Riggins, Inc. d/b/a Riggins, DAB TB6211 (2023)

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

On February 27, 2023, the Center for Tobacco Products (CTP) served the First Amended Administrative Complaint (Amended Complaint) on Respondent, Riggins, Inc. d/b/a Riggins, at 500 Salem Quinton Road, Salem, New Jersey 08079,¹ and filed a copy of the Amended Complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  CTP seeks to impose a $638 civil money penalty against Respondent for three² violations of the Federal Food, Drug, and Cosmetic Act (Act),

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21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R. part 1140,³ within a 24-month period.⁴

Respondent filed an Answer in this matter, 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.  After carefully considering the entire record, I strike Respondent’s Answer, pursuant to the provisions of 21 C.F.R. § 17.35(c)(3).

I.   Procedural History

On January 19, 2023, CTP served an Administrative Complaint (Initial Complaint) on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7.  See CRD Docket (Dkt.) Entry No. 1b (Initial Proof of Service).  On February 10, 2023, CTP filed a Motion for Leave to Amend Complaint (Motion for Leave to Amend), seeking leave to amend the Initial Complaint in order to properly identify Respondent’s address.  CRD Dkt. Entry No. 4.  On that same date, a letter by the direction of Administrative Law Judge Wallace Hubbard, the Administrative Law Judge previously assigned to this case, informed the parties that Respondent had until February 27, 2023, to file a response to CTP’s Motion for Leave to Amend.  CRD Dkt. Entry No. 6.

On February 23, 2023, the Departmental Appeals Board, Civil Remedies Division (CRD), received, via an email from CTP, a correspondence containing a scanned copy of Respondent’s timely filed Answer to CTP’s Initial Complaint, and the envelope it was shipped in.  See CRD Dkt. Entry Nos. 7-8.  In its Answer, Respondent admitted two of the allegations, denied two, asserted some defenses, and indirectly contested the civil money penalty.  See CRD Dkt. Entry No. 7 at 1-3.  In its Answer, Respondent also

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apologized and expressed a lack of understanding and some difficulty with computers.  Id. at 3.

On February 24, 2023, Judge Hubbard granted CTP’s Motion for Leave to Amend, ruling that, “[m]odifying the original complaint in order to properly identify Respondent’s address will not prejudice Respondent.”  CRD Dkt. Entry No. 9 at 2.  Judge Hubbard’s February 24, 2023 Order also instructed CTP to serve the Amended Complaint on Respondent by March 2, 2023.  Id.  On February 28, 2023, CTP filed the Amended Complaint, amended cover letter, and amended Proof of Service, indicating that the Respondent was served the Amended Complaint on February 27, 2023.  See CRD Dkt. Entry Nos. 10-10b.

On March 2, 2023, Judge Hubbard issued an Acknowledgment and Pre-Hearing Order (APHO) in this case.  CRD Dkt. Entry No. 11.  The APHO set deadlines for the parties’ filings and exchanges, including a schedule for discovery.  Judge Hubbard directed that a party receiving a discovery request must provide the requested documents within 30 days of the request.  CRD Dkt. Entry 11 (APHO) ¶ 4; see also 21 C.F.R. § 17.23(a).  Judge Hubbard warned:

[the Administrative Law Judge assigned to this case] 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 that same date, but subsequent to the issuance of Judge Hubbard’s APHO, Respondent registered for DAB E-file, and filed a JPEG image consisting of hand-written text further asserting Respondent’s arguments in this case.  See CRD Dkt. Entry No. 12.

On March 28, 2023, this case was reassigned to me for adjudication, and a transfer letter was issued notifying the parties.  See CRD Dkt. Entry No. 13.

On April 3, 2023, CTP filed a Joint Status Report indicating that the parties had been unable to reach a settlement in this case, and, absent an executed settlement agreement, it intended to proceed to a hearing.  CRD Dkt. Entry No. 14.

On April 7, 2023, CRD received, via U.S. mail then uploaded to the administrative record in DAB ACTS, a document from Respondent that appeared to be Respondent providing pre-hearing exchange responses, although to the questions set forth in the pre-hearing exchange template intended for Complainant.  See CRD Dkt. Entry No. 15.

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On April 14, 2023, CTP filed a Motion to Compel Discovery, asserting that Respondent had not responded to its discovery request as required by the APHO and the regulations.  CRD Dkt. Entry No. 16 (Motion to Compel Discovery).  On that same date, CTP also filed an Unopposed Motion to Extend Deadlines requesting a 30-day extension of “any deadlines, including the May 22, 2023 due date for CTP’s pre-hearing exchange . . . .”  CRD Dkt. Entry No. 17 at 2 (Unopposed Motion to Extend Deadlines).  On April 18, 2023, I issued an Order advising Respondent that it had until May 3, 2023, to file a response to CTP’s Motion to Compel Discovery.  CRD Dkt. Entry No. 18 at 2.  I also warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.”  Id.; 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 No. 18 at 2.  Respondent failed to respond to CTP’s Motion to Compel Discovery or my April 18, 2023 Order, or otherwise comply with CTP’s Request for Production of Documents.

On May 4, 2023, 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 May 18, 2023.  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 No. 19 at 3 (emphasis in the original).

On May 22, 2023, CTP filed a Status Report and Motion to Impose Sanctions.  CRD Dkt. Entry No. 20.  CTP advised that Respondent had not complied with the APHO or my May 4, 2023 Order Granting CTP’s Motion to Compel.  Id. at 1-2.  CTP argues that sanctions against Respondent for its repeated non-compliance are an appropriate remedy.  Specifically, CTP asks 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 $638 civil money penalty.  Id. at 2.  On May 22, 2023, CTP also filed a Motion to Extend Deadlines.  CRD Dkt. Entry No. 21.

On June 5, 2023, I issued an Order giving Respondent until June 20, 2023, to file a response to CTP’s Motion to Impose Sanctions.  CRD Dkt. Entry No. 22 at 2.  The June 5, 2023 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 June 5, 2023 Order.

II.   Striking Respondent’s Answer

I may sanction a party for:

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(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 multiple judicial orders and directives.  Specifically:

• the regulation at 21 C.F.R. § 17.23(a) and paragraph 4 of the APHO, when Respondent failed to respond to CTP’s Request for Production of Documents within 30 days; and
• my May 4, 2023 Order, when it failed to submit documents responsive to CTP’s Request for Production of Documents by May 18, 2023.

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 regulatory requirements and two judicial orders, despite my explicit warnings that its failure could result in sanctions⁵.  See, e.g., CRD Dkt. Entry No. 19 at 3; 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.

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For the purposes of this decision, I assume the facts alleged in the Complaint to be true, pursuant to the provisions of 21 C.F.R. § 17.11(a).  Specifically:

• At approximately 11:24 AM on March 27, 2022, at Respondent’s business establishment, 500 Salem Quinton Road, Salem, New Jersey 08079, an FDA-commissioned inspector conducted an inspection.  During the inspection, a person younger than 21 years of age was able to purchase a package of Newport Box cigarettes.  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;⁶
• In a warning letter dated May 10, 2022, CTP informed Respondent of the inspector’s March 27, 2022 documented violations, and that such actions violate federal law.  The letter further warned that Respondent’s failure to correct its violations could result in a civil money penalty or other regulatory action;
• An FDA-commissioned inspector conducted a subsequent inspection on October 25, 2022, at approximately 2:59 PM at Respondent’s business establishment, 500 Salem Quinton Road, Salem, New Jersey 08079.  During this inspection, a person younger than 21 years of age was able to purchase a package of Newport Box cigarettes.  Additionally, Respondent’s staff failed to verify, by means of photographic identification containing a date of birth, that the purchaser was of sufficient age.

These facts establish Respondent Riggins’ 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.

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A $638 civil money penalty is permissible under 21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $638 against Respondent, Riggins, Inc. d/b/a Riggins.  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 The Amended Complaint properly identities Respondent’s address.  See Amended Complaint ¶ 11; see also amended Proof of Service.

² The Amended Complaint alleges two violations on March 27, 2022, and two violations on October 25, 2022.  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).

³ 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).

⁴ CTP did not include violations that occurred outside the relevant timeframe for this complaint.

⁵ I have considered Respondent’s statements about problems with understanding and computers in this assessment.  However, there is no indication that Respondent made any effort to request assistance or additional information in this process.

⁶ The identification violations alleged by CTP on March 27, 2022, and October 25, 2022, are 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(a)(2)(i), which has not been updated to reflect the age change.  See Complaint ¶¶ 13.b, 15.b; see also supra fn.3.