hearing exchange, . . . .” CRD Dkt. Entry No. 7 at 2.  On May 20, 2024, I issued an Order advising Respondent that it had until June 14, 2024, to file a response to CTP’s Motion to Compel Discovery. CRD Dkt. Entry No. 8.  I also warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.”  Id. at 2; see also CRD Dkt. Entry No. 4 ¶¶ 20-21; 21 C.F.R. § 17.32(c).  In my Order, I also held the parties’ pre-hearing exchange deadlines in abeyance in lieu of CTP’s Motion to Compel Discovery.  CRD Dkt. Entry No. 8 at 2.   Lastly, my May 20, 2024 Order stated that: the APHO directed Respondent’s counsel to file and serve a signed Notice of Entry of Appearance by April 3, 2024; that Respondent’s counsel had not complied with the directive; that Respondent’s counsel also ignored the APHO’s directive to register for DAB E-file; and that Respondent’s counsel was instructed to complete their DAB E-file registration and to submit a signed Notice of Entry of Appearance by May 24, 2024.  Id. at 2.  Further, Respondent’s counsel was informed that failure to comply with the directive in my May 20, 2024 Order may result in the imposition of sanctions.  Id.

Respondent failed to respond to CTP’s Motion to Compel Discovery, my May 20, 2024 Order, or otherwise comply with CTP’s Request for Production of Documents.

On June 24, 2024, I issued an Order Granting Motion to Compel and ordered Respondent to produce responsive documents to CTP’s Request for Production of Documents by July 12, 2024, or submit a written response if Respondent did not have any documents to produce by the same date.  I warned:

Failure to do so may result in sanctions, including the issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint . . . .

CRD Dkt. Entry No. 9 at 2 (emphasis in original).

In the same Order, I stated that the parties’ pre-hearing exchange deadlines shall remain in abeyance.  Id.at 2.

On July 18, 2024, CTP filed its Motion to Impose Sanctions.  CRD Dkt. Entry No. 10. CTP argues that Respondent had not complied with the APHO, has not provided a response to CTP’s Request for Production of Documents, nor has Respondent complied with my June 24, 2024 Order Granting 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

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Initial Decision and Default Judgment finding Respondent liable for the violations listed in the complaint and impose a $20,678 civil money penalty.  Id. at 2.

On July 22, 2024, I issued an Order giving Respondent until August 8, 2024, to file a response to CTP’s Motion to Impose Sanctions.  CRD Dkt. Entry No. 11 at 2.  In my July 22, 2024 Order, I warned Respondent that, “if it fails to timely respond, I may grant CTP’s motion in its entirety.”  Id.  The July 22, 2024 Order also stated that the parties’ pre-hearing exchange deadlines shall remain held in abeyance pending resolution of CTP’s Motion to Impose Sanctions.  Id.

On August 12, 2024, CRD issued a letter informing the parties that a new attorney advisor had been assigned to assist me with this case.  See CRD Dkt. Entry No. 12.

To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or the July 22, 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 has not complied with:

• the regulation at 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
• my June 24, 2024 Order, when Respondent failed to submit documents responsive to CTP’s Request for Production of Documents by July 12, 2024.

Moreover, Respondent’s counsel failed to comply with my May 20, 2024 Order, when Respondent’s counsel failed to complete its DAB E-file registration and submit a signed Notice of Entry of Appearance by May 24, 2024.

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Additionally, 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 May 20, 2024 Order; and
• Respondent did not file a response to CTP’s Motion to Impose Sanctions, as permitted by the regulations and my July 22, 2024 Order.

Respondent’s failure to respond to CTP’s motions, to comply with my multiple orders, and to fulfill its discovery obligations suggests that it has abandoned its defense in this case.

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.

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 at least two of my orders, despite my explicit warnings that its failure could result in sanctions.  CRD Dkt. Entry No. 4 ¶ 21; CRD Dkt. Entry No. 9 at 2.  Respondent failed to respond to any of CTP’s motions.  CRD Dkt. Entry Nos. 8 at 1-2; 11 at 2. Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.  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 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).  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 receives tobacco products, including an Elfbar Strawberry Banana ENDS product (Respondent’s ENDS product), in interstate commerce and delivers or proffers delivery of such product for pay or otherwise.
• In a Warning Letter dated August 8, 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 December 7, 2023, at Respondent’s business establishment, 101 West Absecon Boulevard, Absecon, New Jersey 08201, an FDA-commissioned inspector conducted an inspection.  During this inspection, the inspector observed an Elfbar Strawberry Banana 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 order nor a found-exempt order has been submitted for Respondent’s ENDS product.

These facts establish Respondent Sun Petro / Snack and Go’s liability 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

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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 December 7, 2023, Respondent offered for sale an ENDS product that was adulterated because it lacks the required FDA marketing authorization and is not exempt from this requirement.  21 U.S.C. §§ 387j(a)(2), 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 or found-exempt order, as required by 21 U.S.C. § 387e(j).  Therefore, Respondent’s actions constitute violations of law that merit a civil money penalty.
A $20,678 money penalty is permissible under 21 U.S.C. § 333(f)(9)(A) and 21 C.F.R. § 17.2.  See 45 C.F.R. § 102.3.

Order

For these reasons, I enter a default judgment in the amount of $20,678 against Respondent, Point Pleasant Associates Inc. d/b/a Sun Petro / Snack and Go.  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.