Fenkel Petro, Inc. d/b/a Mobil Mart, DAB TB5094 (2020)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint) against Respondent, Fenkel Petro, Inc. d/b/a Mobil Mart, alleging facts and legal authority sufficient to justify imposition of a No-Tobacco-Sale Order against Respondent for a period of 30 consecutive calendar days.  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 impermissibly 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.

During the course of these administrative proceedings, Respondent failed to comply with orders and procedures governing this proceeding and failed to defend this action, 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 February 27, 2020, CTP served the Complaint on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7.  Respondent timely answered CTP’s Complaint.  On June 12, 2020, I issued an Acknowledgment 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: 

I may impose sanctions including, but not limited to, dismissal of the complaint or answer, if a party fails to comply with any order (including this order), fails to prosecute or defend its case, or engages in misconduct that interferes with the speedy, orderly, or fair conduct of the hearing. 21 C.F.R. § 17.35.

APHO ¶ 16. 

In accordance with the deadlines set forth in the APHO, CTP served Respondent with its Request for Production of Documents on June 26, 2020.  On August 3, 2020, CTP filed a Motion to Compel Discovery asserting that Respondent had not responded to its discovery request.  On August 5, 2020, I issued an Order advising Respondent that it had until August 20, 2020, to file a response to CTP’s Motion to Compel Discovery.  See also 21 C.F.R. § 17.32(c); APHO ¶ 19.  Respondent failed to submit a response to CTP’s Motion to Compel Discovery or the August 5, 2020 Order, or otherwise comply with CTP’s Request for Production of Documents. 

On September 4, 2020, I issued an Order granting CTP’s Motion to Compel Discovery and ordering Respondent to produce responsive documents to CTP’s Request for Production of Documents by September 16, 2020.  I warned:

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 . . . .

September 4, 2020 Order at 1-2.  In the same Order, I also extended the parties’ pre-hearing exchange deadlines.  Id. at 2.

On September 24, 2020, CTP filed a Status Report and Motion to Impose Sanctions.  CTP advised that Respondent had not complied with the APHO or my September 4, 2020

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Order requiring Respondent to produce documents responsive to CTP’s Request for Production of Documents by September 16, 2020.  CTP argued that sanctions against Respondent for its repeated non-compliance are an appropriate remedy.  Specifically, CTP asked that I strike Respondent’s Answer as a sanction and issue an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a No-Tobacco-Sale Order.

On October 2, 2020, I issued an Order giving Respondent until October 19, 2020 to file a response to CTP’s Motion to Impose Sanctions.  The October 2, 2020 Order also extended the parties’ pre-hearing exchange deadlines.  On November 4, 2020, CTP timely filed its pre-hearing exchange.  To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or the October 2, 2020 Order. 

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;
• Respondent failed to comply with my August 5, 2020 Order, when it failed to file a response to CTP’s Motion to Compel Discovery by August 20, 2020;
• Respondent failed to comply with my September 4, 2020, Order, when it failed to submit documents responsive to CTP’s Request for Production of Documents by September 16, 2020; and
• Respondent failed to comply with my October 2, 2020 Order, when it failed to file a response to CTP’s Motion to Impose Sanctions by October 19, 2020.

I find that Respondent failed to comply with orders and procedures governing this proceeding, failed to defend this action, and, as a result, interfered with the speedy, orderly, and fair conduct of this proceeding.  I conclude that Respondent’s conduct

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establishes a basis for sanctions pursuant to 21 C.F.R. § 17.35, and that sanctions are warranted.

The harshness of 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 four of my orders, despite my explicit warnings that its failure could result in sanctions.  APHO ¶ 16; September 4, 2020 Order, at 1-2.  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:

• On January 4, 2017, CTP initiated its first civil money penalty action, FDA Docket Number FDA-2016-H-4599, CRD Docket Number T-17-1421, against Respondent for three1 violations of 21 C.F.R. pt. 1140 within a 24-month period.  CTP alleged those violations to have occurred at Respondent's business establishment, 6306 Fenkell Street, Detroit, Michigan 48238, on February 4, 2016, and June 16, 2016;

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• The first action concluded when an Initial Decision and Default Judgment was entered by the administrative law judge, “finding Respondent liable for the February 4, 2016 and June 16, 2016 violations”;
• On August 21, 2017, CTP initiated its second civil money penalty action, FDA Docket Number FDA-2017-H-5037, CRD Docket Number T-17-5977, against Respondent for one additional violation of 21 C.F.R. pt. 1140.  CTP alleged that violation to have occurred at Respondent's business establishment, 6306 Fenkell Street, Detroit, Michigan 48238, on June 28, 2017;
• The second action concluded when an Initial Decision and Default Judgment was entered by the administrative law judge, “finding Respondent liable for the June 28, 2017 violation”;
• On May 24, 2018, CTP initiated its third civil money penalty action, FDA Docket Number FDA-2018-H-1993, CRD Docket Number T-18-2305, against Respondent for two additional violations of 21 C.F.R. pt. 1140.  CTP alleged that violation to have occurred at Respondent's business establishment, 6306 Fenkell Street, Detroit, Michigan 48238, on January 20, 2018;
• The third action concluded when an Initial Decision and Default Judgment was entered by the administrative law judge, “finding Respondent liable for the January 20, 2018 violations”;
• At approximately 2:28 PM on July 21, 2019, at Respondent's business establishment, 6306 Fenkell Street, Detroit, Michigan 48238, an FDA-commissioned inspector documented Respondent's staff selling a package of Marlboro cigarettes 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 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 cigarettes or smokeless tobacco to any person younger than 18 years of age.  21 C.F.R. § 1140.14(a)/1140.14(a)(1)2 .  The regulations also

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require retailers to verify, by means of photographic identification containing the purchaser's date of birth, that no cigarette or smokeless tobacco purchaser is younger than 18 years of age.  21 C.F.R. § 1140.14(b)(1)/(a)(2)(i). 

Under 21 U.S.C. § 333(f)(8), a No-Tobacco-Sale Order is permissible for five repeated violations of the regulations found at 21 C.F.R. pt. 1140.  The maximum period of time for the first No-Tobacco-Sale Order received by a retailer is 30 calendar days.  See Pub. L. 111-31, div. A, title I, § 103(q)(1)(A), June 22, 2009, 123 Stat. 1838, 1839; Food & Drug Admin., Determination of the Period Covered by a No-Tobacco-Sale Order and Compliance with Order at 3-4, available at https://www.fda.gov/downloads/Tobacco Products/Labeling/RulesRegulationsGuidance/UCM446547.pdf (last updated Aug. 2015); Civil Money Penalties and No-Tobacco-Sale Orders For Tobacco Retailers at 5-6, available at http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM252955.pdf (last updated Dec. 15, 2016).

Taking the above-alleged facts as true, I enter default judgment against Respondent Fenkel Petro, Inc. d/b/a Mobil Mart, in the form of a No-Tobacco-Sale Order, for a period of 30 consecutive calendar days.  During this period of time, Respondent shall stop selling cigarettes, cigarette tobacco, roll-your-own tobacco, smokeless tobacco, and covered tobacco products regulated under the Federal Food, Drug, and Cosmetic Act.  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.

1. Two violations were documented on February 4, 2016, and two on June 16, 2016.  When determining the number of violations for a civil money penalty, CTP counted the violations at the initial inspection as a single violation, and all subsequent violations as separate individual violations, in accordance with customary practice.  When determining the number of violations for a No-Tobacco-Sale Order, CTP counted both of the February 4, 2016 violations (sale to a minor and failure to verify identification) as Respondent’s original violations.  The NTSO Complaint does not include the June 16, 2016 violations as “repeated violations” because they fall outside the specified 36-month timeframe.  See Complaint ¶ 9 fn.4.
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2. On August 8, 2016, the citations to certain tobacco violations changed.  For more information see:  https://federalregister.gov/a/2016-10685.
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