Faiza Enterprises Inc.d/b/a 7-Eleven 32343B, DAB TB5530 (2022)

ORDER GRANTING CTP’S MOTION TO IMPOSE SANCTIONS AND INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an Administrative Complaint (Complaint) on Respondent, Faiza Enterprises Inc. d/b/a 7-Eleven 32343B, at 21200 Three Oaks Parkway, Estero, Florida 33928, and by filing a copy of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  CTP seeks to impose a $594 civil money penalty against Respondent for three¹ violations of the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R. part 1140,² within a 24-month period.

Page 2

Respondent, through counsel, filed an Answer to the Complaint, but has failed to comply with multiple judicial orders and directives during the hearing process.

Currently, CTP’s Status Report and Motion to Impose Sanctions (Motion to Impose Sanctions) is pending before me.  CTP’s Motion to Impose Sanctions requests that I strike Respondent’s Answer as a sanction for failing to respond to CTP’s discovery requests and issue a default judgment against Respondent.  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 April 19, 2022, CTP served the Complaint on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7.  CRD Docket (Dkt.) Entry 1b (Proof of Service).  On May 12, 2022, Respondent’s counsel registered for DAB E-File on Respondent’s behalf.  On that same date, Respondent’s counsel filed a timely answer to CTP’s Complaint.  On May 13, 2022, 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.  CRD Dkt. Entry 4 (APHO) ¶ 4; see also 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 ¶ 21. 

On July 13, 2022, CTP filed a Motion to Compel Discovery, asserting that Respondent had not responded to its discovery request as required by my APHO and the regulations.  CRD Dkt. Entry 9 (Motion to Compel Discovery).  On that same date, CTP also filed a Motion to Extend Deadlines requesting a 30-day extension of “any deadlines, including the August 5, 2022 due date for CTP’s pre-hearing exchange . . . .”  CRD Dkt. Entry 8 at 2 (Motion to Extend Deadlines).  On July 13, 2022, I issued an Order advising Respondent that it had until July 28, 2022, to file a response to CTP’s Motion to Compel

Page 3

Discovery.  I also warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.”  CRD Dkt. Entry 10; see also APHO ¶¶ 20-21; 21 C.F.R. § 17.32(c).  In my Order, I also extended the pre-hearing exchange deadlines.  CRD Dkt. Entry 10 at 2.  Respondent failed to respond to CTP’s Motion to Compel Discovery or my July 13, 2022 Order, or otherwise comply with CTP’s Request for Production of Documents. 

On August 3, 2022, I issued an Order granting CTP’s Motion to Compel Discovery and ordered Respondent to produce responsive documents to CTP’s Request for Production of Documents by August 18, 2022.  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 . . . .

CRD Dkt. Entry 11 at 1.  In the same Order, I also extended the parties’ pre-hearing exchange deadlines.  Id. at 2.

On August 19, 2022, CTP filed a Status Report and Motion to Impose Sanctions.  CTP advised that Respondent had not complied with the APHO or my August 3, 2022 Order Granting CTP’s Motion to Compel.  CRD Dkt. Entry 12 at 1-2.  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 $594 civil money penalty.  Id. at 2.  On August 19, 2022, CTP also filed a Motion to Extend Deadlines.  CRD Dkt. Entry 13. 

On August 22, 2022, I issued an Order giving Respondent until September 6, 2022, to file a response to CTP’s Motion to Impose Sanctions.  CRD Dkt. Entry 14.  The August 22, 2022 Order also extended the parties’ pre-hearing exchange deadlines.  Id. at 2. 

To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or the August 22, 2022 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

Page 4

(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 multiple judicial orders and directives.  Specifically:

• the regulation at 21 C.F.R. § 17 .23(a) and paragraph 4 of my APHO, when Respondent failed to respond to CTP’s Request for Production of Documents within 30 days; and
• my August 3, 2022 Order, when it failed to submit documents responsive to CTP’s Request for Production of Documents by August 18, 2022.

I find that Respondent failed to comply with orders and procedures governing this proceeding and, as a result, 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 two of my orders, despite my explicit warnings that its failure could result in sanctions.  See, e.g., CRD Dkt. Entry 11 at 1; see also APHO ¶ 21.  Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.  I find that Respondent’s actions are sufficiently egregious to warrant striking its Answer and issuing a decision by default, without further proceedings.  21 C.F.R. § 17.35(b), (c)(3).   

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 determine whether the allegations in the Complaint establish violations of the Act.
For the purposes of this decision, I assume the facts alleged in the Complaint to be true.  Specifically:    

• At approximately 11:56 AM on March 14, 2020,³ at Respondent’s business establishment, 21200 Three Oaks Parkway, Estero, Florida 33928, an FDA-

Page 5

commissioned inspector conducted an inspection.  During the inspection, a person younger than 18 years of age was able to purchase a Myblu Intense Tobacco Chill e-liquid product;

• In a warning letter dated April 2, 2020, CTP informed Respondent of the inspector’s March 14, 2020 documented violation, and that such action violates 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;
• An FDA-commissioned inspector conducted a subsequent inspection on November 5, 2021, at approximately 12:23 PM at Respondent’s business establishment, 21200 Three Oaks Parkway, Estero, Florida 33928.  During this inspection, a person younger than 21 years of age was able to purchase an HDQ Cuvie Plus Black Ice electronic nicotine delivery system (ENDS) product.  Additionally, Respondent’s staff failed to verify, by means of photographic identification containing a date of birth, that the purchaser was of sufficient age.⁴

These facts establish Respondent 7-Eleven 32343B’s liability under the Act.  The Act prohibits misbranding of a regulated tobacco product.  21 U.S.C. § 331(k).  A regulated 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 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); 21 U.S.C. § 387f (note) (directing the Secretary to change references to persons younger than 18 to younger than 21, and to change the age verification requirements from individuals under the age of 26 to under the age of 30, in 21 C.F.R. subpart B of part 1140).  Under section 906(d)(5) of the Act, no retailer may sell regulated tobacco products to any person younger than 21 years of age and retailers must verify, by means of photographic identification containing a purchaser’s date of birth, that no regulated tobacco product purchasers are younger than 21 years of age.

A $594 civil money penalty is permissible under 21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $594 against Respondent Faiza Enterprises Inc. d/b/a 7-Eleven 32343B.  Pursuant to 21 C.F.R. § 17.11(b), this

Page 6

order becomes final and binding upon both parties after 30 days of the date of its issuance.

Endnotes

¹  The Complaint alleges one violation was committed on March 14, 2020, and two on November 5, 2021.

²  On December 20, 2019, the Act was amended by the Further Consolidated Appropriations Act, 2020,  (Pub. L. No. 116–94, § 603(a)-(b)), to raise the federal minimum age for sale of tobacco products to 21, and directed the Secretary of the U.S. Department of Health and Human Services (Secretary) to “update all references to persons younger than 18 years of age in subpart B of part 1140 of title 21, Code of Federal Regulations, and to update the relevant age verification requirements under such part 1140 to require age verification for individuals under the age of 30.”  21 U.S.C. § 387f (note).

³  I note that the violation alleged by CTP on March 14, 2020, regarding sale of a regulated tobacco product to an underage purchase, is governed by section 906(d) of the Act, which went into effect as of December 20, 2019, although CTP cites 21 C.F.R.
§ 1140.14(b)(1), which has not been updated to reflect the age change.  See Complaint
¶ 15; see also supra fn. 2.

⁴  I also note that the identification violation alleged by CTP on November 5, 2021, is governed by section 906(d) of the Act, although CTP cites 21 C.F.R. § 1140.14(b)(2)(i), which has not been updated to reflect the age change.  See Complaint ¶ 13.b.