Shreekrishna 1974 Inc. d/b/a Oasis Deli & Grocery, DAB TB9395 (2025)

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

Found:

1) Respondent violated 21 U.S.C. § 331, specifically section 906(d)(5) of the Federal Food, Drug, and Cosmetic Act (Act) (21 U.S.C. § 387f(d)(5)), and 21 C.F.R. § 1140.14(b)(2)(i), as charged in the Complaint;

2) Respondent committed at least three1  violations in a 24-month period as set forth hereinabove; and

3) Respondent is hereby assessed a civil penalty in the amount of $687.

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Glossary:

I. JURISDICTION

I have jurisdiction to hear this case pursuant to my appointment by the Secretary of Health and Human Services and my authority under the Administrative Procedure Act (5 U.S.C. §§ 554-556), 5 U.S.C.A. § 3106, 21 U.S.C. § 333(f)(5), 5 C.F.R. §§ 930.201 et seq. and 21 C.F.R. Part 17.3 

II. PROCEDURAL BACKGROUND

The Center for Tobacco Products (CTP or Complainant) filed a Complaint on July 18, 2024, against Shreekrishna 1974 Inc. d/b/a Oasis Deli & Grocery (Respondent or

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Oasis Deli & Grocery), located at 1641 South Olden Avenue, Trenton, New Jersey 08610, alleging that FDA documented at least three violations within a 24-month period.

Respondent Oasis Deli & Grocery was served with process on July 17, 2024, by United Parcel Service (UPS).  Civil Remedies Division (CRD) Docket (Dkt.) Entry Numbers (Nos.) 1b, 2.  Respondent timely filed its Answer on August 14, 2024.  CRD Dkt. Entry No. 4. 

On August 14, 2024, I issued a Pre-Hearing Order (PHO) setting a schedule for the parties’ exchanges of evidence and the procedures in preparation for a hearing.  CRD Dkt. Entry No. 6.  Pursuant to the PHO, CTP sent a Request for Production of Documents (RFP) to Respondent on September 13, 2024, which was delivered on September 16, 2024.  CRD Dkt. Entry Nos. 8a-8b.  Respondent had ten days after receipt of the RFP (or until September 26, 2024) to file a motion for protective order, or 30 days after an RFP was made (or until October 16, 2024) to provide any responsive documents to CTP. CRD Dkt. Entry No. 6 ¶ 3; 21 C.F.R. §§ 17.23(a), (d), 17.25. 

On October 23, 2024, CTP filed a Motion to Compel Discovery (MTC) with two exhibits consisting of its RFP and the UPS Delivery Notification.  CRD Dkt. Entry Nos. 8, 8a-8b.  In its MTC, CTP stated that Respondent failed to comply with CTP’s RFP by the October 16, 2024, deadline.  CRD Dkt. Entry No. 8 at 1.  CTP also requested a stay on all outstanding deadlines previously established in my PHO, pending resolution of the discovery issues.  Id. at 2.

On October 24, 2024, I issued an Order on Discovery and Order to Show Cause to Respondent (MTC OSC) giving Respondent until November 12, 2024, to show cause

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why its Answer should not be stricken as a sanction against it.  CRD Dkt. Entry No. 9 at 2.  I also stayed all remaining deadlines in this case.  Id. 

On November 7, 2024,4  Respondent filed documentation that appeared to show a change in ownership of the business establishment at issue.  CRD Dkt. Entry No. 10.

On January 24, 2025, I issued an Order Reinstating Deadlines, and giving the parties until February 24, 2025, to discuss settlement of this case.  CRD Dkt. Entry No. 11 at 2.  I also advised the parties that, if a settlement was not reached by the February 24, 2025, deadline, I would establish new benchmarks for moving this case forward.  Id. Neither party provided this office with a timely status update regarding the status of the case.  On February 25, 2025, I issued an Order giving until March 13, 2025, for:  1) CTP to file a status report stating whether it intends to continue pursuit of its MTC; and 2) the parties to submit a joint report advising of the status of any settlement negotiations.  CRD Dkt. Entry 12.  I also advised the parties that if no Notice of Settlement Agreement (NSA) was filed by the March 13, 2025, deadline, I would move this case forward and issue an Order Re-Establishing Pre-Hearing Deadlines.  Id. at 2.

On March 13, 2025, CTP filed a Status Report advising that the parties were not able to reach a settlement, and of CTP’s continued engagement in settlement discussions, and its intent to proceed to hearing.5  CRD Dkt. Entry No. 14.  CTP also advised of its

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intent to pursue the previously-filed MTC and renewed that motion.  Id. at 2.

On March 24, 2025, I issued an Order acknowledging CTP’s Renewed MTC and inferred from the renewed MTC that Respondent had not complied with CTP’s September 13, 2024, Request for Production of Documents.  CRD Dkt. Entry No. 15 at 2. I thereafter granted CTP’s Renewed MTC and directed Respondent to comply with the RFP by April 8, 2025.  Id.  I warned: “Failure to [comply] may result in sanctions, including 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.  My Order also continued the stay on the remaining pre-hearing deadlines pending resolution of all discovery issues.  Id. 

On April 11, 2025, CTP filed a Status Report and Motion to Impose Sanctions (MTIS) stating: “Respondent was given until November 12, 2024, to respond to CTP’s Motion to Compel .  .  .  but did not do so.  And Respondent failed to respond to the ALJ’s March 24, 2025, Order requiring it to comply with CTP’s Request for Production of Documents by April 8, 2025.”  CRD Dkt. Entry No. 16 at 2.  CTP asserted that sanctions against Respondent are appropriate, and a reasonable sanction for Respondent’s non-compliance is to strike Respondent’s Answer.  Id. 

On April 24, 2025, I issued an Order to Show Cause to Respondent (OSCR). CRD Dkt. Entry No. 17.  In my OSCR, I noted Respondent Oasis Deli & Grocery’s failure to comply with the procedural rules in 21 C.F.R. Part 17, that CTP’s MTIS was construed as a request for an order to show cause, and so I directed Respondent to either comply with CTP’s RFP or to show cause why default judgment should not be entered against it for

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failing to comply with the procedural rules by May 9, 2025.  Id. at 1, 2.  I again warned Respondent:

Failure to comply will result in sanctions, which may include 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 1 (citing 21 C.F.R. § 17.35) (emphasis added).  I also continued the stay on all remaining deadlines.  Id. at 2.

III. STRIKING RESPONDENT’S ANSWER

Pursuant to 21 C.F.R. § 17.35(a), I may sanction a person, including any party or counsel 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.

Here, Respondent failed to comply with multiple judicial orders and directives. Specifically, Respondent has not complied with:

• the regulation at 21 C.F.R. § 17.23(a) and paragraph 3 of my August 14, 2024, PHO by failing to respond to CTP’s RFP within 30 days;
• my March 24, 2025, Order by failing to submit documents responsive to CTP’s RFP by April 8, 2025; and
• my April 24, 2025, OSCR by failing to submit documents responsive to CTP’s RFP by May 9, 2025.

Additionally, Respondent failed to defend this action.  21 C.F.R. § 17.35(a)(2). 

Specifically:

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• Respondent did not file a response to CTP’s MTC, as permitted by the regulations, or file a response to my October 24, 2024, MTC OSC giving Respondent until November 12, 2024, to show cause why its Answer should not be stricken as a sanction against it; and
• Respondent did not file a response to CTP’s MTIS, as permitted by the regulations, or file a response to my April 24, 2025, OSCR giving Respondent until May 9, 2025, to show cause why default judgment should not be entered against it.

The harshness of the sanctions I impose upon either party must relate to the nature and severity of the misconduct or failure to comply.  21 C.F.R. § 17.35(b).  I find and conclude that sanctions are appropriate in this proceeding and that striking Respondent’s Answer is an appropriate sanction.  21 C.F.R. §§ 17.35(b), (c)(3).  Striking Respondent’s Answer leaves CTP’s Complaint unanswered.  Therefore, I am required to issue an initial decision by default, provided the Complaint is sufficient to justify a penalty.  See 21 C.F.R. § 17.11(a).  Accordingly, I must determine whether the allegations in the Complaint establish violations of the Act.

IV. BURDEN OF PROOF

CTP as the petitioning party has the burden of proof.  21 C.F.R. § 17.33.

V. LAW

21 U.S.C. § 331, specifically section 906(d)(5) of the Act, and 21 C.F.R. § 1140.14(b)(2)(i).

VI. ISSUE

Did Respondent violate 21 U.S.C. § 331, specifically section 906(d)(5) of the Act, and 21 C.F.R. § 1140.14(b)(2)(i), as alleged in the Complaint?

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VII. DEFAULT

I find Respondent was served, which Respondent has failed to rebut, and that Respondent is subject to the jurisdiction of this forum, as established by the Notice of Filing filed by CTP on July 22, 2024.

It is Respondent’s right to participate in the legal process.
It is Respondent’s right to request a hearing or to waive a hearing. 
I find Respondent waived its right to a hearing pursuant to 21 C.F.R. § 17.11(b).

VIII. ALLEGATIONS

A. Agency’s recitation of facts

CTP alleged that Respondent owns an establishment, doing business under the name Oasis Deli & Grocery, located at 1641 South Olden Avenue, Trenton, New Jersey 08610.  Respondent’s establishment receives tobacco products in interstate commerce and holds them for sale after shipment in interstate commerce.

CTP’s Complaint alleged that on January 4, 2024, CTP issued a Warning Letter to Respondent alleging that Respondent committed the following violations:

1. Selling regulated tobacco products to a person under 21 years of age, in violation of section 906(d)(5) of the Act.  Specifically, a person younger than 21 years of age was able to purchase a Black & Mild Original cigar on December 9, 2023, at approximately 4:20 PM; and
2. Failing to verify the age of a person purchasing tobacco products by means of photographic identification containing the bearer's date of birth, as required by 21 C.F.R. § 1140.14(b)(2)(i).  Specifically, the underage purchaser’s age was

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not verified before the sale, as detailed above, on December 9, 2023, at approximately 4:20 PM.

Because no opportunity for a hearing was provided before the Warning Letter was issued, Respondent had a right to challenge the allegations in the Warning Letter in the instant case.  See Orton Motor Co. d/b/a Orton’s Bagley v. HHS, 884 F.3d 1205 (D.C. Cir. 2018).     

Further, during a subsequent inspection of Respondent Oasis Deli & Grocery’s establishment, conducted on April 14, 2024, an FDA-commissioned inspector documented the following violations:

1. Selling tobacco products to a person under 21 years of age, in violation of section 906(d)(5) of the Act.  Specifically, a person younger than 21 years of age was able to purchase a Black & Mild Original cigar on April 14, 2024, at approximately 10:17 AM; and
2. Failing to verify the age of a person purchasing tobacco products by means of photographic identification containing the bearer's date of birth, as required by 21 C.F.R. § 1140.14(b)(2)(i).  Specifically, the underage purchaser’s age was not verified before the sale, as detailed above, on April 14, 2024, at approximately 10:17 AM.

B. Respondent’s recitation of facts

As the result of being sanctioned for failing to comply with my orders and the procedures governing this proceeding, Respondent’s Answer was stricken from the record.  Since Respondent filed no responsive pleadings that I may consider, I must

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assume those allegations set forth in the Complaint to be true.  21 C.F.R. § 17.11(a).

Therefore, under FDA’s current policy, the violations described in the Complaint count as three violations for purposes of computing the civil money penalty in the instant case.

IX. FAMILY SMOKING PREVENTION AND TOBACCO CONTROL ACT

The “relevant statute” in this case is actually a combination of statutes and regulations:  The Family Smoking Prevention and Tobacco Control Act, Pub. L. No. 111‑31, 123 Stat. 1776 (2009) (TCA), amended the Food, Drug, and Cosmetic Act (21 U.S.C.A. Chap. 9) (FDCA) and created a new subchapter that dealt exclusively with tobacco products, (21 U.S.C. §§ 387-387u), and it also modified other parts of the FDCA explicitly to include tobacco products among the regulated products whose misbranding can give rise to civil, and in some cases criminal, liability.  The 2009 amendments to the FDCA contained within the TCA also charged the Secretary of Health and Human Services with, among other things, creating regulations to govern tobacco sales.  The Secretary’s regulations on tobacco products appear in Part 1140 of Title 21, Code of Federal Regulations.

Under the FDCA, “[a] tobacco product shall be deemed to be misbranded if, in the case of any tobacco product sold or offered for sale in any State, it is sold or distributed in violation of regulations prescribed under section 387f(d).”  21 U.S.C. § 387c(a)(7)(B) (2012).  Section 387a‑1 directed FDA to re-issue, with some modifications, regulations previously passed in 1996.  21 U.S.C. § 387 a-1(a) (2012).  These regulations were passed pursuant to section 387f(d), which authorizes FDA to promulgate regulations on

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the sale and distribution of tobacco products; 75 Fed. Reg. 13,225 (Mar. 19, 2010), codified at 21 C.F.R. Part 1140 (2015); 21 U.S.C. § 387f(d)(1) (2012).  Accordingly, 21 C.F.R. § 1140.1(b) provides “failure to comply with any applicable provision in this part in the sale, distribution, and use of cigarettes and smokeless tobacco renders the product misbranded under the act.” 

Under 21 U.S.C. § 331(k), “[t]he alteration, mutilation, destruction, obliteration, or removal of the whole or any part of the labeling of, or the doing of any other act with respect to, a food, drug, device, tobacco product, or cosmetic, if such act is done while such article is held for sale (whether or not the first sale) after shipment in interstate commerce and results in such article being adulterated or misbranded” is a prohibited act under 21 U.S.C. § 331.  Thus, when a retailer such as Respondent misbrands a tobacco product by violating a requirement of 21 C.F.R. Part 1140, that misbranding in turn violates the FDCA, specifically 21 U.S.C. § 331(k).  FDA may seek a civil money penalty from “any person who violates a requirement of this chapter which relates to tobacco products.”  21 U.S.C. § 333(f)(9)(A) (2012).  Penalties are set by 21 U.S.C. § 333 note and 21 C.F.R. § 17.2.  Under current FDA policy, the first time FDA finds violations of 21 C.F.R. Part 1140 at an establishment FDA only counts one violation regardless of the number of specific regulatory requirements violated, but if FDA finds violations on subsequent occasions, it will count violations of specific regulatory requirements individually in computing any civil money penalty sought.  This policy is set forth in detail, with examples to illustrate, at U.S. Food & Drug Admin., Guidance for Industry, Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers,

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Responses to Frequently Asked Questions , (Revised) (2023), available at https://www.fda.gov/media/80888/download, at 11-13.  So, for instance, if a retailer sells a tobacco product on a particular occasion to an underage purchaser without checking for photographic identification, in violation of section 906(d)(5) of the Act, and subpart B of part 1140 of title 21, Code of Federal Regulations, this will count as two separate violations for purposes of computing the civil money penalty, unless it is the first time violations were observed at that particular establishment.  This policy of counting violations has been determined by the HHS Departmental Appeals Board to be consistent with the language of the FDCA and its implementing regulations.  See Orton Motor Co. d/b/a Orton’s Bagley v. HHS,884 F.3d 1205 (D.C. Cir. 2018).

X. LIABILITY

When a retailer such as Respondent is found to have “misbranded” a tobacco product in interstate commerce, it can be liable to pay a CMP.  21 U.S.C. §§ 331, 333. A retailer facing such a penalty has the right, set out in statute, to a hearing under the Administrative Procedure Act.  21 U.S.C. § 333(f)(5)(A).  A retailer can forfeit its rights under the statute and regulations by failing to participate in the process, a failure known as a “default.”  21 C.F.R. § 17.11. 

As set forth above, it is Respondent’s right to decide whether to participate in the legal process.  It is Respondent’s right to decide to request a hearing and it is Respondent’s right to waive a hearing. 

I find Respondent, by failing to respond, waived its right to a hearing.

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XI. IMPACT OF RESPONDENT’S DEFAULT

When a Respondent defaults by failing to answer the Complaint, or respond to a OSC, an ALJ must assume as true all factual allegations in the Complaint and issue an initial decision within thirty (30) days of the answer’s due date, imposing “the maximum amount of penalties provided for by law for the violations alleged” or “the amount asked for in the Complaint, whichever is smaller” if “liability under the relevant statute” is established.  21 C.F.R. § 17.11(a)(1), (a)(2); but see 21 C.F.R. § 17.45 (initial decision must state the “appropriate penalty” and consider aggravating and mitigating circumstances).

Two aspects of Rule 17.11 are important in default cases. 

First, the Complainant benefits from a regulatory presumption (the ALJ shall assume that the facts alleged in the Complaint are true) which relieves it from having to put on evidence.

The presumption affords a party, for whose benefit the presumption runs, the luxury of not having to produce specific evidence to establish the point at issue.  When the predicate evidence is established that triggers the presumption, the further evidentiary gap is filled by the presumption.  See 1 Weinstein’s Federal Evidence § 301.02[1], at 301‑7 (2d ed.1997); 2 McCormick on Evidence § 342, at 450 (John W. Strong ed., 4th ed. 1992); Routen v. West, 142 F.3d 1434, 1440 (Fed. Cir. 1998).6 

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Second, as far as the penalty is concerned, my discretion is limited by the language of the regulation.  I may not tailor the penalty to address any extenuation or mitigation, for example, nor, because of notice concerns, may I increase the penalty beyond the smaller of (a) the Complainant’s request or (b) the maximum penalty authorized by law.

XII. LIABILITY UNDER THE RELEVANT STATUTE

Taking the CTP’s allegations as set forth in the Complaint as true, the next step is whether the allegations make out “liability under the relevant statute.”  21 C.F.R. § 17.11(a).

Based on Respondent’s failure to answer I assume all the allegations in the Complaint to be true.

I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding that Respondent violated 21 U.S.C. § 331, specifically section 906(d)(5) of the Act, in that a person younger than 21 years of age was able to purchase regulated tobacco products on December 9, 2023, and April 14, 2024.

I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding that Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(2)(i), on those same dates in that Respondent also violated the

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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.

The conduct set forth above on December 9, 2023, and April 14, 2024, counts as three violations for purposes of computing the civil money penalty.

XIII. PENALTY

There being liability under the relevant statute, I must now determine the amount of penalty to impose.  My discretion regarding a penalty is constrained by regulation. I must impose either the maximum amount permitted by law, or the amount requested by the Center, whichever is lower.  21 C.F.R. § 17.11(a)(1), (a)(2).

In terms of specific punishments available, the legislation that provides the basis for assessing civil monetary penalties divides retailers into two categories:  those that have “an approved training program” and those that do not.  Retailers with an approved program face no more than a warning letter for their first violation; retailers without such a program begin paying monetary penalties with their first.  TCA § 103(q)(2), 123 Stat. 1839, codified at 21 U.S.C. § 333 note.  See 21 C.F.R. § 17.2.  The FDA has informed the regulated public that “at this time, and until FDA issues regulations setting the standards for an approved training program, all applicable CMPs will proceed under the reduced penalty schedule.”  FDA Regulatory Enforcement Manual, Aug. 2015, ¶ 5‑8‑1.  Because of this reasonable exercise of discretion, the starting point for punishments and the rate at which they mount are clear – the lower and slower schedules.

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XIV. MITIGATION

It is incumbent upon Respondent to present any factors that could result in mitigation of CTP’s proposed penalty.  Specifically, it is Respondent’s burden to provide mitigating evidence.  In a default, Respondent has failed to participate and has failed to present any evidence regarding potential mitigation.  Accordingly, I have no reason to mitigate the penalty.

XV. CONCLUSION

Respondent committed at least three violations in a 24‑month period and so, Respondent is liable for a civil money penalty of $687.  See 21 C.F.R. § 17.2. 

WHEREFORE, evidence having read and considered it be and is hereby ORDERED as follows:

1. I find Respondent has been served with process herein and is subject to this forum.
2. I find Respondent failed to comply with my PHO, and my March 24, 2025, and April 24, 2025, Orders.
3. I find Respondent failed to comply with my orders and directives governing this proceeding and failed to defend its actions, constituting misconduct that has interfered with the speedy, orderly, or fair conduct of this proceeding.  
   21 C.F.R. § 17.35(a).
4. I find Respondent’s misconduct warrants striking its Answer as a sanction. 21 C.F.R. § 17.35(c).
5. I find striking Respondent’s Answer leaves the Complaint unanswered. 21 C.F.R. § 17.11.
6. I find Respondent is in default.
7. I assume the facts alleged in the Complaint to be true.  21 C.F.R. § 17.11.
8. I find the facts set forth in the Complaint establish liability under the relevant statute.
9. I assess a monetary penalty in the amount of $687.