All About It, LLC d/b/a Woodstock Vape and Glass Gallery, DAB TB4136 (2019)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative complaint (Complaint) on Respondent, All About It, LLC d/b/a Woodstock Vape and Glass Gallery, at 46699 Van Dyke Avenue, Shelby Township, Michigan 48317, and by filing a copy of the Complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  The Complaint alleges that Woodstock Vape and Glass Gallery impermissibly sold cigarettes and a covered tobacco product to minors and failed to verify, by means of photo identification containing a date of birth, that the covered tobacco product purchaser was 18 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 $570 civil money penalty against Respondent Woodstock Vape and Glass Gallery for three violations within a 24-month period.

During the hearing process, Respondent failed to comply with judicial orders and procedures governing the proceeding, and engaged in misconduct that interfered with the speedy, orderly, and fair conduct of the hearing.  I, therefore, strike Respondent’s Answer and issue this decision of default judgment.

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I. Background

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 31, 2019, CTP served the Complaint on Respondent Woodstock Vape and Glass Gallery by United Parcel Service.  On February 28, 2019, Respondent, through counsel, filed its Answer to the Complaint. On March 5, 2019, I issued an Acknowledgment and Pre-hearing Order (APHO) setting forth case procedures and deadlines.  The APHO contained a provision that set out instructions regarding a party’s request for production of documents.  That provision stated, in part, that a party had until April 4, 2019, to request that the other party provide copies of documents relevant to this case.  APHO ¶ 12.  The APHO also stated that, pursuant to 21 C.F.R. § 17.23(a), a party receiving such a request must provide the requested documents no later than 30 days after the request has been made.  Id.  In addition, the APHO stated that a party may file a motion for a protective order with the Civil Remedies Division within 10 days of receiving a request for the production of document.  Id.  See also 21 C.F.R. § 17.23(d).  The parties were warned that failure to comply with any order including the APHO may result in sanctions.  APHO ¶ 16. 

On May 17, 2019, CTP filed a Motion to Compel Discovery stating that CTP’s Request for Production of Documents (RFP) was sent to Respondent on April 4, 2019.  CTP further stated that it did not receive a response from Respondent regarding its RFP, and requested that I issue an order requiring Respondent to comply.  In a May 17, 2019 letter issued by my direction, Respondent was given until June 3, 2019 to file a response to CTP’s Motion to Compel Discovery. 

On June 2, 2019, Respondent, through counsel, filed a response to CTP’s Motion to Compel Discovery requesting a two-week extension of time to respond to CTP’s RFP.  Respondent indicated that the RFP was vague and unduly burdensome and claimed that CTP’s attorney failed to contact Respondent’s attorney to discuss the discovery deadline before filing the Motion to Compel Discovery.  Respondent, however, provided no explanation as to what precluded it from (a) producing responsive documents within 30 days after the RFP was made, or (b) contacting CTP’s counsel before the production deadline.  Moreover, Respondent failed to file a motion for protective order within 10 days of receiving the RFP.  Therefore, on June 4, 2019, I granted CTP’s Motion to Compel Discovery and ordered Respondent to comply with CTP’s RFP by June 12, 2019.  I warned Respondent that failure to comply with my Order may result in sanctions, including the issuance of an initial decision and default judgment finding Respondent liable for the violations alleged in the Complaint and imposing a civil money penalty.

On June 17, 2019, CTP filed a Status Report and Motion to Impose Sanctions stating that Respondent had not produced documents in response to CTP’s RFP as ordered.  CTP requested I strike Respondent’s Answer and issue an initial decision and default judgment imposing a civil money penalty against Respondent.  On June 19, 2019, I issued an Order allowing Respondent until July 2, 2019 to file a response to CTP’s Motion to Impose

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Sanctions.  I warned Respondent that if it failed to respond to the Motion to Impose Sanctions, I may grant the motion in its entirety.  Respondent failed to respond to the Motion to Impose Sanctions by the July 2, 2019 deadline. 

On July 29, 2019, over three weeks after the July 2, 2019 deadline, Respondent, through counsel, filed the following documents with the Departmental Appeals Board: (1) Respondent’s response to CTP’s RFP with attached documents; (2) certificate of service confirming Respondent’s response to CTP’s RFP was sent to CTP on July 29, 2019; (3) stipulation of fact signed by Respondent’s counsel stating Respondent “has the financial means to pay $570 if liability is assessed in this matter[]” and “[p]ayment of $570 will not constitute a financial hardship for Respondent[;]” (4) Respondent’s response to CTP’s Motion to Compel Discovery previously filed on June 2, 2019; and (5) Respondent’s Explanation as to Failure to File Documents (Explanation).  

In its response to CTP’s RFP, Respondent produced copies of alleged postings in the facility in response to RFP Nos. 6 and 8, and either objected or declined to provide anything else in response to the remaining nine requests.   Specifically, Respondent provided a cursory explanation that “[n]o documents exist in Respondent’s possession[]” in response to RFP Nos. 1, 2, 5, 7, 10, and 11.  Respondent further stated that some of the requests (RFP Nos. 3, 4, and 9) were vague, not relevant, and/or unduly burdensome. 

In its Explanation, Respondent provided a few reasons for its failure to file documents.Notably, discovery responses need not be filed with the Civil Remedies Division except when required in connection with a motion for protective order.  See APHO ¶ 12.  First, Respondent claimed that on June 1, 2019, its counsel prepared and tried to file a response to CTP’s Motion to Compel Discovery, but had not completed the filing.The docket, however, reflects that Respondent filed its response to CTP’s Motion to Compel Discovery on June 2, 2019, along with the certificate of service.  Respondent further stated that Respondent’s counsel communicated with CTP’s counsel “in the past about discovery and thought [the parties] had [the discovery dispute] resolved.  [Respondent’s counsel] explained what documents [Respondent] was producing and [they] agreed that [Respondent’s counsel] would sign a stipulation as to [Respondent’s] ability to pay the fine if found responsible.”  Finally, Respondent alleged that Respondent’s counsel “would have realized the oversight if [CTP’s] counsel would have just called [him].”  Respondent’s counsel claimed that he “received no calls from [CTP’s counsel] and [he] ha[d] always reached out to [CTP’s counsel] in the past with any concerns.”  Allegedly, Respondent’s counsel contacted CTP’s counsel on July 29, 2019 and “explained the problems [he] was having with the electronic filing system,” but CTP’s counsel did not agree to withdraw CTP’s Motion to Impose Sanctions.

A July 30, 2019 letter issued by my direction acknowledged Respondent’s July 29, 2019 filings and asked CTP to indicate whether it intended to pursue its Motion to Impose

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Sanctions and, if so, to respond to Respondent’s assertions and provide a detailed rationale for its position by August 9, 2019.  

On August 9, 2019, CTP filed a Response to By Direction Letter stating that it continues to believe that sanctions are appropriate.  CTP stated that on May 30, 2019, after CTP filed its Motion to Compel Discovery on May 17, 2019, Respondent’s counsel contacted CTP’s counsel with questions about e-filing and discovery, and counsel arranged for a call on May 31, 2019.  Allegedly, during that call, counsel “discussed alternatives to providing financial documents that CTP had requested.”  CTP asserted that on June 4, 2019, CTP’s counsel “provided Respondent’s counsel with a proposed stipulation stating that Respondent has the ability to pay the civil money penalty if liability is assessed in this matter.”  Allegedly, on July 29, 2019, Respondent’s counsel contacted CTP’s counsel for the first time since the May 31, 2019 conversation, and filed a number of documents with the Departmental Appeals Board, including a response to CTP’s RFP, a stipulation of fact signed by Respondent’s counsel, and an explanation as to Respondent’s failure to file documents.  CTP argued that Respondent’s explanations “fail[ed] to provide any reasonable basis to excuse counsel’s repeated disregard for the ALJ’s orders or the administrative process, and therefore do not mitigate Respondent’s failure to timely comply with its discovery obligations.”  

Specifically, CTP addressed Respondent’s statement that Respondent’s counsel “prepared and tried to file an answer to Complainant’s Motion to Compel Discovery[,]” but realized on July 29, 2019 that he “didn’t complete the filings.”  CTP asserted that “an ‘answer’ to the Motion to Compel Discovery was filed on June 2, 2019, . . . although that response was a request for a two-week extension.”  CTP further addressed the assertion of Respondent’s counsel that he “would have realized the oversight if [CTP’s] counsel would have just called [him,]” stating “[i]t is not clear what ‘oversight’ [Respondent’s counsel] is referring to.”  CTP further contended that to the extent Respondent referred to its failure to respond to CTP’s RFP, Respondent failed to “identify any previous failed attempt to upload the discovery responses before [July 29, 2019], nor was [CTP’s counsel] informed that [Respondent’s counsel] had attempted to upload any such responses.”  CTP also maintained that “Respondent’s counsel fail[ed] to identify any obligation on the part of [CTP’s] counsel to keep him apprised of the status of his filings on a system to which he independently ha[d] access.”  Similarly, CTP averred that there is no requirement for CTP to consult Respondent before filing a motion to compel. 

CTP further disputed that “the telephone conversations on May 30, 2019 and May 31, 2019 resolved the discovery issues,” arguing that such issues could not had been resolved without Respondent’s actual response which was not received by CTP until July 29, 2019.  CTP asserted that it was unreasonable to assume that discovery issues were resolved in light of CTP’s Motion to Impose Sanctions filed on June 17, 2019.  CTP also contended that Respondent’s submitted stipulation only resolved the discovery issues concerning Respondent’s ability to pay (RFP Nos. 9 and 11).  CTP emphasized, however,

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that Respondent’s counsel failed to provide the signed stipulation until July 29, 2019, “negating any reasonable assumption that those discovery requests were resolved at any point before July 29, 2019.”  As to the remaining document requests, CTP argued that they were not fully resolved by Respondent’s belated response.  CTP stated that despite Respondent’s failure to move for a protective order and being ordered to comply with CTP’s RFP, Respondent continued to object to RFP Nos. 3 and 4 as vague, not relevant, and/or unduly burdensome.  According to CTP, Respondent denied the violations in its Answer making the documents concerning the identify and duty of persons working at the establishment on the dates of the violations (RFP No. 3) and the documents concerning the sale of tobacco products on those dates (RFP No. 4) relevant and producible absent a protective order.

Finally, CTP argued that Respondent missed multiple deadlines including the document production deadlines on May 6, 2019 and June 12, 2019, and the deadline to respond to CTP’s Motion to Impose Sanctions on July 2, 2019.  According to CTP, “Respondent’s repeated disregard for known deadlines, without any reasonable explanation or substantiated reason has unnecessarily delayed the efficient processing of this case and necessitated filing multiple motions to compel, for sanctions, and to extend deadlines, all of which interfered with the speedy, orderly conduct of the hearing.”  CTP concluded by stating that “sanctions are an appropriate consequence for the multiple missed deadlines and incomplete discovery response in this case.”

II. Striking Respondent’s Answer

The regulations authorize me to impose sanctions on any party or counsel 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).

After considering the submissions of the parties, I grant CTP’s Motion to Impose Sanctions, and strike Respondent’s Answer for failing to comply with judicial orders and procedures governing the proceeding, and engaging in misconduct that interfered with the speedy, orderly, and fair conduct of the hearing.  See 21 C.F.R. § 17.35(a)(1) and (a)(3).  Specifically, Respondent failed to comply with the following judicial orders and procedures governing this proceeding:

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• Respondent failed to comply with 21 C.F.R. § 17.23(a) and paragraph 12 of my March 5, 2019 APHO, when Respondent failed to respond to CTP’s RFP within 30 days after the request was made; and
• Respondent failed to comply with my June 4, 2019 Order to Compel Discovery, when it failed to produce documents responsive to CTP’s RFP by June 12, 2019.

Additionally, Respondent failed to timely respond to CTP’s Motion to Impose Sanctions despite my June 19, 2019 Order informing Respondent of such opportunity and warning of consequences. 

Still further, Respondent’s document production in response to CTP’s RFP on July 29, 2019, was not only untimely but also incomplete as it failed to provide any responsive documents to RFP Nos. 3 and 4.  Instead, Respondent’s counsel raised objections to RFP Nos. 3 and 4.  The objections, however, are untimely and inappropriate at this juncture for the following reasons: (1) Respondent failed to move for a protective order within 10 days of service of the RFP (see 21 C.F.R. § 17.23(d)(1)); (2) I considered Respondent’s vagueness and undue burden objections before issuing the June 4, 2019 Order to Compel Discovery; and (3) I ordered Respondent to produce responsive documents by June 12, 2019.Even if the objections were not rejected on untimeliness grounds, they still are inadequate.  RFP No. 3 requested “[a]ll documents relating to the identity and duties of the person(s) working at the Establishment on March 7, 2017 and November 3, 2018.”  RFP No. 4 requested “[a]ll documents relating to the sales of tobacco products at the Establishment on March 7, 2017 and November 3, 2018, including, but not limited to, point of sale transaction logs, point of sale age verification reports and data, register tapes and data and video surveillance tapes and data.”  I find that both requests are specific enough, not burdensome, and relevant to the issues in this case.

Lastly, Respondent failed to demonstrate good cause for its tardiness.  Respondent’s explanation filed on July 29, 2019 is insufficient as it simply attempts to blame CTP’s counsel for Respondent’s failure to timely and fully respond to CTP’s RFP.  Respondent’s flagrant and repeated disregard for the deadlines, coupled with the disingenuous conduct by Respondent’s counsel and the lack of reasonable explanation to justify Respondent’s failure to timely and fully respond to CTP’s RFP, has unnecessarily delayed the efficient processing of this case and interfered with the speedy, orderly, and fair conduct of the hearing.  This repeated conduct is sufficiently egregious to warrant striking Respondent’s Answer and issuing an initial decision by default.

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III. Default Decision

Striking Respondent’s Answer leaves the Complaint unanswered.  Pursuant to 21 C.F.R. § 17.11, I assume that the facts alleged in the Complaint (but not its conclusory statements) are true.  Specifically:

• At approximately 4:56 PM on March 7, 2017, at Respondent’s business establishment, 46699 Van Dyke Avenue, Shelby Township, Michigan 48317, an FDA‑commissioned inspector documented Respondent’s staff selling a package of Marlboro Gold Pack cigarettes to a person younger than 18 years of age;
• In a warning letter dated March 23, 2017, CTP informed Respondent of the inspector’s March 7, 2017 documented violation, and that such action violated federal law.  The letter further warned that Respondent’s failure to correct its violation could result in a civil money penalty or other regulatory action;
• At approximately 11:28 AM on November 3, 2018, at Respondent’s business establishment, 46699 Van Dyke Avenue, Shelby Township, Michigan 48317, an FDA‑commissioned inspector documented Respondent’s staff selling a JUUL Classic Menthol e-liquid product to a person younger than 18 years of age.  The inspector also documented that staff failed to verify, by means of photographic identification containing a date of birth, that the purchaser was 18 years of age or older.

These facts establish Respondent Woodstock Vape and Glass Gallery’s liability under the Act.  The Act prohibits misbranding of a tobacco product.  21 U.S.C. § 331(k).  A tobacco product is misbranded if sold or distributed in violation of regulations issued under section 906(d) of the Act.  21 U.S.C. § 387f(d); see also 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. pt. 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).  Under 21 C.F.R. § 1140.14(a)(1) and 21 C.F.R. § 1140.14(b)(1), no retailer may sell cigarettes or covered tobacco products to any person younger than 18 years of age.  Under 21 C.F.R. § 1140.14(b)(2)(i), retailers must verify, by means of photographic identification containing a purchaser’s date of birth, that no covered tobacco product purchasers are younger than 18 years of age. 

Under 21 C.F.R. § 17.2, a $570 civil money penalty is permissible for three violations of the regulations found at 21 C.F.R. pt. 1140 within a 24-month period.

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Order

For these reasons, I enter default judgment in the amount of $570 against Respondent All About It, LLC d/b/a Woodstock Vape and Glass Gallery.  Pursuant to 21 C.F.R. § 17.11(b), this order becomes final and binding upon both parties after 30 days of the date of its issuance.