Carolina Cigar of Delray, LLC d/b/a Carolina Cigar, DAB TB6991 (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 on Respondent, Carolina Cigar of Delray, LLC d/b/a Carolina Cigar, at 630 East Atlantic Avenue, Delray Beach, Florida 33483, and by filing a copy of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  The complaint alleges that Carolina Cigar impermissibly sold regulated tobacco products to underage purchasers and failed to verify, by means of photo identification containing a date of birth, that the purchasers were of the legal age or older, 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 $638 civil money penalty

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against Respondent Carolina Cigar for three² violations within a 24-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 February 15, 2023, CTP served the Complaint on Respondent by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7.  Civil Remedies Division (CRD) Docket (Dkt.) Entry No. 1b (Proof of Service).  On March 16, 2023, Respondent registered for DAB E-File, and timely filed its Answer to CTP’s Complaint.  CRD Dkt. Entry Nos. 3-3a (Answer). 

On March 17, 2023, I issued an Acknowledgment and Pre-Hearing Order (APHO). CRD Dkt. Entry No. 4. The APHO set deadlines for the parties’ filings and exchanges, including a schedule for discovery.  In the APHO, I directed that a party receiving a discovery request must provide the requested documents within 30 days of the request.  CRD Dkt. Entry No. 4 at 3, ¶ 4; see also 21 C.F.R. § 17.23(a).  I also 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.

CRD Dkt. Entry No. 4 at 10, ¶ 21. 

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On April 17, 2023, CTP filed a Joint Status Report indicating that the parties had been unable to reach a settlement in this case, and that CTP remained willing to engage in settlement discussions but, absent an executed settlement agreement, CTP intended to proceed to a hearing.  CRD Dkt. Entry No. 6 at 1. 

On May 26, 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. 7 (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 June 6, 2023 due date for CTP’s pre-hearing exchange, . . . .”  CRD Dkt. Entry No. 8 at 2 (Motion to Extend Deadlines).  On May 30, 2023, I issued an Order advising Respondent that it had until June 14, 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. 9 at 2; 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. 9 at 2.  Respondent failed to respond to CTP’s Motion to Compel Discovery, my May 30, 2023 Order, or otherwise comply with CTP’s Request for Production of Documents. 

On June 21, 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 July 5, 2023.  I warned: 

Failure to comply with this Order 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. 10 at 2 (emphasis in the original).  In the same Order, I also extended the parties’ pre-hearing exchange deadlines.  Id. at 3.

On July 17, 2023, CTP filed a Status Report and Motion to Impose Sanctions (Motion to Impose Sanctions).  CRD Dkt. Entry No. 11.  CTP advised that Respondent had not complied with the APHO or my June 21, 2023 Order Granting CTP’s Motion to Compel.  Id. 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 impose a $638 civil money penalty.  Id. at 2.  On July 17, 2023, CTP also filed a Motion to Extend Deadlines.  CRD Dkt. Entry No. 12. 

On July 21, 2023, I issued an Order giving Respondent until August 7, 2023 to file a response to CTP’s Motion to Impose Sanctions.  CRD Dkt. Entry No. 13 at 2.  In my July 21, 2023 Order, I warned Respondent that, “if it fails to timely respond, I may grant 

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CTP’s Motion in its entirety.”  Id.  The July 21, 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 July 21, 2023 Order. 

II. Striking Respondent’s Answer

I may sanction a party for: 

1. (1)       Failing to comply with an order, subpoena, rule, or procedure governing the proceeding;
2. (2)       Failing to prosecute or defend an action; or
3. (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: 

• 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 June 21, 2023 Order, when it failed to submit documents responsive to CTP’s Request for Production of Documents by July 5, 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 May 30, 2023 Order; and
• Respondent did not file a response to CTP’s Motion to Impose Sanctions, as permitted by the regulations and my July 21, 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 

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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. 10 at 2; APHO ¶ 21.  Nor did Respondent respond to any of CTP’s motions.  CRD Dkt. Entry Nos. 9 at 1-2; 13 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.”).   

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 4:27 PM on August 17, 2021, at Respondent’s business establishment, 630 East Atlantic Avenue, Delray Beach, Florida 33483, an FDA-commissioned inspector conducted an inspection.  During this inspection, a person younger than 18 years of age³ was able to purchase an HQD Cuvie Plus Mango Peach 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;

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• In a warning letter dated October 12, 2021, CTP informed Respondent of the inspector’s August 17, 2021 documented violations, and that such actions violate federal law. The warning 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 November 13, 2022, at approximately 5:12 PM, at Respondent’s business establishment located at 630 East Atlantic Avenue, Delray Beach, Florida 33483. During this inspection, a person younger than 21 years of age was able to purchase an HQD Cuvie Plus Pina Colada 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.⁴

These facts establish Respondent Carolina Cigar’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 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 $638 civil money penalty is permissible under 21 C.F.R. § 17.2.

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Order

For these reasons, I enter default judgment in the amount of $638 against Respondent, Carolina Cigar of Delray, LLC d/b/a Carolina Cigar.  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  The complaint alleges two violations on August 17, 2021, and two violations on November 13, 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  I note that the violation alleged by CTP on August 17, 2021, 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 August 17, 2021 and November 13, 2022.  See Complaint ¶¶ 13.b, 15.b.   

⁴ Supra fn. 3.