Batesville Express, LLC d/b/a Citgo / Batesville Express, DAB TB5071 (2020)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint) against Respondent, Batesville Express, LLC d/b/a Citgo / Batesville Express, alleging facts and legal authority sufficient to justify imposing a civil money penalty of $5,705.  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 minors and failed to verify that purchasers were of sufficient age, 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 $5,705, for five violations of the regulations within a 36-month period.

During the course of these administrative proceedings, Respondent failed to comply with orders and procedures governing this proceeding and failed to defend its actions, which interfered with the speedy, orderly, or fair conduct of this proceeding.  21 C.F.R.

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§ 17.35(a).  Accordingly, pursuant to 21 C.F.R. § 17.35(c)(3), I strike Respondent's Answer and issue this decision of default judgment.

I.   Procedural History

On August 13, 2019, CTP served the Complaint on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7.  On September 3 and 4, 2019, Respondent registered for the Departmental Appeals Board (DAB) E-File system and timely filed an incomplete Answer form admitting the Complaint allegations.  On September 6, 2019, I issued an Acknowledgment and Status Report Order directing the parties to file a joint status report regarding the status of settlement discussions.  On September 10 and 11, 2019, the Civil Remedies Division (CRD) of the DAB received two complete copies of Respondent's Answer, which were uploaded to the docket on September 12, 2019.  On October 9, 2019, Respondent sent an e-mail to the CRD describing its position on the issues.  On November 5, 2019, CTP filed a Status Report stating the parties were unable to reach a settlement in this case.  On November 7, 2019, I issued an Acknowledgement and Pre-Hearing Order (APHO) that set deadlines for the parties' filings and exchanges, including a schedule for discovery.  I directed that a party receiving a discovery request must provide the requested documents within 30 days of the request.  APHO ¶ 12; see 21 C.F.R. § 17.23(a).  I warned that I may impose sanctions if a party failed to comply with any order, including the APHO.  APHO ¶ 16.

On January 22, 2020, CTP filed a Motion to Compel Discovery asserting that Respondent did not respond to its discovery request as required by my APHO and regulations.  By Order of January 27, 2020, I informed Respondent of its deadline to file a response to CTP's Motion to Compel Discovery, and warned that if Respondent failed to respond, "I may grant CTP's motion in its entirety."  See 21 C.F.R. § 17.32(c); APHO ¶ 19.  Respondent did not respond.

On February 10, 2020, I issued an Order Granting Motion to Compel in which I granted CTP's motion and ordered Respondent to produce documents responsive to CTP's discovery request by February 25, 2020.  I warned Respondent that:

Failure to [comply] may result in 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.

February 10, 2020, Order Granting Motion to Compel.

On March 6, 2020, CTP filed a Status Report and Motion to Impose Sanctions.  CTP advised that Respondent did not produce responsive documents in compliance with my Order to Compel Discovery.  By Order of March 12, 2020, I informed Respondent of its

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deadline to file a response to CTP's motion and warned Respondent that if it failed to file a response, "I may grant CTP's motion in its entirety."  March 12, 2020, Order.  Respondent did not respond.

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 21 C.F.R. § 17.23(a) and paragraph 12 of my APHO, when Respondent failed to respond to CTP's Request for Production of Documents within 30 days; and
• Respondent failed to comply with my February 10, 2020 Order Granting Motion to Compel, when it failed to submit the documents responsive to CTP's Request for Production of Documents by February 25, 2020.

Respondent also failed to defend its action despite my February 10, 2020, and March 12, 2020, orders informing Respondent of such opportunities and warning of consequences.

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, or 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 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 a regulation governing this proceeding.  Respondent failed to comply with two of my orders, despite my explicit warnings that its failure could result in sanctions.  I specified that those sanctions may include "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."  February 10, 2020, Order Granting Motion to Compel.  Respondent also failed to defend its actions, despite my orders expressly reminding Respondent of the

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opportunity.  Respondent's repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.

I find that Respondent's actions are sufficient to warrant striking its Answer and issuing a decision by default, without further proceedings.  21 C.F.R. § 17.35(b), (c)(3).  Accordingly, I strike Respondent's Answer, and issue this Initial Decision and Default Judgment, assuming the facts alleged in CTP's Complaint to be true.  21 C.F.R. §§ 17.35(c)(3), 17.11(a).

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 Citgo / Batesville Express, an establishment that sells tobacco products and is located at 250 Highway 6 West, Batesville, Mississippi 38606.  Complaint ¶¶ 7-8.
• On July 28, 2017, CTP initiated a previous civil money penalty action, CRD Docket Number T-17-5486, FDA Docket Number FDA-2017-H-4446, against Respondent for violations of 21 C.F.R. pt. 1140, three1 of which occurred during the period relevant in the current Complaint.  Complaint ¶ 11.
• The previous action concluded when Respondent "admitted all of the allegations in the Complaint and paid the agreed upon penalty."  Further, "Respondent expressly waived its right to contest such violations in subsequent actions."  Complaint ¶¶ 11-12.
• On May 2, 2019, an FDA-commissioned inspector conducted a subsequent inspection of Respondent's establishment during which "a person younger than

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• 18 years of age was able to purchase a Mr Fog Blueberry e-liquid product . . . at approximately 5:52 PM."  Additionally, "the minor's identification was not verified before the sale . . . ."  Complaint ¶ 9.

These facts establish that Respondent is liable 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. § 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 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).  The regulations prohibit the sale of regulated tobacco products to any person younger than 18 years of age.  21 C.F.R. § 1140.14(b)(1).  The regulations also require retailers to verify, by means of photographic identification containing the purchaser's date of birth, that no regulated tobacco product purchaser is younger than 18 years of age.  21 C.F.R. § 1140.14(b)(2)(i).

Taking the above-alleged facts as true, Respondent had at least five violations of regulations found at 21 C.F.R. pt. 1140 within a 36-month period.  Respondent violated the prohibition against selling regulated tobacco products to persons younger than 18 years of age on August 22, 2016, May 10, 2017, and May 2, 2019.  21 C.F.R. § 1140.14(b)(1).  On those same dates, 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 purchaser is younger than 18 years of age.  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 $5,705, which is a permissible penalty under the regulations.  21 C.F.R. § 17.2.  Therefore, I find that a civil money penalty of $5,705 is warranted and so order one imposed.

1. Two violations were identified on August 22, 2016, and two on May 10, 2017.  In accordance with customary practice, CTP counted the violations at the initial inspection as a single violation, and all subsequent violations as separate individual violations.  See Orton Motor, Inc. d/b/a Orton's Bagley v. U.S. Dep't of Health & Human Serv., 884 F.3d 1205 (D.C. Cir. 2018).
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