We Got It LLC d/b/a We Got It, DAB TB5202 (2020)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative complaint on Respondent, We Got It LLC d/b/a We Got It, at 3401 North Claiborne Avenue, New Orleans, Louisiana 70117, and by filing a copy of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  The complaint alleges that We Got It impermissibly sold regulated tobacco products to minors and failed to verify, by means of photo identification containing a date of birth, that purchasers were 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 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

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on April 9, 2019, CTP served the complaint on Respondent We Got It by United Parcel Service.  Respondent filed its timely Answer, dated April 18, 2019, to CTP’s complaint.  On May 8, 2019, 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 that I may impose sanctions if a party failed to comply with any order, including the APHO.  APHO ¶ 16. 

On June 27, 2019, 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 June 28, 2019, I informed Respondent of its deadline to file a response and warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.”  See also 21 C.F.R. § 17.32(c); APHO ¶ 19.  Respondent did not respond.

On July 18, 2019, I issued an Order Granting Motion to Compel Discovery in which I ordered Respondent to produce documents responsive to CTP’s discovery request by August 1, 2019.  Respondent was also ordered to notify CTP in writing if it did not have documents responsive to CTP’s request.  I warned Respondent that “failure to comply may result in sanctions, which may include striking its filings and issuing an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.”  Order Granting Motion to Compel Discovery at 2, July 18, 2019 (emphasis in original).

On August 6, 2019, CTP filed a Motion to Impose Sanctions stating that, as of its filing, Respondent had not produced documents in response to CTP’s request for production of documents in compliance with my July 18, 2019 Order Granting Motion to Compel Discovery.  In a submission dated July 30, 2019, but not received until August 8, 2019,1 Respondent responded to my Order Granting Motion to Compel Discovery, submitting two documents.  As Respondent submitted one arguably responsive document in the form of a calendar reportedly used by Respondent to calculate age,2 and to ensure that the ends of justice would be served, I denied CTP’s Motion to Impose Sanctions by Order of August 19, 2019.

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Also in my Order of August 19, 2019, I informed the parties that the case would proceed to pre-hearing exchanges of evidence and arguments.  I explained that after the parties submit their pre-hearing exchanges, I normally schedule a pre-hearing telephone conference.  CTP timely filed its pre-hearing exchange.  Respondent did not file a pre-hearing exchange by its deadline, or at any time thereafter. 

On November 26, 2019, I issued an Order Scheduling Pre-Hearing Conference.  In this order, I set a pre-hearing conference by telephone for January 8, 2020, at 11:00 AM Eastern Time, to resolve certain issues and schedule a hearing for this case.  Respondent did not respond to my Order Scheduling Pre-Hearing Conference indicating that it was unable to appear at the scheduled pre-hearing conference call, nor did Respondent appear at the pre-hearing conference as scheduled.

Accordingly, on January 9, 2020, I issued an Order to Show Cause, in which I provided Respondent until January 23, 2019, to show cause for its failure to comply with my order and failure to defend its case, to wit, its failure to appear at the pre-hearing conference.  I warned Respondent that:

. . . failure to do so may result in sanctions, including striking Respondent’s Answer and issuing an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing the $5,705 civil money penalty CTP seeks.

Id. (emphasis in original). 

On January 22, 2020, Respondent timely filed its response to my Order to Show Cause.  In it, Respondent asserts that it did not purposefully miss the pre-hearing conference, that the pre-hearing conference was scheduled so far off (was scheduled in 2019 for a 2020 conference), and that it had a prior engagement on the same date at an earlier time.

I do not find that Respondent has shown good cause for failing to appear at the pre-hearing conference as scheduled.  There is no apparent reason why Respondent could not have requested that I reschedule the pre-hearing conference because of the asserted prior engagement.  The Order Scheduling Pre-Hearing Conference was issued on November 26, 2019, yet Respondent’s unspecified prior engagement was reportedly scheduled at an earlier time.  As such, Respondent had over six weeks to provide notice of this conflict.  Respondent made no effort to do so.  It was not until after Respondent received the Order to Show Cause that it contacted my office about its failure to appear. 

Although not defined by the regulations, good cause must mean something more than a simple error or omission.  Good cause would normally constitute some event or events

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beyond Respondent’s ability to control that acted to prevent Respondent from taking a required action, which, in this case, would be to either appear at the scheduled pre-hearing conference or request it be rescheduled.  Here, Respondent asserts that it had a prior engagement scheduled on the same date.  However, it was then incumbent upon Respondent to timely and promptly provide notice of such conflict and request that I reschedule. 

I do not find that Respondent has shown good cause under any reasonable definition of the term. 

On March 31, 2020, I issued an Order staying these proceedings due to circumstances associated with the current COVID-19 pandemic.3   Circumstances are now such that I may lift the stay and I lift the stay accordingly.

II.    Striking Respondent’s Answer

Pursuant to 21 C.F.R. § 17.35(a), 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 has demonstrated a pattern of noncompliance throughout these proceedings.  As noted earlier, an APHO was issued on May 8, 2019.  In that document, Respondent was notified that a party receiving a request for production of documents must provide the requested documents no later than 30 days after the request has been made.  APHO ¶ 12 (emphasis added).  In that Order, Respondent was also notified that after CTP’s exchange, it shall file its pre-hearing exchange and serve its exchange on CTP.  APHO ¶ 4 (emphasis added).  Respondent was warned that sanctions may be imposed for failure to comply with any order.  APHO ¶ 16.  Respondent did not file any response to the request for production of documents by CTP within the 30 days specified in the APHO.  It was only in response to my Order Granting Motion to Compel Discovery that Respondent provided one arguably responsive document, in the form of a calendar used by Respondent to calculate age, despite CTP’s request for production of 11 different categories of documents.  In my Order denying CTP’s Motion to Impose Sanctions,

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Respondent was given detailed instructions on how to comply with the pre-hearing exchange requirements.  Yet, Respondent failed to submit its exchange by the specified deadline of November 20, 2019, or at any time thereafter.  Respondent then failed to comply with my November 26, 2019 Order Scheduling Pre-Hearing Conference, when it failed to appear at the January 8, 2020 pre-hearing conference and failed to demonstrate good cause for its failure to appear at the pre-hearing conference.

Respondent failed to comply with the following orders, rules, or 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 May 8, 2019 APHO and August 19, 2019 Order when it did not file its pre-hearing exchange and serve its pre-hearing exchange on CTP; and
• Respondent failed to comply with my November 26, 2019 Order Scheduling Pre-Hearing Conference, when it failed to appear at the January 8, 2020, pre-hearing conference and failed to demonstrate good cause for its failure to appear at the pre-hearing conference.

Respondent failed to defend its action:

• By Order of June 28, 2019, I informed Respondent that it had until July 12, 2019, to file a response to CTP’s Motion to Compel Discovery.  Respondent did not defend its action; and
• Respondent failed to appear at the January 8, 2020 pre-hearing conference and failed to demonstrate good cause for the failure to appear.

I find that Respondent has failed to comply with orders and procedures governing this proceeding, has failed to defend its actions, and, as a result, has interfered with the speedy, orderly, and 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 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 my orders, despite my explicit warning that its failure could result in

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sanctions and I specified that those sanctions may include “striking Respondent’s Answer and issuing an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing the $5,705 civil money penalty CTP seeks.”  Respondent also failed to defend its action by failing to appear.  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).  Accordingly, I must first determine whether the allegations in the Complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true (but not its conclusory statements) and I conclude that default judgment is merited based on the allegations of the Complaint.  21 C.F.R. § 17.11.  Specifically:

• On March 27, 2018, CTP initiated a previous civil money penalty action, CRD Docket Number T-18-1737, FDA Docket Number FDA-2018-H-1253, against Respondent for at least four violations4 of the Act.  CTP alleged those violations to have occurred at Respondent’s business establishment located at 3401 North Claiborne Avenue, New Orleans, Louisiana 70117, on March 12, 2016, October 5, 2016, and March 11, 2018;
• The previous action concluded when Respondent admitted the allegations contained in the Complaint issued by CTP, and paid the agreed upon monetary penalty in settlement of that claim.  Further, “Respondent expressly waived its right to contest such violations in subsequent actions”;
• An FDA-commissioned inspector conducted a subsequent inspection on January 10, 2019, at approximately 4:37 PM at Respondent’s business establishment located at 3401 North Claiborne Avenue, New Orleans, Louisiana 70117.  During this inspection, a person younger than 18 years of age was able to

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purchase a package of two Garcia y Vega Game Pineapple cigars.

These facts establish Respondent We Got It’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 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).  Under 21 C.F.R. § 1140.14(a)(1)5 and 21 C.F.R. § 1140.14(b)(1), no retailer may sell regulated tobacco products to any person younger than 18 years of age.  Under 21 C.F.R. § 1140.14(a)(2)(i), retailers must verify, by means of photographic identification containing a purchaser’s date of birth, that no regulated tobacco product purchasers are younger than 18 years of age.

A $5,705 civil money penalty is permissible under 21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $5,705 against Respondent We Got It LLC d/b/a We Got It.  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. Due to a clerical error, the submission was not uploaded to the electronic file for CTP’s review until August 14, 2019.
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2. The other document submitted was entitled Louisiana Responsible Vendor’s Server Permit dated May 16, 2016, which is not relevant to this proceeding.
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3. Due to these circumstances, the Order staying this case was issued by DAB E-File only.  Accordingly, a copy of the March 31, 2020 Order is enclosed with this decision for Respondent’s reference.
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4. The complaint alleges two violations were committed on March 12, 2016, two on October 5, 2016, and one on March 11, 2018.  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 Servs., 884 F.3d 1205 (D.C. Cir. 2018).
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5. 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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