MNG Halsted Mart Inc. d/b/a Citgo, DAB TB8762 (2025)

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, MNG Halsted Mart Inc. d/b/a Citgo, alleging facts and legal authority sufficient to justify imposing a civil money penalty of $687. 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

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its implementing regulations, 21 C.F.R. pt. 1140. CTP seeks a civil money penalty of $687 for three1 violations of the regulations within a 24-month period.2

Respondent filed a timely Answer to CTP’s Complaint, however, 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 5, 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 No. 1 (Complaint), No. 1b (Proof of Service). Respondent timely filed its Answer to CTP’s Complaint on May 6, 2024. CRD Dkt. Entry No. 3. On May 11, 2024, Respondent untimely filed additional documents. CRD Dkt. Entry Nos. 4, 5, 6, 7.

On May 14, 2024, I 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. 8. 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). I warned that sanctions may be imposed if a party failed to comply with any order, including the APHO. Id. at ¶ 21.

On July 23, 2024, CTP filed a Motion to Compel Discovery and an Unopposed Motion to Extend Deadlines asserting that Respondent did not respond to its discovery request as required by the APHO and regulations. CRD Dkt. Entry Nos. 11, 11a-b, 12. By Order of July 23, 2024, I informed Respondent of its August 23, 2024, 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. 13 at 1; see also 21 C.F.R. § 17.32(c). Additionally, I held the pre-hearing exchange deadlines in abeyance. CRD Dkt. Entry No. 13 at 2. Respondent did not respond to my July 23, 2024, Order.

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On August 27, 2024, I issued an Order Granting Complainant’s Motion to Compel and ordered Respondent to produce documents responsive to CTP’s discovery request by September 6, 2024, and warned Respondent that:

failure to comply may result in sanctions, which may include striking its filings and issuing 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. 14 at 1.

On September 30, 2024, CTP filed a Motion to Impose Sanctions and a Motion to Stay Deadlines. CRD Dkt. Entry Nos. 15, 16. CTP advised that Respondent did not produce responsive documents in compliance with my Order Granting Complainant’s Motion to Compel. CRD Dkt. Entry No. 15 at 2.

By Order of October 3, 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 in its entirety.” CRD Dkt. Entry No. 17 at 2. To date, Respondent has not responded to my October 3, 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 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 Complainant’s Motion to Compel when it failed to submit the documents responsive to CTP’s Request for Production of Documents by September 6, 2024.

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Respondent also failed to defend its action despite my July 23, 2024, and October 3, 2024, Orders informing Respondent of such opportunities and warning of consequences. 21 C.F.R. § 17.35(a)(2). 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.

Therefore, in the absence of any explanation from Respondent, 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.

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. Respondent failed to comply with two of my orders, despite my explicit warnings that its failure could result in sanctions. 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. Therefore, 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); 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.”).

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.

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Specifically, CTP alleges the following facts in its Complaint:

• At approximately 10:23 AM on December 15, 2022, at Respondent’s business establishment, 10655 South Halsted Street, Chicago, Illinois 60628, an FDA commissioned inspector conducted an inspection. During this inspection, a person younger than 21 years of age was able to purchase a package of two Swisher Sweets Classic 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;
• In a warning letter dated January 17, 2023, CTP informed Respondent of the inspector’s December 15, 2022, documented violations, and that such actions violate federal law. The letter further warned that Respondent’s failure to correct its violations could result in a civil money penalty or other regulatory action;
• At approximately 11:18 AM on January 29, 2024, at Respondent’s business establishment, 10655 South Halsted Street, Chicago, Illinois 60628, an FDA commissioned inspector conducted a subsequent inspection. During this inspection, a person younger than 21 years of age was able to purchase a package of two Swisher Sweets Classic 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.

These facts establish Respondent Citgo’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.

Taking the above alleged facts as true, I find that Respondent violated the prohibition against selling regulated tobacco products to underage purchasers and failed to verify that the purchasers were 21 years of age or older, thereby violating the Act, 21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140. Therefore, Respondent’s

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actions constitute violations of law that merit a civil money penalty in the amount of $687 which is permissible under 21 C.F.R. § 17.2.

ORDER

For these reasons, I enter default judgment in the amount of $687 against Respondent MNG Halsted Mart Inc. d/b/a Citgo. 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.