Kainat Enterprise LLC d/b/a Union of Humanity Smoke Shop, DAB TB9397 (2025)

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint) against Respondent, Kainat Enterprise LLC d/b/a Union of Humanity Smoke Shop, alleging facts and legal authority sufficient to justify imposing a civil money penalty of $13,785.  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 its implementing regulations, 21 C.F.R. pt. 1140.  CTP seeks a civil money penalty of $13,785 for at least seven violations of the regulations within a 48-month period.

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Respondent filed a timely Answer to CTP’s Complaint.  However, during the course of this administrative proceeding, Respondent failed to comply with 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).

Currently, CTP’s Status Report and Motion to Impose Sanctions (Motion to Impose Sanctions) is pending before me.  CTP’s Motion to Impose Sanctions requests that I strike Respondent’s Answer as a sanction for failing to respond to CTP’s discovery requests and issue a default judgment against Respondent.  After carefully considering the entire record, I grant CTP’s Motion to Impose Sanctions, strike Respondent’s Answer, and issue this default decision, pursuant to the provisions of 21 C.F.R. §§ 17.35(c)(3), 17.35(e).

I. Procedural History

On October 1, 2024, CTP served the Complaint on Respondent, located at 1604 Cullen Boulevard, Houston, Texas 77023, by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7.  Civil Remedies Division (CRD) Docket (Dkt.) Entry Numbers (Nos.) 1 (Complaint), 1b (UPS Delivery Notification).  On October 29, 2024, Respondent registered for the DAB E-File system and timely filed its Answer.  CRD Dkt. Entry No. 3.  In its Answer, Respondent admitted the allegations alleged in the Complaint, explained the extent of its employee trainings, and stated that the civil money penalty is too high for their small business.  Id.

On October 30, 2024, I issued an Acknowledgment and Status Report Order (ASRO), acknowledging receipt of Respondent’s Answer and setting a deadline for the parties to submit a joint status report regarding the status of the case not later than December 30, 2024.  CRD Dkt. Entry No. 4.  On December 30, 2024, CTP filed the joint status report indicating that the parties were unable to reach a settlement in this case.  CRD Dkt. Entry No. 6 at 1.

On January 2, 2025, I issued a Pre-Hearing Order.  CRD Dkt. Entry No. 7 (PHO).  The PHO set deadlines for the parties’ filings and exchanges, including a schedule for discovery.  The PHO informed that a party receiving a discovery request must provide the requested documents within 30 days of the request.  Id. ¶ 4; see also 21 C.F.R. § 17.23(a).  The PHO warned:

• I may impose sanctions including, but not limited to, dismissal of the [C]omplaint or answer, if a party fails to comply with any order (including this order), fails to prosecute or defend its case, or engages in misconduct that interferes with the speedy, orderly, or fair conduct of the hearing.  21 C.F.R. § 17.35.

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Id. ¶ 21. 

On February 3, 2025, CTP filed a Status Report indicating that the parties were unable to reach a settlement and intended to proceed to a hearing.  CTP represented that an attempt was made to contact Respondent to discuss filing the Status Report, to no avail.  CRD Dkt. Entry No. 8 at 1.

On March 4, 2025, CTP filed a Motion to Compel Discovery (MTC) with two exhibits consisting of its Request for Production and the UPS Delivery Notification.  CRD Dkt. Entry Nos. 9, 9a-9b.  In its MTC, CTP stated that Respondent had not responded to its discovery request, as required by the PHO and the regulations.  CRD Dkt. Entry No. 9 at 1.  On that same date, CTP also filed a Motion to Extend Deadlines requesting a 30-day extension of “any deadlines, including the March 24, 2025 due date for CTP’s pre-hearing exchange .  .  .  .”  CRD Dkt. Entry No. 10 at 2.

On March 5, 2025, I issued an Order advising Respondent that it had until March 20, 2025, to file a response to CTP’s Motion to Compel Discovery.  CRD Dkt. Entry No. 11. I also warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.”  Id. at 1-2; see also PHO ¶¶ 20-21.  In my Order, I also extended the pre‑hearing exchange deadlines.  CRD Dkt. Entry No. 11 at 2.  Respondent failed to respond to both CTP’s Motion to Compel Discovery and my March 5, 2025 Order, or otherwise comply with CTP’s Request for Production of Documents.

On March 25, 2025, I issued an Order granting CTP’s Motion to Compel Discovery and ordered Respondent to produce responsive documents to CTP’s Request for Production of Documents by April 4, 2025.  CRD Dkt. Entry No. 12.  Again, I warned:

• Failure [to comply] 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 April 7, 2025, CTP filed a Status Report and Motion to Impose Sanctions.  CRD Dkt. Entry No. 13.  CTP advised that Respondent had not complied with the PHO or my March 25, 2025 Order Granting CTP’s Motion to Compel Discovery.  Id. at 1.  CTP argued that sanctions against Respondent for its repeated non-compliance are an appropriate remedy.  Id. at 2.  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 $13,785 civil money penalty.  Id.  On April 7, 2025, CTP also filed a Motion to Stay Deadlines.  CRD Dkt. Entry No. 14.

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On April 22, 2025, I issued an Order giving Respondent until May 7, 2025, to file a response to CTP’s Motion to Impose Sanctions.  CRD Dkt. Entry No. 15.  The April 22, 2025 Order also stayed the parties’ pre-hearing exchange deadlines and warned Respondent that if it failed to file a response, “I may grant CTP’s Motion to Impose Sanctions and impose the requested civil money penalty amount of $13,785, pursuant to 21 C.F.R. § 17.35.”  Id.  To date, Respondent has not filed any response.

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 the regulation at 21 C.F.R. § 17.23(a) and paragraph 4 of my January 2, 2025 PHO by failing to respond to CTP’s RFP within 30 days; and
• Respondent failed to comply with my March 25, 2025 Order Granting CTP’s Motion to Compel Discovery by failing to submit documents responsive to CTP’s RFP by April 4, 2025. 

Respondent also failed to defend its action.  21 C.F.R. § 17.35(a)(2).  Specifically:

• Respondent did not file a response to CTP’s MTC, as permitted by the regulations, or file a response to my March 5, 2025 Order, giving Respondent until March 20, 2025 to file a response; and
• Respondent did not file a response to CTP’s Motion to Impose Sanctions (MTIS) , as permitted by the regulations, or file a response to my April 22, 2025, Order, giving Respondent until May 7, 2025 to respond to CTP’s MTIS.

I find that Respondent failed to comply with orders and procedures governing this proceeding, failed to defend its case, and, as a result, interfered with the speedy, orderly, and 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.

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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 regulatory requirements and two judicial orders, despite my explicit warnings that its failure to do so could result in sanctions.  See CRD Dkt. Entry Nos. 7, 12; see also PHO ¶ 21.  Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.  In fact, after initially admitting all of the violations alleged in the Complaint, Respondent has not participated in this action in any meaningful fashion since filing its Answer.  Accordingly, 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); 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.”).

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.

Specifically, CTP alleges the following facts in its Complaint:

• On December 15, 2023, CTP initiated a previous civil money penalty action, CRD Docket Number T-24-945, FDA Docket Number FDA-2023-H-5495, against Respondent for at least five violations of the Act.  CTP alleged those violations to have occurred at Respondent’s business establishment, 1604 Cullen Boulevard, Houston, Texas 77023, on September 10, 2022, January 8, 2023, and October 8, 2023.  Complaint ¶ 15.
• The previous action concluded when an Initial Decision and Default Judgment was entered by an Administrative Law Judge, “finding that all of the violations alleged in the Complaint occurred.”  Complaint ¶ 16.
• An FDA-commissioned inspector conducted a subsequent inspection on June 14, 2024, at approximately 11:16 AM, at Respondent’s business establishment. During this inspection, a person younger than 21 years of age was able to purchase a Lost Mary OS5000 Watermelon Lemon electronic nicotine delivery system (ENDS) product.  Additionally, Respondent’s staff failed to verify, by means of 

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• photographic identification containing a date of birth, that the purchaser was 21 years of age or older

These facts establish Respondent, Union of Humanity Smoke Shop’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. § 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. Part 1140 under section 906(d) of the Act.  21 U.S.C. § 387a-1; see also 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). 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, Respondent violated the prohibition against selling regulated tobacco products to purchasers younger than 21 years of age on September 10, 2022, January 8, 2023, October 8, 2023, and June 14, 2024.  Act § 906(d)(5).  On those same dates, 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.  Act § 906(d)(5); 21 C.F.R. § 1140.14(b)(2)(i).  Therefore, Respondent’s actions constitute violations of law that merit a civil money penalty.

CTP has requested a civil money penalty of $13,785, which is a permissible penalty for at least seven violations of the regulations found at 21 C.F.R. pt. 1140 within a 48-month period.  21 C.F.R. § 17.2.  Therefore, I find that a civil money penalty of $13,785 is warranted and so order one imposed.