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                              Richard Lorenz d/b/a Rick's Gas Station, DAB TB5274 (2021)
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Richard Lorenz d/b/a Rick's Gas Station, DAB TB5274 (2021)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Civil Remedies Division





Center for Tobacco Products,
Complainant,

v.

Richard Lorenz
d/b/a Rick's Gas Station,
Respondent.
Docket No. T-20-694FDA Docket No. FDA-2019-R-5402Decision No. TB5274January 8, 2021

        
              
    

      INITIAL DECISION

The Center for Tobacco Products (CTP) of the United States Food and Drug Administration (FDA) seeks a No-Tobacco-Sale Order (NTSO) for a period of 30 consecutive days against Respondent, Richard Lorenz d/b/a Rick's Gas Station, for committing six repeated violations of 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, within a 36-month period.  Specifically, CTP alleges that Respondent violated the Act when it sold regulated tobacco products to minors and failed to verify, by means of photo identification containing a date of birth, that purchasers were 18 years of age or older and then repeated those violations at least six times within a 36-month period.  Respondent denies liability and asks that I deny CTP's request to impose an NTSO.  For the reasons discussed below, I find Respondent liable for six repeated violations over a period of 36 months and conclude that an NTSO of 15 consecutive days is appropriate.

**Page 2**

I.  Background and Procedural History

As provided in 21 C.F.R. §§ 17.5 and 17.7, CTP served a Complaint on Respondent, Rick's Gas Station, located at 1340 North Perry Street, Pontiac, Michigan, 48340, by United Parcel Service, on November 19, 2019.  *See* DAB E-File Docket (Dkt.) No. T-20-694, Dkt. Entry No. 1b.  CTP filed the Complaint and proof of service with the Departmental Appeals Board, Civil Remedies Division (CRD) on November 20, 2019.  Dkt. Entry Nos. 1, 1a-1b.  Specifically, CTP asserts that Respondent has been the subject of three prior civil money penalty (CMP) actions for selling cigarettes or smokeless tobacco to minors and failing to verify the age of the purchasers, in violation of the regulations found at 21 C.F.R. pt. 1140.  Complaint ¶¶ 8-11.

Specifically, CTP asserts that Respondent had one original violation on December 17, 2015, and three repeated violations on July 12, 2016, March 1, 2018, and July 18, 2018, respectively, for selling cigarettes or smokeless tobacco to minors, in violation of 21 C.F.R. § 1140.14(a)(1).  *Id.*¶¶ 8-11.  Further, CTP alleges that Respondent had one original violation and one repeated violation on July 12, 2016, and March 1, 2018, respectively, for failing to verify the age of the cigarette purchasers by means of photographic identification containing the bearer's date of birth, in violation of 21 C.F.R. § 1140.14(a)(2)(i).1
  *Id.*  CTP also alleges that Respondent subsequently sold cigarettes to a minor, in violation of 21 C.F.R. § 1140.14(a)(1), and failed to verify the age of the cigarette purchaser by means of photographic identification containing the bearer's date of birth, in violation of 21 C.F.R. § 1140.14(a)(2)(i), on May 17, 2019.  *Id.* ¶ 6.  Accordingly, CTP alleges that Respondent had four repeated violations from the previous CMP actions and two additional repeated violations on May 17, 2019.  *Id.* ¶¶ 6, 8-11.  Therefore, CTP contends that Respondent has committed six repeated violations within a 36-month period and is subject to an NTSO.  *Id.* ¶ 1.

On December 18, 2019, Respondent, through counsel, timely filed an Answer, neither admitting nor denying the allegations but presenting a defense to liability.  Dkt. Entry Nos. 3, 3a.  In its Answer, Respondent asserts:

In Mr. Lorenz's defense, he was not present during the alleged violations.  Mr. Lorenz ensured that all employees were trained and that signage was used to further notify employees not to sell tobacco to minors.  Because all employees were instructed on how to abide by the relevant tobacco statutes through direct training and signage, the employee's alleged violations fall

**Page 3**

outside of the scope of their employment and Mr. Lorenz cannot be held liable for their violations ultra vires.

Dkt. Entry No. 3a (Answer) at 4.  With regard to the appropriateness of the proposed 30-day NTSO, Respondent reiterates that "Mr. Lorenz was not present during any of the alleged violations[,]" asserts that he "has provided employment opportunities for young adults in the low income community[,]" and "appreciates the seriousness of tobacco related violations and their effect on minors." *Id.*Respondent states that he thoroughly trained and instructed employees on how to comply with the relevant tobacco laws, posted signage at the attendant's counter reminding employees to check necessary identification and not to sell tobacco to anyone under the age of eighteen, and immediately terminated employees involved in the alleged violations.  *Id.* at 4-5.  Further, Respondent states that "Mr. Lorenz has been the sole owner of Rick's Gas Station for 43 years and other than the allegations [in the Complaint], has operated the store without any issues."  *Id.* at 5.  Finally, Respondent asserts that imposing a 30-day NTSO "on Mr. Lorenz as the owner of a small community business would pose a significant and disproportionate economic impact on him."  *Id.* at 5.

On December 19, 2019, I issued an Acknowledgment and Pre-Hearing Order (APHO) acknowledging receipt of Respondent's Answer and establishing a deadline for discovery and a schedule for pre-hearing exchanges between the parties.  Dkt. Entry No. 4.  The parties timely filed their respective pre-hearing exchanges.  On March 31, 2020, I issued an Order Scheduling Pre-Hearing Conference, in which I ordered the parties to appear at a telephone pre-hearing conference.  Dkt. Entry No. 8.  I set the pre-hearing conference for April 23, 2020, at 11:00 AM Eastern Time.  On April 23, 2020, I held the pre-hearing conference call as scheduled.  Counsel for the Center for Tobacco Products, appeared at the pre-hearing conference.  However, Respondent's counsel neither appeared at the pre-hearing conference call as ordered nor provided any response to the Order that scheduled the pre-hearing conference call.

On April 23, 2020, I issued an Order to Show Cause, allowing Respondent until May 1, 2020, to show cause for its failure to comply with my Order and failure to defend this case.  21 C.F.R. § 17.35(a); Dkt. Entry No. 9.  On May 29, 2020, the attorney advisor assisting me with this case contacted Respondent's counsel to inform him of his failure to appear at the pre-hearing conference and the lack of response to my Order to Show Cause.  Respondent's counsel was given ten additional days to respond to the Order to Show Cause.  *See* Dkt. Entry No. 10 (Email Correspondence).

On June 4, 2020, Respondent's counsel filed a Response to the Order to Show Cause.  Dkt. Entry No. 11 (Response to the Order to Show Cause).  In its response, Counsel stated that, as a result of a March 23, 2020, executive order from Michigan Governor Gretchen Whitmer, a significant percentage of the staff at the law firm were furloughed,

**Page 4**

which included Elaina Chebbani, the associate assigned by the law firm to this case.  *Id*. at 1-2.  Specifically, Counsel stated:

It appears that the notice regarding the pretrial date as well as the subsequent show cause order were emailed only to Attorney Elaina Chebbani, and not to Lawrence S. Gadd who retained responsibility for the file subsequent to the furlough of Attorney Chebbani.  As a result, Mr. Gadd did not receive either the emailed Notice of the Pretrial Hearing or the Show Cause Order and he was unable to respond.  Ms. Chebbani did not have home access to her emails and was no longer allowed, by executive order, to travel to or conduct business at the Law Office.  She likewise did not see the Order and thus did not forward the emails to Mr. Gadd.  Accordingly, this is the reason for the non-appearance on April 23rd and the lack of response to the Order to Show Cause prior to this date.

*Id*. at 2.  In light of the COVID-19 Pandemic and the Michigan Governor's Executive Order, I found good cause for Counsel's failure to appear at the April 23, 2020, pre-hearing conference and failure to respond to the April 23, 2020, Order to Show Cause.  Dkt. Entry No. 12.  Accordingly, I rescheduled the pre-hearing conference for July 16, 2020, at 11:00AM Eastern Time.

On July 16, 2020, I held the pre-hearing conference call as scheduled.  During the pre-hearing conference call, I explained the issues and the parties' respective burdens of proof, and discussed the parties' proposed witnesses and exhibits.  Dkt. Entry No. 13.  In the absence of any objection from either party, I also admitted both parties' exhibits into the record.  *Id*.  CTP's pre-hearing exchange included an Informal Brief of Complainant, Complainant's List of Proposed Witnesses and Exhibits, and Exhibits 1 through 16 (CTP Exs. 1-16, respectively).  Dkt. Entry Nos. 6, 6a-6q.  CTP's exhibits included the declaration of one witness, Hiram Harris, FDA-Commissioned inspector for the state of Michigan (CTP Ex. 7).  Dkt. Entry No. 6h.  Respondent's counsel indicated his desire to cross-examine Inspector Harris.  *See* Dkt. Entry No. 13 (Summary of July 16, 2020 Pre-Hearing Conference and Order Scheduling In-Person Telephone Hearing) at 1.  Respondent's pre-hearing exchange consisted of an Informal Brief of Respondent, Respondent's List of Proposed Witnesses and Exhibits, and Exhibits 1 through 6 (R. Exs. 1-6, respectively).  Dkt. Entry Nos. 7, 7a-7g.  Respondent's exhibits included the declaration of one witness, Richard Lorenz, Respondent's Owner (R. Ex. 4).  Dkt. Entry No. 7d.  Complainant's counsel stated that he did not wish to cross-examine Mr. Lorenz.  *See* Dkt. Entry No. 13 at 2.  I scheduled a hearing for August 6, 2020, at 11:00 AM Eastern Time.  *Id*.

On August 6, 2020, I held a telephone hearing.  During the hearing, Respondent's counsel cross-examined Inspector Harris.  Dkt. Entry No.14 (Transcript (Tr.)) at 3-4.  CTP's counsel declined redirect examination.  *Id.*at 4.  On August 20, 2020, I informed

**Page 5**

the parties that CRD had received the transcript of the hearing, and informed the parties that they could file any proposed corrections to the transcript on or before September 21, 2020.  Dkt. Entry No. 15 at 1-2.  I also set the deadline for the parties' post-hearing brief submissions as September 28, 2020.  *Id*. at 2.  I set the deadline for the parties post-hearing responsive briefs as October 13, 2020.  *Id.*  Finally, I reiterated the issues I must decide and advised the parties of settlement procedures.  *Id.* at 3-4.

Neither party proposed any corrections to the hearing transcript.  On September 28, 2020, Respondent filed its post-hearing brief, along with three exhibits.  Dkt. Entry Nos. 16-19.   CTP did not file a post-hearing brief or post-hearing responsive brief.  The administrative record is complete, and this case is now ripe for a decision.  21 C.F.R. § 17.41(a)-(b).  I decide this case based on the evidence admitted into the administrative record.  21 C.F.R. § 17.45(a).

II.  Issues

The issues in this case are:

Whether Respondent, Rick's Gas Station, is liable for six repeated violations of the federal tobacco regulations for selling cigarettes or smokeless tobacco to a minor and failing to verify the purchaser's age using photographic identification on May 17, 2019, in violation of 21 C.F.R. § 1140.14(a)(1) and 21 C.F.R. § 1140.14(a)(2)(i); and
	If so, whether an NTSO for a period of 30 consecutive days is appropriate, pursuant to the provisions of 21 C.F.R. § 17.34(a)-(c).III.  Applicable Law and CTP's Policy Guidance

The Act prohibits the misbranding of tobacco products while they are held for sale after shipment in interstate commerce.  21 U.S.C. § 331(k).  Tobacco products are misbranded if they are sold or distributed in violation of the Act or applicable regulations.  21 U.S.C. §§ 387c(a)(7)(B), 387f(d)(1); *see also* 21 C.F.R. pt. 1140.  FDA and its agency, CTP, may seek the imposition of remedies against any person who violates the Act's and regulations' requirements as they relate to the sale of tobacco products.  21 U.S.C. § 333(f)(5) and (f)(9).  Under 21 C.F.R. § 1140.14(a)(1), no retailer may sell cigarettes or smokeless tobacco to any person younger than 18 years of age.2
  Under 21 C.F.R.

**Page 6**

§ 1140.14(a)(2)(i), retailers must verify, by means of photographic identification containing a purchaser's date of birth, that no cigarette or smokeless tobacco purchasers are younger than 18 years of age.

The Act authorizes CTP to assess a CMP and, in the case of "repeated violations," to impose an NTSO against retailers.  *See*21 U.S.C. § 333(f)(8)-(9)(A).  The term "repeated violations" is defined as "at least 5 violations of particular requirements over a 36-month period at a particular retail outlet that constitute a repeated violation . . . ."  *See*21 U.S.C. § 333 note, at (1)(A).  The Act also provides that "[p]rior to the entry of a no-sale order under this paragraph, a person shall be entitled to a hearing . . . ."  21 U.S.C. § 333(f)(8); *see also* 21 U.S.C. § 333(f)(5)(A).

The Act establishes the factors that must be considered in deciding the length of an NTSO:

In determining the . . . period to be covered by a no-tobacco-sale order, the Secretary shall take into account the nature, circumstances, extent, and gravity of the violation or violations and, with respect to the violator, ability to pay, effect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other matters as justice may require.

21 U.S.C. § 333(f)(5)(B); *see also Kat Party Store, Inc. d/b/a Mr. Grocer Liquor Store*, CRD No. TB509, at 2 (2016).

The Act does not establish specific durations for NTSOs, but it does contemplate permanent NTSOs, which may be compromised, modified, or terminated.  *See*21 U.S.C. § 333(f)(5)(B) & (D).  Likewise, the applicable regulations do not outline specific durations for NTSOs.  However, CTP's non-binding guidance document establishes the maximum periods of time that FDA would seek for an NTSO, ranging from 30 calendar days to an indefinite period of time (*i.e.*, a permanent NTSO).  *See* Determination of the Period Covered by a No-Tobacco-Sale Order and Compliance with an Order: Guidance for Tobacco Retailers, at 3-4 (Aug. 2015), http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM460155.pdf.  The maximum duration of a proposed NTSO increases based on the number of NTSOs previously imposed on a retailer.  Specifically, the maximum period of

**Page 7**

time for the first NTSO that FDA would seek is 30 days.  *Id.*at 4.  The guidance document also states that, "[i]n general, FDA intends to file a complaint seeking the maximum time period."  *Id.*at 3.  However, "FDA may reduce the time period taking into consideration the factors [in the Act] described above and information regarding whether the retailer has taken effective steps to prevent selling tobacco products to minors."  *Id.*  When determining whether a retailer has taken effective steps to prevent tobacco sales to minors, FDA will consider whether the retailer has taken the following actions:

adopting and enforcing a written policy against sales to minors;
	informing its employees of all applicable laws;
	establishing disciplinary sanctions for employee noncompliance; and
	requiring its employees to verify age by way of photographic identification or electronic scanning device.*Id.* at 3-4; *see also* Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers:  Guidance for Industry, at 10-11 (rev. Dec. 2016), https://www.fda.gov/media/80888/download; Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers, Responses to Frequently Asked Questions:  Guidance for Industry, at 15 (rev. Dec. 2016), https://www.fda.gov/media/92558/download.

CTP has the burden to prove Respondent's liability under the Act and the appropriateness of the proposed NTSO by a preponderance of the evidence.  21 C.F.R. § 17.33(b).  Respondent has the burden to prove any affirmative defenses and any mitigating factors, likewise by a preponderance of the evidence.  21 C.F.R. § 17.33(c).  The Supreme Court of the United States has described the preponderance of the evidence standard as requiring that the trier-of-fact believe that the existence of a fact is more probable than its nonexistence before finding in favor of the party that had the burden to persuade the judge of the fact's existence.  *Concrete Pipe and Prods. of Cal., Inc. v. Constr. Laborer*s, 508 U.S. 602, 622 (1993) (citing *In re Winship*, 397 U.S. 358, 371-72 (1970) (Harlan, J., concurring)).

IV.  Findings of Fact, Conclusions of Law, and Analysis

**A.  Violations**

Upon consideration of the entire administrative record and applicable law, I find that Respondent committed six repeated violations of the Act and tobacco regulations over a 36-month period, as alleged in the Complaint.  Complaint ¶¶ 9-11.  In three previous administrative proceedings, Respondent was found liable and admitted to multiple violations of selling cigarettes or smokeless tobacco to minors and failing to verify the age of the cigarette or smokeless tobacco purchasers, in violation of 21 C.F.R. § 1140.14(a)(1) and 21 C.F.R. § 1140.14(a)(2)(i), respectively.  *Id*.  I also find that the

**Page 8**

evidence of record is sufficient to establish that Respondent sold cigarettes or smokeless tobacco to a minor and failed to verify the purchaser's age using photographic identification on May 17, 2019, in violation of 21 C.F.R. § 1140.14(a)(1) and 21 C.F.R. § 1140.14(a)(2)(i), respectively.

**1.  Respondent's Prior Violations**

This case is the fourth administrative proceeding against Respondent.  Because Respondent failed to file answers to the complaints, the first and second CMP actions resulted in default judgments holding Respondent liable for the violations alleged in the prior complaints.  CTP Exs. 1 (First CMP Complaint), 2 (First Initial Decision and Default Judgment), 3 (Second CMP Complaint), and 4 (Second Initial Decision and Default Judgment).  Specifically, Respondent violated 21 C.F.R. § 1140.14(a)(1) when it sold cigarettes or smokeless tobacco to a minor on each of the following dates:  December 17, 2015, July 12, 2016, and March 1, 2018.  CTP Ex. 2 at 2; CTP Ex. 4 at 2-3.  Respondent also violated 21 C.F.R. § 1140.14(a)(2)(i) when it failed to verify the age of a person purchasing cigarettes or smokeless tobacco by means of photographic identification containing the bearer's date of birth on the following dates:  July 12, 2016, and March 1, 2018.  CTP Ex. 2 at 2; CTP Ex. 4 at 2-3.  These prior violations are administratively final and may not be challenged by Respondent.  21 C.F.R. § 17.11(b) (providing that "by failing to file a timely answer, the respondent waives any right to a hearing and to contest the amount of the penalties and assessments . . . and the initial decision shall become final and binding upon the parties 30 days after it is issued").

CTP brought a third CMP action alleging that, in addition to the violations in the previous CMP actions, Respondent sold cigarettes or smokeless tobacco to a minor on July 18, 2018, in violation of 21 C.F.R. § 1140.14(a)(1).  CTP Ex. 5 (Third CMP Complaint) at 2-4.  The third CMP action resulted in a settlement agreement, in which Respondent admitted the allegations in the complaint and paid the agreed upon penalty.  CTP Ex. 6 (Acknowledgment Form).  In the settlement agreement, Respondent waived its ability to contest the violations in the future, and acknowledged that the violations may be counted in determining the total number of violations for purposes of future enforcement actions.  *Id.*  Similar to the violations in the first and second CMP actions, the prior violations in the third CMP action are administratively final and may not be challenged by Respondent.  21 C.F.R. § 17.15(b) (stating that a "settlement agreement shall be filed in the docket and shall constitute complete or partial resolution of the administrative case as so designated by the settlement agreement").

Accordingly, based on the default decisions and settlement agreement, I find that Respondent previously sold cigarettes or smokeless tobacco to minors, in violation of 21 C.F.R. § 1140.14(a)(1), on December 17, 2015, and repeated those violations three times, on July 12, 2016, March 1, 2018, and July 18, 2018.  Respondent also previously failed to verify the age of the cigarettes or smokeless tobacco purchasers, in violation of 21 C.F.R.

**Page 9**

§ 1140.14(a)(2)(i), on July 12, 2016, and repeated that violation on March 1, 2018.  Therefore, I conclude that Respondent previously committed four repeated violations3
 of the Act and implementing regulations.

**2.  Evidence and Legal Arguments Regarding the Alleged May 17, 2019, Violations**

In this proceeding, CTP alleges that Respondent committed two additional, repeated violations.  Specifically, CTP alleges that Respondent sold cigarettes or smokeless tobacco to a minor and failed to verify the age of the cigarettes or smokeless tobacco purchaser on May 17, 2019, in violation of 21 C.F.R. § 1140.14(a)(1), and 21 C.F.R. § 1140.14(a)(2)(i), respectively.  Respondent, in its Answer, neither admitted nor denied the allegations but presented a defense that Respondent's owner, Mr. Lorenz, was not present during the alleged violations.  Dkt. Entry Nos. 3, 3a.  In its Informal Brief, Respondent denied the allegations and stated that "Mr. Lorenz was not personally involved in or present during any of the alleged incidents of wrongful tobacco sales including the most recent incident in May of 2019."  Informal Brief of Respondent, at 6; *see also id.* at 2-4.  Respondent argues further that, "[b]ecause all employees were instructed on how to abide by the relevant tobacco statutes on multiple occasions through direct training and signage, the employee's alleged violations fall[] outside of the scope of their employment and Mr. Lorenz cannot be held liable for their violations ultra vires."  *Id*. at 7; *see also* R. Post Hrg. Brief, at 3.  In support of its defense, Respondent submitted the Declaration of Richard Lorenz (R. Ex. 4), a Notice to Cashiers concerning termination for selling tobacco to a minor (R. Ex. 2), a terminated employee's W2 form, (R. Ex. 1), and a completed work order for changing the age restriction on Respondent's point-of-sales system (R. Ex. 3).

Respondent's arguments lack merit.  The Departmental Appeals Board (Board) has held that a retailer is liable for the actions of its employees, including the sale of tobacco products to minors, even if the retailer has a policy against the sale of tobacco products to minors.  In *TOH, Inc. d/b/a Ridgeville Service Center*, DAB No. 2668, at 16-18 (2015), the Board rejected the argument that the Respondent should not be held liable for its clerks' actions because the unlawful sales of tobacco products were outside the scope of

**Page 10**

their employment when the company had express written policies against tobacco sales to minors.  The Board found that the employees were plainly acting in the course of their employment in making the tobacco sales because they were held out to the public as cashiers to make sales transactions on Respondent's behalf, the transactions occurred in Respondent's place of business, and Respondent provided no evidence that the sales or proceeds were handled in any manner different than Respondent's usual business transactions.  *Id.* at 17.  The same facts are true here, as Respondent has not alleged or provided evidence to the contrary.  Moreover, "[t]he mere fact that Respondent instructed its clerks not to sell to minors is . . . an inadequate defense because the corporation was obliged to ensure that its policies are enforced and effective."  *Id.*at 17-18.  Respondent also argues that, because Mr. Lorenz was not present during the alleged violations, he cannot be held liable for the violations.  However, Respondent's argument is not persuasive, as it would require business owners to be present during all inspections for the FDA to hold them liable, which is neither practical, nor required by the law.  In short, "Respondent's employees are its agents and Respondent bears the onus for assuring that these employees comply with legal requirements."  *Kat Party Store, Inc. d/b/a Mr. Grocer Liquor Store*, DAB No. TB509, at 4 (2016).  Accordingly, I conclude that Respondent's defenses are not meritorious.  21 C.F.R. § 17.45(b)(2).

In contrast, the unrebutted record evidence compels me to find by a preponderance of evidence that the violations occurred on May 17, 2019, as alleged in the Complaint.  21 C.F.R. § 17.45(b)(1).  Specifically, I find credible the testimony of Inspector Harris.  CTP Ex. 7.  Inspector Harris testified that he conducted the undercover buy (UB) inspection of Respondent's establishment located at 1340 North Perry Street, Pontiac, Michigan, on May 17, 2019, at approximately 6:36 P.M. CTP Ex. 7 ¶ 7.  At the time of the inspection, Inspector Harris was an FDA-commissioned officer with the state of Michigan where his duties included performing UB inspections since June 2017.  *Id*. at ¶ 2.  UB inspections are conducted primarily to determine whether retailers are compliant with the age and photo identification requirements relating to the sale of tobacco products.*Id*. at ¶ 3.

Before the inspection, he confirmed that Minor A had a true and accurate photographic identification showing the minor's actual date of birth, Minor A was under the age of 18 at the time of the inspection, and Minor A had no tobacco products in his/her possession.  CTP Ex. 7 ¶ 7; *see also*CTP Ex. 8 (Minor A's redacted identification).  During the inspection, Inspector Harris testified that he parked his car near Respondent's establishment, and he and Minor A exited the car.  CTP Ex. 7 ¶ 8.  Inspector Harris observed Minor A enter the front door of the establishment and entered himself moments afterwards.  *Id*.  From his location, Inspector Harris had a clear, unobstructed view of the sales counter and Minor A.  *Id*.  Inspector Harris also testified that he observed Respondent's employee sell a package of Marlboro cigarettes to Minor A.  *Id*.  Inspector Harris observed that Minor A did not present any identification to the employee before the purchase, and the employee did not give a receipt to Minor A after the purchase.  *Id.*

**Page 11**

After the inspection, Inspector Harris retrieved the package of cigarettes from Minor A.  *Id.*¶ 9.  Inspector Harris then labeled the cigarettes as evidence, photographed the evidence, and processed the evidence according to standard procedures, which entailed completing several contemporaneous reports.  *Id.* ¶¶ 9-11.  These photographs and reports document the inspection and corroborate Inspector Harris' testimony.  *See* CTP Ex. 9 (Narrative Report); CTP Ex. 10 (Tobacco Inspection Management System (TIMS) Assignment Form); CTP Ex. 11 (Photographs of the cigarettes sold by Respondent to Minor A); CTP Ex. 12 (Photographs of the cigarettes sold by Respondent to Minor A and receipt in evidence bag); and CTP Ex. 8 (Minor A's redacted identification).

Respondent cross-examined Inspector Harris at the hearing, but did not impeach his testimony concerning the tobacco sale to Minor A.  Respondent's counsel only asked Inspector Harris a few questions about whether the Respondent's owner was present and whether signage was posted during the UB inspection on May 17, 2019:

*    *    *    *    *    *    *    *    *    *    *    *    *    *    *    *    *

BY MR. GADD: Sir, just -- I just really have a couple questions. First, Mister – it's true, isn't it, that Mr. Lorenz was not present on the premises, to your knowledge, when the alleged sale occurred, correct?

A. That is correct.

Q. And, sir, were you able to observe that there was a sign posted by the cashier which was essentially instructing clerks not to sell tobacco to minors and to check for identification?

A. I don't recall observing that sign.

Q. Is it your testimony that the sign wasn't there, or you just don't remember one way or the other?

A. I don't recall observing the sign.

Q. Okay. And you were, you were present at the gas station on that date, correct?

A. Yes.

MR. GADD: That's all I have.

*    *    *    *    *    *    *    *    *    *    *    *    *    *    *    *    *

**Page 12**

Tr. at 3-4.  Thus, Respondent's cross-examination focused primarily on Respondent's affirmative defenses.  Likewise, the testimony and documentary evidence submitted by Respondent concerned its affirmative defenses.  R. Exs. 1-4.  Respondent did not challenge Inspector Harris' testimony attesting to the tobacco sale to Minor A or any of the documentary evidence corroborating the sale.  *See*Tr. at 3-4; R. Ex. 4; Informal Brief of Respondent at 2-4; Respondent's Post-Hearing Brief at 2-4.  Accordingly, I find Inspector Harris' testimony to be credible because he has professional experience conducting UB inspections and personal knowledge of the UB inspection of Respondent's establishment on May 17, 2019.  I also find Inspector Harris' testimony to be persuasive because it is supported by corroborating evidence documenting that the May 17, 2019, tobacco sale to Minor A occurred.  Specifically, Inspector Harris' testimony is supported by contemporaneous photographs, reports, and Minor A's redacted identification.  CTP Exs.  8-12.  As discussed above, the fact that Respondent's owner was not present during the alleged violations does not absolve Respondent of liability.  Similarly, Respondent's employees' failure to follow company policy does not absolve Respondent of liability.  Therefore, I conclude that Respondent violated the law by selling cigarettes to a minor and failing to verify the age of the cigarette purchaser on May 17, 2019, as alleged in the Complaint.

Given the evidence of record, I also conclude that Respondent committed six repeated violations of the Act and its implementing regulations over a 36-month period, as alleged in the Complaint.  *See* Complaint ¶ 1 n.1; *see also* *id*. ¶ 1 (table).  When determining the number of repeated violations for an NTSO, each regulatory requirement at 21 C.F.R. pt. 1140 is viewed separately and each "repeated violation" represents the second or subsequent violation of a particular requirement over a 36-month period.  *See*21 U.S.C. § 333 note, at (1)(A); *see also*Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers:  Guidance for Industry, at 5-6 (rev. Dec. 2016), https://www.fda.gov/media/80888/download.  Thus, for purposes of imposing an NTSO under 21 U.S.C. § 333(f)(8), the original violations are not included when determining whether a Respondent has committed at least five "repeated violations" over a 36-month period.  *Id.*Accordingly, Respondent originally violated the prohibition against selling cigarettes or smokeless tobacco to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a)(1), on December 17, 2015, and repeated that violation four times, on July 12, 2016, March 1, 2018, July 18, 2018, and May 17, 2019.  Respondent also originally violated the requirement that retailers verify, by means of photo identification containing a purchaser's date of birth, that no cigarette or smokeless tobacco purchasers are younger than 18 years of age, 21 C.F.R. § 1140.14(a)(2)(i), on July 12, 2016, and repeated that violation twice, on March 1, 2018, and May 17, 2019.  Therefore, I conclude that Respondent is liable for six repeated violations of law over a 36-month period, from July 12, 2016, through May 17, 2019.

**Page 13**

**B.  No-Tobacco-Sale-Order**

Having determined that Respondent is liable for committing six repeated violations over a 36-month period, I conclude that I have the authority to impose an NTSO, under 21 U.S.C. § 333(f)(8).  However, the primary issue before me is whether the requested NTSO for a period of 30 consecutive days is appropriate.  21 C.F.R. § 17.34.

As explained above, the Act and regulations do not establish specific durations for NTSOs.  However, CTP's non-binding guidance document states that the maximum period of time that FDA would seek for the first NTSO is 30 consecutive days.  *See* Determination of the Period Covered by a No-Tobacco-Sale Order and Compliance with an Order:  Guidance for Tobacco Retailers, at 4-5 (Aug. 2015), http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM460155.pdf.  While the CTP guidance documents are not regulations, and, thus, are not binding, as a matter of law, I find that CTP has provided a reasonable explanation for its policy determinations and find them persuasive, particularly with respect to the need to protect the public health and gradually increasing the NTSO's duration when imposing subsequent NTSOs.  *Id.*at 3-5.  I may, however, "compromise, modify, or terminate, with or without conditions, any no-tobacco-sale order."  21 U.S.C. § 333(f)(5)(D).  When determining the appropriate period to be covered by an NTSO, I must take into account "the nature, circumstances, extent and gravity of the violations and, with respect to the violator, ability to pay, effect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other matters as justice may require."  21 U.S.C. § 333(f)(5)(B).

Consistent with its guidance document, CTP seeks to impose the maximum NTSO period of 30 consecutive days against Respondent.  Complaint ¶ 1.  In its Informal Brief, CTP asserts that "[g]iven Respondent's apparent unwillingness and/or inability to comply with the tobacco regulations, an NTSO is necessary and appropriate to protect the public health."  Informal Brief of Complainant, at 3.  CTP notes that this is the fourth administrative action that it has brought against Respondent for violating the FDA's tobacco regulations, despite previous warnings and directing Respondent to information on the FDA's website to help tobacco retailers understand and comply with the part 1140 regulations.  *Id.* 2, 12 (citing 2016 Warning Letter to Respondent at CTP Ex. 15).  CTP asserts that Respondent's most recent violations on May 17, 2019, "are particularly serious because they involve Respondent's fourth repeated violation for selling cigarettes to a minor and Respondent's second repeated violation for failing to verify the age of a purchaser of cigarettes . . . ."  Informal Brief of Complainant, at 12.

Respondent argues the following for mitigation of the NTSO period:  Respondent's owner, Mr. Lorenz, was not present during the violations; Respondent has been free of violations for almost a year and a half; Respondent provides employment opportunities for young adults in the low income community of Pontiac, Michigan; and a 30-day

**Page 14**

NTSO would pose a significant and disproportionate economic impact on Respondent, in light of the COVID-19 pandemic.  R. Post Hrg. Brief, at 3-5.  Respondent requests that I "not rule for a 30 day consecutive no-tobacco-sale order but order costs and an appropriate fine."  *Id*. at 5.  Respondent also claims that imposing an NTSO would do more harm than the proceeds and sale of tobacco.  *Id*.  Specifically, Respondent argues that "[c]ustomers come to the store as a one-stop shop where they buy gas, tobacco, food, soft drinks, and other sundry items.  If customers cannot buy tobacco products, they will simply buy all of these items from other stores and may never come back."  *Id*.

The unrebutted record evidence establishes by a preponderance of evidence that the proposed, 30-day NTSO should be mitigated.  Specifically, I find the testimony of Mr. Lorenz to be credible.  Mr. Lorenz testified that he has owned Respondent, Rick's Gas Station, for approximately 43 years, and until 2016, had operated the small business for about 39 years with no alleged violations.  R. Ex. 4 at 1.  He testified that Respondent's establishment "is located in the financially distressed area of Pontiac, Michigan."  *Id.*According to Mr. Lorenz, he "[has] employed local youth to work in the station because [he] cannot be present in the gas station during all operating hours. . . . [and he] was not present during any of the alleged incidents of wrongful tobacco sales."  *Id.*

Mr. Lorenz testified that he "[has] taken ample precautions to prevent employees from selling tobacco to minors."  *Id.*Specifically, he "informed all employees that they may not sell tobacco to minors under any circumstance and that they must verify the identification of customers."  *Id.*  "Since the latest alleged incident on May 17, 2019, [Mr. Lorenz has] repeatedly discussed with employees the importance of verifying customer's identification relevant to tobacco sales and the ramifications if they do not comply."  *Id.* at 2.  Mr. Lorenz also testified that he posted signs visible to employees informing them that, "if they sell tobacco to a minor, their employment will be terminated with no excuses."  *Id.*  Additionally, Mr. Lorenz changed the point of sales system to reflect that tobacco sales to anyone under the age of 21 years is prohibited and to require identification for tobacco sales.  *Id.*  He testified that he will continue to monitor employee compliance with tobacco sale laws.  *Id.*

Additionally, Mr. Lorenz testified that he is "71 years old and [his] income is significantly derived from this small business."  *Id.* at 1.  He stated that tobacco sales are a significant portion of his business and a "30 day tobacco sale suspension would pose an extreme hardship on my small business, especially in light of recent events due to COVID-19."  *Id.* at 2.  He explained that, "[s]ince the outbreak of the virus, the station's sales on gas and all other products have greatly decreased."  *Id.*
Mr. Lorenz's testimony is corroborated by documentary evidence in the record. Specifically, Respondent submitted a completed work order, dated January 17, 2020, establishing that Respondent changed the age restriction on its point-of-sales system to 21 years and required the system to challenge for identification on all sales of cigarettes and

**Page 15**

tobacco products.  R. Ex. 3.  Respondent also submitted a photograph of a sign posted to employees, titled "Notice to cashiers." R. Ex. 2.  The sign states "if you sell tobacco to a minor, you will be fired.  No excuses.  Rick."  *Id*.  Additionally, Respondent submitted the W-2 form of an employee whom Respondent allegedly terminated for selling tobacco products to a minor.  R. Ex. 1.  The W-2 form is illegible, appears to have been altered from tax year 2018 to 2019, and, therefore, has little evidentiary value.  Nevertheless, I find Mr. Lorenz's testimony to be credible that he terminated at least one noncompliant employee, in light of the other record evidence demonstrating that Respondent informed employees that they will be terminated for selling tobacco products to minors and that Respondent updated the point of sale system to restrict sales to purchasers at least 21 years of age.  *See*R. Exs. 2-3.  Finally, Respondent submitted a spreadsheet containing 2019 sales and expenses data (R. Ex. 6) and Mr. Lorenz's 2018 tax returns (R. Ex. 5).  The spreadsheet reflects that Respondent's annual cigarettes sales totaled $███████ in 2019, which represents approximately 72 percent of Respondent's "Total Inside" sales and almost 33 percent of Respondent's "Total Sales," which includes both "Inside" and "Outside" sales.  R. Ex. 6.  Respondent's "Outside" sales were comprised entirely of fuel sales, which totaled $███████.  *Id.*  The spreadsheet states that Respondent's 2019 annual expenses totaled $███████ and it had a net profit of $███████.  Mr. Lorenz's 2018 tax returns reflect that he is self-employed, the sole proprietor of Rick's Gas Station, and had a net profit of $███████.  R. Ex. 5 at 1-2.

As discussed above, CTP declined to cross-examine Mr. Lorenz.  *See* Dkt. Entry No. 13 at 2.  CTP did not submit any contradictory evidence to impeach or otherwise contest the veracity of Mr. Lorenz's testimony.  Thus, I find that the unrebutted testimony of Mr. Lorenz is credible and persuasive because it is supported by corroborating evidence, particularly the notice to cashiers, point of sale work order, 2019 sales and expenses spreadsheet, and the 2018 tax returns.  R. Exs. 2-3, 5-6.  Although I am persuaded that a 30-day NTSO is not appropriate in this case, I disagree that "costs and an appropriate fine" are appropriate in lieu of an NTSO.  R. Post Hrg. Brief, at 5.  For the following reasons, I reject both parties' proposed durations of the NTSO and conclude that an NTSO for 15 consecutive days is appropriate based upon the record evidence, applicable law, and aggravating and mitigating circumstances in this case.

**1.  Nature, Circumstances, Extent and Gravity of the Violations**

I have found that Respondent committed six repeated violations of the tobacco regulations within a 36-month period.  This is the first NTSO action against Respondent after three previous CMP actions.  Moreover, "the May 17, 2019, violations occurred despite warnings from FDA that additional violations would result in more serious consequences, and even after FDA pointed Respondent to information and resources designed to help retailers comply with tobacco regulations."  Informal Brief of Complainant, at 12; *see also* CTP Ex. 15, at 2.  The repeated inability of Respondent to

**Page 16**

comply with federal tobacco regulations is serious in nature and warrants an NTSO with a proportionate NTSO duration.

Respondent attempts to blame its employee for the May 17, 2019, violations, but ultimately, an employer is liable for violations of 21 C.F.R. part 1140 committed by employees acting in the scope of their employment.  Neither the Act nor the tobacco regulations at 21 C.F.R. part 1140 state that an employee's misconduct constitutes an action outside the scope of employment or otherwise absolve the Respondent of responsibility.  Indeed, "Respondent's employees are its agents and Respondent bears the onus for assuring that these employees comply with legal requirements."  *Kat Party Store, Inc. d/b/a Mr.  Grocer Liquor Store*, DAB No. TB509, at 4 (2016).  This remains true even if the employee is acting against company policy.  *See TOH, Inc. d/b/a Ridgeville Service Center,*DAB No. 2668, at 17-18 (2015) ("The mere fact that Respondent instructed its clerks not to sell to minors is . . . an inadequate defense because the [business is] obligated to ensure that its policies are enforced and effective.").

**2.  Respondent's Ability to Pay**

This factor does not apply to the circumstances here because CTP seeks an NTSO, not a civil money penalty.

**3.  Effect on Respondent's Ability to Continue to Do Business**

Respondent argues that "[i]mposing a 30 day suspension for tobacco sales on Mr. Lorenz as the owner of a small community business would pose a significant and disproportionate economic impact on him."  Informal Brief of Respondent, at 5.  Respondent further argues that:

[I]n light of the recent COVID-19 pandemic, Mr. Lorenz's gas sales have been severely depressed as well as sales of items from his convenience store.  At this time, a 30 day suspension of tobacco sales would put him in grave danger of being put out of business.  This would ultimately deprive the Pontiac community of employment opportunities as well as a significant amount of Mr. Lorenz's income.  Considering the massive relief from the federal government to victims of COVID-19, it would seem counterintuitive to impose this type of harsh sanction on Mr. Lorenz's small business.

*Id*. at 5-6.  Additionally, Respondent argues that "[c]ustomers come to the store as a one-stop shop where they buy gas, tobacco, food, soft drinks, and other sundry items.  If customers cannot buy tobacco products, they will simply buy all of these items from other stores and may never come back.  R. Post Hrg. Brief, at 6.  In support, Respondent submitted the testimony of Mr. Lorenz (R. Ex. 4), a 2019 Sales and Expenses Sheet (R.

**Page 17**

Ex. 6), and Mr. Lorenz's 2018 Tax return (R. Ex. 5).  As discussed above, I find the testimony of Mr. Lorenz to be credible and persuasive because it is supported by documentary evidence.  The 2019 Sales and Expenses Sheet shows that tobacco sales account for over 32 percent of Respondent's total annual revenue and approximately 72 percent of Respondent's "Total Inside" sales.  R. Ex. 6.  Although Respondent states that the COVID-19 pandemic has affected sales, it has not submitted any evidence to show how its sales have been affected.  Nevertheless, based on the record evidence, I conclude that an NTSO period of 30 consecutive days is not appropriate because it unavoidably will have a significant effect on Respondent's ability to continue to do business.  R. Exs. 5-6.

I am also mindful that Respondent committed six repeated violations and the purpose of an NTSO is to promote compliance with the Act and regulations by penalizing retailers for non-compliance and deterring future violations.  Thus, "the need to protect the public outweighs the adverse effects that an NTSO may have on an individual retailer's business, especially in light of the fact that imposition of this remedy is reserved only for those retailers who demonstrate indifference to the requirements of law."  Informal Brief of Complainant, at 15 (quoting *Kat Party Store, Inc. d/b/a Mr. Grocer Liquor Store*, DAB No. TB509, at 3-4 (2016)).  Further, as CTP asserts, the "Respondent has no right to continue to operate its business in violation of the Act."  Complainant's Informal Brief, at 13-14 (citing *United States v. Diapulse Corp. of Am.*, 457 F.2d 25, 29 (2d Cir. 1972); *United States v. Ellis Research Labs., Inc.*, 300 F.2d 550, 554 (7th Cir. 1962); and *United States v. Walsh*, 331 U.S. 432 (1947)).

Balancing the objectives of the Act and this statutory factor for imposing an NTSO, I conclude that an NTSO is warranted and the duration of the NTSO should sting, but not be so punitive that it puts a retailer out of business or threatens its viability.  *See*21 U.S.C. § 387 note (explaining that one of the purposes of the Tobacco Control Act is "to continue to permit the sale of tobacco products to adults in conjunction with measures to ensure that they are not sold or accessible to underage purchasers").  Consequently, I also conclude that the proposed duration of the NTSO should be fewer than 30 consecutive days.  21 U.S.C. § 333(f)(5)(B), (D); 21 C.F.R. § 17.33(a).

**4.  History of Prior Violations**

The current action is the first NTSO action against Respondent.  Respondent, therefore, has a significant history of prior repeated violations, including three previous CMP actions.  The CMPs, however, did not deter Respondent from continuing to violate the tobacco regulations by unlawfully selling tobacco products to minors.

The first $550 CMP action, CRD Docket Number T-17-1815, FDA Docket Number FDA-2017-H-0392, was brought against Respondent for violations of 21 C.F.R. § 1140.14(a)(1) and § 1140.14(a)(2)(i) on December 17, 2015, and July 12, 2016.  *See*

**Page 18**

CTP Ex. 1.  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".  *See*CTP Ex. 2.

The second $5,591 CMP action, CRD Docket Number T-18-1622, FDA Docket Number FDA-2018-H-1101, was brought against Respondent for two additional violations on July 12, 2016 -- one violation of 21 C.F.R. § 1140.14(a)(1) and one violation of 21 C.F.R. § 1140.14(a)(2)(i).  *See*CTP Ex. 3.  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".  *See*CTP Ex. 4.

The third $11,182 CMP action, CRD Docket Number T-19-25, FDA Docket Number FDA-2018-H-3717, was brought against Respondent for one additional violation of 21 C.F.R. § 1140.14(a)(1) on July 18, 2018.  *See*CTP Ex. 5.  Respondent settled the third complaint with CTP for an undisclosed penalty amount.  *See*CTP Ex. 6.

The current NTSO action was brought against Respondent for two additional violations on May 17, 2019 -- one violation of 21 C.F.R. § 1140.14(a)(1) and one violation of 21 C.F.R. § 1140.14(a)(2)(i).  I agree with CTP that "[t]hese repeated violations show an unwillingness or inability to sell tobacco products in accordance with federal tobacco regulations."  Informal Brief of Complainant, at 15.  Respondent's continued inability to comply with the federal tobacco regulations calls for a proportionate NTSO.

**5.  Degree of Culpability**

As discussed above, Respondent attempts to shift blame to its employees, but Respondent is responsible for the actions of its employees, even if their actions are against company policy.  *See supra*Part IV.A.2.  Although the actions of Respondent's employees violated Respondent's policies, they do not absolve Respondent of responsibility.  Therefore, I hold Respondent fully culpable for six repeated violations of the Act and its implementing regulations.

**6.  Employee Training Program**

Respondent has not presented any evidence that it has an approved training program that complies with standards developed by the Food and Drug Administration.  21 U.S.C. § 333 note (quoting Tobacco Control Act § 103(q)(2)(A)-(B)); *see also*45 C.F.R. § 102.3.  However, CTP has decided to seek CMPs using the lower schedule for all retailers until FDA promulgates regulations establishing standards for approved retailer training programs.  Guidance for Industry, Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers, https://www.fda.gov/regulatory-information/search-fda-guidance-documents/civil-money-penalties-and-no-tobacco-sale-orders-tobacco-retailers-revised, at 9 (December 2016).

**Page 19**

However, Mr. Lorenz testified that he "[has] taken ample precautions to prevent employees from selling tobacco to minors."  R. Ex. 4 at 1.  Specifically, he "informed all employees that they may not sell tobacco to minors under any circumstance and that they must verify the identification of customers."  *Id.*  Mr. Lorenz also testified that he "repeatedly discussed with employees the importance of verifying customer's identification relevant to tobacco sales and the ramifications if they do not comply."  *Id.* at 2.  Furthermore, Mr. Lorenz testified that he posted signs visible to employees informing them that, "if they sell tobacco to a minor, their employment will be terminated with no excuses."  *Id.*; *see also* R. Ex. 2.  Indeed, Mr. Lorenz testified that he  "immediately terminated all employees who have violated these orders."  R. Ex. 4 at 2.  Thus, I find that that Respondent has taken remedial measures to educate its employees and to require its employees to comply with the tobacco regulations.  Accordingly, this factor weighs in favor of a reduced NTSO period.

**7.  State Penalties**

Respondent has not alleged or presented any evidence that it has paid any penalty to the state of Michigan for the same violations.  21 C.F.R. § 17.34(b).

**8.  Other Matters as Justice May Require and Additional Mitigating Factors**

In its Answer, Respondent asserts that it "ensured that all employees were trained and that signage was used to further notify employees not to sell tobacco to minors."  Answer, at 4.  In its Informal Brief, Respondent asserts that "[d]ue to Mr. Lorenz's appreciation for the seriousness of the sale of tobacco to minors, he immediately terminated [the employee] upon hearing of this incident."  Informal Brief of Respondent, at 3.  Respondent further asserts that "[s]ince the latest alleged incident on May 17, 2019, Mr. Lorenz has taken additional measures to ensure all employees comply with relevant tobacco regulations.  These measures include posting a sign visible to all employees which states that if they sell tobacco to a minor they will be terminated."  *Id*. at 6; *see* R. Ex. 2.  Respondent states that "Mr. Lorenz also had the point of sales system edited to reflect that tobacco products are not to be sold to anyone under the age of 21, and the proper identification is required for these sales."  Informal Brief of Respondent, at 6; *see* R. Ex. 3.  Finally, Respondent argues "[n]otably, it has been almost a full year since the last alleged violation and Mr. Lorenz has been compliant during the entire time frame.  The passage of almost a full year without a violation should indicate that Mr. Lorenz has taken the appropriate protective measures to prevent future violations. . . ."  Informal Brief of Respondent, at 6.  As noted above, Mr. Lorenz's testimony and additional documentary evidence corroborates these arguments.  R. Ex. 4 at 1-2.  Thus, I conclude that the record evidence concerning Respondent's efforts to prevent tobacco sales to minors is sufficient for mitigation purposes.

**Page 20**

Even though Respondent's efforts did not prevent the May 17, 2019 violations from occurring, I find that Respondent has made significant efforts to prevent tobacco sales to minors.  The record evidence establishes that Respondent has taken the following steps:

informing its employees of all applicable laws;
	establishing disciplinary sanctions for employee noncompliance; and
	requiring its employees to verify age by way of photographic identification or electronic scanning device.R. Exs. 2-4.  More importantly, Respondent has demonstrated that it takes its responsibility to prevent underage sales of tobacco seriously by terminating a noncompliant employee and making improvements and appropriate adjustments to its point of sale system.  Informal Brief of Respondent, at 6; *see* R. Exs. 2-3; R. Ex. 4 at 2.  Accordingly, I find that this factor weighs in favor of a reduced NTSO period.  *See*Determination of the Period Covered by a No-Tobacco-Sale Order and Compliance with an Order:  Guidance for Tobacco Retailers, at 3-4 (Aug. 2015), http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM460155.pdf (stating that the FDA may reduce the duration of an NTSO if the "retailer has taken effective steps to prevent selling tobacco products to minors").

In sum, I have considered the evidence of record, statutory factors, and other relevant law, and conclude that Respondent's request for costs and an appropriate fine instead of an NTSO is not appropriate.  Rather, most of the statutory factors support the imposition of an NTSO.  In particular, Respondent has an extensive history of repeated violations of the tobacco regulations and is fully culpable for six repeated violations of the Act and its implementing regulations.  Moreover, Respondent committed the most recent violations despite warnings from CTP and three previous CMP actions with progressively larger penalties.  However, at least two statutory factors, as discussed above, indicate that CTP's requested 30 consecutive day NTSO is not appropriate either.  To ensure that justice is served, I find persuasive Respondent's arguments and evidence that a 30 consecutive day NTSO will have a severe financial strain on Respondent's business and will threaten its ability to continue to do business.  I also find that Respondent has taken significant steps to prevent tobacco sales to minors.  Respondent submitted evidence that it trained its employees concerning compliance with tobacco laws, made changes to its point of sale system to ensure compliance with tobacco sale laws, and terminated the employee who sold the tobacco product on May 17, 2019.  For these reasons, after considering all statutory factors and the evidence of record, I find a reduced NTSO of 15 consecutive days to be appropriate under 21 U.S.C. § 333(f)(5)(B) and (f)(5)(D).

**Page 21**

V.  Conclusion

For the reasons detailed above, I impose a No-Tobacco-Sale Order against Respondent Richard Lorenz d/b/a Rick's Gas Station, for a period of 15 consecutive days.  During this period of time, Respondent shall stop selling cigarettes, cigarette tobacco, roll-your-own tobacco, smokeless tobacco, and covered tobacco products regulated under the Federal Food, Drug, and Cosmetic Act.  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.


          /s/
        Karen R. Robinson

                      Administrative Law Judge
      1. At the time of the FDA inspections leading to Respondent's original violations and one of Respondent's prior violations, the regulations were codified at 21 C.F.R. § 1140.14(a) and 21 C.F.R. § 1140.14(b)(1).  Effective August 8, 2016, the regulations were recodified without any substantive changes.  81 Fed. Reg. 28,973-4, 29,103 (May 10, 2016), https://federalregister.gov/a/2016-10685. back to note 1
                      2. On December 20, 2019, the legal age to purchase tobacco products changed to 21 years of age.  Further Consolidated Appropriations Act, 2020, Pub. L. 116–94, div. N, title I, subtitle F, § 603(a)(1) (substituting "21 years" for "18 years") and § 603(a)(2) (adding subsection 387f(d)(5), which states "[i]t shall be unlawful for any retailer to sell a tobacco product to any person younger than 21 years of age.").  The corresponding regulations have not been updated yet.  See id. § 603(b) (authorizing the 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").  However, each of the violations at issue in this case occurred before the minimum age to purchase tobacco products increased to 21 years of age. back to note 2
                      3. By definition, the term "repeated violations" means "at least 5 violations of particular requirements over a 36-month period at a particular retail outlet that constitute a repeated violation . . . ."  21 U.S.C. § 333 note, at (1)(A).  Although Respondent's four repeated violations from the three previous CMP actions are not, by themselves, considered "repeated violations" for NTSO purposes, I find that Respondent had four recurring violations within a 36-month period after it initially violated 21 C.F.R. § 1140.14(a)(1) and 21 C.F.R. § 1140.14(a)(2)(i).  As discussed in the following section, these violations become "repeated violations" when combined with the violations alleged in the current Complaint. back to note 3 Back to top
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