406 Glass LLC d/b/a/ 406 Glass and Vape Outlet, DAB TB9294 (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, 406 Glass LLC d/b/a 406 Glass and Vape Outlet, 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

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Respondent timely requested a hearing by filing an Answer to the Complaint.  I issued an Acknowledgment and Pre-Hearing Order (APHO) establishing procedural guidance and deadlines for this case.

Currently, 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 these proceedings and failed to defend its actions, which interfered with the speedy, orderly, or fair conduct of these proceedings.  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 September 10, 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 October 4, 2024, Respondent registered for the DAB Electronic Filing System, and timely filed an Answer to CTP’s Complaint.  CRD Dkt. Entry No. 3.  Respondent also filed a copy of CTP’s Complaint.  See CRD Dkt. Entry No. 3a.

On November 8, 2024, I issued an APHO that set deadlines for the parties’ filings and exchanges, including a schedule for discovery.  CRD Dkt. Entry No. 4.  Specifically, I directed that a party receiving a discovery request must provide the requested documents within 30 days of the request.  Id. ¶ 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 ¶ 21.

On December 5, 2024, counsel for CTP filed a 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 executed settlement agreement, intends to proceed to a hearing.”  CRD Dkt. Entry Nos. 5, 6.

On January 10, 2025, CTP filed a Motion to Compel Discovery and an Unopposed Motion to Extend Deadlines.  CRD Dkt. Entry Nos. 7, 7a-7b, 8.  In its Motion to Compel Discovery, CTP asserted that Respondent did not respond to its discovery requests as required by the APHO and regulations.  CRD Dkt. Entry Nos. 7, 7a-7b, 8.  By Order of

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January 24, 2025, I informed Respondent of its February 7, 2025, 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. 9 at 1-2 (emphasis in original); see also 21 C.F.R. § 17.32(c); APHO ¶ 20.  Additionally, I extended the pre-hearing deadlines by 30 days.  CRD Dkt. Entry No. 9 at 2.  CTP’s pre-hearing exchange was extended until February 27, 2025, and Respondent’s pre-hearing exchange was extended until March 20, 2025.  Id.  Respondent did not respond to the January 24, 2025, Order.

On February 19, 2025, I issued an Order Granting Complainant’s Motion to Compel Discovery.  CRD Dkt. Entry No. 10.  Additionally, I ordered Respondent to produce documents responsive to CTP’s discovery requests by March 5, 2025, 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. 10 at 2.  I also extended CTP’s pre-hearing exchange deadline until March 31, 2025, and Respondent’s pre-hearing exchange deadline until April 21, 2025.  Id. 

On March 6, 2025, CTP filed a Status Report and Motion to Impose Sanctions and a Motion to Stay Deadlines.  CRD Dkt. Entry Nos. 11, 12.  CTP argued that sanctions against Respondent are an appropriate remedy as “it is unlikely more time or additional orders . . . will change the status quo.”  Id.  Specifically, CTP asked that I strike Respondent’s Answer as a sanction and issue an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a $345 civil money penalty.  Id.  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. 11 at 2.

On March 10, 2025, Respondent sent an email correspondence to the attorney advisor assisting me with this case seeking information regarding payment of the proposed civil money penalty.  See CRD Dkt. Entry No. 13.  Specifically, Respondent stated “[he] would like to know how [he] [could] pay the civil money penalty of $345.”  Id.  In response to Respondent’s email correspondence, copying counsel for CTP, the attorney advisor provided the direct contact information for CTP’s counsel of record, as well as the contact information for CTP’s settlement negotiations.  See id.  In addition, the attorney advisor informed the parties that my Order regarding CTP’s Motion to Impose Sanctions and Motion to Stay Deadlines would be forthcoming.  Id.  On that same date,

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Respondent responded to the attorney advisor’s email correspondence acknowledging receipt of the information.  See CRD Dkt. Entry No. 14.

By Order of March 11, 2025, I informed Respondent of its March 25, 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 and impose the requested civil money penalty against Respondent.”  CRD Dkt. Entry No. 15 at 2 (emphasis in original).  To date, Respondent has not responded to CTP’s Motion to Impose Sanctions or my March 11, 2025, 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).  “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 directives governing these proceedings:

• 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 February 19, 2025, 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 March 5, 2025.

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 January 24, 2025, and March 11, 2025, Orders informing Respondent of such opportunities and warning of consequences.  21 C.F.R. § 17.35(a)(2).  Respondent’s March 10, 2025, email

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requesting information on how to pay the proposed civil money penalty, coupled with 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, I find that Respondent’s failure to comply with the orders, regulations governing discovery, and other procedures in this case has 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 January 24, 2025, and February 19, 2025, Orders extended the initial pre-hearing deadlines set in the APHO.  Subsequently, all deadlines were stayed by my March 11, 2025, Order to give Respondent an opportunity to file a response to CTP’s Motion to Impose Sanctions. 

In the absence of any explanation from Respondent, I find that Respondent failed to comply with multiple judicial orders and directives governing this proceeding, failed to defend its case, and, as a result, interfered with the speedy, orderly, or fair conduct of this proceeding.  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 the regulations governing this proceeding.  Respondent also failed to comply with two of my Orders, despite my explicit warnings that its failure could result in sanctions.  See CRD Dkt. Entry Nos. 10 at 2; 15 at 2.  I specified in the February 19, 2025, 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. 10 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 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).  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 12, DAB No. 2678, 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 and strike

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Respondent’s Answer from the administrative record.  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 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 406 Glass and Vape Outlet, an establishment that sells tobacco products and is located at 3130 King Avenue West, Billings, Montana 59102.  Complaint ¶¶ 11-12.
• During an inspection of Respondent’s establishment on March 2, 2024, at approximately 10:55 AM, an FDA-commissioned inspector documented that “a person younger than 21 years of age was able to purchase an Elf Juice Blueberry Peach e-liquid product . . . [.]”  The inspector also documented that “the underage purchaser’s identification was not verified before the sale . . . [.]”  Complaint ¶ 15.
• On March 14, 2024, CTP issued a Warning Letter to Respondent regarding the documented violations from March 2, 2024.  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 June 8, 2024, at approximately 11:03 AM, an FDA-commissioned inspector documented that “a person younger than 21 years of age was able to purchase an Elf Juice Blue Razz Ice e-liquid 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

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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.

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 March 2, 2024, and June 8, 2024.  Act § 906(d)(5).  On March 2, 2024, 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(b)(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.