LBR LLC d/b/a Party Shop, DAB No. 3167 (2024)

DECISION TO SUMMARILY AFFIRM ADMINISTRATIVE LAW JUDGE DECISION

LBR LLC d/b/a Party Shop (Respondent) appeals to the Departmental Appeals Board (Board) from the August 29, 2024 Initial Decision and Default Judgment of an Administrative Law Judge (ALJ), which imposed a $6,892 civil money penalty (CMP) on Respondent.  LBR LLC d/b/a Party Shop, DAB TB8434 (2024) (ALJ Decision).  The Center for Tobacco Products (CTP) of the Food and Drug Administration (FDA) filed an administrative complaint (Complaint) seeking the CMP because Respondent allegedly violated federal law by selling tobacco products to underage purchasers and not verifying their age through photo identification.  The ALJ found Respondent interfered with the speedy, orderly, and fair conduct of the proceeding by failing to defend it and comply with governing orders and procedures.  ALJ Decision at 2.  Consequently, the ALJ sanctioned Respondent by striking its answer to the Complaint (Answer) and issuing default judgment against Respondent per 21 C.F.R. § 17.35.¹  Id.  We summarily affirm the ALJ Decision.  

An ALJ may sanction a party for failing to comply with a governing order or procedure.  21 C.F.R. § 17.35(a)(1).  The sanction “shall reasonably relate to the severity and nature of the failure or misconduct” and “[w]hen a party fails to comply with a discovery order” the ALJ may “[s]trike any part of the pleadings or other submissions of” that party.  Id. § 17.35(b), (c)(3).  The Board reviews an ALJ’s discretionary imposition of a sanction for abuse of discretion, and does not substitute the Board’s own judgment for the ALJ’s.  KKNJ, Inc., DAB No. 2678, at 7 (2016); Retail LLC, DAB No. 2660, at 9, 14 (2015).

Summary affirmance is appropriate where, as here, Respondent has not complied with 21 C.F.R. § 17.47(c) and our own consideration of the record reveals “no basis to disturb the ALJ’s factual findings or legal conclusions on any issue.”  Fair Bros. Inc., DAB No. 3012, at 2 (2020).  Respondent’s one-page notice of appeal (NA) does not meet the regulatory requirements that it must be “accompanied by a written brief” and “must

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identify specific exceptions to the initial decision, must support each exception with citations to the record, and must explain the basis for each exception.”  21 C.F.R. § 17.47(c).²  Respondent merely repeats certain assertions it made before the ALJ and adds brief new ones that do not address the basis of the ALJ Decision.

We first dispense with Respondent’s previously raised claims that the product at issue was stolen because there was “no receipt in or on [the] computer register” and that the individual accused of selling the product was “not identified.”  NA; cf. Answer at 2.³  Respondent could have litigated those claims before the ALJ by actively defending this action and complying with the ALJ’s orders and procedures, but did not do so.  ALJ Decision at 4-5.  “Thus, the question before us is not whether Respondent could have prevailed had the case gone to hearing,” but “whether the ALJ abused [their] discretion in striking Respondent’s answer to the Complaint and entering default judgment against Respondent based on CTP’s allegations.”  KKNJ, Inc. at 8; accord Carolina Cigar of Delray, LLC, DAB No. 3134, at 10 (2024).  Having been sanctioned for “repeated and sustained noncompliance, Respondent forfeited the opportunity to ‘prove any affirmative defenses and any mitigating factors by a preponderance of the evidence.’”  Amira Tobacco Inc., DAB No. 3141, at 10 (2024) (quoting 21 C.F.R. § 17.33(c)).   

We also reject Respondent’s claim that it “answered all charges against [it].”  NA.  Respondent filed an Answer but, as the ALJ explained, otherwise failed to defend the action or comply with governing orders and procedures, despite repeated warnings.  ALJ Decision at 2-4.  Pursuant to the ALJ’s Acknowledgment and Pre-Hearing Order (APHO), CTP delivered a Request for Production of Documents (RFP) to Respondent, which did not provide the requested documents, so CTP moved to compel their production.  APHO at 4; Mot. to Compel Disc. at 1 (citing CTP Exs. A, B).  Respondent did not oppose that motion and the ALJ granted it, ordering Respondent to comply with CTP’s RFP or face possible “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.”  June 6, 2024 Order at 2.  Respondent did not comply, CTP moved for sanctions, and the ALJ gave Respondent 21 days to file a response, again

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warning of possible sanctions including imposition of the CMP.  Complainant’s Mot. to Impose Sanctions; June 26, 2024 Order; ALJ Decision at 4-5.  Respondent filed no response.

Based on these unrebutted facts, the ALJ did not err in striking Respondent’s Answer, treating the allegations in CTP’s Complaint as unanswered and proven, and entering Default Judgment against Respondent.  ALJ Dec. at 5-7; see KKNJ, Inc. at 8-11.  When a respondent has not timely answered, the ALJ “shall assume the facts alleged in the complaint to be true” and “issue an initial decision” imposing either the maximum legal penalty for the violations alleged, or the amount the complaint requested, “whichever amount is smaller.”  21 C.F.R. § 17.11(a)(1)-(2).  Thus, the ALJ lawfully issued an initial decision and default judgment against Respondent, imposing the CTP-requested CMP of $6,892 (which also was the maximum authorized CMP for a fifth violation of 21 U.S.C. § 387f(d)(5) or of the tobacco product regulations within a 36-month period).  See Compl. at 1; 21 C.F.R. § 17.2 (citing 45 C.F.R. § 102.3 (table)) (schedule of maximum CMP amounts); Annual CMP Inflation Adjustment, 89 Fed. Reg. 64,815 (Aug. 8, 2024); Amira Tobacco at 6-10 (affirming analogous decision by ALJ).

Respondent’s remaining new assertions establish no error or abuse of discretion by the ALJ for several reasons.  First, the Board “will consider only those issues raised before” the ALJ by Respondent.  21 C.F.R. § 17.47(g); see Carolina Cigar at 10 (“Respondent raises several contentions, none of which were raised before the ALJ.  Therefore, the Board is not required to consider them.”).  Second, Respondent’s new claims would be unpersuasive in any event.  Respondent states it “called several times to get this corrected” and got a “recording every time” but does not specify whom Respondent called, or when, or what exactly Respondent wanted corrected.  NA.  Regardless, Respondent could not reasonably have been confused about its responsibilities to respond to CTP’s document request and comply with the ALJ’s clear orders and warnings.  See KKNJ, Inc. at 9-10 (holding that alleged telephone communication with CTP did not excuse respondent’s “failure to respond in any way to CTP’s formal document request” or ignoring of ALJ’s “repeated orders” and “entirely unambiguous” warnings).  Respondent also appears to seek equitable relief from the ALJ Decision for health-related reasons, and although we are sympathetic to any individual facing medical challenges, “[w]e, like the ALJ, cannot ignore binding regulations on equitable grounds, and, moreover, we find no unfairness in the ALJ Decision in this case.”  See Kwik Gas Inc., DAB No. 2852, at 7 (2018).  Finally, we dispense with Respondent’s request for a “trial by jury,” NA, which is not authorized under the governing 21 C.F.R. Part 17 regulations.  See 21 C.F.R. §§ 17.33, 17.45, 17.47. 

Having considered the entire record, we find no abuse of discretion by the ALJ or any basis to reverse or remand the ALJ Decision or alter the CMP.  See 21 C.F.R. § 17.47(j). 

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Conclusion

We summarily affirm the ALJ Decision.

Endnotes

¹  We cite to the regulations in effect when CTP served the Complaint on Respondent (in March 2024) and the underlying inspection occurred (in December 2023).  See W. Spirits, Inc., DAB No. 2844, at 2 n.1 (2018).

²  The Board’s October 11, 2024 letter acknowledging this appeal (Acknowledgment Letter) referred Respondent to 21 C.F.R. § 17.47 and provided a link to the Board’s explanatory procedural guidelines.  See Acknowledgment Letter at 2; Guidelines – Appellate Review of Decisions of Administrative Law Judges in Food and Drug Administration Tobacco Products Cases, available at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/fda-tobacco-decision-review/index.html (last visited December 23, 2024).  We presume Respondent received proper notice of all filings in this appeal, including the Acknowledgment Letter, which the Board posted in its electronic filing system and sent via certified mail to Respondent’s three addresses on file.  See Certified Mail Receipts.  Two of those mailings were returned (marked, respectively, “RETURN TO SENDER” and “UNCLAIMED”).  See Returned Mail; Unclaimed Mail. However, United States Postal Service documentation shows the third mailing (sent to P.O. Box 29171, Shreveport, LA 71149) was picked up at the Post Office on October 17, 2024.  See Mail Pick-Up Documentation.  CTP similarly filed its November 7, 2024 Memorandum in Opposition to Respondent’s Appeal (CTP’s Mem.) via the Board’s electronic filing system and sent copies to all three of Respondent’s addresses on file.  CTP’s Mem. at 9.

³  We cite to the PDF pages of Respondent’s unpaginated three-page Answer.