Swami Mahant LLC d/b/a Up In Smoke Tobacco Outlet, DAB TB6143 (2023)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative complaint on Respondent, Swami Mahant LLC d/b/a Up In Smoke Tobacco Outlet, at 328 Delsea Drive North, Glassboro, New Jersey 08028, and by filing a copy of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  The complaint alleges that Up In Smoke Tobacco Outlet impermissibly sold regulated tobacco products to underage purchasers, failed to verify, by means of photo identification containing a date of birth, that purchasers were of age, and permitted the use of a self-service display in a non-exempt facility, 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. 1140.¹  CTP seeks a civil money penalty of $12,794 for at least eight violations of the regulations within a 48-month period. 

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During the course of this administrative proceeding, 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. § 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 October 17, 2022, CTP served the complaint on Respondent Up In Smoke Tobacco Outlet by United Parcel Service.  Respondent filed a timely Answer to CTP’s complaint and admitted to all of the allegations.²  Docket (Dkt.) Entry No. 3a.  On November 22, 2022, I issued an Acknowledgement and Status Report Order (ASRO) that set the deadline for the parties to file a joint status report regarding the status of the case.  In the ASRO, I stated that if the parties wish to proceed to a hearing, I will issue a pre-hearing order establishing procedural deadlines and telling the parties what they must do to present evidence and arguments in this case.  On January 19, 2023, a Joint Status Report was filed which stated that the parties have been unable to reach a settlement in this case and intend to proceed to a hearing.  Dkt. Entry No. 7.

On January 27, 2023, 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 ¶ 4; 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 ¶ 21.  

On March 21, 2023, CTP filed a Motion to Compel Discovery, asserting that Respondent did not respond to its discovery request as required by my APHO and regulations.  Dkt. Entry No. 9.  By Order of March 22, 2023, I informed Respondent of its deadline to

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file a response and warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.”  Order at 1, March 22, 2023 (emphasis in original); see 21 C.F.R. § 17.32(c); see also APHO ¶ 20.  Respondent did not respond.

On April 12, 2023, I issued an Order to Compel Discovery in which I ordered Respondent to produce documents responsive to CTP’s discovery request by May 3, 2023.  Respondent was also ordered to notify CTP in writing if it did not have documents responsive to CTP’s request.  I warned Respondent that: 

[F]ailure 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 to Compel Discovery at 1 (emphasis in original).

On May 5, 2023, CTP filed a Status Report and Motion to Impose Sanctions (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 Order to Compel Discovery.  Dkt. Entry No. 13.  By Order of May 10, 2023, I informed Respondent that it had until May 25, 2023, to file a response to CTP’s Motion to Impose Sanctions.  I warned Respondent that if it failed to file a response, “I may grant CTP’s motion in its entirety.”  Order at 2, May 10, 2023 (emphasis added).  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 4 of my APHO, when Respondent failed to respond to CTP’s Request for Production of Documents within 30 days; and

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• Respondent failed to comply with my Order to Compel Discovery when it failed to produce documents responsive to CTP’s Request for Production of Documents by May 3, 2023.

Respondent has also failed to defend its actions.  After filing an Answer admitting all of the identified violations, Respondent has not filed a response to any of the above Orders and has not engaged in any development of this case, which has resulted in significant delay.  It has failed to take any action about this case since filing its Answer on November 15, 2022.

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 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).  When a party fails to comply with a discovery order, including the discovery provisions under the regulations, I may strike any pleadings or submissions of the party failing to comply.  21 C.F.R. § 17.35(c)(3).  Here, Respondent failed to comply with a procedural rule (21 C.F.R. § 17.23(a)), and two of my orders (APHO ¶ 4; Order to Compel Discovery), under 21 C.F.R. § 17.35(a)(1), despite my explicit warnings that its failure could result in sanctions (APHO ¶ 21; Order to Compel Discovery at 1; Order at 1, May 10, 2023).  I specified that these failures 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.”  Order to Compel Discovery at 1.  Respondent also failed to defend its actions, under 21 C.F.R. § 17.35(a)(2).  In fact, Respondent has not participated in this case in any meaningful fashion since filing its Answer on November 15, 2022.  Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding, under 21 C.F.R. § 17.35(a)(3).  

I find that imposing the sanction of striking Respondent’s Answer and issuing a decision by default, without further proceedings, reasonably relates to the severity and nature of Respondent’s misconduct.  21 C.F.R. § 17.35(b), (c)(3).  Accordingly, I strike Respondent’s Answer.  21 C.F.R. § 17.35(c)(3).  

III. Default Decision

Striking Respondent’s Answer leaves the complaint unanswered.  Therefore, pursuant to 21 C.F.R. § 17.11(a), I am required to “assume the facts alleged in the complaint 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

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the complaint establish violations of the Act.  

Specifically, CTP alleges the following facts in its complaint:

On March 15, 2022, CTP initiated a previous civil money penalty action, CRD Docket Number T-22-101, FDA Docket Number FDA-2022-H-0333, against Respondent for at least six violations of the Act. CTP alleged those violations³ to have occurred at Respondent’s business establishment, 328 Delsea Drive North, Glassboro, New Jersey 08028, on June 8, 2019, March 14, 2020, March 17, 2020, and December 3, 2021;

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 August 8, 2022, at approximately 3:08 PM, at Respondent’s business establishment at 328 Delsea Drive North, Glassboro, New Jersey 08028. During this inspection, a person younger than 21 years of age was able to purchase a Bud Vape Magnum Kiwi Watermelon 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 21 years of age or older.

These facts establish Respondent Up In Smoke Tobacco Outlet’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 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); see also 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

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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.  For violations prior to December 20, 2019, regulated tobacco products may not be sold to any person younger than 18 years of age, 21 C.F.R. § 1140.14(b)(1), 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 18 years of age, 21 C.F.R. § 1140.14(b)(2)(i).  Additionally, the regulations prohibit the use of a self-service display in a facility where an underage individual is present or permitted to enter.  Act § 906(d)(5); 21 C.F.R. § 1140.16(c)(2)(ii).

A $12,794 civil money penalty is permissible under 21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $12,794 against Respondent Swami Mahant LLC d/b/a Up In Smoke Tobacco Outlet.  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.

Endnotes

¹  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).

² On November 18, 2022, CTP forwarded via email a scanned copy of Respondent’s Answer.  Dkt. Entry Nos. 3 and 3a.  Respondent’s Answer had been mailed via USPS Priority Mail to CTP.  Dkt. Entry No. 3a.  It was date stamped November 15, 2022, by CTP.  Id. (last page of scanned documents).  Respondent’s Answer was due November 16, 2022.  Complaint ¶ 17; Guidance Establishing Procedures ¶ 1.  I deemed Respondent’s Answer timely based on the date it was received, in this case, November 15, 2022.  See 21 C.F.R. § 17.31.

³  The complaint alleges two violations were committed on June 8, 2019, two on March 14, 2020, one on March 17, 2020, and two on December 3, 2021.  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).