Shesh Narayan LLC d/b/a Citgo / Shane’s, DAB No. 3137 (2024)

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Shesh Narayan LLC d/b/a Citgo / Shane’s (Respondent) appeals the initial decision and default judgment (Initial Decision) and the order of an Administrative Law Judge (ALJ) denying Respondent’s motion to reopen the Initial Decision (Motion to Reopen).  Shesh Narayan LLC d/b/a Citgo / Shane’s, DAB TB7262 (2023); Shesh Narayan LLC d/b/a Citgo / Shane’s, Order Denying Resp’t Mot. to Reopen, Docket No. T-23-3813 (Jan. 30, 2024).  The ALJ entered default judgment against Respondent and imposed a $19,192 civil money penalty (CMP) after Respondent failed to timely file an answer to an administrative complaint (Complaint) from the Food and Drug Administration’s Center for Tobacco Products (CTP).  Respondent filed a Motion to Reopen, which the ALJ denied on the grounds that Respondent failed to meet its burden to establish that extraordinary circumstances prevented it from timely filing an answer.  We affirm the Initial Decision and the Order Denying Respondent’s Motion to Reopen for the reasons stated below.

Legal Background

To protect public health, the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., imposes restrictions on the sale, distribution, and use of tobacco products.  See 21 U.S.C. §§ 301, 331(b), 331(k), 387a(a)-(b), 387c(a)(7)(B), 387f(d).  The Act prohibits the “receipt in interstate commerce of any . . . tobacco product . . . that is adulterated or misbranded, and the delivery or proffered delivery thereof for pay or otherwise.”  Id. § 331(c).  This prohibition extends to “new tobacco product[s],” defined as any tobacco product “that was not commercially marketed in the United States as of February 15, 2007.”  Id. § 387j(a)(1) (defining “new tobacco product”).

A “new tobacco product” must have premarket authorization.  21 U.S.C. § 387j(a)(2)(A).  
A new tobacco product is adulterated if it is required by 21 U.S.C. § 387j(a) to have premarket review and does not have a Marketing Granted Order (MGO) permitting marketing of the new tobacco product in effect under 21 U.S.C. § 387j(c)(1)(A)(i).  Id. § 387b(6)(A).  A new tobacco product is “misbranded” if a “notice of other information

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respecting it was not provided as required” by 21 U.S.C. § 387e(j) unless there is a substantial equivalence (SE) or SE exemption order (“found-exempt order”) in effect for such product.  Id. §§ 387j(a)(2)(A), 387e(j)(3)(A). 

The Act authorizes CMPs against “any person who violates a requirement of [the Act] which relates to tobacco products.”  21 U.S.C. § 333(f)(9)(A).  The implementing regulations concerning CMPs, in 21 C.F.R. Part 17 and 45 C.F.R. § 102.3, establish a schedule of maximum CMP amounts.  See 21 C.F.R. § 17.2 (citing 45 C.F.R. § 102.3 (table)). 

To impose a CMP, CTP files a complaint with the Departmental Appeals Board’s (DAB’s) Civil Remedies Division and serves a copy of the complaint on the “respondent” (the person or entity alleged to have committed the pertinent violation(s)).  See 21 C.F.R. §§ 17.3(b), 17.5, 17.7.  The respondent may then request a hearing before an ALJ by filing an answer to the complaint.  Id. § 17.9(a). 

If the respondent fails to timely answer the complaint, the ALJ “shall assume the facts alleged in the complaint to be true” and issue an initial decision granting a default judgment to CTP if those facts “establish liability,” and impose the CMP amount asked for in the complaint or the maximum amount permitted by law, whichever is smaller.  21 C.F.R.§ 17.11(a).  A respondent that fails to file a timely answer to a complaint “waives any right to a hearing and to contest the amount of the penalties and assessments imposed,” and “the initial decision shall become final and binding upon the parties 30 days after it is issued.”  Id. § 17.11(b). 

Before an ALJ’s initial decision entering a default judgment for failure to respond to a complaint becomes final, the respondent may file “a motion seeking to reopen on the grounds that extraordinary circumstances prevented the respondent from filing an answer,” in which case “the initial decision shall be stayed pending a decision on the 
motion.”  21 C.F.R. § 17.11(c).  If the respondent “can demonstrate extraordinary circumstances excusing the failure to file an answer in a timely manner,” the ALJ “may withdraw the decision . . . and shall grant the respondent an opportunity to answer the complaint as provided in § 17.9(a).”  Id. § 17.11(d).  If the ALJ “decides that the respondent’s failure to file an answer in a timely manner is not excused,” the ALJ “shall affirm” the initial default decision “and the decision shall become final and binding.”  Id. § 17.11(e).

A respondent “may appeal an initial decision, including a decision not to withdraw a default judgment,” by filing a notice of appeal with the Board.  21 C.F.R.§ 17.47(a).  A notice of appeal “must identify specific exceptions to the initial decision, must support each exception with citations to the record, and must explain the basis for each exception.”  Id.§ 17.47(c).  The Board “will consider only those issues raised before the presiding officer [i.e., the ALJ], except that the appellee may make any argument based

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on the record in support of the initial decision or decision granting summary decision.”  Id. § 17.47(g). 

Case Background¹

A. The Complaint

In a warning letter dated June 13, 2023, CTP informed Respondent that the new tobacco products that Respondent sold and distributed were adulterated and misbranded because they lacked the required FDA marketing authorization.  Initial Decision at 2; CTP Complaint (Compl.) ¶ 20.  The letter also stated that if Respondent failed to correct these violations, regulatory action by the FDA or a CMP action could occur and that it was Respondent’s responsibility to comply with the law.  Initial Decision at 2; Compl. ¶ 21. 

On September 25, 2023, CTP served on Respondent a Complaint seeking to impose a CMP of $19,192 for allegedly violating 21 U.S.C. § 331(c) by receiving an adulterated and misbranded electronic nicotine delivery system (ENDS) product in interstate commerce and offering that product for sale.  Initial Decision at 1-3; Compl. ¶¶ 12, 17, 18, 19.  CTP alleged that, on August 14, 2023, an FDA-commissioned inspector conducted a compliance inspection of Respondent’s establishment and observed an Elfbar Cranberry Grape ENDS product for sale.  Compl. ¶ 15.  Respondent allegedly sold a “new tobacco product” because the Elfbar Cranberry Grape ENDS product was not commercially marketed in the United States as of February 15, 2007.  Id. ¶¶ 15, 16.  CTP further alleged that Respondent’s ENDS product is “adulterated” under 21 U.S.C. § 387b(6)(A) because it did not have an MGO in effect, and that the product is “misbranded” under 21 U.S.C. § 387c(a)(6) because Respondent did not submit an SE report or an abbreviated report.  Id. ¶¶ 17, 18.

The Complaint states that “Respondent must respond to this Complaint,” and that “Respondent has the right to request a hearing by filing an Answer within 30 days after service of the Complaint.”  Compl. ¶ 22.  The Complaint further states that the “Answer will be deemed to be a request for hearing unless [it] states otherwise,” and that “[f]ailure to file an Answer within 30 days after service of the Complaint may result in a default order imposing the proposed [CMP].”  Id.  The Complaint informed Respondent that it “has the right, but is not required, to retain counsel for representation.”  Id. ¶ 23.

CTP’s cover letter transmitting the Complaint, dated September 22, 2023, also states that Respondent “must” respond to the Complaint.  CTP’s Cover Letter to the Complaint (Cover Letter) at 1.  The cover letter informed Respondent that it could request a hearing by filing an answer within 30 days after service of the Complaint, and that Respondent

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may “request an extension of time” if it cannot submit an answer within 30 days after delivery of the Complaint.  Id. at 4.  The cover letter states that if Respondent does not take action within 30 days, Respondent “will be in default and the [ALJ] may issue an initial decision ordering [Respondent] to pay the penalty under 21 C.F.R. § 17.11.”  Id. at 1.  The cover letter also enclosed information on how to respond to the Complaint, how to request a hearing, and how to use DAB’s electronic filing system (DAB E-File).  Id. at 1, 4-6.  The letter informed Respondent of its four options for responding to the Complaint:

Option A: Acknowledge that the violations occurred and pay the full penalty amount of $19,192.

*        *        *

Option B: Discuss a possible reduction to your civil money penalty through a settlement agreement.

1. Before submitting payment, you can contact CTP at (877) 287-1373 or email CTPCMP@fda.hhs.gov to schedule a Settlement Conference.
2. If settlement is reached, you must submit the Acknowledgment Form and the agreed-upon penalty amount.
3. Settlement payment must be received by CTP within 30 days after the date you receive this Complaint.  If you cannot submit payment within this time frame you must either:
   • File a response called an Answer (see Option C below), or
   • Request an extension of time for filing the Answer (see Option D below).

If you have difficulty communicating in English, FDA may be able to provide an interpreter for you to discuss your case with a settlement representative.  For more information about these services, you can contact CTP at (877) 287-1373 or email CTP-CMP@fda.hhs.gov.

Option C: Request a hearing.

*        *        *

Option D: Request an extension of time to file an Answer.

Id. at 3-4.

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B. The Initial Decision

Respondent did not file an answer to the Complaint or request a hearing, or request an extension of time to do so.  On November 21, 2023, the ALJ issued the Initial Decision.  The ALJ found that, “[a]s provided for in 21 C.F.R. §§ 17.5 and 17.7, on September 25, 2023, CTP served the [C]omplaint on Respondent” and that Respondent “has neither filed an answer within the time prescribed, nor requested an extension of time within which to file an answer.”  Initial Decision at 1, 2.  Therefore, “[p]ursuant to 21 C.F.R. § 17.11,” the ALJ “assume[d] that the facts alleged in the complaint (but not its conclusory statements) are true” and “establish Respondent’s liability” for violating the Act by impermissibly receiving in interstate commerce a new tobacco product that lacks the required premarket authorization and offering that product for sale.  Id. at 2-3.  The ALJ further concluded that a $19,192 CMP is permissible under 21 C.F.R. § 17.2 and 21 U.S.C. § 333(f)(9)(A).  Id. at 3.

C. Respondent’s Motion to Reopen and Appeal to the Board

On December 19, 2023, Respondent, through counsel, filed a timely Motion to Reopen the Initial Decision.  Order Denying Resp’t Mot. to Reopen.  Respondent argued that extraordinary circumstances prevented it from filing a timely answer because its managing member “speaks primarily Gujarati with some limited fluency in English,” has no formal legal training, and, therefore, “believed that it had, in fact, exercised Option B and reached a settlement agreement with a reduced civil monetary penalty of $0.”  Mot. to Reopen at 2-4. 

On December 21, 2023, the ALJ issued an order staying the Initial Decision pending resolution of Respondent’s Motion to Reopen and providing CTP an opportunity to respond to the motion.  On January 5, 2024, CTP timely filed its response, arguing that Respondent’s arguments do not constitute extraordinary circumstances because they were within Respondent’s control.  CTP Resp. to Resp’t Mot. to Reopen at 1-7.

On January 30, 2024, the ALJ issued an Order Denying Respondent’s Motion to Reopen the Initial Decision.  Order Denying Resp’t Mot. to Reopen at 5.  The ALJ concluded that Respondent “failed to meet its burden to establish that extraordinary circumstances existed preventing it from timely filing an answer.”  Id.  The ALJ first determined that Respondent’s limited fluency in English did not constitute an extraordinary circumstance because “Respondent was apprised, in multiple instances, of the opportunity to obtain an interpreter or translation services free of [charge] but failed to do so.”  Id. at 3.  Next, the ALJ agreed with CTP that “it was well within Respondent’s control to seek aid, including aid of counsel.”  Id. at 4 (citing CTP Resp. to Resp’t Mot. to Reopen at 7).  Finally, the ALJ explained that Respondent’s “misunderstanding with regard to the completion of the settlement negotiations with CTP does not constitute extraordinary circumstances” because “had Respondent requested interpreter services [it] would not have had that

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misunderstanding” and “the onus is on Respondent to take advantage of interpreter or translation services in order to understand official documents pertaining to its course of business.”  Id. at 4.  The ALJ held that “Respondent’s Motion to Reopen, therefore, is DENIED and the Initial Decision and Default Judgment is AFFIRMED.”  Id. at 5 (citing 21 C.F.R. § 17.11(e)).  The ALJ explained that the “Initial Decision becomes final 30 days after the issuance of [the] Order.”  Id. 

Respondent timely appealed the ALJ’s Order Denying Respondent’s Motion to Reopen to the Board, Notice of Appeal & Attached Brief (Br.) at 2, and CTP timely submitted a memorandum in opposition to Respondent’s appeal.  CTP Mem. in Opp’n to Resp’t Appeal.

Standard of Review

The Board’s standard of review on a disputed issue of fact is whether the initial decision is supported by substantial evidence on the whole record.  21 C.F.R. § 17.47(k).  The standard of review on a disputed issue of law is whether the initial decision is erroneous.  Id. 

Analysis

Respondent’s request for Board review argues only that the ALJ erroneously denied Respondent’s Motion to Reopen upon finding that Respondent had not demonstrated that extraordinary circumstances prevented it from timely filing an answer, and asks that the default judgment be reversed and that the case “proceed on its merits.”  Notice of Appeal & Br. at 9.  We affirm the ALJ’s denial for the reasons discussed below. 

A. The standard of review on an ALJ’s ruling on a motion seeking to reopen under section 17.11(c) is an abuse of discretion.

A respondent may file a “motion seeking to reopen on the grounds that extraordinary circumstances prevented the respondent from filing an answer,” and an ALJ “may withdraw” an initial default decision if a “respondent can demonstrate extraordinary circumstances excusing the failure to file an answer in a timely manner.”  21 C.F.R. § 17.11(c), (d).  If the ALJ “decides that the respondent’s failure to file an answer in a timely manner is not excused, he or she shall affirm the [initial default] decision.”  Id. § 17.11(e).  

The Board has applied an abuse of discretion standard in reviewing similar ALJ rulings, such as an appeal from a denial of a motion to vacate a dismissal.  See, e.g., Burien Nursing & Rehab. Ctr., DAB No. 2870 (2018) (applying an abuse of discretion standard in reviewing an ALJ’s denial of a motion to vacate a dismissal); Maximum Hospice & Palliative Care, DAB No. 2898 (2018) (same).  “[T]he Board has regularly reviewed

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ALJs’ denials of motions to vacate dismissals under the [abuse of discretion] standard” where the regulation provides that the ALJ “may” dismiss.  Meridian Nursing & Rehab at Shrewsbury, DAB No. 2504, at 7-8 (2013), aff’d, 555 F. App’x 177 (3d Cir. 2014); see also Retail LLC d/b/a Super Buy Rite, DAB No. 2660, at 9-10 (2015).

Here, the use of the word “may” in section 17.11(d) means that the ALJ has discretion to withdraw an initial default decision if a respondent “can demonstrate extraordinary circumstances.”  And, section 17.11(e) clearly states that the ALJ “decides” whether “respondent’s failure to file an answer in a timely manner is not excused.”  Therefore, the language of the regulation provides for an ALJ’s exercise of discretion and is reviewable as such.  See Joshua Ranjit, Inc. d/b/a 7-Eleven 10326, DAB No. 2758, at 6-7 (2017); Retail LLC at 9-10.  This interpretation is consistent with the pertinent regulatory history and context, in the form of the preamble to the 1995 final rule implementing section 17.11 and the “extraordinary circumstances” test.  The FDA stated that the “determination of whether to set aside a default judgment is an administrative matter that is better suited for initial review by the presiding officer [i.e., the ALJ], and which would be subject to appeal to the DAB.”  60 Fed. Reg. 38,612, 38,617 (July 27, 1995).  The FDA further stated that the “regulation sets forth a reasonable procedure for the [the ALJ] to set aside a default judgment upon the showing of extraordinary circumstances by the respondent.”  Id. at 38,617.

“Under an ‘abuse of discretion’ standard, ‘the reviewer may not simply substitute his or her judgment for that of the person exercising discretion.’” Retail LLC at 10 (quoting Vincent Baratta, M.D., DAB 1172, at 9 n.5 (1990)).  “Instead, the reviewing body – here the Board – will consider only whether the decision maker has articulated a reasonable basis for the decision under review, not whether it was the only reasonable decision.”  Id.  (citing River East Econ. Revitalization Corp., DAB No. 2087, at 9 (2007)).

Therefore, the question before the Board is whether the ALJ committed an abuse of discretion in denying Respondent’s Motion to Reopen.

B. The ALJ did not err or abuse discretion in determining that Respondent had not established that an extraordinary circumstance prevented the filing of a timely answer.

The governing regulations grant the ALJ the authority to reopen an initial default decision if the respondent shows “extraordinary circumstances prevented [it] from filing an answer in a timely manner.”  21 C.F.R. § 17.11(d).  The regulations do not define “extraordinary circumstances,” and the FDA has declined to define it.  60 Fed. Reg. 38,617 (“To attempt to define and thus limit the circumstances which will be deemed ‘extraordinary’ would be futile.  FDA could not possibly anticipate all ‘extraordinary circumstances.’”).  In response to a comment “argu[ing] that § 17.11 should apply an ‘excusable neglect’ standard, not an ‘extraordinary circumstances’ test,” FDA stated it

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“prefers the ‘extraordinary circumstances’ test, which, although somewhat harder to meet, is justified by the need to encourage respondents to respond in a timely fashion.”  Id. at 38,612. 

The ALJ acknowledged that “[t]he regulations do not define the term ‘extraordinary circumstances,’” but noted that an extraordinary circumstance “would normally constitute some event or events beyond a Respondent’s ability to control that acted to prevent Respondent from filing timely.”  Order Denying Resp’t Mot. to Reopen at 2.  The ALJ stated that “[a]t the very least, the term would preclude reopening where ordinary negligence is the cause of a Respondent’s failure to file a timely answer.”  Id.  

We agree with the ALJ that, at minimum, the “extraordinary circumstances” test requires proof of circumstances outside of Respondent’s ability to control and an absence of negligence.  However, such a showing is not necessarily sufficient to demonstrate “extraordinary circumstances,” and the Board is not adopting or setting out any comprehensive definition of the test.  Moreover, we need not define what the term “extraordinary circumstances” means because neither party disagrees with or challenges the ALJ’s assessment of what “extraordinary circumstances” requires, at minimum, in this particular case. 

Respondent challenges the ALJ’s denial of its Motion to Reopen because Respondent asserts that its failure to timely file an answer is “due to exceptional circumstances,” “not due to ordinary negligence.”  Notice of Appeal & Br. at 5.  Reiterating similar arguments made before the ALJ, Respondent contends that its lack of formal legal training resulted in its failure “due to exceptional circumstances” to confirm the settlement agreement that “it believed it had, in fact . . . reached.”  Id. at 3, 4.  Respondent “believed that this matter had been settled under the condition that [it] correct the violations by removing the Elfbar Cranberry Grape ENDS products from its store that purportedly violated federal law.”  Id. at 2.  The ALJ considered Respondent’s arguments, but reasonably rejected those arguments.  As the ALJ observed, “it was well within Respondent’s control to seek aid, including aid of counsel, in understanding official correspondence from a regulatory agency when Respondent has chosen to engage in the sale of tobacco projects, just as Respondent did after the Initial Decision issued.”  Order Denying Resp’t Mot. to Reopen at 4 (quoting CTP Resp. to Resp’t Mot. to Reopen).  We also agree with the ALJ’s assessment that the record “does not reflect that Respondent filed a request for an extension of time within which to file an answer in order to seek the assistance of or retain counsel.”  Id. at 4. The Complaint informed Respondent that it “has the right, but is not required, to retain counsel for representation.”  Compl. ¶ 23.  “The right to counsel, however, does not entitle [Respondent] to sit on their appeal rights indefinitely without seeking or receiving an extension.”  Fairway Med. Clinic & Shadow Creek Med. Clinic, DAB No. 2811, at 14 (2017).  The ALJ rationally determined that “[n]either a lack of formal legal training, nor failure to retain counsel, constitutes extraordinary

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circumstances” that prevented Respondent from filing a timely answer.  Order Denying Resp’t Mot. to Reopen at 4.

The ALJ considered Respondent’s assertion that it believed it had exercised Option B in the cover letter and settled the case, but reasonably determined that “Respondent’s misunderstanding with regard to the completion of settlement negotiations with CTP does not constitute extraordinary circumstances.”  Id.  The ALJ agreed with CTP that “had Respondent requested interpreter services [it] would not have had [the] misunderstanding,” and noted that:

Respondent is in the business of operating a retail store, which includes the sale of regulated tobacco products, and thus the onus is on Respondent to take advantage of interpreter or translation services in order to understand official documents pertaining to its course of business, particularly when such services are availed to Respondent free of charge.

Id. 

On appeal, Respondent asserts it is “worth noting” that the Nondiscrimination Notice providing instructions on how to obtain language services “does not provide any instructions in Gujarati, and if someone is limited to reading and speaking primarily Gujarati, the Nondiscrimination Notice itself is of no value.”  Notice of Appeal & Br. at 4.  However, as the ALJ pointed out, the Nondiscrimination Notice stated that, “the DAB also provides free language services to people whose primary language is not English, such as” “[q]ualified interpreters” and “[i]nformation written in other languages.”  Order Denying Resp’t Mot. to Reopen at 3.  The ALJ appropriately recognized that “[d]eciding to utilize, or not utilize, the interpreter or translation services that were available was within Respondent’s control.”  Id.  We perceive no error or abuse of discretion in the ALJ’s assessment. 

Moreover, Respondent’s assertion that it believed it had settled the case establishes no error or abuse of discretion by the ALJ. Even if we accept Respondent’s assertion as true, Respondent failed to follow the procedure to reach a settlement agreement that the cover letter unambiguously sets forth.  Cover Letter at 3-4.  As the ALJ noted, Option B states that “[i]f settlement is reached, you must submit the Acknowledgment Form,” which Respondent did not do.  Order Denying Resp’t Mot. to Reopen at 4.  Respondent’s failure to follow the procedure to reach and confirm a settlement agreement amounts to no more than neglect and does not constitute an extraordinary circumstance for failing to timely file an answer.

We see no ALJ abuse of discretion in denying Respondent’s Motion to Reopen where, as here, Respondent “received clear notice of its right to appeal and when it had to appeal.”  See generally Illini Heritage Rehab & Health Care, DAB No. 3125, at 13 (2023)

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(concluding that the ALJ did not err in determining that no good cause existed for an extension of petitioner’s time to request a hearing when petitioner “received clear notice of its right to appeal and when it had to appeal”).  Respondent does not dispute that it received the Complaint and cover letter, both of which provided sufficient notice that Respondent had to timely file an answer and that its failure to file an answer could result in a default judgment.  It was incumbent on Respondent to file an answer or an extension before the regulatory deadline passed.

In sum, we conclude that the ALJ did not err or abuse discretion in denying Respondent’s Motion to Reopen and we decline to reverse the ALJ’s denial.  The ALJ reasonably rejected Respondent’s arguments, concluding that “[t]he facts in this case demonstrate that Respondent’s failure to file a timely answer is more than likely due to its neglect, rather than an extraordinary circumstance.”  Order Denying Resp’t Mot. to Reopen at 5.  Again, we do not “substitute our judgment for that of the ALJ,” and we hold that “the ALJ has articulated a reasonable basis for the decision under review,” regardless of “whether it was the only reasonable decision.”  See Retail LLC at 14.

C. The Board is not required to consider new arguments that were not raised before the ALJ and Respondent’s arguments establish no error in any event.

Before the Board, Respondent asserts, for the first time, that its reasonable reliance on a “material misrepresentation of a CTP official” constitutes an extraordinary circumstance. Notice of Appeal & Br. at 5.  Respondent further asserts that “there is an extreme language and cultural barrier that, quite literally, caused [it] to trust the CTP official with whom [Respondent] spoke on the phone and believe that this matter was settled and resolved, only to find out that CTP secured a default against it including a fine of more than $19,000.”  Id. at 4-5.  Respondent argues that “CTP did not even dispute that a CTP official had such a conversation with [Respondent’s managing member].”  Id. at 5.  These are new arguments that were not raised before the ALJ; therefore, the Board is not required to consider them.  See 21 C.F.R. § 17.47(g); Cape Tobacco Inc. d/b/a Santa Tobacco, DAB No. 3091, at 8 (2023) (citing 21 C.F.R. § 17.47(g)) (“The Board is not required to consider an issue Respondent could have raised, but failed to raise, before the ALJ.”)). 

Even if Respondent’s arguments were properly before the Board, they lack merit.  In the affidavit filed with Respondent’s Motion to Reopen, Respondent’s managing member stated that he “believed that this matter had been settled” and “believed and understood after the phone call [with a CTP representative] that [he] had exercised Option B in the cover letter.”  Attach. A to Mot. to Reopen.  These statements reflect Respondent’s subjective belief that it had entered a settlement agreement.  However, the record contains no details about Respondent’s managing member’s purported discussions with CTP and no evidence of any misrepresentation or misconduct by CTP.  Respondent’s subjective belief that it had settled the case does not prove or support its assertion that 

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there was a “material misrepresentation” or “misconduct” by a CTP official.

To the extent that Respondent is trying to assert a claim of equitable estoppel, Respondent has not provided any authority showing that the equitable remedy of estoppel is even available in this administrative case, and the record evidence does not support the elements of such a claim in any event.  The government cannot be estopped absent, “at a minimum, a showing that the traditional requirements for estoppel are present (i.e., a factual misrepresentation by the government, reasonable reliance on the misrepresentation by the party seeking estoppel, and harm or detriment to that party as a result of the reliance) and that the government's employees or agents engaged in affirmative misconduct.”  Auto Valet, Inc. d/b/a Finest Car Wash, DAB No. 2915, at 8 (2018) (quoting Ill. Dep’t of Children & Family Servs., DAB No. 2734, at 8 (2016)).  Even if Respondent could show that a CTP official provided false information that the case was settled and resolved, and we do not conclude that Respondent has done so, Respondent has failed to show that CTP “engaged in ‘affirmative misconduct,’ which is something more than failing to provide accurate information or negligently dispensing erroneous advice.”  Gregory J. Frazer, Au.D., Ph.D., DAB No. 3038, at 12 (citing Linda Silva, P.A., DAB No. 2966, at 8 n.6 (2019)).  “[E]rroneous oral advice is inadequate, as a matter of law, to estop the government from enforcing federal law.”  Frazer at 12 (citing Wash. State Dept. of Soc. & Health Servs., DAB No. 1561, at 10 (1996)).

D. The ALJ did not err in assuming that the facts in the Complaint are true, as the regulation requires, and establish liability.

After deciding that Respondent’s failure to timely file an answer was not excused, the ALJ appropriately affirmed the Initial Decision. See 21 C.F.R. § 17.11(e).  Respondent does not appeal any aspect of the Initial Decision and presents no argument that the ALJ’s findings or conclusions in the Initial Decision are unsupported by substantial evidence or legally erroneous.  In any event, we conclude that the ALJ did not err in treating the allegations set out in CTP’s Complaint as true and proceeding to apply the relevant law to those facts, as section 17.11(a) requires.  With no answer, the ALJ was required to “assume the facts alleged in the complaint to be true,” and, “if such facts establish[ed] liability,” issue a default judgment and impose a civil money penalty.  See 21 C.F.R. § 17.11(a).  Respondent does not contend that the ALJ committed any factual or legal error by entering a default judgment based on the Complaint’s allegations.  In addition, Respondent does not challenge the ALJ’s findings that the Complaint’s allegations established that it violated the Act on August 14, 2023 by impermissibly receiving in interstate commerce a new tobacco product that lacks the required premarket authorization and offering such product for sale.  Respondent also does not dispute that a $19,192 CMP is an authorized penalty for its violation.

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Conclusion

For the foregoing reasons, we affirm the Initial Decision and ALJ’s Order Denying Respondent’s Motion to Reopen.

Endnotes

¹  The facts stated here are taken from the Initial Decision and the administrative record.  We make no new findings of fact, and the facts stated are undisputed unless we indicate otherwise.