Vape MD LLC d/b/a Vape MD, DAB No. 3204 (2025)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Vape MD LLC d/b/a Vape MD (Respondent) appeals an Administrative Law Judge (ALJ)’s Initial Decision and Default Judgment (Initial Decision) and subsequent Order Denying Respondent’s Motion to Reopen Initial Decision (Denial Order).  Vape MD LLC d/b/a Vape MD, DAB TB9234 (2025) (Initial Decision); Docket #12a, T-25-1106 (Apr. 15, 2025) (Denial Order).  We affirm the Initial Decision and the Denial Order for the reasons stated below.

Legal Background

To protect public health, the Federal Food, Drug, and Cosmetic Act (FDC Act) restricts the sale, distribution, and use of tobacco products.  See 21 U.S.C. §§ 301, 331(b), 331(k), 387a(a)-(b), 387c(a)(7)(B), 387f(d).  The FDC Act authorizes a civil money penalty (penalty) against “any person who violates a requirement of [the FDC Act] which relates to tobacco products.”  21 U.S.C. § 333(f)(9)(A).  The implementing regulations concerning penalties at 21 C.F.R. Part 17 and 45 C.F.R. § 102.3 establish a schedule of maximum penalty amounts based on the number of violations committed and the period over which they have occurred.  See 21 C.F.R. § 17.2 (citing 45 C.F.R. § 102.3 (table)).

When CTP serves an administrative complaint alleging a violation of the FDC Act, the respondent may request a hearing before an ALJ “by filing an answer.”  21 C.F.R.§ 17.9(a); see also id. §§ 17.5, 17.7.  The respondent must file the answer “within 30 days of service of the complaint.”  Id. § 17.9(a).

The regulations provide for an ALJ’s entry of a default judgment against a respondent that does not file a timely answer.  21 C.F.R.§ 17.11.  “If the respondent does not file an answer within” 30 days after proper service of the complaint, the ALJ “shall assume the facts alleged in the complaint to be true, and, if such facts establish liability under the relevant statute,” the ALJ shall issue an initial decision imposing a penalty.  Id.  Within 30 days after issuance of that initial decision and default judgment, a respondent may move “to reopen on the grounds that extraordinary circumstances prevented the

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respondent from filing an answer,” and the ALJ shall stay the initial decision while the motion is pending.  Id. § 17.11(b)-(c).  If the respondent demonstrates “extraordinary circumstances,” the ALJ may withdraw the previously issued decision and “grant the respondent an opportunity to answer the complaint.”  Id. § 17.11(d).  However, if the ALJ “decides that the respondent’s failure to file an answer in a timely manner is not excused,” the ALJ “shall affirm the decision.”  Id. § 17.11(e).

A respondent “may appeal an [ALJ’s] initial decision, including a decision not to withdraw a default judgment,” to the Board.  21 C.F.R. § 17.47(a).  The Board may decline to review the case, affirm or reverse the initial decision, “or increase, reduce, reverse, or remand any civil money penalty determined by” the ALJ.  Id. § 17.47(j).

Case Background

On January 13, 2025, CTP served on Respondent an Administrative Complaint for Civil Money Penalty (Complaint) alleging that Respondent was a manufacturer and retailer of new tobacco products lacking the premarketing authorization that the FDC Act required.  Initial Decision at 1; Complaint at 1.  On request, the ALJ granted Respondent an extension until March 14, 2025 to answer.  Initial Decision at 2.  Respondent did not file its Answer until March 18, 2025.  Id.

Because “Respondent failed to file an answer within the time prescribed in 21 C.F.R. § 17.9,” the ALJ, “pursuant to 21 C.F.R. § 17.11(a),” assumed the truth of facts alleged in the Complaint and entered “default judgment in the amount of $21,348 against Respondent” on April 10, 2025.  Initial Decision at 2, 4.

The same day, Respondent filed a Motion to Reopen, arguing that Respondent’s counsel “did not intentionally miss or forget the deadline, but was out of office due to his illness” with what he “believed” was COVID-19.  Mot. to Reopen at 1.  “Out of caution,” counsel claimed, he “did not return to the office for a week,” but on March 18, 2025 he “recognized” that the answer was due “during the time he was sick, and contacted his paralegal to submit the answer on his behalf.”  Id.  CTP opposed Respondent’s motion.  Opp’n to Resp’t’s Mot. to Reopen.  Per 21 C.F.R. § 17.11(c), the ALJ entered an Order Staying Initial Decision pending a ruling on the motion.

On April 15, 2025, the ALJ issued the Denial Order, ruling that “Respondent’s counsel has not met the burden to establish that ‘extraordinary circumstances’ existed at the time that the answer was due, thereby preventing him from filing a timely answer to CTP’s Complaint.”  Denial Order at 2.  The ALJ reasoned:

Although the regulations do not define the term “extraordinary circumstances” clearly, that term must mean something more than a simple error or omission.  An “extraordinary circumstance” would normally

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constitute some event or events beyond a Respondent’s ability to control that acted to prevent Respondent from filing timely.  At the very least, the term would preclude reopening where ordinary negligence is the cause of a Respondent’s failure to file an answer timely.

Denial Order at 2.  The ALJ found Respondent’s counsel did “not allege, in any manner, that he was rendered unable to communicate with []his office while he was out to ensure” timely filing of the answer.  Id. at 2-3.  The record showed “no apparent reason why” Respondent’s counsel could not have enlisted his paralegal’s assistance with filing the answer on March 14, 2025 rather than March 18, 2025.  Id. at 3.  The ALJ also observed that Respondent had received “substantial time” to file a timely answer, as the missed deadline already was extended “an additional 30 days” beyond the original deadline.  Id.  The ALJ therefore denied Respondent’s motion and affirmed the Initial Decision.  Id.

Respondent timely filed a Notice of Appeal and a Brief on Appeal (R. Br.) with the Board.  CTP timely filed a Memorandum in Opposition to Re[s]pondent’s Appeal (CTP Br.), and Respondent timely filed a reply brief captioned “Appeal” (R. Reply).

Standard of Review

We apply established standards of review.  “The standard of review on a disputed issue of fact is whether the initial decision is supported by substantial evidence on the whole record.”  21 C.F.R. § 17.47(k).  “The standard of review on a disputed issue of law is whether the initial decision is erroneous.”  Id.  The standard of review for an ALJ’s ruling on a motion seeking to reopen under section 17.11(c) is whether the ALJ committed an abuse of discretion.  Shesh Narayan LLC, DAB No. 3137, at 6-7 (2024).

Analysis

Before the Board, Respondent agrees with the ALJ’s definition of “extraordinary circumstances” but “disagrees with the application of the definition to the Respondent’s counsel’s case.”  R. Br. at 2.  Respondent also claims that “[t]he Answer was not ‘previously prepared’ as [the ALJ] believed which is why Respondent’s counsel could not simply contact his office to file the answer” on or before March 14, 2025.  Id.

CTP argues the Board should decline to review the case because Respondent “failed to comply with the requirements in 21 C.F.R. § 17.47” for appellate filings.  CTP Br. at 1.  Alternatively, CTP argues that if the Board reviews the case, the Board should affirm the Initial Decision and Denial Order.  Id. at 5-8.

Respondent’s reply brief includes an additional Statement of Facts and argues that the ALJ should have set aside the default judgment due to excusable neglect under Federal Rules of Civil Procedure (FRCP) 6, 55, and 60.  Reply at 1, 4-5.

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After reviewing the record and the parties’ arguments, we affirm the Initial Decision and Denial Order because Respondent has shown no error or abuse of discretion by the ALJ.

I. The ALJ’s Initial Decision and entry of default judgment against Respondent was factually supported and not legally erroneous.

Substantial evidence supports the ALJ’s decision to enter default judgment against Respondent.  Initial Decision at 2-3 (summarizing factual findings).  On January 13, 2025, CTP served on Respondent a Complaint that contained factual allegations supporting CTP’s claim that Respondent violated the FDC Act and warned (with emphasis) that failure to answer within 30 days could result in a default order imposing the proposed penalty.  Id. at 1-2; Complaint at 4-6.  Respondent does not dispute the ALJ’s finding that the answer was due (after an initial extension) on March 14, 2025, but was not filed until March 18, 2025.  Initial Decision at 2; R. Br. at 1; see R. Reply at 4 (admitting that Respondent’s counsel “failed to file the Answer on time”).

Respondent establishes no legal error in the ALJ’s conclusions that the facts alleged in CTP’s Complaint “establish Respondent’s liability under the [FDC] Act” and therefore a $21,348 penalty is permissible.  See Initial Decision at 3.  Respondent’s untimely Answer denied some of CTP’s factual allegations.  Answer at 2-3.  However, because the Answer was untimely, “we conclude that the ALJ did not err in treating the allegations set out in CTP’s Complaint as true and proceeding to apply the relevant law to those facts, as section 17.11(a) requires.”  Shesh Narayan LLC at 11.  Therefore, the ALJ lawfully issued the Initial Decision imposing a $21,348 penalty.

II. The ALJ’s denial of Respondent’s motion to reopen was not an abuse of discretion.

An ALJ’s decision whether to withdraw a default judgment and allow late filing of an answer is discretionary.  Per 21 C.F.R. § 27.11(d), an ALJ “may” withdraw a default judgment decision if the respondent demonstrates “extraordinary circumstances” that excuse an untimely answer.  See KKNJ, Inc., DAB No. 2678, at 7 (2016) (stating that the Board has long interpreted use of “may” in regulations as conferring discretion).

In reviewing an ALJ’s exercise of discretion, the Board’s role “is not to substitute our judgment for that of the ALJ.”  Retail LLC, DAB No. 2660, at 14 (2015); see also Joshua Ranjit Inc., DAB No. 2758, at 7 (2017).  Instead, we “consider only whether the decision maker has articulated a reasonable basis for the decision under review, not whether it was the only reasonable decision.”  Retail LLC at 10 (emphasis omitted); see also Ranjit at 7.

The ALJ did not commit an abuse of discretion in this case because the ALJ articulated a reasonable basis for determining that Respondent did not establish extraordinary

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circumstances excusing the untimely Answer.  See 21 C.F.R. § 17.11(d).  The ALJ stated that the term “extraordinary circumstances,” though undefined, “must mean something more than a simple error or omission” or “ordinary negligence” and normally would constitute “some event or events beyond a Respondent’s control” that prevented timely filing.  Denial Order at 2.  That assessment aligns with Board precedent, which holds that “at minimum, the ‘extraordinary circumstances’ test requires proof of circumstances outside of Respondent’s ability to control and an absence of negligence.”  Shesh Narayan LLC at 8 (italics substituted for boldface).  We agree with the ALJ that the claimed illness of Respondent’s counsel did not constitute an “extraordinary” circumstance that prevented him from filing (or directing his office to file) the Answer on or before the extended filing deadline of March 14, 2025.  Respondent does not establish that his illness, for instance, left him hospitalized without access to communications equipment, or otherwise entirely unable to finish, file, or have his office staff finalize and file, a timely answer.  Thus, the ALJ reasonably ruled that Respondent’s counsel failed to demonstrate that his illness – even if it “may have presented increased difficulties” – was such an “extraordinary” circumstance that it actually “prevent[ed] . . . a timely answer to CTP’s Complaint.”  Denial Order at 3.

On appeal, we need not consider new arguments that the Respondent did not present before the ALJ.  The Board “will consider only those issues raised before” the ALJ and is not required to consider these new contentions.  21 C.F.R. § 17.47(g); see Shesh Narayan LLC at 10 (“These are new arguments that were not raised before the ALJ; therefore, the Board is not required to consider them.”).  For example, Respondent raises new arguments for setting aside the default judgment by applying an “excusable neglect” standard pursuant to FRCP 6, 55, and 60.  R. Reply at 1, 3-4.  The Board need not consider these arguments, and even if we considered them we would find them unpersuasive for two reasons.  First, the Part 17 regulations and not the FRCP govern these proceedings.  See Amira Tobacco Inc., DAB No. 3141, at 8 (2024).  Second, when adopting the pertinent Part 17 regulation, 21 C.F.R. § 17.11, the FDA expressly rejected an “excusable neglect” standard, explaining that “the ‘extraordinary circumstances’ test,” although “somewhat harder to meet, is justified by the need to encourage respondents to respond in a timely fashion.”  60 Fed. Reg. 38,612, 38,617 (July 27, 1995).

Respondent also seeks reversal based on facts newly asserted before the Board, but we find those facts unpersuasive because they lack both consistency and evidentiary support.  For example, Respondent represented to the ALJ that March 18, 2025 was the date Respondent’s counsel “recognized” an answer was due “during the time he was sick” and so “contacted his paralegal to submit” the filing.  Mot. to Reopen at 1.  Yet on appeal, Respondent newly claims March 18, 2025 was the “first day” when counsel “felt well enough to work, at which point he completed the Answer,” which had lacked “the finishing details,” and asked his paralegal to file it.  R. Br. at 2.  Alternatively, and inconsistently, Respondent claims that while home sick he “drafted the Answer,” then “sent the draft to the office, which modified and corrected the draft before filing it a day

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late.”¹  R. Reply at 4.  No evidence (for instance affidavits, redacted medical records, or sick leave documentation) resolves these inconsistencies or shows that the severity and duration of counsel’s illness prevented timely filing of Respondent’s Answer, although the opportunity to proffer such evidence was available.  See 21 C.F.R. § 17.47(i).

Respondent’s criticisms of the ALJ’s decision also establish no abuse of discretion.  We reject Respondent’s unsupported charge that the ALJ found Respondent’s initial extension request to be in “bad faith.”  R. Reply at 4.  There was no such finding.  Instead, the ALJ ruled that Respondent had “substantial time within which to file a timely answer,” as Respondent already had requested and received “an additional 30 days” beyond the original filing deadline.  Denial Order at 3.  We agree with the ALJ’s assessment, particularly as Respondent’s Answer filed on March 18, 2025 was only three pages long and its first two pages were a filled-in version of the “blank form answer” the ALJ had provided in a January 13, 2025 procedural guidance document.  See Guidance Establishing Order at 1; compare id. at PDF pp. 3-4 with Answer.  Respondent’s counsel also asserts that he “could not simply contact his office to file the answer” by March 14, 2025 because the Answer “was not ‘previously prepared’ as [the ALJ] believed.”  R. Br. at 3.  However, Respondent’s rationales – for example, that counsel “began hurriedly” preparing the Answer on February 12 but it was not “complete” until March 18 – are ultimately immaterial.  See R. Br. at 3; see also R. Reply at 4 (stating the Answer was filed with the uncorrected “date that Counsel first started working on” it).  As the ALJ repeatedly noted, “the internal date used by Respondent” on the Answer, meaning February 12, 2025, “is not relevant to the determination of timeliness.”  Initial Decision at 2 n.1 (emphasis added); Denial Order at 2 n.2 (emphasis added).  However complete or incomplete the draft Answer may have been on any given date before the March 14, 2025 filing deadline, Respondent’s counsel was on clear notice of that deadline, failed to meet it, and established no extraordinary circumstances that excuse that failure.

Finally, we reject any attempts by Respondent to seek relief on equitable grounds.  Counsel argues that “the concept of deciding cases based on their merits, rather than on procedural grounds, is a principle of fairness and justice within the legal system.”  R. Reply at 4.  Counsel asserts that “[n]o one should be denied their ‘day in court’ due to a preventable or excusable action by their representative counsel” who “admits he failed to file the Answer on time,” and that CTP “has not lost any position by the late filing.”  Id.  “We construe these assertions by Respondent as a request for equitable relief from the ALJ’s entry of default judgment,” but we cannot ignore regulations on such equitable grounds.  See Carolina Cigar of Delray, LLC, DAB No. 3134, at 10-11 (2024) (citing Kwik Gas Inc., DAB No. 2852, at 7 (2018)).  Counsel also newly suggests that he became sick from “volunteering in the hurricane damaged areas of Western North Carolina,” and claims that his employee urged him to “work from home” while ill to protect her health

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and her husband’s health.  R. Reply at 4; see also R. Br. at 1.  From these newly alleged facts, counsel argues that Respondent should not suffer prejudice because counsel “volunteers in a devastated area, and cannot come to the office because of staff that could risk illness or death to themselves or their spouse.”  R. Reply at 5.  Respondent did not identify these considerations as “extraordinary circumstances” before the ALJ, so we cannot consider them.  Even if we could consider them, we would reiterate that the Board, “like the ALJ, cannot ignore binding regulations on equitable grounds, and, moreover, we find no unfairness in the ALJ Decision in this case.”  Kwik Gas at 7.

The ALJ reasonably found that Respondent did not meet its burden to establish that “extraordinary circumstances” prevented Respondent from timely filing its Answer to CTP’s Complaint.  Therefore, the ALJ did not commit an abuse of discretion in denying Respondent’s Motion to Reopen and affirming the Initial Decision.

Conclusion

We affirm the Initial Decision and the Denial Order.

Endnotes

¹ The answer, due no later than Friday, March 14, 2025 but filed on Tuesday, March 18, 2025, was actually late by two business days and four calendar days.