Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Center for Tobacco Products,

(FDA No. FDA-2017-H-3146)
Complainant
v.

STD Enterprise Inc.
d/b/a 7-Eleven 33850,

Respondent.
Docket No. T-17-4305
Decision No. TB2754

Date: May 25, 2018

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks to impose a civil money penalty
against Respondent, STD Enterprise Inc. d/b/a 7-Eleven 33850, located at 621
West State Street, Geneva, Illinois 60134, for five 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 thirty-six month period. Specifically,
CTP alleges that 7-Eleven 33850 violated the Act by impermissibly selling
cigarettes and smokeless tobacco to minors, and failing to verify, by means of
photo identification containing a date of birth, that the purchasers were 18 years of
age or older.

Procedural History
CTP began this matter by serving an administrative complaint seeking a $5,591

civil money penalty on Respondent 7-Eleven 33850, at 621 West State Street,
Geneva, Illinois 60134, and by filing a copy of the complaint with the Food and
Drug Administration’s (FDA) Division of Dockets Management. Respondent
requested an extension of time to answer CTP’s complaint, I granted that request,
and subsequently issued a default judgment in this case because Respondent failed
to file an answer. I later found that extraordinary circumstances excused
Respondent from filing a timely answer, and reopened the case. Respondent then
filed an answer to CTP’s complaint in which Respondent admitted that it
committed the current violation of selling cigarettes to a minor, and requested a
reduced civil money penalty and that the current violation be dismissed from the
Respondent’s record. On December 7, 2017, I issued an Acknowledgement and
Prehearing Order that set deadlines for the parties to file their pre-hearing
exchanges. CTP filed its pre-hearing exchange on February 27, 2018 that
consisted of a brief and 17 exhibits (CTP Exs. 1-17). Respondent 7-Eleven 33850
subsequently filed its pre-hearing exchange, which consisted of a brief and a
number of photographs. In its brief, Respondent admitted to the current allegation
in the Complaint and requested a reduced civil money penalty.

Decision on the Record

In its pre-hearing exchange, CTP submitted two witness declarations. Respondent
7-Eleven 33850 has not submitted direct testimony. I held a pre-hearing
conference on April 16, 2017, during which Respondent informed me that it did
not intend to cross-examine CTP’s witnesses. Because Respondent 7-Eleven
33850 has not submitted any direct testimony, there is no one for CTP to request
to cross-examine. Therefore, I will decide this case based on the written record.

I allowed both parties to submit final briefs on the issue of the penalty amount.
On April 27, 2018, Respondent timely filed its brief requesting that a fine of
$1,000 or less be imposed, and submitted a March 2018 financial summary with
its brief. On April 30, 2018, CTP timely filed its brief requesting that I impose a
civil money penalty of $5,591, which is the full amount requested. CTP’s brief
also argued against admitting the Respondent’s March 2018 financial summary
into evidence as it was not timely exchanged pursuant to 21 C.F.R. § 17.25(a), and
further noted that I had informed Respondent during the pre-hearing conference
that the time for submitting evidence had passed. I will not admit Respondent’s
March 2018 financial summary into the record or consider it in my decision.
Respondent did not timely submit this evidence and failed to provide cause for the
untimely submission.

admit into evidence the CTP’s exhibits identified as CTP Ex. 1 — CTP Ex. 17,
and the exhibits that Respondent attached to its informal brief that consist of
photographs.
Analysis
I. Violations

In its Complaint, CTP alleges that Respondent 7-Eleven 33850 committed five
violations of the Act and its implementing regulations within a thirty-six month
period. On December 5, 2017, 7-Eleven 33850 filed an answer to the Complaint
requesting a reduced civil money penalty and dismissal of the current violation.
Answer. Additionally, on March 21, 2017, 7-Eleven 33850 filed an informal
brief, in which it admitted to the current allegation in the Complaint, and requested
a reduction of the civil money penalty. Informal Brief of Respondent.

Respondent does not contest any of CTP’s allegations. CTP asserts the following:

e CTP initiated its first civil money penalty action, CRD Docket Number
C-15-3786, FDA Docket Number FDA-2015-H-3001, with a September 1,
2015 Complaint filed against Respondent 7-Eleven 33850 for two
violations of 21 C.F.R. pt. 1140 within a 12-month period. CTP alleged
those violations to have occurred on December 11, 2014, and May 12,
2015;

e The first civil money penalty action concluded when Respondent admitted
the allegations contained in the Complaint issued by CTP, and agreed to
pay a monetary penalty in settlement of that claim;

¢ On September 7, 2016, CTP initiated a second civil money penalty action,
CRD Docket Number T-16-1541, FDA Docket Number FDA-2016-H-
2320, against Respondent 7-Eleven 33850 for four violations of 21 C.F.R.
pt. 1140 within a 24-month period. CTP alleged those violations to have
occurred on December 11, 2014, May 12, 2015, and January 25, 2016;

e That second action concluded when an Administrative Law Judge entered
an Initial Decision and Default Judgment that found that the violations in
the second civil money penalty action occurred;

e During a subsequent inspection, at approximately 11:41 a.m. on February
20, 2017, at Respondent’s business establishment, 621 West State Street,
Geneva, Illinois 60134, an FDA-commissioned inspector documented
Respondent’s staff selling a package of Newport Box 100s cigarettes to a
person younger than 18 years of age.
CTP asserts that these allegations, and accompanying evidence, establish a basis
for liability against Respondent. Respondent 7-Eleven 33850 has not disputed
these allegations.

Therefore, I find that these facts establish Respondent STD Enterprise Inc. d/b/a 7-
Eleven 33850’s liability under the Act. The Act prohibits misbranding of a
tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded if sold or
distributed in violation of regulations issued under section 906(d) of the Act. 21
US.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C.

§ 387a-1; see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19,
2010). 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. Under 21 C.F.R.
§ 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.

II. Civil Money Penalty

Pursuant to 21 U.S.C. § 333(f)(9), Respondent 7-Eleven 33850 is liable for a civil
money penalty not to exceed the amounts listed in FDA’s civil money penalty
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 violations of the
Act and its implementing regulations within a thirty-six month period. Complaint
4) 1. In its Informal Brief and Final Brief, CTP continues to assert that a $5,591
civil money penalty is appropriate. Informal Brief of Complainant at 9; Final
Brief of Complainant at 3.

Respondent 7-Eleven 33850 argues that its profits are declining, its costs are rising
and that there is a high turnover of employees. Final Brief of Respondent at 1.
Respondent asks for a fine of $1,000 or less to be imposed. Jd. at 2. Respondent
asserts that it is “doing everything that I can reasonably do to be in compliance”
that it has “learned so much.” Jd.

When determining the amount of a civil money penalty, I am required to 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. § 303(f)(5)(B).

' On August 8, 2016, the citations to certain tobacco violations changed. For
more information see: https://federalregister.gov/a/2016-10685.

i. Nature, Circumstances, Extent and Gravity of the Violations

Time and again, Respondent 7-Eleven 33850 has failed to comply with the Act
and its implementing regulations. Respondent admitted to two violations for
selling cigarettes and smokeless tobacco to persons younger than 18 years of age.
And, later an Initial Decision and Default Judgment was entered finding that
Respondent committed four violations of the Act. Specifically, the Initial
Decision and Default Judgment found three violations for selling cigarettes and
smokeless tobacco to persons younger than 18 years of age, and one violation for
failing to verify, by means of photo identification containing a purchaser’s date of
birth, that no cigarette purchasers are younger than 18 years of age. Now,
Respondent again admits to selling cigarettes to persons younger than 18 years of
age. The repeated inability of Respondent to comply with federal tobacco
regulations is serious in nature and the civil money penalty amount should be set
accordingly.

ii. Respondent’s Ability to Pay

CTP is seeking a $5,591 civil money penalty against Respondent 7-Eleven 33850.
Respondent 7-Eleven 33850 asserts that the “income generated from my store is at
a negative for the last two months. I am facing declining sales and declining
customer counts.” Informal Brief of Respondent at 4. As pointed out in CTP’s
brief, Respondent provided no documentation evidencing its statements. Informal
Brief of Complainant at 10.

iii. Effect on Ability to do Business

There is nothing in the evidentiary record that shows the effect a civil money
penalty will have on Respondent 7-Eleven 33850’s ability to do business. CTP
asserts that “[a] $5,591 civil money penalty will not affect respondent’s ability to
do business. Respondent may continue to sell tobacco products and other products
at the establishment.” Informal Brief of Complainant at 10. Respondent requests
that its fine be reduced to $1,000 or less and states that “[a]nything greater could
ruin me. I don’t want to lose my business.” Though Respondent asserts that a
civil money penalty of $5,591 will have a substantial effect on Respondent’s
ability to do business, the record does not include evidence to show the effects of a
civil money penalty of this amount on Respondent’s ability to do business.

iv. History of Prior Violations

The current action is the third civil money penalty action brought against
Respondent 7-Eleven 33850 in less than three years for violations of the Act and
its implementing regulations. In the first civil money penalty action, CRD Docket
Number C-15-3786, FDA Docket Number FDA-2015-H-3001, Respondent
violated the prohibition against selling cigarettes and smokeless tobacco to persons
younger than 18 years of age on December 11, 2014, and May 12, 2015.
Respondent settled these claims with CTP for an undisclosed penalty amount.

In the second civil money penalty action, CRD Docket Number T-16-1541, FDA
Docket Number FDA-2016-H-2320, Respondent violated the prohibition against
selling cigarettes to persons younger than 18 years of age, on January 25, 2016.
And, on that same date, Respondent also violated the requirement that retailers
verify, by means of photo identification containing a purchaser’s date of birth, that
no cigarette purchasers are younger than 18 years of age.

Including the current action before me, Respondent’s total violation count is four
sales to a minor, in violation of 21 C.F.R. § 1140.14(a)(1), and one failure to
verify the identification of persons who were not over the age of 26, in violation of
21 C.F.R. § 1140.14(a)(2)(i). Lagree with CTP that the repeated “violations show
an... inability to sell tobacco products in accordance with federal tobacco
regulations.” Informal Brief of Complainant at 10. While Respondent has already
paid a civil money penalty for its previous violations, its continued inability to
comply with the federal tobacco regulations calls for a more severe penalty.

v. Degree of Culpability

Over the course of three civil money penalty actions, Respondent 7-Eleven 33850
admitted to three of the violations set forth in the current action, and an Initial
Decision and Default Judgment was entered against Respondent that included the
two violations that Respondent did not admit to. I hold Respondent 7-Eleven
33850 fully culpable for all five violations of the Act and its implementing
regulations.

vi. Additional Mitigating Factors

Respondent 7-Eleven 33850 states that it has taken additional steps to prevent
future violations. Specifically, Respondent states that it has taken the following
actions:

1. Ihave a zero-tolerance policy. If an age restricted product is
being purchased in my store my clerks must ask for an ID if the
person looks under the age of 30. If they don’t, the clerk is
terminated for not following company policy.

2. That ID must be scanned into our POS. 7-Eleven has a new POS
age restricted screen that pops up and an ID must be scanned into the
system. If the picture matches the person and the age is legal the
POS will allow the sale to continue. If the ID is expired or the
birthdate is too young, the ID scan will alert the clerk to refuse the
sale. (There is a problem that I brought to 7-Eleven’s attention that
if a student produces a fake ID the ID will still scan because the
information on the scan strip must have the legal age birthdate.) I
would look into this.

3. All Employees must watch the training video from 7- Eleven
called coming of age.

4. BARRS will continue to come into our business once per month
to see if we are carding guest for age restricted products.

5. Ihave employed employees to run my own compliance checks
on our employees.

6. [have clear signage on my counters, doors and displays saying
WE CARD. [also have a calendar present for customers to see what
their birthday must be at the minimum to purchase age restricted
products. This was supplied by the CTP.

Informal Brief of Respondent at 3.

Further, in Respondent’s final brief on the amount of the penalty, it stressed how
much it has learned during this process, and stated that it “would be more than
willing to help others see the importance of having proper policies in place.” Final
Brief of Respondent at 2-3. Further, Respondent again reiterated that if its
employees “choose not to use the resources and training that I have equipped them
with, then they will no longer be a part of my team going forward.” Jd. at 2.

vii. Penalty

l acknowledge the numerous steps taken by Respondent to ensure additional future
violations do not occur. Respondent has clearly taken these violations very
seriously, accepted responsibility for the violations and taken great measures to
ensure that they are not repeated. Further, these additional measures clearly
required additional cost, as well as Respondent’s time, to implement. Based on
the foregoing reasoning, I find a reduced penalty amount of $2,000 to be
appropriate under 21 U.S.C. §§ 303(f)(5)(B) and 333(f)(9).
Conclusion

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $2,000 against
Respondent, STD Enterprise Inc. d/b/a 7-Eleven 33850, for five 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 thirty-six month period.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Center for Tobacco Products,

(FDA No. FDA-2017-H-1698)
Complainant
v.

Leung’s Inc.
d/b/a El Faro Supermarket,

Respondent.
Docket No. T-17-2998
Decision No. TB2752

Date: May 24, 2018

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks to impose a civil money penalty against
Respondent, Leung’s Inc. d/b/a El Faro Supermarket, located at 4338 Northwest 7th
Street, Miami, Florida 33126, for four 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 twenty-four month period. Specifically, CTP alleges that Respondent
violated the Act by impermissibly selling tobacco products to minors and failing to
verify, by means of photo identification containing a date of birth, that the purchasers
were 18 years of age or older.

Procedural History
CTP began this matter by serving an administrative complaint, seeking a $2,200 civil

money penalty, on Respondent, at 4338 Northwest 7th Street, Miami, Florida 33126, and
by filing a copy of the complaint with the Food and Drug Administration’s (FDA)
Division of Dockets Management. Respondent timely answered CTP’s complaint. In its
answer, Respondent denied the allegations and stated that the inspector’s narrative report
was inaccurate. On May 11, 2017, Administrative Law Judge Bill Thomas issued an
Acknowledgment and Pre-Hearing Order (APHO). Subsequently, CTP timely filed its
pre-hearing exchange. Respondent did not file a pre-hearing exchange.

On December 15, 2017, this case was transferred to me. On December 20, 2017, I held a
pre-hearing conference to resolve any issues in advance of a hearing. During the pre-
hearing conference, Respondent stated that it wanted to cross-examine the inspector
involved in the October 15, 2016 inspection of its establishment at issue in this case.
Following the pre-hearing conference, I issued an Order Scheduling Telephone Hearing
for January 17, 2018, noting that Respondent wished to cross-examine Inspector Krystle
Kirkland-Mobley.

On January 17, 2018, a hearing was held in this case. The purpose of the hearing was to
allow Respondent to cross-examine Inspector Krystle Kirkland-Mobley. On February 7,
2018, I informed the parties that the Court had received the transcript of the hearing, and
set a March 9, 2018 deadline for the parties’ post-hearing brief submissions. On
February 20, 2018, Respondent filed its post-hearing brief. On March 9, 2018, CTP filed
its post-hearing brief along with a Motion to Exclude Evidence and a Memorandum in
Support of its Motion to Exclude Evidence. In a March 12, 2018 letter issued by my
direction, Respondent was allowed until March 26, 2018 to file a response to CTP’s
Motion to Exclude Evidence. To date, Respondent has not filed a response.

Pending Motion

On March 9, 2018, CTP filed a Motion to Exclude Evidence and a Memorandum in
Support of its Motion to Exclude Evidence. In its motion and memorandum, CTP argues
that Respondent’s post-hearing brief seeks to introduce witness testimony and
documentary evidence that was not submitted as part of a pre-hearing exchange. CTP
asserts that Respondent’s failure to submit this information in its pre-hearing exchange
but include it for the first time in Respondent’s post-hearing brief is “extremely
prejudicial to CTP’s ability to prepare its case for adjudication.”

After reviewing Respondent’s post-hearing brief and CTP’s arguments, I see no reason to
exclude Respondent’s post-hearing brief. Respondent’s post-hearing brief consists of
argument - not evidence. With its post-hearing brief, Respondent did not submit a
written declaration submitted under penalty of perjury or documentary evidence for the
first time. 21 C.F.R. §§ 17.25(a)-(b), 17.37(b); APHO ff 4, 9-10. Here, I provided both
parties an opportunity to submit post-hearing argument and both parties availed
themselves to that opportunity. CTP has not pointed to a valid basis for me to exclude
Respondent’s post-hearing argument.
CTP may argue that I should not rely on Respondent’s post-hearing assertions. I note
that Respondent’s post-hearing arguments are unsupported by any documentary or
testimonial evidence. As there is no evidence to support Respondent’s arguments in its
post-hearing brief, I do not assign any weight can be assigned to those assertions.

As such, CTP’s Motion to Exclude Evidence is Denied.
Analysis
I. Violations

CTP determined to impose a civil money penalty against Respondent pursuant to the
authority conferred by the Federal Food, Drug, and Cosmetic Act (Act) and
implementing regulations at Part 21 of the Code of Federal Regulations. 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). FDA and its agency, CTP, may seek civil
money penalties from any person who violates the Act’s requirements as they relate to
the sale of tobacco products. 21 U.S.C. § 331(£)(9). The sale of tobacco products to an
individual who is under the age of 18 is a violation of implementing regulations. 21
C.F.R. § 1140.14(a)(1).! Additionally, failure to verify, by means of photographic
identification containing a purchaser’s date of birth is a violation of implementing
regulations. 21 C.F.R. § 1140.14(a)(2)(1).

In its Complaint, CTP alleges that Respondent committed four violations of the Act and
its implementing regulations within a twenty-four month period. Respondent previously
admitted to two violations: (1) Sale of tobacco products to a minor on March 19, 2015
and September 23, 2015; and (2) Failure to verify the age of a person purchasing tobacco
products on March 19, 2015. CTP initiated the current complaint following an

October 15, 2016 inspection documenting two violations of the regulations - sale to a
minor (21 C.F.R. § 1140.14(a)(1)) and failure to verify photographic identification

(21 C.F.R. § 1140.14(a)(2)(1)). Respondent denies the allegations that it sold tobacco
products to a minor and failed to verify the minor’s identification. Answer at 1.
Specifically, Respondent argues that the inspector’s narrative report is inaccurate on at
least five points and that there were only two prior violations within the last 24 months.
Id. at 2.

+On August 8, 2016, the citations to certain tobacco violations changed. For more
information see: https://federalregister.gov/a/2016-10685.

2 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.

CTP’s case against Respondent rests on the testimony of Inspector Krystle Kirkland-
Mobley plus corroborating evidence. CTP Exhibits (Exs.) 4, 6, 7, 9. During the hearing,
CTP’s exhibits 1 through 14 were admitted into the record without objection. Hearing
Transcript at 6. The sole witness presented for cross examination at the hearing was
Inspector Kirkland-Mobley. Ms. Kirkland-Mobley is an FDA-commissioned officer with
the state of Florida whose duties include determining whether retail outlets are in
compliance with federal tobacco product requirements. CTP Ex. 4, §§ 1-3. Ms.
Kirkland-Mobley’s inspections entail accompanying minors who attempt to purchase
tobacco products from retail establishments such as the one operated by Respondent. Id.
49 at 3-4.

Ms. Kirkland-Mobley’s declaration states that she conducted an inspection of
Respondent’s place of business on October 15, 2016. CTP Ex. 4, § 8. Her declaration
further states that she accompanied a minor into Respondent’s establishment on October
15, 2016, where she witnessed the minor purchase a package of cigarettes from an
employee without presenting identification. Jd. On cross-examination, Ms. Kirkland-
Mobley confirmed that she accompanied the minor into Respondent’s establishment and
observed an employee sell a tobacco product to a minor. Hearing Transcript at 7-8.

Throughout this case, Respondent has denied the allegations and questioned the accuracy
of the inspector’s narrative report. Answer; Post-hearing Brief of Respondent. As
previously stated, Respondent’s arguments are unsupported by evidence written direct
testimony. Absent documentary evidence or written direct testimony, Respondent’s
arguments are unpersuasive. 21 C.F.R. § 17.33(c).

The testimony of Ms. Kirkland-Mobley plus the corroborating evidence consisting of a
photograph of the pack of cigarettes that were obtained from the minor on October 15,
2016 are compelling evidence that Respondent unlawfully sold cigarettes to a minor and
failed to verify the age of the minor using photographic identification. The evidence of
record sufficiently identifies the cashier who made the sale to the minor, and the sworn
testimony of the inspector establishes to my satisfaction that the violations charged in this
case in fact took place on the date in question. 21 C.F.R. § 17.33(b).

I find that the facts as outlined above establish Respondent Leung’s Inc. d/b/a El Faro
Supermarket’s liability under the Act.

Il. Civil Money Penalty

Pursuant to 21 U.S.C. § 333(f)(9), Respondent Leung’s Inc. d/b/a El Faro Supermarket is
liable for a civil money penalty not to exceed the amounts listed in FDA’s civil money
penalty regulations at 21 C.F.R. § 17.2. In its Complaint, CTP sought to impose the
maximum penalty amount, $2,200, against Respondent for four violations of the Act and
its implementing regulations within a twenty-four month period.
I have found that Respondent committed four violations of the Act and its implementing
regulations within a twenty-four month period. When determining the amount of a civil
money penalty, I am required to 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).

i. Nature, Circumstances, Extent and Gravity of the Violations

I have found that Respondent committed four violations of the Act and its implementing
regulations within a twenty-four month period. The repeated inability of Respondent to
comply with federal tobacco regulations is serious in nature and the civil money penalty
amount should be set accordingly.

ii. Respondent’s Ability to Pay And Effect on Ability to do Business

Respondent has not presented any evidence that it does not have the ability to pay the
$2,200 Civil Money Penalty sought by CTP; nor has Respondent presented evidence as to
the effect this penalty would have on its ability to do business.

iii. History of Prior Violations

The current action is the second civil money penalty action brought against Respondent
for violations of the Act and its implementing regulations. As noted above, Respondent
previously violated the prohibition against selling tobacco products to persons younger

than 18 years of age, 21 C.F.R. § 1140.14(a)(1), on March 19, 2015 and September 23,

2015, and failed to verify the age of a person purchasing tobacco products, 21 C.F.R.

§ 1140.14(a)(2)(1), on March 19, 2015. Instead of remedying these issues, Respondent
repeated the same violations on October 15, 2016.

iv. Degree of Culpability

Based on my finding that Respondent committed four violations as alleged in the
Complaint, I hold it fully culpable for four violations of the Act and its implementing
regulations.
vy. Additional Mitigating Factors

Respondent has not presented any evidence to mitigate the civil money penalty amount.
As such, I find no reason to mitigate the penalty amount.

vi. Penalty

Based on the foregoing reasoning, I find a penalty amount of $2,200 to be appropriate
under 21 U.S.C. §§ 333(f)(5)(B) and 333(f)(9).

Conclusion

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $2,200 against
Respondent, Leung’s Inc. d/b/a El Faro Supermarket, for four 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 twenty-four month period.

/s/
Wallace Hubbard
Administrative Law Judge


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

Center for Tobacco Products,
(FDA No. FDA-2016-H-3860)
Complainant
v.

Hollistic, Inc.
d/b/a 7-Eleven Store 25975A,

Respondent.
Docket No. T-17-764
Decision No. TB2744

Date: May 23, 2018

INITIAL DECISION

The Center for Tobacco Products (CTP) brings this action against Hollistic, Inc.
d/b/a 7-Eleven Store 25975A (Respondent) for four violations of the Federal Food,
Drug, and Cosmetic Act (the Act), 21 U.S.C. § 301 et seq., and its implementing
regulations, 21 C.F.R. pt. 1140, within a twenty-four month period.

For the reasons discussed below, I find that Respondent violated the applicable
regulations as alleged and, based upon Respondent’s violations, I assess a civil
money penalty of $2,200.

I. Procedural History

CTP began this matter by serving an administrative complaint seeking a $2,200
civil money penalty on Respondent at 4000 West Lake Mary Boulevard, Lake
Mary, Florida 32746, and by filing a copy of the complaint with the Food and
Drug Administration’s (FDA) Division of Dockets Management. Respondent
timely answered CTP’s complaint. On December 19, 2016, I issued an
Acknowledgment and Prehearing Order (APHO) that set various deadlines for the
parties.

A. Discovery Disputes

On January 26, 2017, CTP served a Request for Production of Documents to
Respondent. In its request, CTP sought: documents regarding the ownership of
Respondent’s establishment; documents relating to employee penalties and/or
discipline for failure to adhere to Respondent’s policies or laws relating to the sale
of tobacco products; and federal and state income tax returns to identify
Respondent’s income for 2016. On February 6, 2017, Respondent filed a Motion
for Protective Order, asserting that those documents were not relevant.

On February 6, 2017, CTP received Respondent’s Amended Request for
Production of Documents, which sought, among other things, production of an
unredacted copy of the photo identification used by the minor during the April 30,
2016 inspection. On February 28, 2017, CTP filed a Motion for a Protective
Order, asserting that the documents sought by Respondent were privileged,
undisclosable by law, and irrelevant.

CTP filed its opposition to Respondent’s Motion for a Protective Order on
February 28, 2017, and on March 10, 2017, Respondent filed its opposition to
CTP’s Motion for a Protective Order. After considering both motions and their
respective responses, I issued an order granting in part and denying in part the
parties’ cross-motions for protective orders on April 6, 2017. That order:

(1) required CTP to produce certain documents related to the alleged April 30,
2016 inspection;

(2) required CTP to file a privilege log by April 28, 2017 regarding any
documents it considered to be privileged and allowed time for Respondent
to respond to that log;

(3) denied Respondent’s request for the unredacted identification used by the
minor in the April 30, 2016 inspection alleged in CTP’s complaint;

(4) required Respondent to produce to CTP any responsive documents not
subject to the Protective Order by April 28, 2017;

(5) deferred Respondent’s production of any documents relating to mitigation
until later in these proceedings; and

(6) extended the due dates for the parties’ pre-hearing exchanges.

On April 28, 2017, CTP filed its privilege log identifying five entirely withheld
documents and three documents released with redactions. Respondent filed a
motion to compel disclosure of the documents set forth in the privilege log on May
15, 2017, arguing CTP improperly asserted the deliberative process and attorney-
client privileges as to certain documents related to CTP’s inspection of
Respondent. On May 30, 2017, CTP filed its response to Respondent’s motion to
compel.

On June 2, 2017, CTP filed a Motion to Compel Discovery and Extend Deadlines
asserting Respondent had failed to produce any responsive documents by the
deadline set forth in my April 6, 2017 Protective Order. Respondent filed its
response on June 16, 2017, arguing it had already produced the documents
requested by CTP. On June 19, 2017, CTP filed a Motion for Leave to File a
Reply to Respondent’s Opposition to Complainant’s Motion to Compel Discovery.
Without waiting for a ruling, CTP filed a reply to Respondent’s response claiming
Respondent had not provided sufficient documents in response to certain of its
requests. On June 29, 2017, I denied CTP’s Motion to Compel because it failed to
articulate which specific responses were at issue, but permitted CTP to file an
amended motion to compel.

CTP filed a Second Motion to Compel Discovery on July 13, 2017, asserting
Respondent had failed to produce documents to several specific requests.
Respondent filed a response on July 27, 2017. On September 8, 2017, I issued an
order denying both Respondent’s May 15, 2017 Motion to Compel and CTP’s July
13, 2017 Motion to Compel.

B. Pre-hearing Conference and Hearing

CTP filed its pre-hearing exchange on July 14, 2017, submitting its informal brief
and fourteen exhibits, which included the declarations of two witnesses.
Respondent filed its pre-hearing exchange on August 4, 2017, including its
informal brief and eight exhibits,' which contained the declaration of one witness.

I held a pre-hearing conference by telephone with the parties on September 28,
2017. Both parties expressed the desire to proceed with a hearing in order to
cross-examine each other’s witnesses. CTP offered two witnesses for the hearing:
Laurie Sternberg, who would testify that the tobacco products at issue in this case
were sold in interstate commerce; and Jose Rodriguez, who conducted the
inspection of Respondent’s establishment on April 30, 2016, the date of the
alleged violation. Respondent’s counsel stipulated to Ms. Sternberg’s testimony.
For its part, Respondent offered one witness for cross-examination at the hearing:
Mr. Paramjeet Singh, the principal of Hollistic, Inc.

l accordingly held a hearing by telephone on November 15, 2017. During the
course of the hearing, I admitted the parties’ exhibits and the uncontested

! Respondent submitted one numbered exhibit and seven exhibits labeled A through G.
testimony of CTP witness Laurie Sternberg into evidence. Hearing Transcript
(Tr.) at 8. CTP cross-examined Mr. Singh, id. at 9-10, while Respondent cross-
examined Inspector Rodriguez. Id. at 12-16.

On November 17, 2017, I issued a post-hearing order notifying the parties that a
transcript of the November 15, 2017 hearing would be prepared and that the
parties would have 10 days from its filing to propose any corrections. My order
also provided the parties until February 9, 2018 to file post-hearing briefs, stating:

Briefs shall not exceed 25 pages. While I have made no determination
as to liability in this matter, the Respondent may at that time submit
any evidence and arguments regarding mitigation of the monetary
penalty. Should I find liability, Complainant shall be given an
opportunity to respond to any evidence and arguments provided.

Nov. 17, 2017 Post-hearing Order at 1. The transcript was filed on December 5,
2017.2 Both parties submitted their post-hearing briefs on February 9, 2018.

On March 22, 2018, I directed CTP to provide a response to Respondent’s
arguments for mitigation set forth in its post-hearing brief. CTP submitted its
“Response to Mitigation Evidence and Argument in Respondent’s February 9, 2018,
Final Hearing Brief’ (CTP Response) on April 9, 2018.

IL. Applicable Law

CTP seeks to impose a CMP against Respondent pursuant to the authority
conferred by the Federal Food, Drug, and Cosmetic Act (Act) and its
implementing regulations found at Part 21 of the Code of Federal Regulations.
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).

The government may seek civil money penalties from any person who violates the
Act’s requirements as they relate to the sale of tobacco products. Jd. at

§ 331(f)(9). The implementing regulations prohibit the sale of cigarettes to any
person younger than 18 years of age. 21 C.F.R. § 1140.14(a)(1).> The regulations
also require retailers to verify, by means of photo identification containing a
purchaser’s date of birth, that no cigarette purchasers are younger than 18 years of
age. Id. at § 1140.14 (a)(2)(i).

? Respondent proposed striking the name of one of its attorneys, Himanshu Patel, from page two
of the transcript as he did not appear at the hearing. Rather than order correction of a minor error
in the transcript, I instead note here for the record that Mr. Patel did not appear at the hearing.

3 On August 8, 2016, the citations to certain tobacco violations changed. See
https://federalregister.gov/a/2016-10685.
Ill. Discussion

A. Respondent committed four violations of the Act within a 24-month

period as alleged by CTP.

CTP alleges that Respondent twice violated the Act on April 30, 2016 by
impermissibly selling cigarettes to minors and failing to verify, by means of photo
identification containing a date of birth, that the purchasers were 18 years of age
or older. Complaint { 8.

CTP also asserted it had previously initiated a complaint against Respondent on
January 19, 2016 for three additional violations that took place in February and
September 2015. Jd. at § 10; CTP Ex. 2. The prior complaint alleged that

Res

pondent had committed two violations on February 27, 2015 by sel

ling

cigarettes to minors and failing to verify their age, and another violation on
September 25, 2015 by selling cigarettes to minors. Id.

Res
at]

pondent settled the prior action by admitting the 2015 violations occurred. Jd.
11; CTP Ex. 3. Respondent also explicitly acknowledged that the violations to

which it admitted could be counted in determining the total number of violations

for
viol

CTP’s case against Respondent relies on the direct testimony provided

dec!

aration by Jose Rodriguez, an FDA-commissioned officer, as well

‘uture enforcement actions. /d. Because CTP customarily counts the first two
ations as one, the current alleged violations, which Respondent denied in its
Answer, amount to the third and fourth violations in a 24-month period.

ina written
as evidence

submitted to corroborate his testimony. CTP Ex. 8. Mr. Rodriguez’s duties

incl

out

ude conducting “undercover buy” inspections to determine whether retail
lets are unlawfully selling tobacco products to minors. /d. at 1-2. During these

inspections, Mr. Rodriguez provides direct oversight to state-contracted minors
attempting to purchase tobacco products from retail establishments similar to the
one operated by Respondent. /d. at 2. These minors were required to be 16 to 17
years old, possess valid state-issued identification, and undergo training to
participate in the undercover buy inspections. Jd.

Mr. Rodriguez testified that he went to Respondent’s place of business on April
30, 2016 accompanied by a minor I identify as Minor A, in order to conduct an a
“follow-up compliance check inspection.” CTP Ex. 8 at 2-3. Before the
inspection, Mr. Rodriguez confirmed that Minor A was carrying photographic
identification and did not have tobacco products in his possession. Jd. at 3. Mr.
Rodriguez testified that he entered the establishment shortly after Minor A and
stood in an area of the store with an unobstructed view of the sales counter and
Minor A. From that vantage point, Mr. Rodriguez observed Minor A purchase a
package of cigarettes from an employee of Respondent, who did not provide
Minor A with a receipt after purchase. Jd. Mr. Rodriguez also observed that
Minor A did not present any identification prior to the purchase. Jd.

After the purchase, Mr. Rodriguez and Minor A exited the store and returned to
his vehicle, where Minor A immediately gave him the pack of cigarettes, which he
observed to be a package of Newport Box cigarettes. CTP Ex. 8 at 3. Mr.
Rodriguez labeled the cigarettes as evidence, and took photographs of the
package. Jd.; see also CTP Ex. 12. Mr. Rodriguez recorded the inspection shortly
thereafter in the FDA’s Tobacco Inspection Management System (TIMS).

Mr. Rodriguez’s testimony, if taken to be true, proves Respondent unlawfully sold
a tobacco product to a minor and failed to verify that minor’s age. The
corroborating evidence provided by CTP, consisting of photographs of the pack of
cigarettes allegedly sold to Minor A and then transferred to Mr. Rodriguez’s
custody, is consistent with that testimony.

Respondent denies the events Mr. Rodriguez testified about took place on April
30, 2016, but has provided no direct evidence to refute his testimony. In its cross-
examination of Mr. Rodriguez, Respondent focused on Mr. Rodriguez’s
recollection of the April 30, 2016 inspection, asking questions regarding the
specific timeline of events from the inspection start to the filing of the TIMS
report (Tr. at 21-24); whether Mr. Rodriguez physically inspected Minor A’s
wallet to determine if Minor A had any other form of identification (Tr. at 25); and
whether Mr. Rodriguez maintained a constant or unobstructed view of the April
30, 2016 transaction at issue (Tr. at 28-29).

Respondent now contends that Mr. Rodriguez testimony should be considered
suspect because he “‘could not even independently recall the inspection in
question.” Post-Hearing Brief of Respondent (Resp. Post-Hearing Brief) at 2.
Respondent argues that Mr. Rodriguez’s reliance on his April 30, 2016 narrative
report during his cross-examination testimony demonstrates he was an unreliable
witness. Jd. at 2-4; 9-11. Respondent relies on Center for Tobacco Products v.
Chambers Drive, Inc. d/b/a Dynasty Deli Quick Shop, ALJ Ruling No. 2012-3
(2012), to argue that CTP cannot carry its burden of proof on business records
alone. Resp. Post-Hearing Brief at 12.

Respondent’s reliance on that particular ruling is profoundly misplaced. A ruling
by another Administrative Law Judge (ALJ) is not binding but merely persuasive,
and only then if the facts suggest a similar analysis under the law would yield a
similar outcome. But the circumstances of that case differed significantly. CTP
filed a motion for summary disposition and as such, needed to demonstrate no

genuine issue of material fact existed for the ALJ to adjudicate. See Chambers
Drive, Inc. d/b/a Dynasty Deli Quick Shop at 4, citing 21 C.F.R. § 17.17(b).
Examining the case in the context of summary disposition, the ALJ noted the
inspector’s practices were “rife with the potential for errors,” observing that the
inspector did not take photographs of the establishments during the inspection and
did not prepare his narrative report until later in the day after he had visited
multiple establishments. /d. She also pointed out deficiencies in the narrative
statement of the minor who performed the undercover buy, and ultimately
concluded that CTP could not prevail on summary disposition, relying solely on
documentary evidence, where the ALJ was required to draw all inferences in favor
of the Respondent.

Here, however, CTP’s investigating officer did indeed provide a declaration and
appeared to testify, and I am not obliged to draw inferences in favor of
Respondent. Nor am I required to consider the inspector’s testimony in a vacuum,
as Respondent would wish. Instead, I find Mr. Rodriguez’ testimony well-
supported by corroborating evidence, including the report he drafted on the date of
the inspection at 12:56 p.m., a mere twelve minutes after the inspection at issue
occurred. CTP Ex. 10. Mr. Rodriguez also contemporaneously documented the
results of the inspection with five photographs of the purchased cigarettes
timestamped at 12:52-12:54 p.m. on the date of the inspection. CTP Ex. 12. I
note further that it is entirely customary to allow witnesses to refresh their
recollection of past events using documents they prepared contemporaneously. I
do not find Mr. Rodriguez’ need to refresh his recollection years after the
inspection at issue took place to undermine the veracity or integrity of his
testimony.

Respondent submitted a signed declaration from Mr. Singh, Respondent’s
principal. Resp. Ex. 1. In his declaration, Mr. Singh offered no personal
knowledge of the April 30, 2016 tobacco transaction, which Mr. Singh confirmed
during cross-examination, stating he was not present at the establishment on April
30, 2016, at 12:44 p.m. Tr. at 9-10. Instead of offering any direct knowledge of
the particular transaction in this case, Mr. Singh testified in his declaration that, in
order to complete a tobacco transaction at his establishment, an employee would
have had to either utilize a point-of-sale system that requires the clerk to manually
enter a purchaser’s date of birth or swipe the buyer’s identification card. Resp.
Ex. | at 21. Mr. Singh asserted his establishment maintained a “strict
identification” policy for tobacco product sales and that employees were required
to sign a copy of that policy. Id. at §24. Mr. Singh emphasized that Respondent’s
employees were required to complete a course regarding tobacco sales restrictions.
Id. at § 25. In sum, Mr. Singh stated:
I do not believe that the alleged sale on April 30, 2016 occurred as set
forth in the CTP’s evidence because in order for that to have
happened, my employee would have needed to ignore its [sic] training
and manually override the point of sale system. My employees know
not to take such actions and in fact our compliance with age restricted
product sales has been confirmed by [the] City of Lake Mary Police
Department on multiple occasions.

Id. at { 14.

In order to prevail, CTP must prove Respondent’s liability by a preponderance of
the evidence. See 21 C.F.R. § 17.33(b). As such, I must determine whether I am
convinced the greater weight of the evidence supports Complainant’s allegations.
See Sec'y of Labor v. Keystone Coal Min. Corp., 151 F.3d 1096, 1103 (D.C. Cir.
1998). In this case, taking into account all of the evidence submitted, I find the
testimony of FDA inspector Jose Rodriguez to be credible and reliable, as it was
well-corroborated by the additional evidence submitted by CTP, including his
narrative report and the documented photographic evidence of the transaction.

By contrast, Mr. Singh’s statement may be credible in the sense that he is not
lying; but his belief that CTP’s allegations are baseless because his employees
must have conformed to his training is entirely speculative. But I need not
consider his credibility because by his own admission, he was not present to
observe the events at issue before me. I further note that Mr. Singh’s claim to
rigid compliance by his employees with age verification for tobacco sales is hardly
consistent with Respondent’s recent history of tobacco sales violations.

I, therefore, find that the weight of the evidence, including the testimony of Mr.
Rodriguez, the underlying statement made by Minor A, and the corroborating
physical evidence, establish Respondent’s liability under the Act by a
preponderance of the evidence.

B. A Civil Money Penalty of $2,200 is Warranted.

Pursuant to 21 U.S.C. § 333(f)(9), Respondent is liable for a civil money penalty
not to exceed the amounts listed in FDA’s civil money penalty regulations at 21
C.F.R. § 17.2. In its complaint, CTP sought to impose the maximum penalty
amount, $2,200, against Respondent for four violations of the Act and its
implementing regulations within a 24-month period. Complaint at § 1. CTP has
maintained that this penalty is appropriate in both its Informal Brief and its post-
hearing response addressing penalty factors. See Informal Brief of Complainant at
9-13; CTP Response.
Respondent argues that CTP’s penalty is inappropriate, asserting that CTP should
have used the penalty schedule in place in 2015, the time of its first violation,
rather than the penalty schedule in place in 2016, the time of its most recent
violation. See Resp. Post-Hearing Brief at 15.

CTP, however, argues that “the fact that the penalty amount is based on
cumulative violations [does not mean] that subsequent penalties are locked into
the amounts application at the time the initial violation occurred.” CTP Response
at 3. CTP notes that the “adjusted civil penalty amounts are applicable only to
civil penalties assessed after August 1, 2016, whose associated violations occurred
after November 2, 2015...” /d. citing 81 Fed. Reg. 61528 (Sept. 9, 2016).

CTP’s argument is well taken, and Respondent has provided no legal basis for its
position. Thus, I find Respondent’s position to be without merit. In April 2016,
the time of Respondent’s most recent violation, $2,200 was the maximum penalty
amount applicable for four violations in 24 months. Jd.

When determining the amount of a civil money penalty, I am required to 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. § 303(f)(5)(B).

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

Within a 24-month period, Respondent committed three violations of selling
cigarettes and/or smokeless tobacco to persons younger than 18 years of age, 21
C.F.R. § 1140.14(a)(1), and two violations for failing to verify, by means of photo
identification containing a purchaser’s date of birth, that no cigarette and/or
smokeless tobacco purchasers are younger than 18 years of age, 21 C.F.R.

§ 1140.14(a)(2).

Respondent’s repeated inability to comply with federal tobacco regulations as they
relate to selling tobacco products to children is serious in nature. The civil money
penalty amount should be set accordingly.

2. Respondent’s Ability to Pay
CTP is seeking a $2,200 civil money penalty against Respondent. Respondent has

not provided any argument or evidence that it lacks the ability to pay the $2,200
civil money penalty.
10

3. Effect on Ability to do Business

Respondent claims that “‘a finding here of 21 C.F.R. 1140.14...may constitute” a
breach of its franchise contract with 7-Eleven. Informal Brief of Respondent at 9;
see also Resp. Ex. A. But even if an adverse finding may harm Respondent’s
relationship with its franchisor, Respondent has not explained why a reduction in
the penalty would therefore be appropriate. It would appear that harm to this
relationship would occur no matter what penalty amount I imposed.

As Respondent has provided no arguments or evidence to suggest otherwise, I
must conclude that imposition of a $2,200 civil monetary penalty would not
significantly affect Respondent’s ability to continue lawful retail operations.

4. History of Prior Violations

As a result of random inspections, Respondent has now been caught selling
tobacco products to minors three times, and twice failing to check their
identification. The instant action before me is the second civil money penalty
action that CTP has brought against Respondent. Respondent ultimately settled
the first action brought against it by admitting all the allegations in CTP’s
complaint, paying an agreed-upon penalty, and waiving its rights to contest those
violations in a subsequent action. Complaint at { 11. Despite the outcome of
those proceedings, Respondent committed the exact same violations during an
inspection only four months later, in April 2016. Application of this statutory
factor militates towards imposition of a higher civil money penalty.

5. Degree of Culpability

Ihave concluded that Respondent is liable for four violations as set forth in the
Complaint. No evidence suggesting culpability by another party has been
adduced. I hold Respondent fully culpable for each violation of the Act and its
implementing regulations.

6. Additional Mitigating Factors

In his declaration, Mr. Singh stated that Respondent, as required by 7-Eleven Inc.
in its franchise agreement, is required to use a point-of-sale system to verify ages
of tobacco customers at the time of purchase. Resp. Ex. | at 20-21. As he
described it, the system used by Respondent required the sales clerk to manually
enter a compliant birth date or swipe an identification card with a compliant birth
date, in order to proceed with the sale. /d. at §21. Mr. Singh also testified that he
posted signs around his store “regarding the requirement for patrons to show
identification when purchasing...tobacco products” (/d. at §] 23); that he requires
11

Respondent’s employees to sign a copy of the Respondent’s policies on tobacco

sales (Id. at § 24); and that he requires all Respondent’s employees to take a course
regarding tobacco sales restrictions (/d. at §{] 25-26). In addition to these measures,
Mr. Singh stated that he voluntarily participated in an additional program, the Bars
Program, in which 7-Eleven, acting as franchisor, would “send investigators to the
store to conduct age restricted product sales.” Jd. at § 30.

Respondent relies on previously established internal efforts at compliance in
support of mitigation, but they do not appear to have been effective. It further
appears that the prior penalty of $250, for what Respondent’s principal described
as “seemingly minor violations,” was insufficient to draw his attention to the
importance of avoiding the real and substantial harm of selling tobacco to minors.
Id. at § 8. He now finds the penalty amount for the fourth violation to be of great
“concern.” Id. at §§ 7-9.

I see no basis to mitigate the present penalty amount, given the lack of impression
prior actions and penalties have made on Respondent. Presumably, the
progressive penalty system utilized here will have its intended effect, and motivate
Respondent to take meaningful action to comply with the Act and prevent the sale
of tobacco products to children.

7. Penalty

Based on the foregoing reasoning, I find a penalty amount of $2,200 to be
reasonable and appropriate under 21 U.S.C. §§ 303(£)(5)(B) and 333(£)(9).

ORDER

For the foregoing reasons, I enter judgment in the amount of $2,200 against
Respondent Hollistic, Inc. d/b/a 7-Eleven Store 25975A. 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/
Bill Thomas
Administrative Law Judge


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

Center for Tobacco Products,
(FDA No. FDA-2017-H-4684)

Complainant
v.

Seja, Inc.
d/b/a 7-Eleven Store 32605A,

Respondent.
Docket No. T-17-5673
Decision No. TB2743

Date: May 22, 2018

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks to impose a civil money penalty (CMP)
against Respondent, Seja, Inc. d/b/a 7-Eleven Store 32605A, located at 8674 Maitland
Summit Boulevard, Orlando, Florida 32810, for two violations of the Federal Food,
Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seg., and its implementing regulations,
21 C.F.R. pt. 1140, within a 12-month period. Specifically, CTP alleges that Respondent
violated the Act by impermissibly selling cigarettes to minors on two separate occasions.
For the reasons discussed below, I find in favor of CTP and impose a $279 CMP against
Respondent.

I. Procedural History

CTP began this matter by serving an administrative complaint, seeking a $279 CMP, on
Respondent at 8674 Maitland Summit Boulevard, Orlando, Florida 32810, and by filing a
copy of the complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. In its answer, Respondent denied the allegations and requested a
hearing.
On September 22, 2017, I issued an Acknowledgment and Pre-Hearing Order (APHO)
setting forth case procedures and exchange deadlines. On February 14, 2018, CTP filed
its pre-hearing exchange, which included an Informal Brief of Complainant, and 21
exhibits (CTP Exs. 1-21). The 21 exhibits included the direct testimony, in the form of
declarations, for three witnesses — Senior Regulatory Counsel Laurie Sternberg, Inspector
Jose Ceballos, and Inspector Rolando Banasco. Respondent did not file a pre-hearing
exchange.

On March 27, 2018, I scheduled this matter for a prehearing conference. The prehearing
conference was scheduled for April 26, 2018 at 11:00 AM (Eastern). Both parties were
notified of the time and date. The prehearing conference was held as scheduled on
April 26, 2018. Representatives for CTP appeared on the call, however, Respondent
failed to appear.

On April 26, 2018, I issued an Order requiring Respondent to show cause for its failure to
appear at the prehearing conference. Respondent was warned that failure to respond to
the Order could result in sanctions, including the issuance of a decision finding
Respondent liable for the violations in the complaint and imposing a civil money penalty.
Respondent was given until May 7, 2018 to show cause. To date, Respondent has not
responded to the April 26, 2018 Order.

Pursuant to 21 C.F.R. § 17.35(e), I am authorized to impose sanctions and issue an initial
decision imposing penalties and assessments if a party fails to defend an action. Any
sanction I impose must reasonably relate to the severity and nature of the failure or
misconduct. 21 C.F.R. § 17.35(b). Here, Respondent did not file a pre-hearing exchange
as ordered by my September 22, 2017 APHO, it failed to appear at the prehearing
conference, and it did not respond to my April 26, 2018 Order. Based on Respondent’s
repeated failure to defend this action, I find sanctions are appropriate. Accordingly, I
find Respondent is liable for the violations alleged in the complaint and impose the $279
CMP sought by CTP.

I. Decision

CTP determined to impose a civil money penalty against Respondent pursuant to the
authority conferred by the Act and implementing regulations at Part 21 of the Code of
Federal Regulations. 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). FDA and its
agency, CTP, may seek civil money penalties from any person who violates the Act’s
requirements as they relate to the sale of tobacco products. 21 U.S.C. § 331(f)(9). The
sale of cigarettes to an individual who is under the age of 18 is a violation of
implementing regulations. 21 C.F.R. §§ 1140.14(a)(1).
In its complaint, CTP alleges that Respondent committed two violations of the Act and its
implementing regulations within a 12-month period. Specifically, CTP alleges:

e At approximately 5:27 p.m. on September 29, 2016, at Respondent’s business
establishment, 8674 Maitland Summit Boulevard, Orlando, Florida 32810, an
FDA-commissioned inspector documented Respondent’s staff selling a package of
Marlboro Gold Pack cigarettes to a person younger than 18 years of age;

e Ina warning letter dated October 20, 2016, CTP informed Respondent of the
inspector’s September 29, 2016 documented violations, and that such actions
violate federal law. The letter further warned that Respondent’s failure to correct
its violations could result in a civil money penalty or other regulatory action;

e At approximately 11:36 p.m. on June 9, 2017, at Respondent’s business
establishment, 8674 Maitland Summit Boulevard, Orlando, Florida 32810, an
FDA-commissioned inspector documented Respondent’s staff selling a package of
Newport Box cigarettes to a person younger than 18 years of age.

Based on Respondent’s failure to defend its action, I find these facts are true and establish
Respondent’s liability under the Act. Under 21 C.F.R. § 17.2, a $279 civil money
penalty is permissible for two violations of the regulations found at 21 C.F.R. pt. 1140.
Respondent has not provided any mitigating circumstances for me to consider, therefore,
I find $279 is an appropriate penalty.

Til. Conclusion

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $279 against
Respondent, Seja, Inc. d/b/a 7-Eleven Store 32605A, for two 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 twelve-month period.

/s/
Margaret G. Brakebusch
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Center for Tobacco Products,

(FDA No. FDA-2017-H-4227)
Complainant
v.

C.W. White, Inc.
d/b/a Senatobia Food Mart,

Respondent.
Docket No. T-17-5295
Decision No. TB2713

Date: May 15, 2018

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks to impose a civil money penalty
(CMP) against Respondent, C.W. White, Inc. d/b/a Senatobia Food Mart, located
at 434 West Main Street, Senatobia, Mississippi 38668, for three 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. Specifically, CTP alleges that
Respondent violated the Act by selling covered tobacco products to minors and by
failing to verify the purchasers were 18 years of age or older. For the reasons
discussed below, | find in favor of CTP and impose a $559 CMP against
Respondent.

Background and Procedural History

CTP began this matter by serving an administrative complaint seeking a $559 civil
money penalty on Respondent, at 434 West Main Street, Senatobia, Mississippi
38668, and by filing a copy of the complaint with the Food and Drug
Administration’s (FDA) Division of Dockets Management. Respondent timely
answered CTP’s complaint. In its answer, Respondent denied the allegations. On
August 25, 2017, I issued an Acknowledgment and Pre-Hearing Order (APHO).

On September 25, 2017, CTP filed a Motion for Protective Order (MPO) stating,
in part:

. .. Respondent has served CTP with a request for production of
documents . . . Some of the documents responsive to Respondent’s
request include (1) the personal identifying information of the
minors who participated in the undercover inspections; (2)
information reflecting CTP’s pre-decision deliberative process in
this matter; (3) communications between CTP and FDA’s Office of
the Chief Counsel (“OCC”) regarding this matter; and (4) documents
prepared by OCC in anticipation of litigation in this matter... .

E-File Docket #9 (MPO) at 1-2.

On September 28, 2017, a letter issued at my direction gave Respondent until
October 5, 2017 to file a response to CTP’s MPO. See E-File Docket #10.
Respondent did not file a response to the MPO. Instead, on October 26, 2017,
Respondent filed a response regarding CTP’s Request for Production, without the
attachments referenced in its response. See E-File Docket #11. On November 9,
2017, an email sent at my direction to CTP inquired, based on Respondent’s
October 26, 2017 discovery response, of CTP’s intent to pursue the pending MPO.
E-File Docket # 13. On November 15, 2017, in an email communication, CTP
advised “that there is no need for the ALJ to address the motion for protective
order.” E-File Docket #14.

CTP filed its pre-hearing exchange on November 14, 2017. Respondent filed its
pre-hearing exchange on December 5, 2017. On December 22, 2017, I held a pre-
hearing conference in this case. During the pre-hearing conference, counsel for
Respondent stated that it wanted to cross-examine CTP’s witness Justin
Montgomery, the inspector involved in the inspections of its establishment. CTP
advised of its intent to cross-examine Respondent’s witness Charles White,
President of the business entity Senatobia Food Mart. Also during the pre-hearing
conference, Respondent sought to subpoena the undercover buyer (UB) minor
involved in the April 10, 2017 inspection. I denied Respondent’s request, advising
that the UB minor’s identity is protected from disclosure. Following the pre-
hearing conference, I issued an Order Scheduling Telephone Hearing for January
29, 2018.

On January 29, 2018, a hearing was held in this case. The purpose of the hearing
was to allow Respondent to cross-examine Inspector Montgomery, and to afford
CTP the opportunity to cross-examine Respondent’s witness Charles White. !
During the hearing, CTP’s exhibits (Exs.) 1 through 18 and Respondent’s (R’s)
exhibits 1 through 8 were admitted into the record without objection. Hearing
Transcript (Tr.) at 7. On February 21, 2018, I informed the parties that the Court
had received the transcript of the hearing, and set the deadline for the parties’
simultaneous post-hearing brief submissions as March 26, 2018. On March 26,
2018, CTP filed its post-hearing brief. Respondent did not file a post-hearing
brief.

Issues

e Whether Respondent Senatobia Food Mart sold covered tobacco products
to a minor and failed to verify that the covered tobacco product purchaser
was of sufficient age, on January 18, 2017 and April 10, 2017, in violation
of 21 C.F.R. §§ 1140.14(b)(1) and 1140.14(b)(2)(i); and

e Whether the penalty amount sought by CTP is reasonable.

Analysis
I. Violations
A. Alleged Violations, Parties’ Contentions, and Findings of Fact

CTP determined to impose a civil money penalty against Respondent pursuant to
the authority conferred by the Act and implementing regulations at Part 21 of the
Code of Federal Regulations. The Act prohibits the misbranding of tobacco
products while they are held for sale after shipment in interstate commerce. 21
ULS.C. § 331(k). FDA and its agency, CTP, may seek civil money penalties from
any person who violates the Act’s requirements as they relate to the sale of
tobacco products. 21 U.S.C. § 331(f)(9). The sale of covered tobacco products to
an individual who is under the age of 18 is a violation of implementing
regulations. 21 C.F.R. § 1140.14(b)(1). In addition, a retailer’s failure to verify,
by means of photographic identification containing a purchaser’s date of birth, that
no covered tobacco product purchaser is younger than 18 years of age is also a
violation of the regulations.

' At the close of Respondent’s cross-examination of Inspector Montgomery, CTP
waived cross-examination of Charles White. See Tr. at 22.
1. Alleged Violations

CTP alleges that Respondent committed three? violations of the Act and its
implementing regulations within a 24-month period. Complaint at { 1.

In its Complaint, CTP alleged that at approximately 2:34 PM on January 18, 2017,
and at approximately 2:49 PM on April 10, 2017, at Respondent’s business
establishment, 434 West Main Street, Senatobia, Mississippi 38668, an FDA-
commissioned inspector documented Respondent’s staff selling a package of two
White Owl White Grape cigars to a person younger than 18 years of age.
Complaint at {{ 9, 11; see also, Informal Brief of Complainant at 4-9. The
inspector also documented that the staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older. Jd.; see also, Informal Brief of Complainant at 9-11.

In its Answer, Respondent denies all of the violations alleged in the Complaint,
and requests that the Complaint be “dismissed with prejudice.” Answer.

2. Parties’ Contentions and Evidence
a. CTP’s Position

CTP’s case against Respondent relies on the testimony of Inspector Justin
Montgomery, who accompanied by a state-contracted undercover minor (Minor
A), conducted an undercover buy (UB) compliance inspection on January 18,
2017, and a follow-up UB compliance inspection on April 10, 2017. Informal
Brief of Complainant at 3. As evidence*, CTP provided a sworn declaration from
Inspector Montgomery. See CTP Ex. 4 (Montgomery Declaration). Inspector
Montgomery is an FDA-commissioned officer with the state of Mississippi. His
duties include conducting undercover inspections to determine whether retailers
comply with the age and photographic identification requirements relating to the
sale of tobacco. Id. at §§ 3-4. Inspector Montgomery declared that he conducted a
UB compliance check inspection of Respondent’s establishment, accompanied by
a Minor A, on January 18, 2017. Jd. at § 10. Inspector Montgomery stated that
prior to initiating the inspection, he confirmed Minor A’s possession of his/her
photographic identification, and that he/she did not possess any tobacco products.
Id. The inspector stated that he watched Minor A enter Respondent’s

? Two violations were documented on January 18, 2017, and two were
documented on April 10, 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.

3 The evidence discussed in this paragraph is not exhaustive.
establishment, and that he remained “directly outside the establishment because
my identity is known to the retailer or establishment.” Jd. at § 11. Inspector
Montgomery asserted that he obtained an unobstructed view of the sales counter
and directly observed Minor A purchasing a package of cigars from Respondent’s
clerk. Jd. Inspector Montgomery noted that Minor A did not present any
identification to the sales clerk, and the sales clerk did not provide a receipt after
the sale. /d. Inspector Montgomery declared that, after the transaction, he and
Minor A returned to the vehicle where the minor immediately handed the
inspector the package of cigars. Jd. at § 12. The inspector observed that the
package of cigars contained White Owl White Grape cigars. Jd. Inspector
Montgomery processed the evidence according to procedure and created a
narrative report shortly thereafter. Jd.

Inspector Montgomery further declared that, on April 10, 2017, he and Minor A
conducted a follow-up UB compliance check inspection at Respondent’s
establishment. CTP Ex. 4, at § 15. Again, prior to initiating the inspection,
Inspector Montgomery declared that he confirmed Minor A’s possession of his/her
photographic identification, and that he/she did not possess any tobacco products.
Id. The inspector stated that he watched Minor A enter Respondent’s
establishment, and he “remained directly outside the establishment because I felt
my presence would compromise the undercover nature of the inspection.” Jd. at
416. Inspector Montgomery asserted that he obtained an unobstructed view of the
sales counter and directly observed Minor A purchasing a package of cigars from
Respondent’s clerk. Jd. Inspector Montgomery noted that Minor A did not
present any identification to the sales clerk prior to the sale, and that the sales clerk
did not provide a receipt after the sale. Jd. Inspector Montgomery declared that,
after the transaction, he and Minor A returned to the vehicle where the minor
immediately handed the inspector the package of cigars. Id. at 17. The inspector
observed that the package of cigars contained White Owl White Grape cigars. Jd.
Inspector Montgomery took pictures and labeled the cigar package. He then
processed the evidence according to procedure and created a narrative report
shortly thereafter. /d. Beyond Inspector Montgomery’s declaration, CTP also
provided evidence corroborating his testimony, including: photographs of the pack
of cigars Respondent unlawfully sold to Minor A (CTP Exs. 8, 9, 14, 15); copies
of the Compliance Check Inspection Notices (CTP Exs. 10, 16); Inspector
Montgomery’s Narrative Reports of the undercover inspections (CTP Exs. 6, 12);
the TIMS Forms (CTP Exs. 7, 13); and a redacted copy of the Minor A’s
identification establishing his/her age at the time of the sale (CTP Ex. 5).

b. Respondent’s Position

Respondent filed an answer and an informal brief, denying that covered tobacco
products were sold to a minor, or that Respondent failed to verify the minor’s age
during the inspections at issue. Answer; Informal Brief of Respondent.
Respondent asserts that no covered tobacco products were sold during the time
period alleged by CTP; that CTP has not provided a receipt; and that CTP’s
description of the sales clerk alleged to have made each of the violative sales “is
based on the faulty observation of Inspector Montgomery

... [t]hus destroys the credibility of all other observations by Inspector
Montgomery in his report and in this case... .” Answer at 2; Informal Brief of
Respondent at 3-8. More specifically, Respondent argues:

... CTP alleges that on January 18, 2017 A C.W. White Inc. senior
age female employee with white/gray hair and who wore glasses
sold tobacco products to a minor. There was no senior age female
employee with glasses and white/gray hair working at the Senatobia
Food Mart on January 18, 2017. CTP also alleges that on April 10,
2017 aC.W. White Inc. senior age female employee with white/gray
hair sold tobacco products to a minor. There was no senior age
female employee with white/gray hair working at the Senatobia
Food Mart on April 10, 2017.

These two facts alone defeat the CTP’s case and its ability to meet
its burden of proof... .

Informal Brief of Respondent at 1.

In support of its assertions, and included as part of its pre-hearing exchange,
Respondent submitted the declaration of Charles White, President of C.W. White,
Inc., as well as employee time cards for the periods covering January 15-21, 2017
and April 9-15, 2017. R’s Exs. 2, 3. In his declaration, Mr. White asserts that
none of the employees on duty at Respondent’s establishment on either January
18, 2017 or April 10, 2017 fit the physical description given by Inspector
Montgomery in his Narrative Reports; i.e., a female of senior age, with gray/white
hair, and wore glasses. R. Ex. 2, at §§ 3-8. Further, Respondent contends that the
time cards identify the employees on duty during the relevant inspection periods.
See Informal Brief of Respondent at 3, 6. According to Respondent, the
employees on duty do not fit the description provided by Inspector Montgomery in
the January 18, 2017 and April 10, 2017 Narrative Reports. Jd.

c. Hearing Testimony

Respondent cross-examined Inspector Montgomery at the January 29, 2018
hearing. See Tr. at 8-22. During the hearing, Respondent’s cross-examination of
Inspector Montgomery focused substantially on questions regarding the
background and experience of the investigator and the minor; the methods used to
select minors for participation in the undercover investigations; whether the minor
is checked or searched for fake identification; the method of payment used in
undercover operations; and the sources of the descriptions of the sales clerks
allegedly involved in the violative sales as documented in the Narrative Reports
for the dates at issue. See Tr. at 10-19.

Specifically, with regard to the description of the sales clerks noted in the
Narrative Reports for the inspections conducted on January 18, 2017, and April
10, 2017, Inspector Montgomery testified as follows:

Q. Okay. Now, on both instances on January the 18" and April the
10", you did not go into the store with the minor, did you?

A. No.

Q. Okay. And you - - you only observed from the outside?
A. Yes.

Q. On - - on both instances, . . . how far away from the actual

counter would you say you were?

A. Probably . . . maybe five - - five feet - - five, six feet because I
pulled about right directly in front of the store where the actual front
door is, where the actual pump would have been...

Q. And that’s - - that’s the same on both instances?

A. Yeah.

OR OK Rk Ok

Q. Okay. So you weren’t inside. So you don’t know what may
have been said between the person who allegedly sold tobacco and
the minor inside the store, do you?

A. No.

OR OK Rk Ok

Q. Okay. And the - - the only description of the person who
allegedly sold the tobacco comes from your observations, correct?
A. They come from the minor as well. He comes in, describes, you
know, any type of his characteristic that the - - that the clerk had and
I can also visually see as well.

OR OK Rk Ok

Q. Mr. Montgomery, we’ve got the two minor narrative reports
which have been admitted as respondent’s Exhibits 4 and Exhibit 5.
And neither one of those reports contain a description of the person
who allegedly sold the tobacco, do they?

A. No, they don’t.

Q. Okay. So the only documentation we have of the description of
the person who allegedly sold the tobacco comes from your
observation, is that correct?

A. ... For paper wise documentation, yes, because it’s not listed on
the minor narrative form, there’s not a - - there’s not a section on
there for characteristics.

Q. Okay. So... your report and your description . . . on CTP
Exhibits 6 and Exhibit 12 which are your - - it’s your narrative
reports from January the 18", 2017, and April the 10" of 2017.
Under Section 16 of both those reports, does - - those descriptions
you provided there match what the minor provided you, is that
correct?

A. Yes.

Q. Okay. So is it fair to say that your knowledge of what took place
came from your observations?

A. Yes. And also, along with the teen.

Q. Right. Okay. But outside the minor’s report, the only
knowledge you had comes from your observations, is that right?

A. Yes.

Tr. at 15-16, 17-19.
3. Findings of Fact

Respondent offered no evidence to rebut Inspector Montgomery’s statements
regarding the sale of the covered tobacco products, in the instance cigars, or the
failure to verify the purchaser’s age. However, based on Respondent’s line of
questioning at the hearing, Respondent sought to attack the inspector’s description
of the sales clerks involved in the respective alleged transactions. It is undisputed
that Inspector Montgomery did not witness the alleged transactions from within
Respondent’s establishment on either January 18, 2017 or April 10, 2017. Tr. at
15-16; CTP Ex. 4, at §§ 11, 15. Instead, the inspector states that in each instance,
he had an unobstructed view of each transaction from the window outside of the
establishment. Jd. However, the regulations do not require a direct eyewitness.
Rather, I must determine whether - based on a preponderance of the evidence -
the allegations are true, and, if so, whether these actions constitute a violation of
law. 21 C.F.R. §§ 17.33, 17.45.

As previously discussed, Respondent’s primary contention is that the employees
on duty at the time in Respondent’s establishment on January 18, 2017 and April
10, 2017 do not match the physical description of the employees involved in the
alleged transactions given by Inspector Montgomery in his Narrative Reports.
Answer at 2-3; Informal Brief of Respondent at 2, 3-4, 6-7. In his declaration, Mr.
White states that the two female employees on duty January 18, 2017 had
blond/blond-brown hair, and one wore glasses “sparingly.” R. Ex. 2, at f§ 3, 5, 6.
Mr. White further states that of the three female employees working on April 10,
2017, two were the same employees on duty during the January 18, 2017
inspection. Jd. at {| 4-7. However, Mr. White expressly states that: “[t]here was
no employee of C.W. White, Inc. working at the Senatobia Food Mart on January
18, 2017... [or] April 10, 2017, who was senior age, with gray/white hair and
who would have been wearing glasses. Id. at §§j 8, 9.

On cross-examination, Inspector Montgomery testified that the two minor
Narrative Reports do not contain physical descriptions of the clerks who allegedly
sold the cigars because those forms do not include a section for characteristics. Tr.
at 18. The inspector further testified that the clerk descriptions are based on both
the description provided by the minor and the inspector’s own observations. Id. at
18-19. Although probative, this testimonial evidence is not crucial based on the
entirety of the evidentiary record. It is clear from the record that on both January
18, 2017 and April 10, 2017, an adult female with light colored hair (blond/blond-
brown as described by Mr. White, or possibly gray/white as seen by Inspector
Montgomery through the store front window) and glasses was working at
Respondent’s establishment.

With respect to both of the alleged sales on January 18, 2017 and April 10, 2017,
employee Wanda Moore is a 56-year-old adult female with blond-brown hair
“who only wears glasses sparingly and does not wear glasses while at work.” R.
Ex. 2, at 96. While this may be her custom, there is nothing in the record that she
never uses her glasses at work, or that she may not have done so on January 18,
2017, or April 10, 2017.

Respondent also makes the argument that the minor obtained the cigars from a
“non-employee” of C.W. White, Inc. Informal Brief of Respondent at 5.
Respondent further asserts:

... the minor would also have ulterior motives to produce evidence
of tobacco sale as confidential informants or undercover operators
such as the minor in this case generally serve in that capacity in
exchange for leniency or as part of an arrangement such as a “plea
deal” with an investigative or enforcement body.

Id. | find it incredible that the minor obtained the cigars from a third party in the
establishment. Based on the evidentiary record, there is no reason for the minor to
10

do so. Inspector Montgomery testified that minors’ involvement in undercover
buy operations is strictly voluntary and not subject to a plea deal or any
arrangement. Tr. at 15. There is no evidence to support that the minor had an
incentive to trick Respondent’s staff.

Simply, the minor entered Respondent’s establishment without cigars and returned
to the inspector with them. Based on the evidence, the most reasonable
explanation for the minor to emerge from the establishment with cigars is that
he/she purchased then in the establishment.

The testimony of Inspector Montgomery, supported by corroborating evidence, is
sufficient to establish that it is more likely than not that Respondent unlawfully
sold covered tobacco products to a minor and failed to verify that the purchaser
was of sufficient age, in violation of 21 C.F.R. §§ 1140.14(b)(1) and
1140.14(b)(2)(i). 21 C.F.R. § 17.33(b); see also, Tr. at 15-19; CTP Exs. 4-7, 8-9,
12-15.

Therefore, I find that CTP has met its burden to establish Respondent Senatobia
Food Mart’s liability under the Act for three violations within a 24-month period.

I. Civil Money Penalty

Pursuant to 21 U.S.C. § 333(f)(9), Respondent C.W. White, Inc. d/b/a Senatobia
Food Mart is liable for a civil money penalty not to exceed the amounts listed in
FDA’s civil money penalty regulations at 21 C.F.R. § 17.2. In its Complaint, CTP
sought to impose the maximum penalty amount, $559, against Respondent for
three violations of the Act and its implementing regulations within a 24-month
period. Complaint at § 1.

In both its Answer and Informal Brief, Respondent denied any obligation to pay a
civil money penalty because there is insufficient proof it violated the regulations.

I have found that Respondent committed three violations of the Act and its
implementing regulations within a 24-month period. When determining the
amount of a civil money penalty, I am required to 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).
11

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

Ihave found that Respondent committed two violations of selling covered tobacco
products to minors, and two violations of failing to verify that the covered tobacco
product purchaser was of sufficient age, although it is only being held liable for
three of those violations. The repeated inability of Respondent to comply with
federal tobacco regulations is serious in nature and the civil money penalty amount
should be set accordingly.

B. Respondent’s Ability to Pay And Effect on Ability to do Business

Respondent has not presented any evidence that it does not have the ability to pay
the $559 CMP sought by CTP.

C. History of Prior Violations

The current action is the first civil money penalty action brought against
Respondent for violations of the Act and its implementing regulations. As noted
above, Respondent has, at least three times, violated the prohibition against selling
covered tobacco products to persons younger than 18 years of age, and failing to
verify that the covered tobacco product purchaser was of sufficient age. 21 C.F.R.
§§ 1140.14(b)(1) and 1140.14(b)(2)(i).

D. Degree of Culpability

Based on my finding that Respondent committed the three violations in the
Complaint, I hold it fully culpable for three violations of the Act and its
implementing regulations.

E. Additional Mitigating Factors

Respondent has asserted it provided training to its employees, and that it “takes
extraordinary precaution and measures to guard against the sale of tobacco
products to minors and the verification and identification of the age of those
purchasing tobacco products.” Informal Brief of Respondent at 8. However, this
in itself is not a mitigating factor, since Respondent through its employee failed to
actually prevent the sale. Moreover, rather than make assurances as to reinforced
training or other procedures that could promote compliance, Respondent simply
notes distribution of additional documentation to employees which advises “check
photo ID for anyone under 27.” Jd. at 9. Accordingly, I have no basis in the
record before me to find mitigating factors that would allow me to reduce the
penalty requested by CTP, which I find proportional and appropriate in this case.
12

F. Penalty

Based on the foregoing reasoning, I find a penalty amount of $559 to be
appropriate under 21 U.S.C. §§ 333(f)(5)(B) and 333(f)(9).

Conclusion

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $559 against
Respondent, C.W. White, Inc. d/b/a Senatobia Food Mart, for three 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 24-month period.

/s/
Catherine Ravinski
Administrative Law Judge