O D Inc. d/b/a Discount Tobacco Palace, DAB No. 3236 (2026)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

O D Inc. d/b/a Discount Tobacco Palace (Respondent) appeals an Administrative Law Judge’s (ALJ) Initial Decision and Default Judgment (Initial Decision) and subsequent Order Denying Respondent’s Motion to Reopen Initial Decision and Default Judgment (Denial Order).  O D Inc. d/b/a Discount Tobacco Palace, DAB TB10121 (2025) (Initial Decision); O D Inc. d/b/a Discount Tobacco Palace, Order Denying Resp’t Mot. to Reopen, Docket No. T-26-153 (Mar. 11, 2026) (Denial Order).  For the reasons explained below, we affirm the Initial Decision and the Denial Order.

Legal Background

To protect public health, the Federal Food, Drug, and Cosmetic Act (Act) restricts the sale, distribution, and use of tobacco products.  See 21 U.S.C. §§ 301, 331, 387a, 387f.  The Act provides, among other things, that “[i]t shall be unlawful for any retailer to sell a tobacco product to any person younger than 21 years of age.”  Id. § 387f(d)(5).  Under the applicable regulations, retailers are prohibited from “sell[ing] covered tobacco products to any person younger than 21 years of age” and must “verify by means of photographic identification . . . that no person purchasing the product is younger than 21 years of age.”  21 C.F.R. § 1140.14(b)(1), (2).

The Act authorizes a civil money penalty (penalty) against “any person who violates a requirement of [the Act] which relates to tobacco products.”  21 U.S.C. § 333(f)(9)(A).  Applicable regulations establish a schedule of maximum penalties based on the number of violations committed and the period over which they occurred.  21 C.F.R. § 17.2 (citing 45 C.F.R. § 102.3 (table)).  To impose a penalty, the Center for Tobacco Products (CTP) must file an administrative complaint and serve a copy of the complaint on the respondent.  21 C.F.R. § 17.5.  The respondent may request a hearing before an ALJ by filing an answer to the complaint within 30 days of service.  Id. § 17.9(a).  The respondent may request an extension of time and the ALJ may, for good cause shown, grant the respondent “up to 30 additional days” to answer the complaint.  Id. § 17.9(c).

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The regulations authorize a default judgment if the respondent does not timely answer the complaint.  Id. § 17.11.  If the respondent does not answer the complaint, then 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. § 17.11(a).

Within 30 days after issuance of a default judgment, the respondent may move “to reopen on the grounds that extraordinary circumstances prevented the respondent from filing an answer.”  Id. § 17.11(c).  If the respondent demonstrates “extraordinary circumstances excusing the failure to file an answer in a timely manner,” the ALJ may withdraw the initial decision and “grant the respondent an opportunity to answer the complaint.”  Id. § 17.11(d).  If the ALJ determines that the respondent’s failure to timely file an answer is not excused, then the ALJ shall affirm the initial 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 October 15, 2025, CTP served an administrative complaint on Respondent, alleging that Respondent violated the Act and regulations five times within 36 months when it sold tobacco products to underage purchasers and failed to verify that the purchasers were 21 years of age or older.  CRD Dkt. 1 (Compl.) ¶¶ 1, 13, 15; CRD Dkt. 1b (proof of service).1  The complaint alleged that three of the five violations were the subject of a prior administrative complaint, which was closed when Respondent admitted all the allegations in the prior complaint, paid an agreed penalty, and expressly waived its right to contest those violations in any subsequent action.  Compl. ¶¶ 15-16.  The complaint alleged that Respondent subsequently committed two additional violations, which led to the current complaint.  Id. ¶¶ 13-14.  Based on five violations within 36 months, CTP sought a civil money penalty of $7,115.  Id. ¶¶ 1, 19.

The complaint and accompanying cover letter instructed Respondent to answer the complaint within 30 days to avoid a default.  Compl. ¶ 17; CRD Dkt. 1a (Cover Ltr.).  The cover letter also included detailed instructions for responding to the complaint, including the option of requesting a hearing by filing an answer or requesting an extension of time.  Cover Ltr. at 3-6.

Additionally, on October 16, 2025, the ALJ issued a guidance document to the parties outlining initial procedures, including requirements for filing an answer and the

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consequences of failing to timely answer the complaint.  CRD Dkt. 2 (guidance establishing procedures).  The guidance document informed Respondent that its answer was due on November 14, 2025.  Id. at 1; see also 21 C.F.R. § 17.9(a) (answer due within 30 days of service of the complaint).  The guidance document further explained that a failure to timely answer the complaint could result in the issuance of “a default judgment assessing a civil money penalty against Respondent.”  CRD Dkt. 2, at 2.  Additionally, the guidance document supplied instructions for registering for CRD’s electronic filing system, provided information about requesting an extension of time, and enclosed a blank answer form that Respondent could use to answer the complaint.  Id. at 1-7.

Respondent failed to file an answer or any responsive pleading.  On December 15, 2025, the ALJ issued the Initial Decision, entering a default judgment against Respondent under 21 C.F.R. § 17.11, finding Respondent liable for the violations alleged in the complaint (having assumed the facts alleged in the complaint to be true), and imposing a penalty of $7,115.  Initial Decision at 1-3.

On January 14, 2026, Respondent filed a motion to reopen, requesting reconsideration “due to significant procedural and evidentiary concerns.”  CRD Dkt. 4.2  Respondent asserted that on November 14, 2025, the day its answer was due, it “attempted to contact the appropriate office to request clarification regarding this matter” but “only received an automatic out-of-office response and no subsequent follow-up.”  Id. at 1.  Respondent also denied selling tobacco products to underage purchasers and asserted that CTP did not “substantiate the allegations” in the complaint with sufficient evidence.  Id.  Respondent further alleged that it was “unfairly targeted” due to its owner’s “ethnicity and naturalized status.”  Id.

The ALJ denied Respondent’s motion to reopen and affirmed the Initial Decision, finding that Respondent failed to establish that “extraordinary circumstances” prevented it from timely filing an answer.  Denial Order at 2-4.  The ALJ determined “the circumstances described by Respondent fall well short of the standard required for reopening,” noting that “Respondent was repeatedly advised that the answer was due by November 14, 2025 and provided with instructions on how to file it.”  Id. at 3.  The ALJ found Respondent’s failure to answer the complaint was “attributable to its own negligence and/or lack of diligence and was not caused by ‘extraordinary circumstances’ beyond Respondent’s control.”  Id. at 3.  The ALJ rejected Respondent’s other arguments as irrelevant to the analysis of the motion to reopen.  Id.

Respondent subsequently filed with the Board a “motion to reopen,” which we will treat as a notice of appeal and appeal brief (R. Br.).3  Respondent requests that the matter be

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“reopened and thoroughly reconsidered,” arguing that “significant procedural irregularities and evidentiary deficiencies . . . were not adequately addressed during the initial review process.”  R. Br. at 1, 4.4  CTP filed a brief in opposition, arguing that the Initial Decision and Denial Order should be affirmed.

Standard 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 Board reviews an ALJ’s ruling on a motion to reopen for abuse of discretion.  Shesh Narayan LLC, DAB No. 3137, at 6-7 (2024).

Analysis

Before the Board, Respondent argues that it “made a timely and good-faith effort to comply with all procedural requirements,” asserting that on November 14, 2025, it “attempted to contact the appropriate office to seek clarification” about the case but received only an “automated out-of-office response and no subsequent follow-up.”  R. Br. at 1-2.  Respondent states that, as a result, it was “left without the guidance necessary to properly address the issues raised.”  Id. at 2.  Respondent makes no other arguments regarding its failure to answer the complaint.  Instead, Respondent attempts to challenge the finding that it sold tobacco products to minors, arguing that the complaint was “not supported by sufficient or credible evidence” and that its own review of surveillance footage showed no violation.  Id. at 2-3.  Respondent also repeats its contention that it was “subjected to discriminatory treatment” based on its owner’s (unspecified) ethnicity and status as a naturalized citizen.  Id. at 4.  We reject each of Respondent’s arguments for the reasons explained below.

I.    The ALJ’s denial of Respondent’s motion to reopen was not an abuse of discretion or legally erroneous.

When an ALJ enters a default judgment under 21 C.F.R. Part 17, the respondent may file a motion to reopen on grounds that “extraordinary circumstances prevented the respondent from filing an answer.”  21 C.F.R. § 17.11(c).  If “the respondent can demonstrate extraordinary circumstances excusing the failure to file an answer in a timely manner,” the ALJ may withdraw the default judgment and allow the respondent to file an answer.  Id. § 17.11(d).  “An ALJ’s decision whether to withdraw a default judgment and allow late filing of an answer is discretionary.”  Vape MD LLC, DAB No. 3204, at 4 (2025).  Thus, the Board reviews an ALJ’s denial of a motion to reopen for abuse of discretion.  Id.  “In reviewing an ALJ’s exercise of discretion, the Board’s role ‘is not to

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substitute our judgment for that of the ALJ.’”  Id. (quoting Retail LLC, DAB No. 2660, at 14 (2015)).  Rather, the Board considers only whether the ALJ “‘has articulated a reasonable basis for the decision under review, not whether it was the only reasonable decision.’”  Id. (quoting Retail at 10).

Respondent does not dispute that it was served with the complaint on October 15, 2025, and failed to file an answer on or before the November 14, 2025 filing deadline.  Moreover, Respondent does not argue that “extraordinary circumstances” prevented it from timely filing an answer to the complaint.  Respondent contends that it “made a timely and good-faith effort to comply with all procedural requirements” as shown by its timely submission of a “previous letter of appeal,” which Respondent claims did not receive adequate consideration.  R. Br. at 1.  It is unclear what “letter of appeal” Respondent is referring to.  If Respondent means the motion to reopen it filed with the ALJ, that motion was fully considered and appropriately denied by the ALJ.

In denying Respondent’s motion to reopen, the ALJ articulated a reasonable basis for finding that Respondent did not show that “extraordinary circumstances” prevented it from filing an answer to the complaint.  Denial Order at 1, 3-4 (citing 21 C.F.R. § 17.11).  The ALJ recognized that “extraordinary circumstances” is a “high bar,” noting that “[c]ircumstances attributable to ordinary negligence or lack of diligence are insufficient” to set aside a default judgment.  Id. at 3.  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 at 8.  Moreover, a mere showing of inconvenience or difficulty in meeting a deadline is ordinarily not enough to warrant reopening.  See, e.g., Vape MD at 5 (“[T]he 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 prevented a timely answer to CTP’s Complaint.” (brackets, ellipses, and internal quotation marks omitted)).

Here, Respondent reiterates its argument that on the day its answer was due, it purportedly “attempted to contact the appropriate office to seek clarification regarding several aspects of this case” but “received only an automated out-of-office response and no subsequent follow-up.”  R. Br. at 1-2.  Notably, the record contains no evidence of any attempt to seek “clarification,” nor does Respondent identify which “office” it purportedly attempted to contact.

The ALJ reasonably determined that such circumstances “fall well short of the standard required for reopening.”  Denial Order at 3.  As the ALJ correctly noted, Respondent is “a business engaged in the sale of regulated tobacco products” and “has an obligation to exercise reasonable diligence and timely respond to regulatory correspondence and complaints, especially given its prior violations.”  Id. (emphasis added).  Moreover, the ALJ correctly found that Respondent was “repeatedly advised” that its answer was due

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on November 14, 2025, and it was given detailed instructions on how to file an answer.  Id. (citing CRD Dkt. 1, 1a, 2).  As the ALJ further found, Respondent took no action in connection with the case until it submitted its motion to reopen two months after the deadline for filing an answer.  Id.  We find no error in the ALJ’s conclusion that Respondent’s failure to timely file an answer was due to its own lack of diligence and not due to “extraordinary circumstances” beyond its control.  Id. 

The ALJ also considered Respondent’s “belated” arguments challenging the substance of the complaint and the sufficiency of CTP’s evidence in support of the complaint, noting that such arguments “have no bearing on whether this case should be reopened.”  Denial Order at 3.  We agree.  CTP was not required to submit any evidence with its complaint.  Because Respondent did not file an answer, the ALJ appropriately assumed “the facts alleged in the complaint to be true.”  21 C.F.R. § 17.11(a).  By failing to file an answer, Respondent necessarily forfeited its opportunity for a hearing at which both parties could have submitted evidence relevant to any disputed issue of fact.  21 C.F.R. § 17.11(b) (“[B]y failing to file a timely answer, the respondent waives any right to a hearing.”). 

The ALJ also addressed “Respondent’s bald allegations of discrimination,” explaining that such allegations “have no connection to Respondent’s failure to timely file an answer.”  Denial Order at 3.  We agree that Respondent proffered no evidence of unfair discrimination and, in any event, such allegations do not excuse Respondent’s failure to timely answer the complaint.  As the ALJ found, Respondent made no showing of any “exceptional circumstances” that prevented Respondent from timely filing an answer to the complaint.  Id. (“Respondent has failed to identify any valid basis for reopening this case.”); see also 21 C.F.R. § 17.11(c), (d).  We find no error in the ALJ’s analysis or conclusion.

II.    The ALJ did not err in assuming that the facts alleged in the complaint are true and establish Respondent’s liability.

Having concluded that Respondent’s failure to timely file an answer was not excused by extraordinary circumstances, the ALJ appropriately affirmed the Initial Decision.  Denial Order at 4 (citing 21 C.F.R. § 17.11(d), (e)).  Because Respondent did not timely file an answer, the regulations required the ALJ to “assume the facts alleged in the complaint to be true” and, “if such facts establish liability,” issue a default judgment and impose a civil money penalty.  See 21 C.F.R. § 17.11(a).

The ALJ determined that the facts alleged in the complaint, taken to be true, establish that Respondent violated the Act and regulations on multiple occasions, when it sold regulated tobacco products to underage purchasers and failed to verify that the purchasers were 21 years of age or older.  Initial Decision at 2-3.  Respondent does not show that the ALJ committed any legal error by assuming the facts alleged in the complaint to be true, as 21 C.F.R. § 17.11(a) required.  Respondent also does not contend or show that those

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facts, once assumed as the regulation requires, are insufficient to establish Respondent’s liability under the Act and warrant the imposition of a penalty.  We find no error in the ALJ’s analysis or conclusion as set forth in the Initial Decision.  Accordingly, we conclude that the ALJ lawfully issued the Initial Decision imposing a $7,115 penalty.

Conclusion

We affirm the Initial Decision and the Denial Order.