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                              Adam NYC Enterprises Inc. d/b/a NYC 3, DAB TB4282 (2019)
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Adam NYC Enterprises Inc. d/b/a NYC 3, DAB TB4282 (2019)








  
  
    

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





Center for Tobacco Products,
Complainant,

v.

Adam NYC Enterprises Inc.
d/b/a NYC 3,
Respondent.
Docket No. T-18-2421FDA Docket No. FDA-2018-H-2128Decision No. TB4282September 20, 2019

        
              
    

      INITIAL DECISION

Found:

Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i), as charged in the Complaint; and
	Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i), as charged in the prior Complaint; and
	Respondent committed five (5) violations in a 36-month period as set forth hereinabove; and
	Respondent is hereby assessed a civil penalty in the amount of $5,591.**Page 2**

Glossary:

ALJ
			administrative law judge1CMP
			civil money penaltyCRD
			Civil Remedies Division of the Departmental Appeals BoardCTP/Complainant
			Center for Tobacco ProductsDAB
			Departmental Appeals BoardFDA
			Food and Drug AdministrationFDCA
			Federal Food, Drug, and Cosmetic Act (21 U.S.C.A. Chap. 9)HHS
			Department of Health and Human ServicesIOEP
			Initial Order Establishing ProceduresNYC 3/Respondent
			Adam NYC Enterprises Inc. d/b/a NYC 3PHO
			Pre-Hearing OrderRFP
			Request for Production of DocumentsTCA
			The Family Smoking Prevention and Tobacco Control Act, Pub. L. No. 111-31, 123 Stat. 1776 (2009)UPS
			United Parcel ServiceI. 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

**Page 3**

II. PROCEDURAL BACKGROUND

The Center for Tobacco Products (CTP or Complainant) filed a Complaint on June 7, 2018, alleging that FDA documented five (5) violations within a 36-month period. CTP seeks a civil money penalty (CMP) in the amount of $5,591.

There is a presumption Adam NYC Enterprises Inc. d/b/a NYC 3 (NYC 3 or Respondent) was served with process on June 6, 2018, by United Parcel Service (UPS). On June 11, 2018, I issued an Initial Order Establishing Procedures (IOEP), noting: "Respondent has until July 6, 2018 to request an extension of time to file an answer or file its answer." The IOEP further stated: "If Respondent fails to file an answer by July 6, 2018, then the CTP has until July 23, 2018 to file a motion for default judgment or the case will move towards dismissal."

Respondent neither filed an answer within the time prescribed, nor requested an extension of time within which to file an answer. On July 23, 2018, CTP filed a Motion for Default Judgment, pursuant to 21 C.F.R. §§ 17.11 and 17.32, asking that a default judgment be entered finding Respondent liable for five (5) violations as alleged in the Complaint, and imposing a civil money penalty in the amount of $5,591. On July 25, 2018, I issued an Order Granting Motion for Default and Order to Show Cause, ordering Respondent "to Show Cause on or before close of business July 30, 2018, why Judgment of Default should not be entered in favor of the Complainant pursuant to 21 C.F.R. § 17.11." On July 30, 2018, the Departmental Appeals Board (DAB), Civil Remedies Division (CRD), received Respondent's Answer. CTP did not object to the timeliness of Respondent's Answer.

**Page 4**

On August 8, 2018, I issued a Pre-Hearing Order (PHO) setting a schedule for filings and procedures. The PHO established a deadline of September 7, 2018, to serve requests for documents, and a deadline of November 6, 2018, for all pre-hearing exchanges. On September 7, 2018, CTP served Respondent with a Request for Production of Documents (RFP). On October 24, 2018, CTP filed a Motion to Compel Discovery, asserting that Respondent failed to respond to its RFP. On that same date, CTP filed an Unopposed Motion to Extend Deadlines. On October 26, 2018, I issued an Order granting the Unopposed Motion to Extend Deadlines, and extending the pre-hearing exchange deadline to December 6, 2018.

Respondent did not file a response to CTP's Motion to Compel Discovery or otherwise respond to CTP's RFP. Accordingly, on November 30, 2018, I issued an Order to Compel Discovery and Order to Show Cause to Respondent, instructing Respondent to "show cause on or before December 13, 2018, why default judgment should not be entered against it" for failure to comply with the procedural rules, and respond to CTP's RFP. I further extended the pre-hearing exchange deadline to January 3, 2019, in case Respondent is able to show cause.

On December 13, 2018, CTP filed a Status Report and Unopposed Motion to Extend Deadlines, requesting "that all deadlines in this case be extended for thirty (30) days, so that Respondent can fully respond to CTP's discovery request, and CTP can prepare its Pre-Hearing Exchange." On that same date, I issued an Order granting the

**Page 5**

Unopposed Motion to Extend Deadlines, and extending the pre-hearing exchange deadline to February 2, 2019.3

On February 4, 2019, CTP filed its pre-hearing exchange, containing an Informal Brief (CTP Pre-Hearing Brief), a List of Proposed Witnesses and Exhibits, and 13 exhibits (CTP Exhibits (Exs.) 1-13). The exhibits included the written direct testimony of two proposed witnesses, Senior Regulatory Counsel, Laurie Sternberg (CTP Ex. 4), and FDA-commissioned Inspector Kenya Wilson (CTP Ex. 6). On February 12, 2019, Respondent filed a statement alleging: "[w]e have complied with any and all requests. We have submitted any and all documentation that we have." However, Respondent failed to submit a list of proposed exhibits and witnesses, a copy of each proposed exhibit, written direct testimony of any proposed witness, or a pre-hearing brief.

On February 14, 2019, I issued an Order Scheduling a Telephone Hearing (Hearing Order), which set the hearing date for March 20, 2019. My Hearing Order instructed: "[a]t least 15 days before the hearing date, the parties shall file any motions to exclude or objections to the other party's proposed exhibits. By that same date, Respondent must indicate which witnesses, if any, it wishes to cross-examine at the hearing." Respondent neither filed any objections to CTP's proposed exhibits, nor indicated which of CTP's proposed witness it wished to cross-examine at the hearing.

**Page 6**

I conducted a hearing on March 20, 2019. *See*Transcript (Tr.). At the hearing, Counsel for CTP indicated that Respondent "has not [] filed anything or noted they would like to cross-examine." Tr. at 7. I noted that in determining whether to give Respondent's cross-examination any weight, I would take into consideration Respondent's failure to indicate which of CTP's proposed witness it wished to cross-examine at the hearing. I allowed Respondent an opportunity to cross-examine Inspector Wilson. Respondent indicated he did not have any questions for Ms. Sternberg. CTP moved to admit its exhibits into evidence. Absent Respondent's objection, I admitted CTP's exhibits into evidence at the hearing.

On May 14, 2019, I issued an Order setting the deadline to file post-hearing briefs for June 14, 2019. On May 17, 2019, CTP filed a Notice of Waiver of Post-Hearing Brief, noting: "it does not intend to file a post-hearing brief ... [.]" On June 10, 2019, Respondent contacted the DAB stating it had difficulty accessing DAB E-File system, and requesting the mailing address, which was provided to Respondent. On June 19, 2019, the CRD received Respondent's timely filed Post-Hearing Brief (Resp.'s Post-Hearing Brief).

The matter is now ready for decision. 21 C.F.R. § 17.45(c).

III. BURDEN OF PROOF

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

IV. LAW

21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i).

**Page 7**

V. ISSUES

Did Respondent violate 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i), as alleged in the Complaint?
	If so, is a CMP in the amount of $5,591 appropriate?VI. ALLEGATIONS

**A. Complainant's Recitation of Facts**

CTP's Complaint alleges that Respondent owns an establishment, doing business under the name NYC 3, located at 3212 Roosevelt Boulevard, Middletown, Ohio 45044. CTP alleges that Respondent's establishment receives tobacco products in interstate commerce and holds the tobacco products for sale after shipment in interstate commerce.

CTP's Complaint further alleges that on April 19, 2018, an FDA-commissioned inspector conducted an inspection of NYC 3, and documented Respondent committing the following violations:

Selling a covered tobacco product to a minor, in violation of 21 C.F.R. § 1140.14(b)(1). Specifically, a person younger than 18 years of age was able to purchase a blu Glacier Mint electronic nicotine delivery system (ENDS) product on April 19, 2018, at approximately 6:33 PM; and
	Failing to verify the age of a person purchasing a covered tobacco product 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 minor's identification was not verified before the sale, as detailed above, on April 19, 2018, at approximately 6:33 PM.**Page 8**

**B. Respondent's Recitation of Facts**

In its Answer, Respondent checked the box indicating "I deny the following allegations in the Complaint." However, Respondent failed to deny any specific allegations, including sale to a minor and failure to verify the purchaser's age. Instead, Respondent alleged: "I was not present at [sic] time of said allegations. I was out of the country." Respondent asserted that "as a business owner/manager" he has "taken time to make sure all current employees know and abide by law[s] of tobacco ...." Respondent further disputes the appropriateness of the CMP sought by CTP, explaining: "[w]e are a small business, for a fine so high. It is hard to pay in such a low economy." Answer, at 1-2.

VII. PRIOR VIOLATIONS

On January 16, 2018, CTP initiated a previous civil money penalty action, CRD Docket Number T-18-919, FDA Docket Number FDA-2018-H-0176, against Respondent for three violations4
 of 21 C.F.R. pt. 1140. CTP Ex. 2. CTP alleged those violations to have occurred at Respondent's business establishment, 3212 Roosevelt Boulevard, Middletown, Ohio 45044, on May 5, 2017, and December 5, 2017. *Id.* The previous action concluded when Respondent "admitted all of the allegations in the Complaint and paid the agreed upon penalty." CTP Ex. 3. Further, "Respondent expressly waived its right to contest such violations in subsequent actions." *Id.*

**Page 9**

VIII. 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 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. § 387a‐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 (March 19, 2010), codified at 21 C.F.R. pt. 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

**Page 10**

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 tobacco products." 21 U.S.C. § 333(f)(9)(A) (2012). Penalties are set by 21 U.S.C. § 333 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 CMP sought. This policy is set forth in detail, with examples to illustrate, at *U.S. Food & Drug Admin., Guidance for Industry and FDA Staff, Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers, Responses to Frequently Asked Questions (Revised)*(2016), available at http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM447310.pdf [hereinafter *Guidance for Industry*], at 13‐14. So, for instance, if a retailer sells a tobacco product on a particular occasion to a minor

**Page 11**

without checking for photographic identification, in violation of 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i), this will count as two separate violations for purposes of computing the CMP, unless it is the first time violations were observed at that 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).

IX. HEARING

I conducted a hearing on March 20, 2019, by telephone.

Claudia A. Ahiabor, Esquire, appeared on behalf of Complainant.

Mahmoud Mohamed, appeared Pro Se on behalf of Respondent.

X. SUMMARY OF TESTIMONY AND EVIDENCE

**A. Complainant's Case**

Complainant submitted CTP's Exhibits 1-13, which included photos and written direct testimony from CTP's witnesses Inspector Wilson, and Ms. Sternberg. CTP Exs. 4, 6. Respondent did not object to the admission of any of Complainant's exhibits. Therefore, I admitted CTP's Exhibits 1-13 into evidence. Additionally, Complainant proffered Inspector Wilson for cross-examination during the hearing on March 20, 2019.

**i. Inspector Kenya Wilson**

Witness Kenya Wilson, the FDA-commissioned Inspector who conducted the April 19, 2018 inspection at issue, provided written direct testimony on behalf of Complainant. CTP Ex. 6.

**Page 12**

In her declaration, Inspector Wilson testified that on April 19, 2018, at approximately 6:33 PM, she and a confidential minor (Minor A) performed an undercover buy (UB) inspection at Respondent's establishment, NYC 3, located at 3212 Roosevelt Boulevard, Middletown, Ohio 45044. CTP Ex. 6, at 1-2.

Prior to the inspection, Inspector Wilson confirmed that Minor A possessed "true and correct photographic identification showing his/her actual date of birth in his/her possession." CTP Ex. 6, at 2. Inspector Wilson further confirmed that "Minor A was under the age of 18 when he/she participated in the inspection in this case." *Id.*; *see also*CTP Ex. 7. Additionally, Inspector Wilson "confirmed that Minor A did not have any tobacco products in his/her possession." CTP Ex. 6, at 2.

Inspector Wilson then parked her car in Respondent's parking lot, and she and Minor A exited the vehicle. Minor A was the first to enter NYC 3, and the inspector followed thereafter. Inspector Wilson noted: "[f]rom my location inside the NYC 3, I had a clear, unobstructed view of the sales counter and Minor A. During the inspection, I observed Minor A purchase a blu Glacier Mint electronic nicotine delivery system (ENDS) product from an employee at the establishment." Inspector Wilson observed that Minor A neither presented identification for the blu Glacier Mint ENDS product purchase, nor received a receipt with the purchase. CTP Ex. 6, at 2-3.

After exiting Respondent's establishment, Inspector Wilson and Minor A returned to the vehicle, whereupon Minor A handed the Inspector the blu Glacier Mint ENDS product. Shortly thereafter, Inspector Wilson labeled the blu Glacier Mint ENDS product as evidence, photographed the packaging (CTP Exs. 10 and 11), and "processed the

**Page 13**

evidence in accordance with standard procedures at the time of the inspection." CTP Ex. 6, at 3.

Inspector Wilson subsequently recorded the inspection in the FDA's Tobacco Inspection Management System (TIMS) (CTP Ex. 9), and created a Narrative Report (CTP Ex. 8). In her written direct testimony, Inspector Wilson testified that "Exhibits 7 and 8 are true and accurate copies of the Narrative Report and the TIMS Form."5
 CTP Ex. 6, at 3. Further, "Exhibits 9 and 10 are true and accurate copies of photographs I took during the inspection."6
*Id.*

Upon cross-examination, Inspector Wilson testified that Minor A was underage, "between the age of 16 to 17." Tr. at 9. Inspector Wilson testified that "[t]he person who sold the tobacco product was behind the counter." Tr. at 10. Inspector Wilson further testified that she was unable to recall the age or gender of the person who sold the tobacco product, but stated she had previously notated that information.7
*Id.*

**ii. Senior Regulatory Counsel Laurie Sternberg**

Witness Laurie Sternberg, Senior Regulatory Counsel in the Office of Compliance and Enforcement, CTP, FDA, provided written direct testimony on behalf of Complainant. CTP Ex. 4. In her declaration, Ms. Sternberg testified that the blu Glacier

**Page 14**

Mint ENDS product purchased during the April 19, 2018 inspection "is manufactured, prepared, compounded, or processed for commercial distribution ... in North Carolina." CTP Ex. 4, at 3; *see also*CTP Ex. 5. Ms. Sternberg further noted that the manufacturer of ENDS products does not have any registered tobacco production facilities in the state of New York.8
 CTP Ex. 4, at 3.

**B. Respondent's Case**

Respondent failed to submit written direct testimony or other documentary evidence in accordance with my PHO dated August 8, 2018, and subsequent Order Scheduling a Telephone Hearing, dated February 14, 2019.

It is Respondent's position that: (1) as the business owner and manager, he has taken the time to ensure that "all current employees know and abide" by tobacco laws; (2) Respondent was out of the country on the date of the violations at issue, April 19, 2018; and (3) the CMP of $5,591 sought by CTP is inappropriate because it is too high, Respondent is a small business, and "[i]t is hard to pay in such a low economy." Answer, at 1-2.

At the hearing, I allowed Respondent to make a statement. I noted, however, that I would weigh Respondent's failure to submit a pre-hearing exchange in determining "what weight I give [Respondent's statement] in my deliberations." Tr. at 11. Respondent then indicated that he did take action, and that the older gentleman who sold

**Page 15**

the tobacco product to the minor was terminated as a result. Respondent further noted that he was not in town at the time of the sale, apologized for the violations, and stated that all new employees receive training related to tobacco sales. Additionally, Respondent reiterated that he is a "small business owner in a small town" and "tobacco products is not one of our main sales ...." Tr. at 11-12.

In its post-hearing brief, Respondent stated that as a small business owner he "should not be faulted for the actions of others.... We know the law and do enforce it. We have done everything in our power to provide the proper training ...." Respondent further alleged that the employee who sold the tobacco product to the minor was terminated. Additionally, Respondent asserted that to ensure that tobacco is never sold to a minor again, it changed the business layout, "with our [tobacco] product being contained into one area ...." Resp.'s Post-Hearing Brief, at 1.

XI. ANALYSIS OF EVIDENCE AND TESTIMONY

**A. Complainant's Case**

Complainant offered and I have admitted into evidence CTP Exhibits 1-13. Pursuant to 21 C.F.R. § 17.33(b), in order to prevail, CTP must prove Respondent's liability and the appropriateness of the penalty under the applicable statute by a preponderance of the evidence.

I must determine whether the allegations in the Complaint are true, and if so, whether Respondent's actions identified in the Complaint violated the law. 21 C.F.R. § 17.45(b)(1).

**Page 16**

**B. Respondent's Case**

Pursuant to 21 C.F.R. § 17.33(c), Respondent must prove any affirmative defenses and any mitigating factors by a preponderance of the evidence. As indicated above, Respondent has offered affirmative defenses to rebut the allegations in the Complaint, in addition to some mitigating factors. However, Respondent provided no evidence in support of its affirmative defenses or mitigating factors.

**C. Analysis**

**1. I find and conclude that CTP has shown by a preponderance of the evidence that Respondent violated 21 C.F.R. § 1140.14(b)(1) when it impermissibly sold a covered tobacco product to Minor A on April 19, 2018, at approximately 6:33 PM.**

Respondent's establishment receives tobacco products (including blu Glacier Mint electronic nicotine delivery system (ENDS) products) in interstate commerce, and holds them for sale after shipment in interstate commerce. CTP Ex. 4, at 3; *see also*CTP Ex. 5.

On April 19, 2018, Inspector Wilson conducted an UB compliance check inspection at Respondent's establishment, NYC 3, with Minor A. Prior to the inspection, Inspector Wilson confirmed that Minor A had his or her photographic identification in his or her possession, was under the age of 18, and did not have any tobacco products in his or her possession. CTP Ex. 6, at 2.

Minor A entered Respondent's establishment, and the inspector followed behind. Inspector Wilson positioned herself so she "had a clear, unobstructed view of the sales counter and Minor A." During the inspection, Inspector Wilson "observed Minor A

**Page 17**

purchase a blu Glacier Mint electronic nicotine delivery system (ENDS) product from an employee at the establishment." Inspector Wilson observed that Minor A did not receive a receipt with the purchase. CTP Ex. 6, at 2.

After Inspector Wilson and Minor A exited Respondent's establishment, they returned to the vehicle. Immediately upon entering the vehicle, Minor A tendered the blu Glacier Mint ENDS product to the inspector. Inspector Wilson labeled the blu Glacier Mint ENDS product as evidence, photographed the packaging, and "processed the evidence in accordance with standard procedures at the time of the inspection." CTP Ex. 6, at 3.

Inspector Wilson's testimony is further supported by physical evidence. CTP submitted a redacted copy of Minor A's state of Ohio photo identification, listing the date of birth as August 23, 2000, showing that Minor A was 17 years old at the time of the April 19, 2018 inspection. CTP Ex. 7. CTP also submitted copies of the photographs that Inspector Wilson took of the blu Glacier Mint ENDS product package. CTP Exs. 10, 11. CTP also submitted a contemporaneously-created Narrative Report and TIMS form. CTP Exs. 8, 9.

I find Inspector Wilson's testimony to be credible and unbiased. I find that in conjunction with the corroborating documentary evidence (*e.g.*, the contemporaneous reports), physical evidence (*e.g.*, photographs), and Ms. Sternberg's declaration, Inspector Wilson's testimony is sufficient to satisfy CTP's burden of proving that Respondent violated 21 C.F.R. § 1140.14(b)(1) on April 19, 2018, at approximately 6:33 PM, by a preponderance of the evidence.

**Page 18**

**2. I find and conclude that CTP has shown by a preponderance of the evidence that Respondent violated 21 C.F.R. § 1140.14(b)(2)(i) when it failed to verify the age of Minor A by means of photographic identification containing his or her date of birth, on April 19, 2018, at approximately 6:33 PM.**

On April 19, 2018, Inspector Wilson conducted an UB compliance check inspection at Respondent's establishment, NYC 3, with Minor A. Prior to the inspection, Inspector Wilson confirmed that Minor A was under the age of 18 and had in his or her possession "true and correct photographic identification showing his/her actual date of birth ...." CTP Ex. 6, at 2. Prior to the sale of the ENDS product, Inspector Wilson observed that Minor A did not present his or her identification to Respondent's employee.CTP Ex. 6, at 3.

I find Inspector Wilson's testimony to be credible and unbiased. I find that in conjunction with the corroborating documentary evidence (*e.g.*, identification showing that Minor A was 17 years old at the time of the inspection), Inspector Wilson's testimony is sufficient to satisfy CTP's burden of proving that Respondent violated 21 C.F.R. § 1140.14(b)(2)(i) on April 19, 2018, at approximately 6:33 PM, by a preponderance of the evidence.

**3. Respondent offered no proof to rebut the evidence of noncompliance on April 19, 2018, presented by CTP.**

Respondent has not provided any evidence which rebuts the documentation submitted by CTP or the testimony of Inspector Wilson and Ms. Sternberg. Therefore, I

**Page 19**

conclude that Respondent has not proven any affirmative defense or mitigating factors by a preponderance of the evidence.

XII. 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.

I find and conclude that the evidence presented supports a finding that on April 19, 2018, Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1), in that a person younger than 18 years of age was able to purchase a covered tobacco product.

I find and conclude that the evidence presented supports a finding that on April 19, 2018, Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(2)(i), in that Respondent failed to verify, by means of photo identification containing a purchaser's date of birth, that no covered tobacco product purchaser was younger than 18 years of age.

The conduct set forth above on April 19, 2018, counts as two (2) violations under FDA policy for purposes of computing the CMP in the instant case. *See Guidance for Industry*, at 13-14. As discussed above, Respondent previously admitted to three (3) violations in the relevant timeframe. CTP Ex. 3. Accordingly, I find and conclude that Respondent is liable for five (5) violations of the FDCA and its implementing regulations within a 36-month period.

**Page 20**

XIII. PENALTY

There being liability under the relevant statute, I must now determine the amount of penalty to impose. Pursuant to 21 U.S.C. § 333(f)(9), Respondent is liable for a CMP not to exceed the amounts listed in FDA's CMP regulations at 21 C.F.R. § 17.2. In its Complaint, CTP sought to impose the maximum penalty amount, $5,591, against Respondent for five (5) violations of the FDCA and its implementing regulations within a 36-month period. Complaint ¶ 1.

In its pre-hearing brief,9
 CTP asserts that a $5,591 civil money penalty is appropriate. "Under 45 C.F.R. § 102.3, the maximum penalty for five violations in a thirty-six month period is $5,591. CTP believes that, for Respondent's five violations in a thirty-six month period, an assessment of a $5,591 penalty is appropriate." CTP's Pre-Hearing Brief, at 9.

As discussed, I find that CTP met its burden by a preponderance of the evidence and conclude that Respondent committed five (5) violations of the FDCA and its implementing regulations within a 36-month period.

Respondent failed to file a pre-hearing brief. However, in its Answer, Respondent denied responsibility for the violations, contending: "I was not present at [sic] time of said allegations. I was out of the country." Respondent further disputed the appropriateness of the civil money penalty sought by CTP, noting: "[w]e are a small business, for a fine so high. It is hard to pay in such a low economy." Answer, at 1-2.

**Page 21**

In its statement at the hearing, Respondent apologized for the violations, alleged that he was out of town during the time of the sale, stated that the employee who sold tobacco products to the minor was terminated, and reiterated that all employees receive training. Tr. at 11-12. In its post-hearing brief, Respondent stated that he should not be "faulted" for the actions of others, he knows the laws, and provides proper training to his employees. Respondent further asserted that he terminated the employee who sold tobacco to the minor, changed the layout of the establishment to prevent future tobacco sales to minors, and informed employees of the "proper protocol and the consequences" of failure to adhere to tobacco regulations. Resp.'s Post-Hearing Brief, at 1.

When determining the amount of a CMP, I am required to "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).

**A. The Nature, Circumstances, Extent and Gravity of the Violations**

I have found that Respondent specifically committed three (3) violations of selling covered tobacco products to minors, and three (3) violations of failing to verify the photographic identification of a purchaser, totaling five (5)10
 violations of the tobacco

**Page 22**

regulations. Respondent's repeated inability to comply with federal tobacco regulations is serious in nature and the CMP amount should be set accordingly.

**B. Respondent's Ability to Pay and Effect on Ability to do Business**

CTP seeks a $5,591 CMP against Respondent. Respondent contends that the CMP is too high for his small business, and "[i]t is hard to pay in such a low economy." Answer, at 1-2. However, Respondent has neither presented evidence related to its inability to pay the $5,591 CMP, nor its inability to continue to do business.

**C. History of Prior Violations**

It is undisputed that Respondent is a repeated violator of FDA's tobacco regulations prohibiting the sale of tobacco products to minors. Respondent has been the subject of one (1) prior CMP action. Previously, Respondent has twice violated the prohibition against selling covered tobacco products to persons younger than 18 years of age, and twice failed to verify that covered tobacco product purchasers were of sufficient age. 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i).

**D. Degree of Culpability**

Respondent previously admitted to three (3) violations of the FDCA and its implementing regulations. Additionally, based upon the evidence presented, I found that Respondent committed two (2) recent violations, as set forth in the current Complaint. Therefore, I find Respondent fully liable for five (5) violations of the FDCA and its implementing regulations.

**Page 23**

**E. Additional Mitigating Factors**

Mitigation is an affirmative defense for which Respondent bears the burden of proof. *See* 21 C.F.R. § 17.33(c). I do not find any mitigating factors. Respondent has provided neither evidence nor witnesses to refute the documentation submitted by CTP proving that on April 19, 2018, at approximately 6:33 PM, Respondent sold a blue Glacier Mint ENDS product to Minor A, and failed to verify the Minor A's age by means of photographic identification at the time of purchase.

The purpose of the TCA is to prevent unlawful sales of tobacco products to minors. Tobacco is a highly addictive and dangerous product. The reason that selling tobacco products to minors is unlawful is that consumption of these products at an early age can lead to a lifetime of addiction, illness, and ultimately, premature death. Sales of tobacco products to minors are unlawful because younger individuals often lack the maturity and judgment to make informed decisions about whether to consume such inherently dangerous and addictive products. Selling tobacco products to these individuals puts them at risk for the adverse consequences related to addiction.

I find and conclude that there is no reason to consider mitigation of the penalty herein.

**F. Penalty**

Based on the foregoing reasoning, I conclude that a penalty amount of $5,591 is appropriate under 21 U.S.C. § 333(f)(5)(B) and (f)(9).

**Page 24**

XIV. CONCLUSION

Respondent committed five (5) violations of the FDCA and its implementing regulations within a 36‐month period. Respondent is liable for a CMP of $5,591. *See*21 C.F.R. § 17.2.

WHEREFORE, evidence having read and considered it be and is hereby ORDERED as follows:

I find Respondent has been served with process herein and is subject to this forum;
	I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i), on April 19, 2018, in that Respondent sold a covered tobacco product to a person younger than 18 years of age, and failed to verify the age of the purchaser by means of photographic identification containing the bearer's date of birth, as set forth in the Complaint;
	I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i), on May 5, 2017 and December 5, 2017, in that Respondent sold covered tobacco products to persons younger than 18 years of age, and failed to verify the age of the purchasers by means of photographic identification containing the bearer's date of birth, as stipulated in the settlement agreement of the prior action;
	I find and conclude Respondent committed five (5) violations of the FDCA and its implementing regulations within a 36-month period; and
	I assess a monetary penalty in the amount of $5,591./s/
        Richard C. Goodwin

                      Administrative Law Judge
      1. See 5 C.F.R. § 930.204. back to note 1
                      2. See also Butz v. Economou, 438 U.S. 478, 513 (1978); Marshall v. Jerrico, Inc., 446 U.S. 238 (1980); Fed. Maritime Com'n v. S. C. State Ports Auth., 535 U.S. 743, 744 (2002). back to note 2
                      3. I note that the December 13, 2018 Order granting the Unopposed Motion to Extend Deadlines inadvertently referenced the pre-hearing exchange deadline as Saturday, February 2, 2019. The correct pre-hearing exchange deadline was Monday, February 4, 2019. back to note 3
                      4. An FDA-commissioned inspector documented two violations on May 5, 2017, and two on December 5, 2017. In accordance with customary practice, CTP counted the violations at the initial inspection as a single violation, and all subsequent violations as separate individual violations. back to note 4
                      5. Complainant's February 4, 2019 List of Proposed Witnesses and Exhibits, lists Inspector Wilson's Narrative Report as Exhibit 8, and the TIMS Form as Exhibit 9. back to note 5
                      6. Complainant's February 4, 2019 List of Proposed Witnesses and Exhibits, lists the photograph copies as Exhibit 7 (Minor A's redacted identification card), and Exhibits 10 and 11 (blu Glacier Mint ENDS product evidence). back to note 6
                      7. The TIMS form states that Inspector Wilson observed a senior, male, gray/white haired employee sell the tobacco product to Minor A. CTP Ex. 9, at 2. back to note 7
                      8. Ms. Sternberg erroneously notes that the covered tobacco product at issue was purchased in the state of New York. The blu Glacier Mint ENDS product at issue was purchased at Respondent's establishment, located in the state of Ohio. back to note 8
                      9. On May 17, 2019, Complainant filed a Notice of Waiver of Post-Hearing Brief, noting: "it does not intend to file a post-hearing brief ...." back to note 9
                      10. As previously noted, an FDA-commissioned inspector documented two violations on May 5, 2017, two on December 5, 2017, and two on April 19, 2018. In accordance with customary practice, CTP counted the violations at the initial inspection as a single violation, and all subsequent violations as separate individual violations. back to note 10 Back to top
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