Royalty and Sons Inc. d/b/a BP, DAB TB6955 (2023)

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint) against Respondent, Royalty and Sons, Inc. d/b/a BP, alleging facts and legal authority sufficient to justify imposing a civil money penalty of $638.  CTP began this case by serving a Complaint on Respondent and filing a copy of the Complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  The Complaint alleges that Respondent’s staff sold regulated tobacco products to underage purchasers and failed to verify that purchasers were of sufficient age, 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 $638, for three violations of the regulations within a 24-month period.

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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. § 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

On March 23, 2023, CTP served the Complaint on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7.  Respondent timely filed its Answer to CTP’s Complaint.  On April 14, 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 June 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.  On the same date, CTP also filed an Unopposed Motion to Extend Deadlines.  On June 23, 2023, I issued an Order informing Respondent of its deadline to file a response to CTP’s Motion to Compel Discovery, 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 ¶ 21.  Respondent did not respond.

On July 7, 2023, I issued an Order to Compel Discovery in which I granted CTP’s motion and ordered Respondent to produce documents responsive to CTP’s discovery request by July 21, 2023.  I warned Respondent that failure to comply may result in sanctions, which may include 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].²  July 7, 2023, Order to Compel Discovery.

On July 27, 2023, CTP filed a Status Report and Motion to Impose Sanctions (Motion to Impose Sanctions).  CTP advised that Respondent did not produce responsive documents as ordered.  On that same date, CTP also filed a Motion to Extend Deadlines.  On that same day, I issued an Order informing Respondent of its deadline to file a response to CTP’s motion and warned Respondent that if it failed to file a response, “I may grant CTP’s [Motion to Impose Sanctions] in its entirety.”  July 27, 2023 Order (emphasis added).  My July 27, 2023 Order also extended the pre-hearing exchange deadlines.  Respondent did not file a response.

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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
• Respondent failed to comply with my July 7, 2023 Order to Compel Discovery, when it failed to submit the documents responsive to CTP’s Request for Production of Documents by July 21, 2023.

Respondent also failed to defend its action despite my June 23, 2023, and July 27, 2023, orders informing Respondent of such opportunities and warning of consequences.

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 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 a regulation governing this proceeding.  Respondent failed to comply with two of my orders, despite my explicit warnings that its failure could result in sanctions.  I specified that those sanctions may include 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 2; Order at 2, July 7, 2023.  Respondent also failed to defend its actions, despite my orders expressly reminding Respondent of the opportunity.  Respondent’s repeated misconduct interfered with the speedy, orderly, or fair conduct of this proceeding.  

I find that Respondent’s actions are sufficient to warrant striking its Answer and issuing a decision by default, without further proceedings. 

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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).  Pursuant to 21 C.F.R. § 17.11(a), I am required to “assume the facts alleged in the [C]omplaint 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 the Complaint establish violations of the Act.

Specifically, CTP alleges the following facts in its Complaint:

• Respondent owns BP, an establishment that sells tobacco products and is located at 6044 Brooklyn Boulevard, Minneapolis, Minnesota 55429.  Complaint ¶¶ 11 - 12.  
• An FDA-commissioned inspector conducted an inspection of Respondent’s establishment on June 23, 2022, at approximately 11:19 AM, during which “a person younger than 21 years of age was able to purchase a package of two Swisher Sweets Classic Diamonds cigars . . . .”  Additionally, “the underage purchaser’s age was not verified before the sale . . . .”  Complaint ¶ 15.   
• On August 9, 2022, CTP issued a Warning Letter to Respondent regarding the June 23, 2022 inspection.  The letter explained that the inspector documented violations of federal law, and that the named violations were not necessarily intended to be an exhaustive list of all violations at the establishment.  The Warning Letter also stated that if Respondent failed to correct the violations, regulatory action by the FDA or a civil money penalty action could occur and that it is Respondent’s responsibility to comply with the law.  Complaint ¶¶ 15-16.  
• An FDA-commissioned inspector conducted a subsequent inspection of Respondent’s establishment on December 14, 2022, at approximately 9:00 AM, during which “a person younger than 21 years of age was able to purchase a package of two Swisher Sweets Classic Diamonds cigars. . . .”  Additionally, “the underage purchaser’s age was not verified before the sale . . . .”  Complaint ¶ 13.   

These facts establish Respondent BP’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

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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.

Taking the above alleged facts as true, Respondent had at least three violations of regulations found at 21 C.F.R. pt. 1140 within a 24-month period.  Respondent violated the prohibition against selling regulated tobacco products to persons younger than 21 years of age on June 23, 2022, and December 14, 2022.  Act § 906(d)(5).  On those same dates, Respondent also violated the requirement that retailers verify, by means of photo identification containing a purchaser’s date of birth, that no regulated tobacco product purchasers are younger than 21 years of age. ³  Id.; 21 C.F.R. § 1140.14(b)(2)(i).  Therefore, Respondent’s actions constitute violations of law that merit a civil money penalty.

CTP has requested a civil money penalty of $638, which is a permissible penalty for three violations of the regulations found at 21 C.F.R. pt. 1140 within a 24-month period.  21 C.F.R. § 17.2.  Therefore, I find that a civil money penalty of $638 is warranted and so order one imposed.

ENDNOTES

¹    As of December 20, 2019, the Act was amended to raise the federal minimum age for the sale of tobacco products to 21 years of age or older.  See Act, § 906(d)(5).

²    The July 7, 2023 Order mistakenly included language regarding a No-Tobacco-Sale-Order, when it should have referenced the civil money penalty at issue.

³    I note that CTP cites 21 C.F.R. § 1140.14(b)(2)(i), which has not been updated to reflect the age change, for the identification violations alleged on June 23, 2022, and December 14, 2022.  See Complaint ¶¶ 13.b, 15.b; see also supra fn.1.