The Bronx Inc. d/b/a Fill N Shop / Food Shop, DAB TB7206 (2023)

Glossary:

I.   Jurisdiction

I have jurisdiction to hear this case pursuant to my appointment by the Secretary of Health and Human Services and my authority under the Administrative Procedure Act (5 U.S.C. §§ 554-556), 5 U.S.C.A. § 3106, 21 U.S.C. § 333(f)(5), 5 C.F.R. §§ 930.201 et seq. and 21 C.F.R. Part 17.²

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II.  Procedural Background

The Center for Tobacco Products (CTP/Complainant) filed a Complaint on April 20, 2023, against The Bronx Inc. d/b/a Fill N Shop / Food Shop (Fill N Shop / Food Shop/Respondent), located at 17505 Aurora Avenue North, Shoreline, Washington 98133, alleging that FDA documented three violations within a 24-month period.

Respondent Fill N Shop / Food Shop was served with process on April 19, 2023, by United Parcel Service (UPS).  Docket (Dkt.) Entry Nos. 1b, 2.  Respondent timely filed its Answer on May 15, 2023.  Dkt. Entry No. 4.  On May 19, 2023, I issued a Pre-Hearing Order (PHO) setting a schedule for the parties’ exchanges of evidence and the procedures in preparation for a hearing.  Dkt. Entry No. 5.  On July 6, 2023, CTP filed a Motion to Compel Discovery.³  Dkt. Entry No. 7.  CTP served Respondent with a Request for Production of Documents (RFP) on May 30, 2023, Dkt. Entry Nos. 7 at 1, 7b, and Respondent had 30 days after receiving the CTP’s request to produce any responsive

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documents.  PHO ¶ 3 (citing 21 C.F.R. § 17.23(a)); Dkt. Entry No. 7 at 2.  However, CTP stated that Respondent had failed to respond to the RFP.  Dkt. Entry No. 7 at 2.

On July 18, 2023, I issued an Order to Compel Discovery and Order to Show Cause to Respondent (OSCR).  In my OSCR, I explained that Respondent failed to comply with the procedural rules of 21 C.F.R. Part 17, that CTP’s motion will be construed as a request for an Order to Show Cause, and so I directed Respondent to comply with CTP’s RFP by July 24, 2023.  I warned Respondent:

Failure to comply will result in sanctions, which may include issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.

July 18, 2023, Order (citing 21 C.F.R. § 17.35).  Further, I ordered Respondent to respond to CTP’s RFP and to show cause by July 24, 2023, why default judgment should not be entered against it for failing to comply with the procedural rules.  I also extended the parties’ prehearing exchange deadline if Respondent was able to show cause.  Respondent did not show cause or otherwise respond to my July 18, 2023, OSCR.

On August 2, 2023, CTP filed a Status Report and Motion to Impose Sanctions asserting that, “Respondent has neither produced documents to CTP in response to its RFP nor filed any pleading to show cause why a default judgment should not be entered against it.”  Dkt. Entry No. 9 at 2.  CTP asserted that sanctions against Respondent are appropriate, and that a reasonable sanction for Respondent’s non-compliance is to strike Respondent’s Answer.  Id.

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On August 9, 2023, I issued another Order to Show Cause to Respondent (OSC).  In my OSC, I explained that Respondent failed to comply with the procedural rules of 21 C.F.R. Part 17, that CTP’s motion will be construed as a request for an Order to Show Cause, and so I directed Fill N Shop / Food Shop to either comply with CTP’s RFP or to show cause by August 18, 2023, why default judgment should not be entered against it for failing to comply with the procedural rules.  Dkt. Entry No. 10 at 2.  I again warned
Respondent:

Failure to comply will result in sanctions, which may include issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.

August 9, 2023, Order (citing 21 C.F.R. § 17.35).  I extended again the parties’ prehearing exchange deadline if Respondent was able to show cause.  Respondent did not show cause or respond to my August 9, 2023, OSC.

III.  Striking Respondent’s Answer

I may sanction a person, including any party or counsel 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).  In this case, Respondent failed to comply with my orders and the procedures governing this proceeding.  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.

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§ 17.35(b).

My July 18, 2023, and August 9, 2023, Orders directed Respondent to comply with CTP’s request for document production, to show cause as to its failure to comply, and to do so on or before July 24, 2023, and August 18, 2023, respectively.  Respondent failed to comply with my July 18, 2023, and August 9, 2023, Orders when it failed to show cause by the deadlines.  Respondent also failed to file responsive pleadings to CTP’s RFP, Motion to Compel Discovery, and Motion to Impose Sanctions and my July 18, 2023, and August 9, 2023, Orders.

Respondent failed to comply with my May 19, 2023, PHO, and my July 18, 2023, and August 9, 2023, Show Cause Orders.  In fact, Respondent has not made any contact since filing its May 15, 2023, Answer.  Due to Respondent’s noncompliance and failure to defend its case, I find that striking Respondent’s Answer is an appropriate sanction.  Therefore, I grant CTP’s Motion to Impose Sanctions and strike Respondent’s Answer.  21 C.F.R. §§ 17.11(a), 17.35(b), (c)(3).  Striking Respondent’s Answer leaves CTP’s Complaint unanswered.

IV.  Burden of Proof

CTP as the petitioning party has the burden of proof.  21 C.F.R. § 17.33.

V.  Law

21 U.S.C. § 331, specifically section 906(d)(5) of the Act, and 21 C.F.R. § 1140.14(b)(2)(i) as modified by the Act.

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VI.  Issue

Did Respondent violate 21 U.S.C. § 331, specifically section 906(d)(5) of the Act, and 21 C.F.R. § 1140.14(b)(2)(i) as modified by the Act, as alleged in the Complaint?

VII.  Default

I find Respondent was served and is subject to the jurisdiction of this forum, as established by the Notice of Filing filed by CTP on April 21, 2023. 
It is Respondent’s right to participate in the legal process. It is Respondent’s right to request a hearing or to waive a hearing.
I find Respondent waived its right to a hearing pursuant to 21 C.F.R. §  17.11(b).

VIII.  Allegations

A. Agency’s recitation of facts

CTP alleged that Respondent owns an establishment, doing business under the name Fill N Shop / Food Shop, located at 17505 Aurora Avenue North, Shoreline, Washington 98133.  Respondent's establishment receives tobacco products in interstate commerce and holds them for sale after shipment in interstate commerce.

CTP’s Complaint alleged that on November 30, 2021, CTP issued a Warning Letter to Respondent, alleging that Respondent committed the following violations:

1. Selling regulated tobacco products to a person under 21 years of age, in violation of section 906(d)(5) of the Act.  Specifically, a person younger than 21 years of age was able to purchase a HYPPE Max Flow Watermelon Peach

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Pear electronic nicotine delivery system (ENDS) product on October 12, 2021, at approximately 11:00 AM; and

2. Failing to verify the age of a person purchasing covered tobacco products by means of photographic identification containing the bearer's date of birth, as required by 21 C.F.R. § 1140.14(b)(2)(i).  Specifically, the underage purchaser’s age was not verified before the sale, as detailed above, on October 12, 2021, at approximately 11:00 AM.

Because no opportunity for a hearing was provided before the Warning Letter was issued, Respondent had a right to challenge the allegations in the Warning Letter in the instant case.  See Orton Motor Co. d/b/a Orton’s Bagley v. HHS, 884 F.3d 1205 (D.C. Cir. 2018).

Further, during a subsequent inspection of Fill N Shop / Food Shop conducted on January 12, 2023, an FDA-commissioned inspector documented the following violations:

1. Selling regulated tobacco products to a person under 21 years of age, in violation of section 906(d)(5) of the Act.  Specifically, a person younger than 21 years of age was able to purchase a Puff Plus Watermelon electronic nicotine delivery system (ENDS) product on January 12, 2023, at approximately 11:34 AM; and
2. Failing to verify the age of a person purchasing covered tobacco products by means of photographic identification containing the bearer's date of birth, as required by 21 C.F.R. § 1140.14(b)(2)(i).  Specifically, the underage

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purchaser’s age was not verified before the sale, as detailed above, on January 12, 2023, at approximately 11:34 AM.

B. Respondent’s recitation of facts

As the result of being sanctioned for failing to comply with my orders and the procedures governing this proceeding, Respondent’s Answer was stricken from the record.  Since Respondent filed no responsive pleadings that I may consider, I must assume those allegations set forth in the Complaint to be true.  21 C.F.R. § 17.11(a).

Therefore, under FDA’s current policy, the violations described in the Complaint count as three violations for purposes of computing the civil money penalty in the instant case.  I find and conclude Respondent committed three violations of 21 U.S.C. § 331, specifically section 906(d)(5) of the Act, and 21 C.F.R. § 1140.14(b)(2)(i) as modified by the Act, within a 24‑month period as set forth in the Complaint.

IX. Family Smoking Prevention and Tobacco Control Act

The “relevant statute” in this case is actually a combination of statutes and regulations:  The Family Smoking Prevention and Tobacco Control Act, Pub. L. No. 111‑31, 123 Stat. 1776 (2009) (TCA), amended the Food, Drug, and Cosmetic Act (21 U.S.C.A. Chap. 9) (FDCA) and created a new subchapter of that Act that dealt exclusively with tobacco products, (21 U.S.C. §§ 387-387u), and it also modified other parts of the FDCA explicitly to include tobacco products among the regulated products whose misbranding can give rise to civil, and in some cases criminal, liability.  The 2009 amendments to the FDCA contained within the TCA also charged the Secretary of Health and Human Services with, among other things, creating regulations to govern tobacco

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sales.  The Secretary’s regulations on tobacco products appear in Part 1140 of Title 21, Code of Federal Regulations.

Under the FDCA, “[a] tobacco product shall be deemed to be misbranded if, in the case of any tobacco product sold or offered for sale in any State, it is sold or distributed in violation of regulations prescribed under section 387f(d).”  21 U.S.C. § 387c(a)(7)(B) (2012).  Section 387a‑1 directed FDA to re-issue, with some modifications, regulations previously passed in 1996.  21 U.S.C. § 387 a-1(a) (2012).  These regulations were passed pursuant to section 387f(d), which authorizes FDA to promulgate regulations on the sale and distribution of tobacco products; 75 Fed. Reg. 13,225 (Mar. 19, 2010), codified at 21 C.F.R. Part 1140 (2015); 21 U.S.C. § 387f(d)(1) (2012).  Accordingly, 21 C.F.R. § 1140.1(b) provides that “failure to comply with any applicable provision in this part in the sale, distribution, and use of cigarettes and smokeless tobacco renders the product misbranded under the act.”

Under 21 U.S.C. § 331(k), “[t]he alteration, mutilation, destruction, obliteration, or removal of the whole or any part of the labeling of, or the doing of any other act with respect to, a food, drug, device, tobacco product, or cosmetic, if such act is done while such article is held for sale (whether or not the first sale) after shipment in interstate commerce and results in such article being adulterated or misbranded” is a prohibited act under 21 U.S.C. § 331.  Thus, when a retailer such as Respondent misbrands a tobacco product by violating a requirement of 21 C.F.R. Part 1140, that misbranding in turn violates the FDCA, specifically 21 U.S.C. § 331(k).  FDA may seek a civil money penalty from “any person who violates a requirement of this chapter which relates to

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tobacco products.”  21 U.S.C. § 333(f)(9)(A) (2012).  Penalties are set by 21 U.S.C. § 333 note and 21 C.F.R. § 17.2.  Under current FDA policy, the first time FDA finds violations of 21 C.F.R. Part 1140 at an establishment, FDA only counts one violation regardless of the number of specific regulatory requirements that were actually violated, but if FDA finds violations on subsequent occasions, it will count violations of specific regulatory requirements individually in computing any civil money penalty sought.  This policy is set forth in detail, with examples to illustrate, at U.S. Food & Drug Admin., Guidance for Industry, Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers (Revised) (Aug. 2023), available at https://www.fda.gov/regulatory-information/search-fda-guidance-documents/civil-money-penalties-and-no-tobacco-sale-orders-tobacco-retailers-revised.  So, for instance, if a retailer sells a tobacco product on a particular occasion to a minor without checking for photographic identification, in violation of section 906(d)(5) of the Act,⁴ and subpart B of part 1140 of title 21, Code of Federal Regulations, this will count as two separate violations for purposes of computing the civil money penalty, unless it is the first time violations were observed at that

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particular establishment.  This policy of counting violations has been determined by the HHS Departmental Appeals Board to be consistent with the language of the FDCA and its implementing regulations.  See Orton Motor Co. d/b/a Orton’s Bagley v. HHS,884 F.3d 1205 (D.C. Cir. 2018).

X.  Liability

When a retailer such as Respondent is found to have “misbranded” a tobacco product in interstate commerce, it can be liable to pay a CMP.  21 U.S.C. §§ 331, 333.  A retailer facing such a penalty has the right, set out in statute, to a hearing under the Administrative Procedure Act.  21 U.S.C. § 333(f)(5)(A).  A retailer can forfeit its rights under the statute and regulations by failing to participate in the process, a failure known as a “default.”  21 C.F.R. § 17.11. 

As set forth above, it is Respondent’s right to decide whether to participate in the legal process.  It is Respondent’s right to decide to request a hearing and it is Respondent’s right to waive a hearing. 

I find Respondent, by failing to respond, waived its right to a hearing.

XI.  Impact of Respondent’s Default

When a Respondent defaults by failing to answer the complaint, or respond to a OSC, an ALJ must assume as true all factual allegations in the complaint and issue an initial decision within thirty (30) days of the answer’s due date, imposing “the maximum amount of penalties provided for by law for the violations alleged” or “the amount asked for in the complaint, whichever is smaller” if “liability under the relevant statute” is established.  21 C.F.R. § 17.11(a)(1) and (2).  But see 21 C.F.R. § 17.45 (initial decision

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must state the “appropriate penalty” and take into account aggravating and mitigating circumstances).

Two aspects of Rule 17.11 are important in default cases.&

First, the Complainant benefits from a regulatory presumption (the ALJ shall assume that the facts alleged in the complaint are true) that relieves it from having to put on evidence.

The presumption affords a party, for whose benefit the presumption runs, the luxury of not having to produce specific evidence to establish the point at issue.  When the predicate evidence is established that triggers the presumption, the further evidentiary gap is filled by the presumption.  See 1 Weinstein's Federal Evidence § 301.02[1], at 301‑7 (2d ed.1997); 2 McCormick on Evidence § 342, at 450 (John W. Strong ed., 4th ed. 1992); Routen v. West, 142 F.3d 1434, 1440 (Fed. Cir. 1998).⁵

Second, as far as the penalty is concerned, my discretion is limited by the language of the regulation.  I may not tailor the penalty to address any extenuation or mitigation, for example, nor, because of notice concerns, may I increase the penalty beyond the

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smaller of (a) the Complainant's request or (b) the maximum penalty authorized by law.

XII. Liability Under the Relevant Statute

Taking the CTP’s allegations as set forth in the Complaint as true, the next step is whether the allegations make out “liability under the relevant statute.”  21 C.F.R. § 17.11(a).

Based on Respondent’s failure to answer I assume all the allegations in the Complaint to be true.

I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding that Respondent violated 21 U.S.C. § 331, specifically section 906(d)(5) of the Act, in that a person younger than 21 years of age was able to purchase regulated tobacco products on October 12, 2021, and January 12, 2023.

I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding that Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(2)(i) as modified by section 906(d)(5) of the Act, on those same dates in that 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.

The conduct set forth above on October 12, 2021, and January 12, 2023, counts as three violations for purposes of computing the civil money penalty.

XIII.  Penalty

There being liability under the relevant statute, I must now determine the amount of penalty to impose.  My discretion regarding a penalty is constrained by regulation.  I

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must impose either the maximum amount permitted by law or the amount requested by the Center, whichever is lower.  21 C.F.R. § 17.11(a)(1), (a)(2).

In terms of specific punishments available, the legislation that provides the basis for assessing civil monetary penalties divides retailers into two categories:  those that have “an approved training program” and those that do not.  Retailers with an approved program face no more than a warning letter for their first violation; retailers without such a program begin paying monetary penalties with their first.  TCA § 103(q)(2), 123 Stat. 1839, codified at 21 U.S.C. § 333 note.  See 21 C.F.R. § 17.2.  The FDA has informed the regulated public that “at this time, and until FDA issues regulations setting the standards for an approved training program, all applicable CMPs will proceed under the reduced penalty schedule.”  FDA Regulatory Enforcement Manual, Aug. 2015, ¶ 5‑8‑1.  Because of this reasonable exercise of discretion, the starting point for punishments and the rate at which they mount are clear – the lower and slower schedules.

XIV.  Mitigation

It is incumbent upon Respondent to present any factors that could result in mitigation of CTP’s proposed penalty.  Specifically, it is Respondent’s burden to provide mitigating evidence.  In a default, Respondent has failed to participate and has failed to present any evidence regarding potential mitigation.  Accordingly, I have no reason to mitigate the penalty.

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XV.  Conclusion

Respondent committed three violations in a 24‑month period and so, Respondent is liable for a civil money penalty of $638.  See 21 C.F.R. § 17.2.

WHEREFORE, evidence having read and considered it be and is hereby

ORDERED as follows:

1. I find Respondent has been served with process herein and is subject to this forum.
2. I find Respondent failed to respond to my July 18, 2023, and August 9, 2023, Show Cause Orders.
3. I find Respondent failed to comply with my orders and procedures governing this proceeding and failed to defend its actions, constituting misconduct that has interfered with the speedy, orderly, or fair conduct of this proceeding.  21 C.F.R. § 17.35(a).
4. I grant CTP’s Motion to Impose Sanctions and strike Respondent’s Answer filed on May 15, 2023, as a sanction pursuant to 21 C.F.R. § 17.35(c)(3).
5. I find Respondent’s misconduct warrants striking its answer as a sanction.  21 C.F.R. § 17.35(c).
6. I find striking Respondent’s answer leaves the complaint unanswered.  21 C.F.R. § 17.11. 
7. I find Respondent is in default.
8. I assume the facts alleged in the Complaint to be true.  21 C.F.R. § 17.11. 
9. I find the facts set forth in the Complaint establish liability under the relevant statute.
10. I assess a monetary penalty in the amount of $638.

Endnotes

¹  See 5 C.F.R. § 930.204.

²  See also Butz v. Economou, 438 U.S. 478, 513 (1978); Marshall v. Jerrico, Inc., 446 U.S. 238 (1980); Federal Maritime Com’n v. South Carolina State Ports Authority, 535 U.S. 743, 744 (2002).

³  CTP filed three exhibits with its Motion to Compel Discovery.  They included its Request for Production of Documents (RFP), the UPS Delivery Notification (DN), and a United States Postal Services (USPS) Zip Code Lookup of the Respondent’s business establishment zip code to establish service.  Dkt. Entry Nos. 7, 7a-7c.  CTP’s complaint and RFP were addressed to the Respondent at 17505 Aurora Avenue North, Shoreline, WA 98133, Dkt. Entry Nos. 1, 7a, CTP Ex. A (emphasis added); however, the UPS DN lists Respondent at the same street address in Seattle, WA 98133, Dkt. Entry No. 7b, CTP Ex. B (emphasis added).  CTP asserts that according to the USPS website, Seattle and Shoreline are both recognized city names for addresses in ZIP code 98133 in Washington state.  Dkt. Entry No. 7, fn.1; see also Dkt. Entry No. 7c, CTP Ex. C.  Additionally, Respondent who presumably received the complaint without issue was able to file its Answer on May 15, 2023, Dkt. Entry No. 4, and CTP’s RFP was subsequently received by “PARK” per the DN, Dkt. Entry No. 7b (CTP Ex. B).  Having reviewed the evidence in the record and noting the discrepancy in city name, I conclude that service on the Respondent was proper.

⁴   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 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).  Prior to December 20, 2019, the sale of regulated tobacco products was only prohibited to any person younger than 18 years of age, 21 C.F.R. § 1140.14(a)(1), (b)(1), and retailers were only required to verify, by means of photographic identification containing a purchaser’s date of birth, that no regulated tobacco product purchasers were younger than 18 years of age, 21 C.F.R. § 1140.14(a)(2)(i), (b)(2)(i).

⁵  However, when the opposing party puts in proof to the contrary of that provided by the presumption, and that proof meets the requisite level, the presumption disappears.  See Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 254–55, 101 S.Ct. 1089, 1094–95, 67 L.Ed.2d 207 (1981); A.C. Aukerman, 960 F.2d at 1037 (“[A] presumption ... completely vanishes upon the introduction of evidence sufficient to support a finding of the nonexistence of the presumed fact.”); see also Weinstein’s Federal Evidence § 301App.100, at 301App.–13 (explaining that in the “bursting bubble” theory once the presumption is overcome, then it disappears from the case); 9 Wigmore on Evidence
§ 2487, at 295–96 (Chadbourn rev.1981).  See generally Charles V. Laughlin, In Support of the Thayer Theory of Presumptions, 52 Mich. L.Rev. 195 (1953); Routen v. West, 142 F.3d 1434, 1440 (Fed. Cir. 1998).