Broad Gas LLC d/b/a US Gas, DAB TB6247 (2023)

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, Broad Gas LLC d/b/a US Gas, at 642 West Broad Street, Paulsboro, New Jersey 08066, 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 $12,794 civil money penalty against Respondent for at least seven violations of the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq.,

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and its implementing regulations, 21 C.F.R. part 1140,¹ within a 48-month period.² The Complaint alleges CTP previously initiated a civil money penalty action against Respondent US Gas.  The prior action concluded when a final default judgment was entered against Respondent US Gas for five violations of the Act.  Specifically, Respondent was found to have sold regulated tobacco products to underage purchasers and failed to verify, by means of photo identification containing a date of birth, that some of the purchasers were of sufficient age.  The Complaint further alleges that Respondent US Gas subsequently committed two additional violations of the Act.  Specifically, that Respondent sold regulated tobacco products to a person under 21 years of age and failed to verify, by means of photo identification containing a date of birth, that the purchaser was of sufficient age, thereby violating the Act.  Therefore, CTP seeks a $12,794 civil money penalty against Respondent US Gas for a total of seven violations within a 48-month period.

During the course of this administrative proceeding, 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. § 17.35(a).  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 December 15, 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 No. 1b (Proof of Service).  On January 18, 2023, Respondent’s attorney, Edward P. Vidal, registered for DAB E-File on Respondent’s behalf.  On that same date, Respondent’s counsel filed an

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answer to CTP’s Complaint.³ On January 19, 2023, a letter at the direction of  Administrative Law Judge (ALJ) Karen Robinson, previously assigned to this case⁴ issued giving CTP until January 25, 2023 to file any objections to the untimely filed answer.  CRD Dkt. Entry No. 4.  On January 25, 2023, CTP filed a response advising of no objections to the untimely answer.

On February 6, 2023, Judge Robinson issued an Order Accepting Respondent’s Answer as Timely Filed and Acknowledgment and Pre-Hearing Order (APHO).  The APHO set deadlines for the parties’ filings and exchanges, including a schedule for discovery.  Judge Robinson directed that a party receiving a discovery request must provide the requested documents within 30 days of the request.  APHO ¶ 4; see also 21 C.F.R.
§ 17.23(a).  Judge Robinson 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 April 20, 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. 10 (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 May 1, 2023 due date for CTP’s pre-hearing exchange, . . . .”  CRD Dkt. Entry No. 11 at 2 (Motion to Extend Deadlines).  On April 21, 2023, I issued an Order advising Respondent that it had until May 8, 2023, to file a response to CTP’s Motion to Compel Discovery.  I also warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.”  CRD Dkt. Entry No. 12; 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. 12 at 2.  Respondent failed to respond to CTP’s Motion to Compel Discovery or my April 21, 2023 Order, or otherwise comply with CTP’s Request for Production of Documents.

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On May 17, 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 June 1, 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. 13 at 1-2.  In the same Order, I also extended the parties’ pre-hearing exchange deadlines.  Id. at 2.

On June 7, 2023, CTP filed a Status Report and Motion to Impose Sanctions.  CTP advised that Respondent had not complied with the APHO or my May 17, 2023 Order Granting CTP’s Motion to Compel.  CRD Dkt. Entry No. 14 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 $12,794 civil money penalty.  Id. at 2.  On June 7, 2023, CTP also filed a Motion to Extend Deadlines.  CRD Dkt. Entry No. 15.

On June 9, 2023, I issued an Order giving Respondent until June 23, 2023 to file a response to CTP’s Motion to Impose Sanctions.  CRD Dkt. Entry No. 16 at 2.  The June 9, 2023 Order also extended the parties’ pre-hearing exchange deadlines.  Id.

To date, Respondent has not filed a response to CTP’s Motion to Impose Sanctions or the June 9, 2023 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 multiple judicial orders and directives.  Specifically, Respondent has not complied with:

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• 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 17, 2023 Order, when it failed to submit documents responsive to CTP’s Request for Production of Documents by June 1, 2023.

Additionally, Respondent failed to defend this action.  21 C.F.R. § 17.35(a)(2).  Specifically:

• Respondent did not file a response to CTP’s Motion to Compel Discovery, as permitted by the regulations and my April 21, 2023 Order; and
• Respondent did not file a response to CTP’s Motion to Impose Sanctions, as permitted by the regulations and my June 9, 2023 Order.

Respondent’s failure to respond to CTP’s motions, to comply with my multiple orders, and to fulfill its discovery obligations suggests that it has abandoned its defense in this case.

In the absence of any explanation from Respondent, 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 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.  CRD Dkt. Entry No. 13 at 2; APHO ¶ 21.  Nor did Respondent respond to any of CTP’s motions.  See CRD Dkt. Entry Nos. 12 at 1-2; 16 at 2.  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); see also KKNJ, Inc. d/b/a Tobacco Hut 12, DAB No. 2678 at 8 (2016) (concluding that “the ALJ [Administrative Law Judge] did not abuse her discretion in sanctioning Respondent’s ongoing failure to comply with the ALJ’s directions by striking Respondent’s answer to the Complaint.”).

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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:

• On March 15, 2022, CTP initiated a previous civil money penalty action, CRD Docket Number T-22-102, FDA Docket Number FDA-2022-H-0334, against Respondent for five violations⁵ of the Act.  CTP alleged those violations to have occurred at Respondent’s business establishment, 642 West Broad Street, Paulsboro, New Jersey 08066, on March 31, 2019, January 11, 2020, and December 4, 2021;

• The previous action concluded when an Initial Decision and Default Judgment was entered by an Administrative Law Judge, “finding that all of the violations alleged in the Complaint occurred”;

• An FDA-commissioned inspector conducted a subsequent inspection on September 26, 2022, at approximately 3:45 PM at Respondent’s business establishment located at 642 West Broad Street, Paulsboro, New Jersey 08066.  During this inspection, a person younger than 21 years of age was able to purchase a Black & Mild cigar.  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 US Gas’ 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

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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.⁶ 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).

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 Broad Gas LLC d/b/a US Gas.  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  CTP did not include any prior violations that occurred outside of the relevant timeframe in the Complaint.  Complaint ¶ 1 fn.1.

³  The filing deadline for Respondent’s answer was January 17, 2023.  Respondent’s untimely answer was filed via DAB E-File on January 18, 2023, one day after the deadline for answering the complaint.  21 C.F.R. § 17.9; see also CRD Dkt. Entry No. 3a (Answer).  Respondent’s counsel explained that he was retained by Respondent the previous day, had technical difficulty filing the answer electronically, and requested that I accept the untimely answer.  Answer at 2.

⁴  On February 8, 2023, a letter was issued transferring this case to me.  CRD Dkt. Entry No. 8.

⁵  The Complaint alleges two violations were committed on March 31, 2019, one on January 11, 2020, and two on December 4, 2021.

⁶  I note that the violation alleged by CTP on January 11, 2020, regarding the sale of a regulated tobacco product to an underage purchaser, 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.a; see also supra fn.1.  Similarly, CTP cites 21 C.F.R. § 1140.14(b)(2)(i), which has not been revised to reflect the age change, for the identification violations on December 4, 2021 and September 26, 2022.  See Complaint ¶¶ 13.b, 15.b.