TA Group USA Inc. d/b/a EZ Mart Convenience Stores / Shell, DAB 8956 (2025)

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

On February 12, 2024, the Center for Tobacco Products (CTP) served a complaint on Respondent, TA Group USA Inc. d/b/a EZ Mart Convenience Stores / Shell, at 78 Elm Street, Milford, New Hampshire 03055. A copy of the complaint was also filed with the Food and Drug Administration’s (FDA) Division of Dockets Management. CTP seeks a civil money penalty of $20,678 against Respondent for allegedly receiving in interstate commerce an electronic nicotine delivery system (ENDS) product that lack 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.

Respondent filed an untimely answer to the complaint, which was accepted by the Administrative Law Judge (ALJ) previously assigned to this case.1 Since filing the answer, however, Respondent has repeatedly disregarded orders and rules, has been non- responsive to CTP’s discovery requests, and has failed to respond to multiple motions.

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Currently before me is CTP’s Motion to Impose Sanctions, which requests that I impose sanctions against Respondent for failing to respond to CTP’s discovery requests and for ignoring my order granting CTP’s Motion to Compel Discovery. As a proposed sanction, CTP asks me to strike Respondent’s answer and issue a default judgment against Respondent pursuant to 21 C.F.R. § 17.35(c)(3). For the reasons stated below, I find that sanctions are warranted in this case and that the sanction proposed by CTP is appropriate. Accordingly, I grant CTP’s Motion to Impose Sanctions, strike Respondent’s answer, and issue this decision of default judgment imposing the requested civil money penalty against Respondent.

Procedural History

On February 12, 2024, CTP served an administrative complaint on Respondent by United Parcel Service in accordance with 21 C.F.R. §§ 17.5 and 17.7. See Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 1 (Complaint), 1b (Proof of Service). On March 13, 2024, Respondent requested an extension of time to answer the complaint. CRD Dkt. Entry No. 3. On March 14, 2024, the previously assigned ALJ, Judge Marla Y. Johnson, granted the request and extended the answer deadline to April 12, 2024. CRD Dkt. Entry No. 4.

Respondent failed to answer the complaint prior to the extended deadline. On April 19, 2024, however, Respondent filed an untimely answer in the form of a letter, which asserted defenses to the allegations in the complaint and claimed Respondent could not afford to pay a reduced penalty amount allegedly offered by CTP as part of a settlement. CRD Dkt. Entry No. 5.

On April 23, 2024, a letter was issued at the direction of Judge Johnson, which gave Respondent until May 15, 2024 to file a statement identifying extraordinary circumstances excusing its failure to timely file an answer. CRD Dkt. Entry No. 6. The letter also gave CTP until May 31, 2024 to file a response. Id. On May 14, 2024, Respondent filed an explanation for its untimely answer, stating that an issue with its accountant caused the delayed filing and that Respondent had also been “totally confused” about the procedures for filing documents in this case. CRD Docket Entry No. 7. On May 31, 2024, CTP filed a response, arguing that Respondent’s statement failed to demonstrate that extraordinary circumstances prevented it from timely filing an answer. CRD Docket Entry No. 8.

On June 10, 2024, Judge Johnson issued an Acknowledgment and Pre-Hearing Order (APHO). CRD Dkt. Entry No. 9. In the APHO, Judge Johnson found Respondent demonstrated extraordinary circumstances and accepted the untimely answer “in the interest of due process.” Id. at 1 n.1. However, Judge Johnson warned Respondent to “follow all deadlines moving forward, as sanctions may be imposed for failure to comply with directions.” Id.

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The APHO set forth the procedures and schedule governing this case, including deadlines for the parties to complete discovery and file pre-hearing exchanges. CRD Dkt. Entry No. 9. With respect to discovery, the APHO stated that a party must produce any requested documents no later than 30 days after receiving a request for documents from the opposing party. Id. ¶ 4; see also 21 C.F.R. § 17.23(a). The APHO also warned that sanctions may be imposed against a party, up to and including dismissal of the Complaint or answer, for failing to comply with any order in this case, failing to prosecute or defend its case, or engaging in misconduct that “interferes with the speedy, orderly, or fair conduct of the hearing.” CRD Dkt. Entry No. 9 ¶ 21; see also 21 C.F.R. § 17.35.

On July 9, 2024, CTP filed a joint status report, stating that the parties had been unable to reach a settlement in this case. CRD Dkt. Entry No. 10. On August 1, 2024, CTP filed an Unopposed Motion to Extend Deadlines, stating it served document requests on Respondent on June 20, 2024, and was seeking a 60-day extension of all deadlines “[t]o accommodate Respondent’s request for additional time to respond” to those requests. CRD Dkt. Entry No. 11. On August 2, 2024, Judge Johnson granted the Motion and extended all deadlines by 60 days. CRD Dkt. Entry No. 12.

On September 26, 2024, after this case was transferred to me, CTP filed a Motion to Compel Discovery, stating that Respondent had failed to respond to its June 20, 2024 Request for Production of Documents. CRD Dkt. Entry No. 15. On the same date, CTP also requested a 30-day extension of all deadlines in this case. CRD Dkt. Entry No. 16.

On October 3, 2024, I issued an Order advising Respondent that it had until October 11, 2024, to respond to CTP’s Motion to Compel Discovery. CRD Dkt. Entry No. 17. I also extended the parties’ pre-hearing exchange deadlines as requested. CRD Dkt. Entry No. Id. at 2.

Respondent did not file a response to CTP’s Motion to Compel Discovery. Accordingly, on October 15, 2024, based on the representations made by CTP, I granted the Motion and ordered Respondent to comply with CTP’s request for production of documents by October 22, 2024. CRD Dkt. Entry No. 18. I also warned:

[F]ailure to comply with this Order 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.

Id. at 2.

On October 25, 2024, CTP filed the present Motion to Impose Sanctions. CRD Dkt. Entry No. 19. In the Motion, CTP states Respondent failed to comply with my October 25, 2024 Order granting CTP’s Motion to Compel Discovery and still has not produced any documents in response to CTP’s Request for Production of Documents. Id. at 1.

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CTP asks that I strike Respondent’s answer as a sanction for Respondent’s repeated non- compliance and non-responsiveness. Id. at 2. CTP also asks that I issue an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the complaint and imposing a $ 20,678 civil money penalty. Id. CTP filed a separate motion asking me to stay all deadlines pending resolution of its Motion to Impose Sanctions. CRD Dkt. Entry No. 20.

On October 28, 2024, I issued an Order giving Respondent until November 12, 2024, to file a response to CTP’s Motion to Impose Sanctions. CRD Dkt. Entry No. 21 at 2. I also granted CTP’s request to stay all deadlines pending resolution of the Motion to Impose Sanctions. Id.

Respondent did not file a response to CTP’s Motion to Impose Sanctions. Moreover, to date, Respondent has not produced any documents in response to CTP’s Request for Production of Documents or otherwise complied with my Order granting CTP’s Motion to Compel Discovery.

Motion to Impose Sanctions

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).

Here, Respondent failed, and continues to fail, to comply with multiple orders and rules, including:

• the requirements in 21 C.F.R. § 17.23 and Judge Johnson’s March 14, 2024 Order, by failing to file a timely answer to the complaint;
• the requirements in 21 C.F.R. § 17.23(a) and paragraph 4 of the APHO, by failing to respond to CTP’s Request for Production of Documents within 30 days; and
• my October 15, 2024 Order granting CTP’s Motion to Compel Discovery, by failing to produce documents responsive to CTP’s Request for Production of Documents by October 22, 2024.

Additionally, Respondent has failed to defend this action. Specifically, Respondent did not file a response to CTP’s Motion to Compel Discovery or CTP’s Motion to Impose Sanctions and has not taken any action in this case since May 2024.

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Based on the foregoing, I find that Respondent has failed to comply with orders and procedures governing this proceeding, has failed to defend this action, and, as a result, has interfered with the speedy, orderly, and fair conduct of this proceeding. Therefore, I conclude that Respondent’s conduct establishes a basis for sanctions pursuant to 21 C.F.R. § 17.35, and that sanctions are warranted under the circumstances.

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 regulatory requirement and multiple orders, despite repeated warnings that such conduct may result in sanctions. See, e.g., CRD Dkt. Entry No. 9 at 1 n.1, ¶ 21; CRD Dkt. Entry No. 18 at 2. Respondent also failed to respond to multiple motions, including the present Motion to Impose Sanctions. In fact, Respondent has failed to take any meaningful action in this case since May 14, 2024, when it filed the explanation for its untimely answer. CRD Docket Entry No. 7. While I recognize that Respondent is unrepresented and may not be familiar with the applicable procedures, Respondent’s disregard for multiple orders and complete lack of responsiveness suggests it has abandoned its defense and is not interested in continuing to participate in these proceedings.

Respondent’s conduct has caused unnecessary delays and disruptions, interfered with CTP’s ability to prosecute its case, and prevented me from conducting a hearing or otherwise deciding this case on the merits. Based on the severity and ongoing nature of Respondent’s conduct, I find that the appropriate sanction is to strike Respondent’s answer to the complaint. 21 C.F.R. § 17.35(b), (c)(3); see also KKNJ, Inc. d/b/a Tobacco Hut 12, DAB No. 2678 at 10-11 (2016) (concluding ALJ did not abuse discretion by striking Respondent’s answer for failure to comply with discovery order). While I recognize that this is a harsh remedy, I conclude that a lesser sanction would not effectively address Respondent’s repeated noncompliance and failure to defend this case. Therefore, CTP’s Motion to Impose Sanctions is GRANTED and Respondent’s answer to the complaint is hereby STRICKEN from the record.

I. 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, pursuant to the provisions of 21 C.F.R. § 17.11(a). Specifically, CTP alleges the following facts in its complaint:

• Respondent owns EZ Mart Convenience Stores / Shell, located at 78 Elm Street, Milford, New Hampshire 03055. The establishment receives tobacco products, including an Elfbar Crazi Berry ENDS product (Respondent’s ENDS product), in

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interstate commerce and delivers or proffers delivery of these products for pay or otherwise. Complaint ¶¶ 13-14.

• 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. Complaint ¶¶ 20-21.
• On December 6, 2023, an FDA-commissioned inspector conducted an inspection of Respondent’s establishment. During the inspection, the inspector an Elfbar Crazi Berry ENDS product for sale at Respondent’s establishment. Complaint ¶ 15.2
• Respondent’s ENDS product is a “new tobacco product” because it was not commercially marketed in the United States as of February 15, 2007. Complaint ¶ 16.
• Respondent’s ENDS product does not have an order permitting marketing of the new tobacco product in effect under 21 U.S.C. 387j(c)(1)(A)(i) and is, therefore, adulterated under 21 U.S.C. § 387b(6)(A). Complaint ¶ 17.
• Neither a substantial equivalence report nor an abbreviated report has been submitted for Respondent’s e-liquid products, and it is therefore, misbranded under 21 U.S.C. § 387c(a)(6). Complaint ¶ 18.

These facts establish Respondent’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 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

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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. 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).

Accepting the above alleged facts as true, Respondent violated the Act’s prohibition against receiving and offering for sale a new tobacco product that was adulterated and misbranded. 21 U.S.C. § 331(c). Specifically, on December 6, 2023, Respondent offered for sale an ENDS product that was adulterated because it lacked the required FDA marketing authorization and were 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 had 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 $20,678, which is a permissible penalty under 21 C.F.R. § 17.2 and 21 U.S.C. § 333(f)(9)(A). See also 45 C.F.R. § 102.3. Therefore, I find that a civil money penalty of $20,678 is warranted and I impose a penalty in that amount against Respondent. See 21 C.F.R. § 17.11(a).

ORDER

For the reasons stated above, I enter default judgment and impose a civil money penalty in the amount of $20,678 against Respondent, TA Group USA Inc. d/b/a EZ Mart Convenience Stores / Shell. 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.