Eva Operation LLC d/b/a Conoco DAB TB9727 (2025)

ORDER IMPOSING SANCTIONS AND INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint) against Respondent, Eva Operation LLC d/b/a Conoco, 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 some 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 six violations of the regulations within a 48-month period.

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

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speedy, orderly, or fair conduct of this proceeding.  21 C.F.R. § 17.35(a).  Accordingly, pursuant to 21 C.F.R. § 17.35(a)(1); 21 C.F.R. § 17.35 (a)(2), I strike Respondent’s Answer and issue this decision of default judgment.

I. Procedural History

On September 12, 2024, CTP served the Complaint on Respondent, at 1201 South Range Line Road, Joplin, Missouri 64801, by United Parcel Service (UPS), 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 16, 2024, via the DAB E-File system, Respondent’s counsel (Counsel) filed an answer in response to CTP’s complaint, accompanied by a request for a one-day extension of time in which to file the answer.  CRD Dkt. Entry Nos. 3, 3a.  The request for extension and answer, both dated October 16, 2024, were filed one day after the October 15, 2024 deadline for answering the complaint or filing an extension request, pursuant to 21 C.F.R. § 17.9.  On October 24, 2024, a letter by my direction was issued, giving CTP until November 4, 2024 to file any objections to Respondent’s untimely filed answer and request for extension.  CRD Dkt. Entry No. 4.  On October 30, 2024, by email transmission, CTP informed this office that it did not object to Respondent’s late-filed answer.  CRD Dkt. Entry No. 5.

On November 5, 2024, I issued an Acknowledgment and Pre-Hearing Order (APHO), acknowledging receipt of Respondent’s Answer and establishing procedural deadlines for this case.  CRD Dkt. Entry No. 6.  Among other things, the APHO ordered CTP to file its pre-hearing exchange by January 27, 2025, and Respondent to file its pre-hearing exchange by February 18, 2025.  Id. ¶¶ 6a, 6b. Further, the APHO warned the parties that “I may impose sanctions including, but not limited to, dismissal of the complaint 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 this hearing.” Id. ¶ 21, citing 21 C.F.R. § 17.35.

On December 5, 2024, CTP filed a Status Report indicating that the parties were unable to reach a settlement in this case and intended to proceed to a hearing.  CRD Dkt. Entry No. 8 at 1.

On January 27, 2025, CTP timely filed its pre-hearing exchange, consisting of a pre-hearing brief, a list of proposed witnesses and exhibits, and 17 proposed exhibits (CTP Exhibits (Exs.) 1-17), including the written direct testimony of two proposed witnesses, James Bowling, CTP Deputy Division Director for the Division of Enforcement and Manufacturing (“DEM”) in the Office of Compliance and Enforcement (CTP Ex. 5), and Inspector Nicholas Huckstep (CTP Ex. 6). Respondent did not file a pre-hearing exchange.

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On April 8, 2025, CTP filed a Motion to Extend Deadlines, stating that “[o]n April 1, 2025, FDA experienced a significant reduction in force (RIF), including in FDA’s Center for Tobacco Product’s [CTP’s] Office of Compliance and Enforcement, the office that supports all tobacco-related administrative cases” and Complainant “is still evaluating the impact the RIF may have on CTP’s immediate operations .  .  .  [and] is requesting a 30-calendar day extension of all pending deadlines in this matter.”  CRD Dkt. Entry No. 13. On April 9, 2025, I issued an Order Granting CTP’s Motion to Extend Deadlines, directing CTP to file a status update regarding the RIF impact on FDA operations by May 9, 2025. CRD Dkt. Entry No. 14.  On May 9, 2025, CTP filed a Status Report.  CRD Dkt. Entry No. 15.  In the Status Report, CTP stated that “CTP is still evaluating the impact the RIF may have on CTP’s immediate operations .  .  .  [and] is requesting a 30-calendar day extension of all pending deadlines in this matter.”  Id.  On May 14, 2025, I issued an Order Granting CTP’s Second Motion to Extend Deadlines extending all pending deadlines for an additional 30 days.  CRD Dkt. Entry No. 16.  My May 14, 2025 Order directed CTP to file an updated Status Report regarding the status of FDA operations by June 9, 2025.  Id.  On June 10, 2025, CTP filed a second Status Report advising that it was prepared to move forward in this case and did not require any additional extensions.  CRD Dkt. Entry No. 18.

On June 11, 2025, the attorney advisor assisting me with this case sent the parties an email with a list of possible dates for a pre-hearing conference.  CRD Dkt. Entry No. 19.  On June 18, 2025, CTP’s Counsel emailed the attorney advisor assisting me with this case that the parties had agreed to July 16, 2025 for a pre-hearing conference.  CRD Dkt. Entry No. 20.  On June 24, 2025, I issued an Order directing the parties to appear for a pre-hearing conference on Wednesday, July 16, 2025, at 11:00 AM Eastern Time.  CRD Dkt. Entry No. 21; see also CRD Dkt. Entry Nos. 18-19, 20-20a.  The Order explained that the purpose of the conference was to discuss all matters related to the hearing, including any objections to the parties’ evidentiary submissions and whether either party wished to cross-examine any witnesses.  CRD Dkt. Entry No. 21 at 2.

On July 16, 2025, I convened the pre-hearing conference as scheduled.  Counsel for CTP, Brian Atkin, appeared at the pre-hearing conference.  However, Stephanie G. Hazelton, Counsel for Respondent, failed to appear as ordered, despite agreeing to the date and time.  See CRD Dkt. Entry No. 20.

On July 16, 2025, I issued an Order to Show Cause for Failure to Appear (OSC) at Pre-Hearing Conference, giving Counsel until July 30, 2025 to show cause for her failure to appear at the July 16, 2025 scheduled pre-hearing conference.  CRD Dkt. Entry No. 22. I warned that failure to respond to the OSC “may result in the imposition of 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 1-2.  To date, Counsel has failed to respond to the OSC.

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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. § 17.25(a) and paragraph 6 of my November 5, 2024 APHO by failing to file its pre-hearing exchange by February 18, 2025; and
• Respondent failed to comply with my June 24, 2025 Order Scheduling Pre-Hearing Conference, requiring both parties to appear at the pre-hearing conference; and
• Respondent failed to comply with my July 16, 2025 OSC requiring it to show cause for its failure to appear at the July 16, 2025 pre-hearing conference.

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

• Respondent failed to file a pre-hearing exchange as directed by my APHO;
• Respondent failed to appear at the pre-hearing conference; and
• Respondent failed to respond to my OSC.

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.  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 three judicial orders, despite my explicit warnings that its failure to do so could result in sanctions.  See CRD Dkt. Entry No. 22; see also APHO ¶ 21.  Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.  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), (d); see also KKNJ, Inc. d/b/a Tobacco Hut 12, DAB No. 2678 at 8 (2016) (concluding that “the ALJ [Administrative

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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:

• Respondent owns Conoco, an establishment that sells tobacco products and is located at 1201 South Range Line Road, Joplin, Missouri 64801.  Complaint ¶¶ 11-12.
• On March 25, 2024, CTP initiated a previous civil money penalty action, CRD Docket Number T-24-2222, FDA Docket Number FDA-2024-H-1408, against Respondent for violations of the Act, four of which occurred during the 48-month period relevant in the current Complaint.  CTP alleged those violations to have occurred on November 15, 2022, February 10, 2023, and January 16, 2024. Complaint ¶ 15.
• The previous action concluded when Respondent admitted all of the allegations in the Complaint and paid the agreed upon monetary penalty.  Further, “Respondent expressly waived its right to contest such violations in subsequent actions.” Complaint ¶ 16.
• An FDA-commissioned inspector conducted a subsequent inspection of Respondent’s establishment on May 24, 2024, at approximately 2:13 PM during which a person younger than 21 years of age was able to purchase a VUSE Originals Menthol e-liquid product .  .  .  .”  Additionally, the underage purchaser’s age was not verified before the sale .  .  .  .”  Complaint ¶ 13.

These facts establish Respondent Conoco’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

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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 November 15, 2022, February 10, 2023, January 16, 2024, and May 24, 2024.  Act § 906(d)(5).  On January 16, 2024, and May 24, 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).  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 six 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.