Plaza Tobacco and Vape, Inc. d/b/a L and X Tobacco and Vape, DAB TB8712 (2024)

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

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint) against Respondent, Plaza Tobacco and Vape, Inc. d/b/a L and X Tobacco and Vape, alleging facts and legal authority sufficient to justify imposing a civil money penalty of $6,892.  CTP began this case by serving a Complaint on Respondent and filing a copy of the Complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  The Complaint alleges that Respondent’s staff sold regulated tobacco products to underage purchasers and failed to verify that the purchasers were 21 years of age or older, thereby 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.  CTP seeks a civil money penalty of $6,892 for five violations of the regulations within a 36-month period.

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During the course of these administrative proceedings, Respondent failed to comply with multiple judicial 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 C.F.R. § 17.35(c)(3), I strike Respondent’s Answer and issue this decision of default judgment.

I. Procedural History

On April 30, 2024, CTP served the Complaint and supporting documents on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7.  Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 1, 1a, 1b.  On May 30, 2024, Respondent timely filed its Answer to CTP’s Complaint.  CRD Dkt. Entry No. 3a.

On June 3, 2024, Hon. Benjamin Zeitlin issued an Acknowledgment and Pre‑hearing Order (APHO) that set deadlines for the parties’ filings and exchanges, including a schedule for discovery.  CRD Dkt. Entry No. 5.  The APHO directed that a party receiving a discovery request must provide the requested documents within 30 days of the request.  Id. at ¶ 4; see 21 C.F.R. § 17.23(a).  The APHO also warned that sanctions may be imposed if a party failed to comply with any order, including the APHO.  CRD Dkt. Entry No. 5 at ¶ 21.

On July 29, 2024, CTP filed a Motion to Compel Discovery, asserting that Respondent did not respond to its discovery request as required by the APHO and regulations.  CRD Dkt. Entry No. 8.  On July 29, 2024, CTP also filed a Motion to Extend Deadlines.  CRD Dkt. Entry No. 9.  By Order of July 30, 2024, Respondent was informed of its deadline to file a response to CTP’s Motion to Compel Discovery, and warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.”  CRD Dkt. Entry No. 10 at 1 (emphasis added); see also 21 C.F.R. § 17.32(c); CRD Dkt. Entry No. 5 at ¶ 21. Additionally, the pre-hearing exchange deadlines were held in abeyance.  CRD Dkt. Entry No. 10 at 2.  Respondent did not respond to the July 30, 2024 Order.

This case was subsequently transferred to me, as advised in the letter sent to both parties. CRD Dkt. Entry No. 12.  On August 27, 2024, I issued an Order Granting Motion to Compel in which I granted CTP’s motion and ordered Respondent to produce documents responsive to CTP’s discovery request by September 12, 2024.  I warned Respondent that:

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 and imposing a civil money penalty.

CRD Dkt. Entry No. 11 at 1 (emphasis added).

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On September 18, 2024, CTP respectively filed Complainant’s Status Report and Motion to Impose Sanctions, and Complainant’s Motion to Stay Deadlines.  CRD Dkt. Entry Nos. 13, 14.  CTP advised that Respondent did not produce responsive documents in compliance with my August 27, 2024 Order Granting Motion to Compel.  CRD Dkt. Entry No. 13 at 2; see also CRD Dkt. Entry No. 11.  By Order of September 18, 2024, I informed Respondent of its deadline to file a response to CTP’s motion and warned Respondent that if it failed to file a response, “I may grant CTP’s Motion to Impose Sanctions and impose the requested civil money penalty of $6,892, pursuant to 21 C.F.R. § 17.35.”  CRD Dkt. Entry No. 15 at 2 (emphasis in original).  To date, Respondent has not responded.

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 the following orders and procedures governing this proceeding:

• 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 August 27, 2024 Order Granting Motion to Compel, when it failed to submit the documents responsive to CTP’s Request for Production of Documents by September 12, 2024.

Respondent also failed to defend its action despite the July 30, 2024, and September 18, 2024 Orders informing Respondent of such opportunities and warning of possible consequences of failing to do so.  21 C.F.R. § 17.35(a)(2).

I find that Respondent failed to comply with multiple judicial 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.

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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 a regulation governing this proceeding, when it failed to provide the documents requested by CTP within 30 days, as required by 21 C.F.R. § 17.23(a). Further, Respondent failed to comply with two judicial orders, despite explicit warnings that its failure to do so could result in sanctions.  Those orders specified that such sanctions may include “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. 11 at 1; see also CRD Dkt. Entry No. 5 ¶ 21.  Respondent also failed to defend its actions, despite my orders expressly reminding Respondent of the opportunity to do so.  Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.

I find that Respondent’s actions are sufficient to warrant striking its Answer and issuing a decision by default, without further proceedings.  21 C.F.R. § 17.35(b), (c)(3). Accordingly, I strike Respondent’s Answer, and issue this Initial Decision and Default Judgment, assuming the facts alleged in CTP’s Complaint to be true.  21 C.F.R. §§ 17.35(c)(3), 17.11(a).

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).  Pursuant to 21 C.F.R. § 17.11(a), I am required to “assume the facts alleged in the [C]omplaint 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.

Specifically, CTP alleges the following facts in its Complaint:

• On December 1, 2023, CTP initiated a previous civil money penalty action, CRD Docket Number T-24-773, FDA Docket Number FDA-2023-H-5277, against Respondent for at least three violations of the Act.  CTP alleged those violations to have occurred at Respondent’s business establishment, 49 Plaza Parkway, Lexington, North Carolina 27292, on November 11, 2022, and September 22, 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”;

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• An FDA-commissioned inspector conducted a subsequent inspection on February 17, 2024, at approximately 10:51 AM at Respondent’s business establishment located at 49 Plaza Parkway, Lexington, North Carolina 27292.  During this inspection, a person younger than 21 years of age was able to purchase a VUSE Originals Golden Tobacco e-liquid product.  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.

These facts establish Respondent L and X Tobacco and Vape’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. 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); 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 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 $6,892 civil money penalty is permissible under 21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $6,892 against Respondent, Plaza Tobacco and Vape, Inc. d/b/a L and X Tobacco and Vape.  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.