SKB Deli, Inc. d/b/a Andy's Deli, DAB TB9189 (2025)

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

The Food and Drug Administration, Center for Tobacco Products (CTP or Complainant) began this case by serving a Complaint on Respondent, SKB Deli, Inc. d/b/a Andy’s Deli, and filing a copy of the Complaint with the Departmental Appeals Board (DAB), Civil Remedies Division (CRD). The Complaint alleges that Respondent’s staff sold regulated tobacco products to underage purchasers and failed to verify that a purchaser was 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 $345 for two violations of the regulations within a 12-month period.1 Respondent, through counsel, timely requested a hearing by filing an Answer. I

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issued an Acknowledgment and Pre-Hearing Order (APHO) establishing procedural deadlines for this case.

Complainant’s Status Report and Motion to Impose Sanctions (Motion) is pending before me. CTP’s Motion 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. 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). Therefore, pursuant to 21 C.F.R. § 17.35(c)(3), I grant CTP’s Motion, strike Respondent’s Answer, and issue an Initial Decision and Default Judgment imposing a civil money penalty of $345.

I. Procedural History

On June 27, 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. CRD Docket (Dkt.) Entry Numbers (Nos.) 1, 1a-1b. On July 25, 2024, counsel for Respondent registered for the DAB Electronic Filing System, and timely filed Respondent’s Answer to CTP’s Complaint. CRD Dkt. Entry No. 3. Counsel for Respondent also filed a copy of CTP’s Complaint, Cover Letter, and supporting documentation. See CRD Dkt. Entry No. 3a.

On August 20, 2024, I issued an APHO that set deadlines for the parties’ filings and exchanges, including a schedule for discovery. CRD Dkt. Entry No. 4. I 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). Also, I warned that I may impose sanctions if a party failed to comply with any order, including the APHO. CRD Dkt. Entry No. 4 at ¶ 21.

On August 21, 2024, counsel for Respondent filed a duplicate copy of the documents it filed on July 25, 2024, specifically, CTP’s Complaint, Cover Letter, and supporting documentation. CRD Dkt. Entry No. 5; compare CRD Dkt. Entry No. 3a.

On August 31, 2024, counsel for Respondent filed its Entry of Appearance on behalf of Respondent. CRD Dkt. Entry No. 7.

On September 19, 2024, counsel for CTP filed its Notice of Entry of Appearance, and a Joint Status Report, stating that “[t]he parties have been unable to reach a settlement in this case. CTP remains willing to engage in settlement discussions but, absent an

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executed settlement agreement, intends to proceed to a hearing.” CRD Dkt. Entry Nos. 7, 8.

On October 31, 2024, CTP filed a Motion to Extend Deadlines and 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 Nos. 9, 9a-9c, 10. By Order of November 7, 2024, I informed Respondent 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. 11 (emphasis in original); see also 21 C.F.R. § 17.32(c); APHO ¶ 20. Additionally, I extended the pre-hearing deadlines by thirty days. CRD Dkt. Entry No. 11 at 2. CTP’s pre-hearing exchange was extended until December 12, 2024, and Respondent’s pre-hearing exchange was extended until January 2, 2025. Id. Respondent did not respond to the November 7, 2024, Order.

On December 6, 2024, I issued an Order Granting Complainant’s Motion to Compel Discovery. CRD Dkt. Entry No. 12. Additionally, I ordered Respondent to produce documents responsive to CTP’s discovery request by December 16, 2024, and warned Respondent that:

Failure 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.

CRD Dkt. Entry No. 12.

Additionally, I extended CTP’s pre-hearing exchange until January 13, 2025, and Respondent’s pre-hearing exchange until February 3, 2025. Id. at 2.

On December 18, 2024, CTP filed a Status Report and Motion to Impose Sanctions and a Motion to Stay Deadlines. CRD Dkt. Entry Nos. 13, 14. CTP advised that Respondent did not produce responsive documents in compliance with my Order Granting Complainant’s Motion to Compel Discovery. CRD Dkt. Entry No. 13 at 2.

On January 10, 2025, CTP sent an email correspondence to the attorney advisor assisting me with this case seeking confirmation that “[CTP] would not be expected to file its pre-hearing exchange on [January 13, 2025].” CRD Dkt. Entry No. 15 at 1. On that same date, the attorney advisor responded to CTP, and contemporaneously uploaded a copy of the email correspondences to the case record. See id.

By Order of January 21, 2025, I informed Respondent of its February 5, 2025, deadline to file a response to CTP’s Motion to Impose Sanctions and warned Respondent that if it failed to file a response, “I may grant CTP’s motion in its entirety.” CRD Dkt. Entry

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No. 16 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). 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).

I conclude that sanctions against Respondent are warranted. Respondent repeatedly 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 December 6, 2024, Order Granting Complainant’s Motion to Compel Discovery when it failed to submit (or indicate that it did not have) documents responsive to CTP’s Request for Production of Documents by December 16, 2024.

Respondent also repeatedly failed to defend its action by failing to respond to CTP’s Motion to Compel Discovery and Motion to Impose Sanctions, despite my November 7, 2024, and January 21, 2025, orders informing Respondent of such opportunities and warning of consequences. 21 C.F.R. § 17.35(a)(2). Respondent’s failure to fulfill its discovery obligations and respond to CTP’s various motions suggests that Respondent has abandoned its defense of this case.

Further, Respondent’s failure to comply with the orders, regulations governing discovery, and other procedures in this case delayed the hearing process. To provide ample opportunity for Respondent to respond to CTP’s motions and for the parties to prepare their respective pre-hearing exchanges, my November 7, 2024, and January 21, 2025, orders extended the initial pre-hearing deadlines set in the APHO. Subsequently, all

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deadlines were stayed by my January 21, 2025, Order to give Respondent an opportunity to file a response to CTP’s Motion to Impose Sanctions.

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. In the absence of any explanation from Respondent, I find no basis to excuse Respondent’s repeated failure to comply with the various orders and regulations in this administrative 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 also failed to comply with four of my orders, despite my explicit warnings that its failure could result in sanctions. I specified in the December 6, 2024, Order that those 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. No. 12 at 2. 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). Although striking an answer is a harsh sanction, the Departmental Appeals Board has repeatedly held in similar circumstances involving a Respondent’s repeated failure to comply with discovery and procedural orders that “the ALJ determination to impose sanctions was not an abuse of discretion, and the sanction imposed was reasonably related to the nature and severity of Respondent’s noncompliance.” Carolina Cigar of Delray, LLC d/b/a Carolina Cigar, DAB No. 3134, at 11 (2024) (citing Joshua Ranjit, Inc. d/b/a 7-Eleven 10326, DAB No. 2758, at 1, 8-11; KKNJ, Inc. d/b/a Tobacco Hut at 8-11 (2016); and Retail LLC d/b/a Super Buy Rite, DAB No. 2660, at 10-14 (2015)). Accordingly, I grant CTP’s Motion to Impose Sanctions, 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 must “assume the facts alleged in the [C]omplaint to be true” and, if those facts establish liability under the Act, issue a default judgment imposing the “maximum amount of penalties provided

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for by law for the violations alleged” or the civil money penalty “amount asked for in the complaint, whichever is smaller.” Id. Accordingly, I must determine whether the allegations in the Complaint establish violations of the Act.

Specifically, CTP alleges the following facts in its Complaint:

• Respondent owns Andy’s Deli, an establishment that sells tobacco products and is located at 106 7th Avenue South, New York, New York 10014. Complaint ¶¶ 11-12.
• During an inspection of Respondent’s establishment on August 4, 2023, at approximately 10:33 PM, an FDA-commissioned inspector documented that “a person younger than 21 years of age was able to purchase a package of Newport Box cigarettes . . . [.]” The inspector also documented that “the underage purchaser’s identification was not verified before the sale . . . [.]” Complaint ¶ 15.
• On September 5, 2023, CTP issued a Warning Letter to Respondent regarding the documented violations from August 4, 2023. The letter explained that the observations constituted violations of the regulations, and that the named violations were not necessarily intended to be an exhaustive list of all violations at the establishment. The Warning Letter also stated that if Respondent failed to correct the violations, regulatory action by the FDA or a civil money penalty action could occur and that Respondent is responsible for complying with the law. Complaint ¶¶ 15-16.
• During a subsequent inspection of Respondent’s establishment on March 31, 2024, at approximately 5:13 PM, an FDA-commissioned inspector documented that “a person younger than 21 years of age was able to purchase a ZYN Coffee oral nicotine product . . . [.]” Complaint ¶ 13.

These facts establish that Respondent is liable under the Act. The Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded if distributed or offered for sale in any state in violation of regulations issued under section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The Secretary of the U.S. Department of Health and Human Services issued the regulations at 21 C.F.R. pt. 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); 89 Fed. Reg. 70,483, 70,485 (Aug. 30, 2024). Section 906(d)(5) of the Act prohibits the sale of regulated tobacco products to any person younger than 21 years of age, and requires retailers to verify, by means of photographic identification containing a purchaser’s date of birth, that no regulated tobacco product purchaser is younger than 21 years of age.

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Taking the above alleged facts as true, Respondent violated the prohibition against selling regulated tobacco products to persons younger than 21 years of age on August 4, 2023, and March 31, 2024. Act § 906 (d)(5). On August 4, 2023, Respondent also violated the requirement that retailers verify, by means of photo identification containing a purchaser’s date of birth, that no regulated tobacco product purchasers are younger than 21 years of age. Id.; 21 C.F.R. § 1140.14(a)(2)(i). All violations observed during the initial failed inspection are counted as a single violation, and each separate violation observed during subsequent failed inspections count as a discrete violation. 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). Therefore, Respondent’s actions constitute two violations of law within a 12-month period that merit a civil money penalty.

CTP has requested a civil money penalty of $345, which is a permissible penalty under the regulations. 21 C.F.R. §§ 17.2, 17.11; see also 45 C.F.R. § 102.3. Therefore, I find that a civil money penalty of $345 is warranted and so order one imposed.