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                              Bellman Oil Company Inc. d/b/a Bremen Bell-Mart, DAB TB5128 (2020)
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Bellman Oil Company Inc. d/b/a Bremen Bell-Mart, DAB TB5128 (2020)








  
  
    

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





Center for Tobacco Products,
	Complainant,
v.
Bellman Oil Company Inc.
	d/b/a Bremen Bell-Mart,
	Respondent.
Docket No. T-19-4140FDA Docket No. FDA-2019-R-3763Decision No. TB5128May 5, 2020

        
              
    

      INITIAL DECISION AND DEFAULT JUDGMENT
Found:
1)  Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(a)(1)1
 and 1140.14(a)(2)(i), as charged in the complaint; and
	2)  Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(a)(1) and 1140.14(a)(2)(i), as charged in the prior complaint; and
	3)  Respondent committed six repeated violations in a 36-month period as set forth hereinabove.
	4)  Respondent is hereby assessed a 21-day No-Tobacco-Sale Order (NTSO).
Page 2
Glossary:
ALJ
		administrative law judge2
	CMP
		civil money penalty
	CTP/Complainant
		Center for Tobacco Products
	FDCA
		Federal Food, Drug, and Cosmetic Act (21 U.S.C.A.
			Chap. 9)
	FDA
		Food and Drug Administration
	HHS
		Dept. of Health and Human Services
	NTSO
		No-Tobacco-Sale Order
	POS
		UPS Proof of Service
	Respondent
		Bellman Oil Company Inc. d/b/a Bremen Bell-Mart
	TCA
		The Family Smoking Prevention and Tobacco Control
			Act, Pub. L. No. 111-31, 123 Stat. 1776 (2009)
I.    JURISDICTION
I have jurisdiction to hear this case pursuant to my appointment by the Secretary of Health and Human Services and my authority under the Administrative Procedure Act.  5 U.S.C. §§ 554-556, 5 U.S.C.A. § 3106, 21 U.S.C. § 333(f)(5), 5 C.F.R. §§ 930.201 *et* *seq*., 21 C.F.R. part 17.3
II.    PROCEDURAL BACKGROUND
The Center for Tobacco Products (CTP/Complainant) filed a Complaint on August 14, 2019, alleging that FDA documented six repeated violations within a 36-month period.
There is a presumption Bellman Oil Company Inc. d/b/a Bremen Bell-Mart (Respondent or Bremen Bell-Mart) was served with process on August 13, 2019, by
Page 3
United Parcel Service.  On September 10, 2019, Respondent filed a timely answer.
CTP filed its prehearing exchange, containing an informal brief and 16 proposed exhibits (CTP Exs. 1-16), including the written direct testimony of one witness, FDA-commissioned Inspector Miles Hewitt (CTP Ex. 7).  Respondent filed its prehearing exchange, containing an informal brief and four proposed exhibits (R. Exs. A-D), including the written direct testimony of one witness, Respondent’s owner Jamie Bellman (R. Ex. D).
On February 10, 2020, the parties filed joint notice that neither party sought to cross-examine any proposed witness and moved to admit all proposed exhibits.  Neither party moved to exclude proposed evidence or objected to my consideration of such evidence.  Accordingly, I admit CTP Exhibits 1-16, and Respondent’s Exhibits A-D to the administrative record.
As neither party seeks to cross-examine a proposed witness, a hearing is not necessary.  Accordingly, I now proceed to a decision on the written record.
III.    BURDEN OF PROOF
CTP as the petitioning party has the burden of proof.  21 C.F.R. § 17.33.
IV.    LAW
21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(a)(1) and 1140.14(a)(2)(i).
Page 4
V.    ISSUES
Did Respondent repeatedly violate 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(a)(1) and 1140.14(a)(2)(i), five or more times within a 36-month period; and if so, is a 30-day NTSO appropriate?
VI.    ALLEGATIONS
A. Complainant’s recitation of facts
CTP alleged that Respondent owned an establishment, doing business under the name Bremen Bell-Mart, located at 1151 West Plymouth Street, Bremen, Indiana 46506.  Respondent's establishment received tobacco products in interstate commerce and held them for sale after shipment in interstate commerce.
During an inspection of Bremen Bell-Mart conducted on February 2, 2019, an FDA-commissioned inspector documented the following violations:
Selling regulated tobacco products to a minor, in violation of 21 C.F.R. § 1140.14(a)(1).  Specifically, a person younger than 18 years of age was able to purchase a package of Skoal Long Cut Classic Mint smokeless tobacco on February 2, 2019, at approximately 1:52 PM; and
	Failing to verify the age of a person purchasing regulated tobacco products by means of photographic identification containing the bearer's date of birth, as required by 21 C.F.R. § 1140.14(a)(2)(i).  Specifically, the minor's identification was not verified before the sale, as detailed above, on February 2, 2019, at approximately 1:52 PM.Page 5
B. Respondent’s recitation of facts
Respondent does not dispute the allegations made in the Complaint that on February 2, 2019, Respondent sold regulated tobacco products to a minor and failed to verify the age of the purchaser through photographic identification containing the bearer’s date of birth.
VII.    PRIOR VIOLATIONS
On May 25, 2016, CTP initiated its first civil money penalty (CMP) action, CRD Docket Number T-16-534, FDA Docket Number FDA-2016-H-1045, against Respondent.  In it, CTP alleged that Respondent sold regulated tobacco products to a minor, in violation of 21 C.F.R. § 1140.14(a)(1), and failed to verify the age of the 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 February 8, 2015, and November 29, 2015.4
  CTP Exhibit (Ex.) 1.
The first CMP action concluded when Respondent admitted the allegations contained in the Complaint and agreed to pay a monetary penalty in settlement of that claim.  Further, Respondent expressly waived its right to contest such violations in subsequent actions.  CTP Ex. 2.
On February 13, 2017, CTP initiated its second CMP action, CRD Docket Number T-17-2098, FDA Docket Number FDA-2017-H-0700, against Respondent.  In it, CTP
Page 6
alleged that, in addition to the violations alleged in the first CMP action, Respondent sold regulated tobacco products to a minor, in violation of 21 C.F.R. § 1140.14(a)(1), and failed to verify the age of the 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 July 31, 2016.  CTP Ex. 3.
The second CMP action concluded when Respondent admitted the allegations contained in the Complaint and agreed to pay a monetary penalty in settlement of that claim.  Further, Respondent expressly waived its right to contest such violations in subsequent actions.  CTP Ex. 4.
On May 15, 2018, CTP initiated its third CMP action, CRD Docket Number T-18-2220, FDA Docket Number FDA-2018-H-1874, against Respondent.  In it, CTP alleged that, in addition to the violations alleged in the prior CMP actions, Respondent sold regulated tobacco products to a minor, in violation of 21 C.F.R. § 1140.14(a)(1), and failed to verify the age of the 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 January 13, 2018.  CTP Ex. 5.
The third CMP action concluded when Respondent admitted the allegations contained in the Complaint and agreed to pay a monetary penalty in settlement of that claim.  Further, Respondent expressly waived its right to contest such violations in subsequent actions.  CTP Ex. 6.
I find and conclude that Respondent committed six repeated violations of 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(a)(1) and 21 C.F.R.
Page 7
§ 1140.14(a)(2)(i), within a 36‐month period as set forth in the Complaint.  *See* CTP Ex. 1-12.
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 387 a‐1 directed FDA to re-issue, with some modifications, regulations previously passed in 1996.  21 U.S.C. § 387 a-1(a)(2012).  These regulations were passed pursuant to section 387f(d), which authorizes FDA to promulgate regulations on the sale and distribution of tobacco products.  75 Fed. Reg. 13,225 (Mar. 19, 2010), *codified at*
Page 8
21 C.F.R. part 1140 (2015); 21 U.S.C. § 387f(d)(1) (2012).  Accordingly, 21 C.F.R. § 1140.1(b) provides that “failure to comply with any applicable provision in this part in the sale, distribution, and use of cigarettes and smokeless tobacco renders the product misbranded under the act.”
Under 21 U.S.C. § 331(k), “[t]he alteration, mutilation, destruction, obliteration, or removal of the whole or any part of the labeling of, or the doing of any other act with respect to, a food, drug, device, tobacco product, or cosmetic, if such act is done while such article is held for sale (whether or not the first sale) after shipment in interstate commerce and results in such article being adulterated or misbranded” is a prohibited act under 21 U.S.C. § 331.  Thus, when a retailer such as Respondent misbrands a tobacco product by violating a requirement of 21 C.F.R. part 1140, that misbranding in turn violates the FDCA, specifically, 21 U.S.C. § 331(k).  FDA may seek a CMP or No-Tobacco-Sale Order from “any person who violates a requirement of this chapter which relates to tobacco products.”  21 U.S.C. § 333(f) (2012).  Penalties are set by 21 U.S.C. § 333 note and 21 C.F.R. § 17.2.  Under current FDA policy, the first time FDA finds violations of 21 C.F.R. part 1140 at an establishment, FDA only counts one violation regardless of the number of specific regulatory requirements that were actually violated, but if FDA finds violations on subsequent occasions, it will count violations of specific regulatory requirements individually in computing any CMP sought.  This policy is set forth in detail, with examples to illustrate, at U.S. Food & Drug Admin.,*Guidance for Industry & FDA Staff, Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers, Responses to Frequently Asked Questions (Revised)*,13-14 (Dec. 2016),
Page 9
*available at*http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM447310.pdf.  So, for instance, if a retailer sells a tobacco product on a particular occasion to a minor without checking for photographic identification, in violation of 21 C.F.R. § 1140.14(a)(1) and (a)(2)(i), this will count as two separate violations for purposes of computing the penalty, unless it is the first time violations were observed at that particular establishment.  This policy of counting violations has been determined by the District of Columbia Circuit to be consistent with the language of the FDCA and its implementing regulations.  *Orton Motor Co. d/b/a Orton’s Bagley v. HHS*, 884 F.3d 1205 (D.C. Cir. 2018).
IX.    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 or have an NTSO imposed against it.  21 U.S.C. §§ 331, 333.
Respondent concedes that the allegations as set forth in the complaint are true.
I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding that Respondent repeatedly violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(a)(1), in that a person younger than 18 years of age was able to purchase cigarettes or smokeless tobacco on February 8, 2015, July 31, 2016, January 13, 2018, and February 2, 2019.
I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding that Respondent repeatedly violated 21 U.S.C. § 331,
Page 10
specifically 21 C.F.R. § 1140.14(a)(2)(i), on the same dates in that Respondent also repeatedly 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.
The conduct set forth above on February 8, 2015, count as Respondent’s initial violations.  The conduct set for above on July 31, 2016, January 13, 2018, and February 2, 2019, counts as six repeated violations within a 36-month period under FDA policy.5
X.    PENALTY
There being liability under the relevant statute, I must now determine the penalty to impose.
Pursuant to 21 U.S.C. § 333(f)(8), (9)(A), an NTSO may be imposed against Respondent for “repeated violations” of the regulations promulgated under section 906(d) of the Act.  “Repeated violation” means “at least 5 violations of particular requirements over a 36-month period at a particular retail outlet.”  TCA § 103(q)(1)(A), 123 Stat. at 1838.  The statute does not establish specific periods for NTSOs, but it does contemplate NTSOs of an indefinite duration.  21 U.S.C. § 333(f)(5)(B).  The maximum period of time for the first NTSO received by a retailer is 30 consecutive calendar days.  *See*Pub. L. 111–31, div. A, Title I, § 103(q)(1)(A), June 22, 2009, 123 Stat. 1838, 1839; U.S. Food & Drug Admin., *Civil Money Penalties & No-Tobacco-Sale Orders For Tobacco*
Page 11
*Retailers: Guidance for Industry*, 5-6 (Dec. 2016), *available at*http://www.fda.gov/ downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM252955.pdf; U.S. Food & Drug Admin., *Determination of the Period Covered by a No-Tobacco-Sale Order & Compliance with Order*, 3-4 (Aug. 2015), *available* athttps://www.fda.gov/ downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM460155.pdf.
As discussed, I found that CTP met its burden by a preponderance of the evidence and concluded that Respondent committed six repeated violations of the Act and its implementing regulations within a 36-month period.  CTP asserts that a 30-day NTSO is appropriate for Respondent’s repeated violations.  Respondent asks that I instead impose a money penalty.
In determining the duration of an NTSO, the Secretary must consider “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 repeated violations of selling regulated tobacco products to minors, and three repeated violations for failure to verify photographic identification of the purchasers, totaling six repeated violations of the tobacco regulations within a 36-month period.  The repeated inability of Respondent to comply with federal tobacco regulations is serious in nature and the penalty should be set accordingly.
Page 12
B.  Respondent’s Ability to Pay and Effect on Ability to Continue to do Business
Respondent has presented evidence regarding the effect of a 30-day NTSO on its ability to continue to do business.  Specifically, Jamie Bellman, the part-owner of Respondent, testified that a 30-day NTSO “would be financially significant, potentially detrimental, hardship . . . .”  R. Ex. D. at 2.  Mr. Bellman testified that tobacco sales account for approximately $1000 per day.  *Id*.  Further, that many customers may come to his establishment to purchase tobacco products but also purchase additional products such as gasoline.  As such, Mr. Bellman argues that an NTSO will not only eliminate the income from tobacco sales but will “decrease [Respondent’s] sales in regards to all of [Respondent’s] products, most notably gasoline.”  *Id*.  Mr. Bellman concludes that a 30-day NTSO would, “potentially put the Bremen Bell-Mart out of business as well as cause severe financial hardship to Bellman at large.”  *Id*.  CTP did not seek to cross-examine Respondent’s witness.
In support of Mr. Bellman’s testimony, Respondent does not submit tax returns, or any financial documents; only a business ledger from single day of its sales.  R. Ex. C.  This snapshot shows that Respondent sold approximately $1000, in regulated tobacco products and is only second to gasoline sales.  *Id*. at 2.
I find Mr. Bellman’s testimony credible and worthy of some weight.
C.  History of Prior Such Violations
This is the fourth administrative action brought against Respondent for violations of the Act and its implementing regulations.  *See* CTP Exs. 1-6.  Respondent sold
Page 13
regulated tobacco products to minors on February 8, 2015, November 29, 2015, July 31, 2016, January 13, 2018, and February 2, 2019.  On the same five dates, Respondent also failed to verify, through photographic identification the age of the purchasers.  Between February 8, 2015 and February 2, 2019, Respondent violated the applicable regulations ten times.  Although here, Respondent is charged with only six repeated violations of the regulations over a 36-month period, Respondent’s history of noncompliance is telling.
Respondent’s actions demonstrate that it is either unable or unwilling to comply with the federal tobacco regulations and calls for a severe penalty.  It is evident that multiple CMP actions have not deterred Respondent from continuing to sell tobacco products in violation of law.  Accordingly, something other than a CMP plainly is needed here.
D.  Degree of Culpability
Respondent asserts that it has provided sufficient training and education to its staff to comply with the law and concludes that the unlawful sales were simply outside its ability to control.  R. Br. at 3-4; *see* R. Ex. D at 1-2 (stating “The only explanation for this sale occurring would be that either through willful misconduct or individual negligence the employee . . . .”).  However, Respondent bears the onus for assuring that its employees acting within the scope of their employment comply with federal law.  The sale of tobacco products is clearly within the scope of employment for Respondent’s staff.  Respondent may have implemented policies against illegal sales, but Respondent is tasked to ensure that its policies are enforced and effective to prevent
Page 14
such violations of law.  I find Respondent fully culpable for its violations.
E.  Other Matters as Justice may Require
Respondent asserts that it has implemented a variety of measures to ensure its staff complies with the law.  These measures include terminating those who violate the law, completion of an online training program through the WeCard program, and software prompting age verification on its registers.  Respondent implemented these strategies over the past few years.  R. Br. at 1-3; *see* R. Exs. A-B, D.  Clearly, these measures have not proven effective to prevent it from violating the law.
I note that, the COVID-19 pandemic has had sweeping effects, both health and financial, and touched nearly every American in some capacity.  Respondent has not argued that its ability to continue to conduct business will be further impacted by the effects of this pandemic.  However, Respondent’s submissions predated the implementation of vast necessary and drastic measures.
F.  Penalty
For these reasons, I find that imposing a 21-day NTSO is appropriate to deter Respondent from continuing to violate federal law, but enable Respondent an opportunity to conduct its business in compliance with the law.  I warn Respondent that any future noncompliance will surely demonstrate that more drastic measures are necessary protect the public from Respondent’s business practices.
Page 15
XI. CONCLUSION
Respondent committed six repeated violations in a 36‐month period and an NTSO for a period of 21 consecutive calendar days is appropriate.
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 that Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(a)(1) and (a)(2)(i), on February 2, 2019.
	I find and conclude that the evidentiary facts, by a preponderance of the evidence standard, support a finding that Respondent initially violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(a)(1) and (a)(2)(i), on February 8, 2015, and then repeatedly violated those provisions on July 31, 2016, January 13, 2018, and February 2, 2019.
	I find and conclude Respondent committed six repeated violations of the applicable regulations within a 36-month period.
	I find and conclude that a 21-day NTSO is appropriate.
	I assess an NTSO against Respondent for a period of 21 consecutive days./s/
        Richard C. Goodwin

                      Administrative Law Judge
      1. On August 8, 2016, the citations to certain tobacco violations changed.  For more information see:  https://federalregister.gov/a/2016-10685. back to note 1
                      2. See 5 C.F.R. § 930.204. back to note 2
                      3. See also Butz v. Economou, 438 U.S. 478 at 513 (1978); Marshall v. Jerrico, Inc., 446 U.S. 238 (1980); Federal Maritime Com’n v. South Carolina State Ports Authority, 535 U.S. 743, 744 (2002). back to note 3
                      4. Respondent’s original violations of 21 C.F.R. § 1140.14(a)(1) and (a)(2)(i), occurred on February 8, 2015. back to note 4
                      5. CTP did not count the violations Respondent committed on November 29, 2015, as repeated violations because the violations fall outside of the 36-month period at issue here. back to note 5 Back to top
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