Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Robert E. Darnaby, M.D.

(PTANs: 390700, M400055587, 94093),
Petitioner,

v.

Centers for Medicare & Medicaid Services.
Docket No. C-18-205
ALJ Ruling No. 2018-6

Date: February 15, 2018

DISMISSAL

On November 22, 2017, I issued an Acknowledgment and Pre-Hearing Order (

Pre-Hearing

Order) in which I observed that Petitioner’s hearing request may have been untimely filed.
Pre-Hearing Order § 1. My Pre-Hearing Order permitted, but did not require, the Centers
for Medicare & Medicaid Services (CMS) to file a motion to dismiss if it believed
Petitioner had not shown good cause for the untimely filing. Jd. On December 21, 2017,

CMS filed a Motion to Dismiss (CMS Motion), along with twelve proposed ex!

ibits (CMS

Exs. 1-12). Also on December 21, 2017, I issued an Order Extending Pre-Hearing
Deadlines and Compelling Petitioner to Enroll in the Electronic Filing System or to
Request a Waiver (Ext. Order). In that order, I directed Petitioner to respond to the CMS
Motion on or before January 16, 2018. Ext. Order § 1. Petitioner timely filed his response

(P. Resp.) along with three exhibits.'! As explained more fully below, I do not

find that

' Petitioner designated two exhibits as “Exhibit A” and “Exhibit B.” Exhibit A is a copy
of a letter to Petitioner dated August 8, 2016; Exhibit B is an affidavit signed by an
individual identified as the custodian of records for Franciscan Health. Petitioner also
submitted his own affidavit, which he did not mark as an exhibit. For consistency, I will
refer to Petitioner’s affidavit as Petitioner’s Exhibit C. Petitioner’s affidavit cross-

references another “Exhibit B,” described as a letter from Unity Health Service

Ss.
Petitioner’s response demonstrates that he had good cause for filing his hearing request out
of time. I therefore dismiss the hearing request.

1. Petitioner’s hearing request was filed untimely.

Wisconsin Physicians Services (WPS), a CMS Medicare administrative contractor, issued
an unfavorable reconsidered determination dated March 14, 2017. CMS Ex. 11. The
reconsidered determination denied Petitioner’s request to establish an earlier effective
date for his Medicare enrollment and billing privileges. Jd. at 2. By letter postmarked
November 9, 2017, Petitioner requested a hearing to contest the reconsidered
determination. Request for Hearing (RFH). I take administrative notice that

November 9, 2017, is 240 days after March 14, 2017.

Pursuant to 42 C.F.R. § 498.40(a)(2), a hearing request must be filed within 60 days from
receipt of the reconsidered determination. I will presume that a party received the
reconsidered determination five days after the date of the notice unless the party shows
that it was, in fact, received earlier or later. 42 C.F.R. § 498.22(b)(3), incorporated by
reference in 42 C.F.R. § 498.40(a)(2). Petitioner asserts that he did not receive a copy of
the reconsidered determination within five days after March 14, 2017. RFH. However,
Petitioner does acknowledge that, on April 10, 2017, staff of Unity Healthcare LLC
(Unity) informed him of WPS’s unfavorable reconsidered determination. Jd. He objects
that neither WPS nor Unity sent a copy of the determination to him. /d. Petitioner also
represents that Unity did not inform him of the opportunity to request a hearing before an
administrative law judge. RFH; see also P. Ex.C 48.

I conclude that Petitioner’s representations do not rebut the presumption that he (or his
authorized representative) received a copy of the reconsidered determination on or before
March 19, 2017. Accordingly, Petitioner’s hearing request was filed untimely.
Petitioner’s hearing request explains that he was “partnered with” Unity at the time WPS
requested revalidation. RFH. Petitioner further acknowledges that he delegated to
Unity’s credentialing staff the task of straightening out the problem with his Medicare
revalidation. Jd. Because Petitioner delegated to Unity staff the responsibility for
dealing with WPS regarding his Medicare revalidation, it was proper for WPS to send
notice of its reconsidered determination to Unity, as Petitioner’s agent. Consistent with
this authority, WPS addressed the reconsidered determination to Unity. CMS Ex. 11.

I accept that Petitioner himself may not have received a copy of the notice from WPS on
or before March 19, 2017. However, that Petitioner may not personally have received the
notice does not rebut the presumption that Unity, which he authorized to correspond with

However, that letter was not a part of the electronic submission Petitioner filed. Because
neither party objected to any of the exhibits proposed by the opposing party, I admit CMS
Exs. 1-12 and Petitioner’s Exhibits (P. Exs.) A-C into the record.
WPS for this purpose, did receive the notice on or before March 19, 2017. Moreover,
Petitioner acknowledges that, at least as of April 10, 2017, Unity had informed him that
WPS had issued an unfavorable reconsideration. RFH. This is consistent with Unity
having received the notice sometime in March 2017. I therefore conclude that Petitioner
failed to rebut the presumption that Unity (acting on his behalf) received the reconsidered
determination on or before March 19, 2017.

2. Petitioner has not demonstrated good cause for the untimely filing.

Because Petitioner did not file his hearing request within 60 days after March 19, 2017
(the presumed date of receipt), I must dismiss the hearing request unless I find there was
good cause for the untimely filing. 42 C.F.R. § 498.40(c)(2). Under the circumstances
presented here, I do not find good cause for Petitioner’s untimely filing.

Appellate panels of the Departmental Appeals Board (DAB) have not attempted to
provide a complete or authoritative definition of good cause, but have generally
supported administrative law judges’ views that circumstances within a party’s ability to
control do not establish good cause. See, e.g., MedStar Health, Inc., DAB No. 2684 at 8
(2016) (circumstances within a party’s control do not establish good cause under any
reasonable definition of the term). Here, it was within Petitioner’s power to direct
Unity’s actions, which Unity took based on Petitioner’s delegation of authority to Unity.
Further, having delegated to Unity staff the responsibility to handle his revalidation,
Petitioner cannot be heard to complain that Unity did not properly exercise those
responsibilities. Petitioner himself, and not an agent or employee, is ultimately
responsible for maintaining compliance with Medicare requirements. See, e.g., Dr.
Elinor Schottstaedt, M.D., DAB No. 2337 at 5 (2010) (supplier herself, and not her office
manager, “was responsible for assuring compliance with participation standards,
including those of part 498”).

Significantly, Petitioner acknowledges that, at least by April 10, 2017, Unity informed
him that WPS had denied his request for an earlier effective date of revalidation. This
information should have led him to inquire further. If, on April 10, 2017, Petitioner had
asked for a copy of the WPS reconsidered determination, Unity presumably would have
provided it.2 Had he requested and received a copy of the reconsidered determination,
Petitioner would have been aware of WPS’s instructions regarding the methods and
timeframes for filing an appeal to an administrative law judge. See CMS Ex. 11 at 2-4.
Moreover, as of April 10, 2017, there still remained more than a month before the

? While Petitioner’s affidavit states that Unity did not inform him of his right to request a
hearing, the affidavit does not assert that Petitioner requested, and Unity refused to
provide, a copy of the reconsidered determination. P. Ex. C.
deadline to file a hearing request would expire.* Yet, Petitioner did not file his hearing
request until November 9, 2017, that is, more than six months after learning of the
unfavorable decision. For these reasons, Petitioner has not shown good cause for filing
his hearing request out of time.

3. Petitioner’s argument that WPS misdirected the request for revalidation does
not require a different result.

Petitioner devotes his response to explaining that he did not receive the WPS request to
revalidate his Medicare enrollment information because the revalidation request was sent
to an incorrect address. P. Resp. On this basis, Petitioner argues that WPS should not
have deactivated his Medicare enrollment and that he should not be subject to a gap in his
billing privileges. Jd. The response provides little, if any, evidence or argument
justifying the untimely filing beyond what was stated in his hearing request.

As I have concluded above, the hearing request was filed untimely and there is no good
cause for the untimely filing. For those reasons, the hearing request must be dismissed. I
add this brief discussion to explain why, even if I found Petitioner’s hearing request to be
timely, I would nevertheless sustain the effective date of reactivation (and resulting gap
in billing privileges) assigned by WPS.

If Petitioner had filed a timely hearing request, my jurisdiction in this case would be
limited to reviewing the effective date of the approval of Petitioner’s reactivation
enrollment application. 42 C.F.R. § 498.3(b)(15). I do not have jurisdiction to review
WPS’s deactivation of Petitioner’s Medicare billing privileges because deactivation is not
an “initial determination” and deactivation decisions have a separate review process. See
42 C.F.R. §§ 424.545(b), 498.3(b); see also Willie Goffney, Jr., M.D., DAB No. 2763 at
4-5 (2017).

Thus, even if Petitioner were correct in asserting that WPS mishandled the request to
revalidate his Medicare enrollment information by sending it to an incorrect address, this
would not be a basis to grant Petitioner an earlier effective date. As an appellate panel of
the Departmental Appeals Board observed in James Shepard, M.D., providers and
suppliers may not challenge indirectly an action for which the regulations prohibit direct
administrative review. DAB No. 2793 at 8 (2017). In Shepard, the panel held that the
supplier could not obtain review of a CMS contractor’s rejection of a previous enrollment
application by challenging the effective date of enrollment based on a later approved
application. For the same reasons articulated by the panel in Shepard, Petitioner’s
arguments in the present case amount to a backdoor challenge to a contractor
determination—here, deactivation—for which there are no administrative appeal rights.
See id.

3 T take administrative notice that the 65" day after March 14, 2017 was May 18, 2017.
ORDER

Petitioner’s hearing request was not filed within 60 days after his agent received the
March 14, 2017 reconsidered determination, as required by 42 C.F.R. § 498.40(a)(2). For
the reasons explained above, Petitioner failed to demonstrate that he had good cause for
filing the hearing request out of time as provided in 42 C.F.R. § 498.40(c). For the same
reasons, I grant the CMS Motion to Dismiss. I order that Petitioner’s hearing request be
dismissed. The parties may request that an order dismissing a case be vacated pursuant to
42 CFR. § 498.72.

/s/
Leslie A. Weyn
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Cascade-Nueces Health Services, LTD
D/B/A Cimarron Place Health & Rehabilitation Center,
(CCN: 67-6087),
Petitioner,
v.
Centers for Medicare & Medicaid Services
Docket No. C-17-155
Decision No. CR5026

Date: February 14, 2018

DECISION

I grant the motion for summary judgment filed by the Centers for Medicare & Medicaid
Services (CMS) against Petitioner, Cascade-Nueces Health Services, Ltd d/b/a Cimarron
Place Health & Rehabilitation, a skilled nursing facility. I impose civil money penalties
against Petitioner in the following amounts:

e $4,550 per day for each day of a period that began on July 6, 2015 and that ran
through July 28, 2016; and

e $150 per day for each day of a period that began on July 29, 2015 and that
continued through September 16, 2015.

I. Background
This case originally was assigned to another administrative law judge and was transferred

to me in early February of this year. CMS moved for summary judgment while the case
was assigned to the other judge and Petitioner opposed the motion.
2

In support of its motion CMS relies on 29 exhibits identified as CMS Ex. 1-CMS Ex. 29.
Petitioner, in opposition, relies on two exhibits identified as P. Ex. 1-P. Ex. 2. Ido not
receive these exhibits into evidence inasmuch as I find the material facts of this case to be
undisputed. I cite to some of the exhibits only to identify the source of undisputed facts.

II. Issues, Findings of Fact and Conclusions of Law
A. Issues

The issues are whether undisputed material facts establish that Petitioner failed to comply
substantially with Medicare participation requirements, whether CMS’s determination of
immediate jeopardy level noncompliance is clearly erroneous, and whether the penalty
amounts and durations determined by CMS are reasonable.

B. Findings of Fact and Conclusions of Law

CMS determined that Petitioner failed to comply substantially with six conditions of
participation, at the immediate jeopardy level of noncompliance. CMS Ex. 2. It
determined also that Petitioner failed to comply substantially with two additional
conditions of participation albeit at a scope and severity of noncompliance that did not
constitute immediate jeopardy. Id. Petitioner opted to challenge only the immediate
jeopardy level noncompliance findings. P. Request for Hearing. The findings as to non-
immediate jeopardy level noncompliance therefore are administratively final.'

The allegations of immediate jeopardy level noncompliance all pertain to the care that
Petitioner provided to a Resident who is identified as Resident 1.” It is undisputed that
Resident 1 is an individual who, on the relevant dates, was suffering from a variety of
medical problems that included, among others, atrial fibrillation, hypothyroid disease,
congestive heart failure, and coronary artery disease. CMS Ex. 8 at 1; CMS Ex. 18; CMS
Ex. 19. Her physician prescribed a variety of medications to treat these conditions. One
of those medications was Coumadin. CMS Ex. 29 at 3-7.

' The non-immediate jeopardy level noncompliance findings are that Petitioner failed to
comply substantially with the requirements of 42 C.F.R. §§ 483.25(a)(3) and
483.75(1)(1). CMS Ex. 2 at 36-42, 77-84.

2 CMS’s original allegations of noncompliance also addressed care that Petitioner’s staff
gave to a second Resident, Resident 5. However, CMS bases its motion for summary
judgment entirely on the care that Petitioner’s staff gave to Resident 1. As I discuss
below, the undisputed facts addressing Petitioner’s noncompliance as respects the care
that it gave to Resident 1 amply support CMS’s noncompliance allegations and a finding
that this noncompliance was at the immediate jeopardy level.
3

Coumadin is an anticoagulant that is used to prevent heart attacks, strokes, and blood
clots in susceptible individuals. CMS Ex. 29 at 3-7. Coumadin’s benefits must be
balanced against the risks that it poses for those individuals taking the drug. Id. While
the drug effectively slows blood clotting time it may slow clotting time in some
individuals so much as to be dangerous. Id. Coumadin has the potential of causing fatal
bleeding in some individuals. Id. The blood clotting time of individuals taking
Coumadin — measured in tests that assess how long it takes for blood to clot — must be
carefully monitored. Id.

On June 20, 2015, Resident 1’s physician issued a telephone order that the physician and
one of Petitioner’s nurses subsequently signed, directing Petitioner’s staff to monitor the
resident’s blood clotting time weekly. CMS Ex. 8 at 169. Petitioner’s staff noted the
order on the resident’s medication administration record (MAR). Id. at 152. However,
the staff never conducted the prescribed tests even though they were administering
Coumadin to the resident. Tests were supposed to have been done on July 6, 13, and 20,
2015, pursuant to the resident’s physician’s orders. They were not performed. Id. at 152.

On July 24, 2015, Petitioner’s staff discovered a “clot and blood” coming from Resident
1’s rectum. CMS Ex. 28 at 4. Petitioner sent the resident to the emergency room at a
local hospital. There, the hospital staff determined that the resident’s blood clotting time
was far above normal. On one test for clotting time, the resident scored at a level that is
8-10 times the normal range. On another test her score was more than twice normal.
CMS Ex. 8 at 212, 232. The resident suffered from Coumadin toxicity and the hospital
treated her for a Coumadin overdose. Id. at 212.

Petitioner disputes none of the foregoing facts. P. Br. The undisputed failure by
Petitioner’s staff to follow Resident 1’s physician’s order to monitor the resident’s blood
clotting time while she was receiving Coumadin violated several conditions of
participation. Petitioner clearly contravened 42 C.F.R. § 483.20(k)(3)(ii).?. This
regulation requires that a facility arrange or provide services to a resident in accordance
with the resident’s plan of care. Petitioner failed to comply with this regulation in that its
staff had planned to monitor Resident 1’s blood clotting times in accordance with a
physician’s order but failed to do it.

Petitioner also contravened 42 C.F.R. § 483.25(1). The regulation requires that a
resident’s drug regime be free from unnecessary drugs. That requirement applies to any
drug that is administered in an excessive dose or without adequate monitoring. Failure to
provide ordered blood clotting time tests for a resident who is receiving Coumadin is a
clear violation of the regulation’s requirements. Universal Health Care — King, DAB No.

3 Some of the regulations that I cite were recodified. I cite to the versions of these
regulations that were in effect in 2015 as of the dates of Petitioner’s noncompliance.
4

2383, at 4,7 (2011). The undisputed material facts establish additionally that Petitioner
contravened the requirements of a related regulation, 42 C.F.R. § 483.75(j)(1). This
regulation requires a skilled nursing facility to provide or obtain laboratory services to
meet the needs of its residents. Here, laboratory services included obtaining the results of
blood clotting tests that Resident 1’s physician prescribed. Petitioner’s failure to
administer the tests precluded any possibility of performing the requisite laboratory
services. CMS Ex. 28 at 4.

In addition, the undisputed material facts establish that Petitioner failed to comply
substantially with the requirement set forth at 42 C.F.R. § 483.13(c). This regulation
requires a facility to develop and to implement written policies and procedures that
prohibit mistreatment, neglect, and abuse of residents. The term “neglect” is defined at
42 CFR. § 488.301 to mean a failure to provide goods and services to a resident that are
necessary to avoid physical harm, mental anguish, or mental illness. Petitioner neglected
to provide necessary care to Resident 1. That failure constituted a failure by Petitioner to
implement its own policies governing resident treatment and care. CMS Ex. 23. The
staff’s failure to monitor the resident’s blood clotting time — against the resident’s
physician’s orders — was an evident failure to provide Resident 1 with necessary services.

Finally, the undisputed material facts establish that Petitioner failed to comply with the
requirements of 42 C.F.R. § 483.75. This regulation requires a skilled nursing facility to
be administered in a manner that enables it to use its resources effectively and efficiently
so that each of its residents may obtain the highest practicable level of physical, mental,
and psychosocial well-being. The undisputed facts establish an obvious supervisory
failure at Petitioner’s facility. Someone should have reviewed Resident 1’s records to
assure compliance with her physician’s order. The absence of supervision compounded
the staff’s failure to comply with the order in that the failure went undetected or corrected
for a full month.

The undisputed facts establish that Petitioner’s noncompliance with these regulatory
requirements posed immediate jeopardy for residents of Petitioner’s facility. A
Coumadin overdose may be lethal. In the case of Resident 1, the overdose endangered
her to the extent that she exhibited bleeding of such severity that she needed hospital
treatment. At the time of her visit to the emergency room the resident displayed blood
clotting times that were several times the average, a highly dangerous situation.

Petitioner defends against summary judgment by asserting that the undisputed facts
establish that Petitioner’s noncompliance in providing care to Resident 1 was at most an
isolated mistake by Petitioner’s staff, one that Petitioner self-corrected prior to it being
discovered by Texas state agency surveyors, and one that needed no further remediation
after Petitioner corrected the problem. P. Br. at 3-4. Accepting Petitioner’s
representations as true for purposes of deciding the motion for summary judgment, I find
that they provide no defense against the imposition of remedies. 42 C.F.R. § 483.430(b)

5

authorizes CMS to impose civil money penalties for noncompliance that predate a
survey. Indeed, such remedies are routine. Moreover, the fact that Petitioner self-
corrected its noncompliance does nothing to mitigate the findings of immediate jeopardy.
Put simply, Resident 1 was at likelihood for serious harm or worse throughout the month-
long period when Petitioner’s staff failed to perform the physician-ordered tests of her
blood clotting time. I do not find anything in the facts offered by Petitioner to suggest
that the immediate jeopardy determination was clearly erroneous.

Petitioner also makes a disparate treatment argument, asserting that CMS has not
imposed similar remedies in other instances where facts similar to those of this case
existed. P. Br. at 4. That argument fails as a matter of law. Regulations governing
remedies against skilled nursing facilities neither state nor do they imply that remedies
should be imposed based on a comparative standard. What is reasonable in each case
depends on the unique facts of that case and not what CMS may have determined to
impose in other cases. Beverly Health and Rehabilitation Serv. — Spring Hill, DAB No.
1696 (1999), aff'd, Beverly Health and Rehabilitation Serv. v. Thompson, 223 F. Supp.
2d 73 (D.D.C. 2002).

Petitioner asserts that there are disputed issues of fact in this case that preclude issuance
of summary judgment. P. Br. at 3. I disagree. The facts that I have stated in this
decision aren’t disputed and, indeed, Petitioner admits them. What Petitioner claims are
disputed facts are, rather, opinions offered by two witnesses whose testimony CMS
provides. See CMS Ex. 28; CMS Ex. 29. Those witnesses offer their opinions as to
ultimate conclusions such as whether Petitioner failed to comply substantially with
regulatory requirements, the scope and severity of Petitioner’s noncompliance, and the
reasonableness of the penalty amounts. These are all legal conclusions and I do not rely
on them because they would not be admissible were I to conduct a hearing, and because
they add nothing to the undisputed facts. By contrast, facts the declarants cite in CMS
Ex. 28 and CMS Ex. 29 are not disputed by Petitioner.

The per diem civil money penalties that CMS imposed to remediate Petitioner’s
immediate jeopardy level noncompliance are reasonable both in amount and in duration.
CMS imposed these penalties for each day that Petitioner’s staff failed to carry out
Resident 1’s physician’s order to monitor the resident’s blood clotting times. In other
words, the remedy applies only during the period of Petitioner’s immediate jeopardy
level noncompliance, and that is reasonable.

As for penalty amount, a penalty of $4,450 per day is modest considering the flagrant
failure of Petitioner’s staff to do what they were ordered to do and the likelihood of
serious harm or worse that Resident 1 experienced as a consequence. Civil money
penalties may be determined based on regulatory factors that include a facility’s
compliance history, the severity of its noncompliance, its culpability, and its financial
condition. 42 C.F.R. §§ 488.438(f)(1)-(4), 438.404 (incorporated by reference into 42
6

C.F.R. § 488.438(f)(3)). Here, the undisputed facts establish that Petitioner committed
very serious regulatory violations. Its staff completely ignored a physician’s order to
monitor a resident’s blood clotting time under conditions where grave harm to the
resident was a likely consequence of the staff’s neglect. The undisputed facts establish
also that Petitioner has an extensive history of noncompliance beginning in 2006. CMS
Ex. 7 at 1-5.

The penalties that CMS imposed in this case are modest in light of the severity of
Petitioner’s noncompliance and its poor compliance history. Under regulations that were
in effect as of the time of Petitioner’s noncompliance, CMS could have imposed civil
money penalties of as much as $10,000 per day. 42 C.F.R. § 488.438(a)(1)(i). The
penalties that CMS determined to impose here are in fact quite modest, comprising less
than one-half the maximum allowable daily penalty amount.

I find that the penalties that CMS imposed for non-immediate jeopardy level
noncompliance of $150 per day for each day of the period from July 29 through
September 16, 2015 are administratively final and not subject to review inasmuch as
Petitioner did not challenge the deficiency findings that form the basis for these penalties.

/s/
Steven T. Kessel
Administrative Law Judge


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

Center for Tobacco Products,
Complainant

v.
Sinjil, Inc.
d/b/a Sunoco,
Respondent

FDA Docket No. FDA-2017-R-0223
CRD Docket No. T-17-1631

Decision No. TB2454

Date: February 14, 2018

DECISION

Found:

1) Respondent violated 21 U.S.C. § 387f(d), specifically 21 C.F.R.
§ 1140.14(a)(1) and 21 C.F.R. § 1140.14(a)(2)(i) on February 13, 2016 as

charged in the Complaint; and

2) Respondent violated 21 U.S.C. § 387f(d), specifically 21 C.F.R.
§ 1140.14(a)(1)! and 21 C.F.R. § 1140.14(a)(2)(i) as charged in prior

complaints; and

3) Respondent committed six (6) repeated violations in a thirty-six (36)

month period as set forth hereinabove.

4) Respondent is hereby assessed a two (2) day No-Sale-Tobacco Order
(NTSO) and a civil money penalty in the amount of $7,500.

' As of August 8, 2016, the citations to certain tobacco regulations have changed. See

https://federalregister.gov/a/2016-10685.
Glossary:

ALJ administrative law judge”

CMP Civil Money Penalty

CTP/Complainant Center for Tobacco Products

FDCA Federal Food, Drug, and Cosmetic Act (21 U.S.C.A.
Chap. 9)

DN UPS Delivery Notification

FDA Food and Drug Administration

HHS Dept. of Health and Human Services

POS UPS Proof of Service

SOP Service of Process

Respondent Sinjil, Inc. d/b/a Sunoco

TCA The Family Smoking Prevention and Tobacco Control
Act, Pub. L. No. 111-31, 123 Stat. 1776 (2009)

TR Transcript

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(£)(5), 5 C.E.R. §§ 930.201 et
seq. and 21 C.F.R. Part 17.3
IL. PROCEDURAL BACKGROUND

The Center for Tobacco Products (CTP/Complainant) filed a Complaint dated
January 17, 2017 alleging that FDA documented six (6) repeated violations within a

thirty-six (36) month period.

2 See 5 C.F.R. § 930.204.

3 See also Butz v. Economou, 438 U.S. 478 at 513, 98 S.Ct. 2894, 57 L.Ed.2d 895
(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).

2
Sinjil, Inc. d/b/a Sunoco was served with process on January 18, 2017 by United
Parcel Service. Respondent filed an Answer dated February 15, 2017 in which it could
not confirm nor deny the current allegations and requested I dismiss the Complaint with
prejudice.

I conducted a hearing on September 13, 2017. Both parties filed post-hearing
briefs on December 8, 2017.

The matter is now ready for decision. 21 C.F.R. § 17.45.
Ill. | BURDEN OF PROOF

Complainant as the petitioning party has the burden of proof. 21 C.F.R. § 17.33.
IV. LAW

21 U.S.C. § 387£(d), specifically 21 C.F.R. § 1140.14(a)(1) and § 1140.14(a)(2)(i).
Vv. ISSUES

Did Respondent violate 21 U.S.C. § 387f(d), specifically § 1140.14(a)(1) and
§ 1140.14 (a)(2)() as alleged in the complaint?

Is a thirty (30) day NTSO appropriate?
VI. ALLEGATIONS

A. Complainant’s Recitation of Facts

Complainant alleged that Respondent owned an establishment, doing business
under the name Sunoco, located at 21435 West 8 Mile Road, Detroit, Michigan 48219.
Complainant further alleged during an inspection of Sunoco, conducted on February 13,
2016, an FDA-commissioned inspector documented the following violations:

a. Selling tobacco products to a minor, in violation of 21 C.F.R.

3
§ 1140.14(a)(1). Specifically, a person younger than 18 years of age was
able to purchase a package of Newport Box 100s cigarettes on February 13,
2016 at approximately 12:37 PM.

b. Failing to verify the age of a person purchasing tobacco products by means
of photographic identification in 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 on February 13, 2016 at
approximately 12:37 PM.

B. Respondent’s Recitation of Facts

In its Answer and subsequent filings, Respondent could not confirm nor deny the
allegations listed in the Complaint. Respondent argued that it did not receive proper
service of the February 13, 2016 Notice of Compliance Check Inspection. Respondent
also argued that Complainant did not demonstrate that the cigarettes in question were
held in interstate commerce. Finally, Respondent argued that the imposition of an NTSO
is reserved for the “most egregious” offenders. As such, Respondent asked for the
Complaint to be dismissed or a lesser sanction be imposed.

VII. PRIOR VIOLATIONS
On June 10, 2014, CTP initiated its first Civil Money Penalty (CMP) action, CRD

Docket Number C-14-1217, FDA Docket Number FDA-2014-H-0719, against
Respondent# for three* (3) violations of 21 C.F.R. pt. 1140 within a twenty-four (24)
month period. CTP alleged Respondent sold cigarettes to a minor and failed to verify the
age of a person purchasing cigarettes by means of photographic identification containing
the bearer’s date of birth on March 9, 2013 and November 2, 2013.

The first CMP action concluded with an Initial Decision and Default Judgment
entered by an Administrative Law Judge, finding Respondent liable for the alleged
violations.®

On April 6, 2015, CTP initiated a second CMP action, CRD Docket Number C-
15-1875, FDA Docket Number FDA-2015-H-1044, against Respondent for five (5)
violations of 21 C.F.R. pt. 1140 within a thirty-six (36) month period. CTP alleged
Respondent sold cigarettes to a minor and failed to verify the age of a person purchasing
cigarettes by means of photographic identification containing the bearer’s date of birth on
December 5, 2014.

The second CMP action concluded when Respondent “admitted all the allegations
in the Complaint and paid the agreed upon penalty.” Further, “Respondent expressly

waived its right to contest such violations in subsequent actions.”

4 Tn the June 10, 2014 action, Respondent was identified as Raed Iwais / Rafat Iwies d/b/a
Sunoco. CTP alleged that licensing evidence showed that Sinjil, Inc. owns the
establishment and does business as Sunoco. Respondent has not contested this issue.

5 Two original violations occurred on March 9, 2013 and two repeated violations on
November 2, 2013. In accordance with customary practice, CTP counted the violations
at the initial inspection as a single violation, and all repeated violations as separate
individual violations.

® Respondent subsequently paid the civil money penalty and admitted the allegations in
the June 2014 CMP Complaint occurred. CTP Ex. 4.

5
I find and conclude that Respondent committed five (5) violations of 21 U.S.C.
§ 331, specifically two (2) original violations,’ two (2) repeated violations of 21 C.F.R.
§ 1140.14(a)(1) and two (2) repeated violations of 21 C.F.R. § 1140.14(a)(2)(i) based on
the conduct as set forth in the prior complaint.
VII. 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

7 The original violations are not included in the counting for the current action.

6
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 (March 19, 2010), codified at
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 civil money penalty
from “any person who violates a requirement of this chapter which relates to tobacco
products.” 21 U.S.C. § 333(f)(9)(A) (2012). Penalties are set by 21 U.S.C. § 333 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 civil money penalty sought. This policy is set

7
forth in detail, with examples to illustrate, at U.S. Food & Drug Admin., Guidance for
Industry and FDA Staff, Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco
Retailers, Responses to Frequently Asked Questions (Revised) (2015), available at
http://www.fda. gov/downloads/TobaccoProducts/Labeling/RulesRegulations Guidance/U
CM447310.pdf [hereinafter Guidance for Industry], at 13-15. 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) and (b)(1), this will
count as two separate violations for purposes of computing the civil money penalty,
unless it is the first time violations were observed at that particular establishment. This
policy of counting violations has been determined by the HHS Departmental Appeals
Board to be consistent with the language of the FDCA and its implementing regulations,
see CTP v. Orton Motor Company, Departmental Appeals Board Decision number 2717
of June 30, 2016.

NTSOs are authorized at 21 U.S.C. § 333(f)(8). The section allows for the
imposition of an NTSO against a person who has committed “repeated violations” of
restrictions on the sale of tobacco products. The term “repeated violations” is defined to
mean “at least 5 violations of particular requirements over a 36-month period at a
particular retail outlet . . . .” See FDA Civil Money Penalties and No-Tobacco-Sale
Orders For Tobacco Retailers: Guidance for Industry (December 2016) at 3,5-6,
available at

https://www.fda.gov/TobaccoProducts/Labeling/RulesRegulationsGuidance/ucm447308.

htm. The Act also provides that “[p]rior to the entry of a no-sale order under this

8
paragraph, a person shall be entitled to a hearing... .” 21 U.S.C. § 333(f)(8).

CTP developed policy guidelines that establish maximum NTSO durations. For a
first NTSO, CTP recommends a maximum duration of 30 calendar days. See
Determination of the Period Covered by a No-Tobacco-Sale Order and Compliance with
an Order: Guidance for Tobacco Retailers (August 2015) at 4, available at

http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/U

CM460155.pdf.

VIII. HEARING

A hearing was held on September 13, 2017 by telephone as set forth in my August
14, 2017 Order Scheduling Telephone Hearing.

Samantha Hong, Esquire, appeared on behalf of Complainant.

Sam M. Fakih, Esquire, appeared on behalf of Respondent.

Witness Justin Bishop testified on behalf of Complainant.

Witness Rafat Iwies testified on behalf of Respondent.
IX. SUMMARY OF TESTIMONY AND EVIDENCE

A. Complainant’s case

Complainant submitted evidence and testimony in the form of written declarations
and photographs. Complainant offered CTP Exhibits | through 23, inclusive.
Respondent did not object to the exhibits. I admit Complainant’s Exhibits | through 23,
inclusive.

i. Inspector Justin Bishop
Witness Justin Bishop, the FDA-commissioned inspector who conducted the

9
inspection of Respondent’s establishment on February 13, 2016, testified on behalf of
Complainant. Complainant provided Inspector Bishop’s direct testimony as CTP Ex. 21
in the form of a written declaration.

Inspector Bishop testified that on February 13, 2016, at approximately 12:37 PM,
he and a minor conducted the follow-up compliance inspection at Respondent’s
establishment Sunoco, located at 21435 West 8 Mile Road, Detroit, Michigan 48219.
Before the inspection, Inspector Bishop ensured the minor had photographic
identification (ID) and that the minor did not have tobacco products. CTP Ex. 21 at 2-3.

According to his testimony, Inspector Bishop accompanied the minor into
Respondent’s establishment and took a position where he had an unobstructed view of
the sales counter and the minor. /d. at 3. Inspector Bishop observed the minor purchase
a package of cigarettes directly from a store employee. /d. The Inspector also observed
that the minor did not present any identification to the employee before the transaction.
Id.

After purchasing the cigarettes, the minor exited the establishment and the
Inspector followed shortly after. /d. Both returned to the vehicle where upon entering,
the minor handed Inspector Bishop a package of Newport Box 100s cigarettes. Id.
Inspector Bishop processed the evidence according to procedure and completed a
narrative report soon after. Id.

On cross-examination, Inspector Bishop testified that his written declaration was
executed on May 12, 2017, approximately thirteen months after the February 13, 2016

inspection. Tr. at 9. He also testified that his written declaration is based upon the

10
narrative report generated on the date of the inspection, along with some assistance from
CTP. Id. at 9-10. Finally, Inspector Bishop testified that he had no knowledge as to
whether the tobacco products in question were in interstate commerce at any point in
time. /d. at 10-11.

B. Respondent’s case

Respondent submitted nine exhibits marked as Respondent’s Exhibits 1 through 9.
CTP did not object to any of Respondent’s exhibits. | admit Respondent’s Exhibits 1
through 9, inclusive.

It is Respondent’s alleged position that it is unable to confirm or deny that its
employee sold tobacco to a minor or failed to verify the identification and age of the
purchaser because it did not receive proper service of the February 13, 2016 Notice of
Compliance Check Inspection. Respondent’s argument was unrebutted by Complainant.
Respondent further argued that an NTSO is reserved only for the most egregious
offenders, which it is not. Finally, Respondent argued, in its post-hearing brief, that
Complainant offered no evidence that the tobacco products were in interstate commerce
at any point in time.

i. Mr. Rafata Iwies

Mr. Rafata Iwies, Respondent’s owner, testified on behalf of Respondent. Mr.
Iwies testified that he has owned Sunoco since it was incorporated. Resp. Ex. at 1. He
testified that he has informed all employees, by means of written Employee Agreements,
that they must card all individuals who attempt to purchase tobacco. Jd. at 2. In addition,

he testified that numerous placards and signs are placed throughout the establishment

11
indicating that minors are not to attempt to purchase tobacco products. Id.

Mr. Iwies also testified that he has installed numerous cameras throughout the
location that record individuals who visit and make purchases. Jd. He testified that the
cameras record 24 hours a day, but it will record over previously recorded material once
capacity is reached. Id.

Mr. Iwies further testified that notice of the violations was not delivered for
thirteen days after the alleged violations and was signed by an individual named “ELI.”
Id.; Resp. Pre-Hearing Br. at 4; CTP Ex. 13. ELI was not the owner of the business nor
resident agent of Respondent, and no one named Eli had worked at that establishment in
the past three years. /d.; Tr. 15-17. Mr. Iwies testified that due to the fact that notice was
not properly served, it was unable to preserve the videotapes. Jd. Again, Respondent’s
testimony was unrebutted by Complainant.

C. Credibility determinations

I find and conclude testimony and evidence by both parties was credible.

X. RULING ON ADMISSIBILITY OF EVIDENCE

Complainant offered and I received into evidence Exhibits 1 through 23, inclusive.
Respondent offered and I received into evidence Exhibits | through 9, inclusive. There
were no objections to the exhibits.

Iam to rule on the admissibility of evidence in these proceedings. 21 C.F.R.

§ 17.39(a). While I am not bound by the Federal Rules of Evidence, I may apply the
Rules when appropriate. 21 C.F.R. § 17.39(b). Iam only required to exclude evidence
that is not relevant or material to the issues before me. 21 C.F.R. § 17.39(c). Imay

12
however exclude relevant evidence if I determine that its probative value is substantially
outweighed by the danger of unfair prejudice, confusion of the issues, or by
considerations of undue delay or needless presentation of cumulative evidence. 21
C.F.R. § 17.39(d).

I find that the evidence submitted by Complainant and Respondent is credible and
relevant.
XI. ANALYSIS OF EVIDENCE AND TESTIMONY

A. Complainant’s case

Complainant offered and I received into evidence Exhibits 1 through 23, inclusive.

Pursuant to 21 C.F.R. 17.33(b), in order to prevail, Complainant must prove
Respondent’s liability and appropriateness of the penalty under the applicable statute by a
preponderance of the evidence.

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

B. Respondent’s case

Pursuant to 21 C.F.R. § 17.33(c), Respondent must prove any affirmative defenses
and any mitigating factors by a preponderance of the evidence.

It is Respondent’s position that it is unable to confirm or deny that its employee
sold tobacco to a minor or failed to verify the identification and age of the purchaser
because Complainant did not properly serve the February 13, 2016 Notice of Compliance

Check Inspection. Respondent also argued Complainant offered no evidence that the

13
tobacco products were in interstate commerce at any point in time. Respondent further

argued that an NTSO is reserved only for the most egregious offenders, which it is not.

C. Analysis

a. [find and conclude that Complainant has shown by a preponderance of

the evidence that Respondent violated 21 C.F.R. § 1140.14(a)(1) when

it impermissibly sold cigarettes to a minor on February 13, 2016 at

12:37 PM.

Inspector Bishop testified that on February 13, 2016, at approximately 12:37 PM,
he and a minor conducted the follow-up compliance inspection at Respondent’s
establishment Sunoco, located at 21435 West 8 Mile Road, Detroit, Michigan 48219.
Before the inspection, Inspector Bishop ensured the minor had photographic
identification (ID) and that the minor did not have tobacco products. CTP Ex. 21 at 2-3.

According to his testimony, Inspector Bishop accompanied the minor into
Respondent’s establishment and took a position where he had an unobstructed view of
the sales counter and the minor. /d. at 3. Inspector Bishop observed the minor purchase
a package of cigarettes directly from a store employee. Id.

After purchasing the cigarettes, the minor exited the establishment and the
Inspector followed shortly after. /d. Both returned to the vehicle where upon entering,
the minor handed Inspector Bishop a package of Newport Box 100s cigarettes. Id.

Inspector Bishop processed the evidence according to procedure and completed a

14
narrative report soon after. Jd.

I find Inspector Bishop’s testimony about the February 13, 2016 inspection
credible and unbiased. | find that, in conjunction with the corroborating documentary
evidence (e.g. the report) and the physical evidence (e.g. the photographs of the Newport
Box 100s cigarettes purchased on that date), Complainant has satisfied its burden of
proving that Respondent violated § 1140.14(a)(1) on February 13, 2016 at 12:37 PM bya
preponderance of the evidence.

b. Lfind and conclude that Complainant has shown by a preponderance of

the evidence that Respondent violated 21 C.F.R. § 1140.14(a)(2)(i)

when, on February 13, 2016 at 12:37 PM, it failed to verify, by means

of a photo identification containing the purchaser’s date of birth, that no

cigarette purchaser is younger than 18 years of age.

Inspector Bishop testified that on February 13, 2016, at approximately 12:37 PM,
he and a minor conducted the follow-up compliance inspection at Respondent’s
establishment Sunoco, located at 21435 West 8 Mile Road, Detroit, Michigan 48219.
Before the inspection, Inspector Bishop ensured the minor had photographic
identification (ID) and that the minor did not have tobacco products. CTP Ex. 21 at 2-3.

According to his testimony, Inspector Bishop accompanied the minor into
Respondent’s establishment and took a position where he had an unobstructed view of
the sales counter and the minor. /d. at 3. Inspector Bishop observed the minor purchase
a package of cigarettes directly from a store employee. Jd. The Inspector also observed

that the minor did not present any identification to the employee before the transaction.

15
Id.

After purchasing the cigarettes, the minor exited the establishment and the
Inspector followed shortly after. /d. Both returned to the vehicle where upon entering,
the minor handed Inspector Bishop a package of Newport Box 100s cigarettes. Id.
Inspector Bishop processed the evidence according to procedure and completed a
narrative report soon after. Jd.

I find Inspector Bishop’s testimony about the February 13, 2016 inspection
credible and unbiased. | find that, in conjunction with the corroborating documentary
evidence (e.g. the report) and the physical evidence (e.g. the photographs of the Newport
Box 100s cigarettes purchased on that date), Complainant has satisfied its burden of
proving that Respondent violated § 1140.14(a)(2)(i) on February 13, 2016 at 12:37 PM
by a preponderance of the evidence.

c. I find and conclude that Respondent committed six (6) repeated

violations in a thirty-six (36) month period

I find and conclude that the evidentiary facts, by a preponderance of the evidence
standard, support a finding Respondent violated 21 C.F.R. §§ 1140.14(a)(1) and
1140.14(a)(2)(i) on February 13, 2016 in that Respondent violated the requirement that
retailers not sell cigarettes to minors and 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.

The conduct set forth above on February 13, 2016 counts as two (2) additional

repeated violations under FDA policy for purposes of computing penalty in this matter.

16
See Guidance for Industry, at 13-15. Respondent was previously found liable for two (2),
and admitted to two (2), violations of FDA policy in the relevant timeframe.

Accordingly, I find and conclude that Respondent is liable for six (6) repeated
violations of FDA policy in a thirty-six (36) month period.

d. Respondent’s offered no affirmative proof to rebut the evidence of

noncompliance presented by Complainant.

Respondent argues that it is unable to confirm or deny that its employee sold
tobacco to a minor under the age of 18 on February 13, 2016 because it did not receive
the Notice of Compliance Check Inspection. Specifically, Respondent argued that the
Notice of Compliance Check was signed for by an individual by the name of “ELI.”
Respondent testified that ELI is not the owner of the business nor the registered agent and
that Respondent does not, nor has it ever, employed anyone named ELI.

Section 17.7(a) provides that service of a complaint may be made in one of two
ways: either by certified or registered mail or similar mail delivery service (i.e., one
which provides a return receipt record reflecting receipt), or by delivery in person. 21
C.F.R. §§ 17.1(a)(1) and (a)(2). Delivery in person must be to either an individual
respondent or to an “officer or managing or general agent in the case of a corporation or
unincorporated business.” 21 C.F.R. §§ 17.7(a)(2)(i) and (a)(2)(ii). If the complaint is
served by certified or registered mail or similar mail delivery service, proof of service,
stating the name and address of the person on whom the complaint was served, and the
manner and date of service must be provided. 21 C.F.R. § 17.7(b). Nothing in the

regulations require me to assume that a UPS Delivery Notification proves that the parcel

17
delivered to Respondent contained the complaint and not any other printed or non-printed
matter handled by the carrier or nothing at all. See T and M United Corporation d/b/a BP
Shop, DAB No. 2705 (2016).

Respondent may, in its response or answer to the complaint, raise a challenge to
jurisdiction or defective service. However, if Respondent files a response or answer that
does not specifically challenge jurisdiction, then Respondent is considered served and
subject to the jurisdiction of this Court.

While Respondent’s argument about the ineffective service of the Notice of
Compliance Check may be considered in the mitigation of penalty, it has no merit in
determining liability. In its Answer, Respondent stated it is “unable to confirm or deny”
the allegations of February 13, 2016 and points to the lack of notice as a reason it is
unable to confirm or deny the allegations. The regulations provide that in its answer,
Respondent “[s]hall admit or deny each of the allegations of liability made in the
complaint; allegations not specifically denied in the answer are deemed admitted.” 21
C.F.R. § 17.9(b)(1) (emphasis added). Therefore, because Respondent did not expressly
deny the allegations in the complaint, it is deemed admitted.

Respondent, in the hearing and in its post-hearing brief, argued that Complainant
did not establish that the tobacco products were in interstate commerce at any point in
time.

I find this argument to be without merit. While Respondent is correct that
Complainant seeks relief under 21 U.S.C. § 333(f)(8), there is nothing in that statute that

requires Complainant to show that the tobacco products were held in interstate

18
commerce.

The Act authorizes FDA to assess civil money penalties under 21 U.S.C.
§333(f)(9) for any violations of the Act related to tobacco products. 21 U.S.C. § 331(k),
in turn, prohibits doing an act that causes the misbranding of tobacco products while they
are held for sale after shipment in interstate commerce; thus, Complainant must prove
that the tobacco products traveled in interstate commerce in its civil money penalty cases.

However, Complainant is not seeking a civil money penalty. Rather, Complainant
is asking for an NTSO, authorized by 21 U.S.C. § 333(£)(8). In relevant part, 21 U.S.C.
§333(£)(8) states “[i]f the Secretary finds that a person has committed repeated violations
of restrictions promulgated under section 387f(d) of this title at a particular retail outlet
then the Secretary may impose a no-tobacco-sale order on that person prohibiting the sale
of tobacco products in that outlet.” Section 387f(d) authorizes the FDA to promulgate
regulations on the sale and distribution of tobacco products. 75 Fed. Reg. 13,225 (March
19, 2010), codified at 21 C.F.R. Part 1140 (2015); 21 U.S.C. § 387£(d)(1) (2012).
Nothing in 21 U.S.C. § 333(f)(8), 21 U.S.C. § 387£(d), or the applicable regulations
requires Complainant to demonstrate that the tobacco products were held in interstate
commerce. Accordingly, Complainant need only to show that there have been five or
more repeated violations of regulations found at 21 C.F.R. § 1140.

Therefore, so long as Respondent is found in repeated violation of the regulations
found at 21 C.F.R. 1140, an NTSO may be imposed.
XII. LIABILITY

When a retailer such as Respondent is found to have committed repeated

19
violations of the regulations promulgated under section 387f(d), a no-tobacco-sale-order
may be imposed. 21 U.S.C. § 333(£)(8).

I find and conclude that the evidentiary facts, by a preponderance of the evidence
standard, support a finding Respondent violated 21 C.F.R. § 1140.14(a)(1), in that a
person younger than 18 years of age was able to purchase a package of Newport Box
100s cigarettes on February 13, 2016, at approximately 12:37 PM as set forth in the
complaint.

I find and conclude that the evidentiary facts, by a preponderance of the evidence
standard, support a finding Respondent violated 21 C.F.R. § 1140.14(a)(2)(i) on that
same date in that 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.

The conduct set forth above on February 13, 2016 counts as two (2) additional
repeated violations under FDA policy for purposes of computing penalty in this matter.
See Guidance for Industry, at 13-15. Respondent was previously found liable for two (2),
and admitted to two (2), violations of FDA policy in the relevant timeframe.

Accordingly, I find and conclude that Respondent is liable for six (6) repeated
violations of FDA policy in a thirty-six (36) month period.

XIV. PENALTY

There being liability under the relevant statute, I must now determine the

appropriate penalty to impose. NTSOs are authorized at 21 U.S.C. § 333(f)(8). The

section allows for the imposition of an NTSO against a person who has committed

20
“repeated violations” of restrictions on the sale of tobacco products, promulgated under
section 387f(d). 21 U.S.C. § 333(f)(8). The term “repeated violations” is defined to
mean “at least 5 violations of particular requirements over a 36-month period at a
particular retail outlet . . . .” See FDA Civil Money Penalties and No-Tobacco-Sale
Orders For Tobacco Retailers: Guidance for Industry (December 2016) at 3, 5-6,
available at

https://www.fda.gov/TobaccoProducts/Labeling/RulesRegulationsGuidance/ucm447308.

htm.

In its Complaint, Complainant sought a thirty (30) day NTSO against Respondent
for six (6) repeated violations of the Act and its implementing regulations within a thirty-
six (36) month period. In its Post-Hearing Brief, Complainant continued to assert that a
thirty (30) day NTSO is appropriate. Complainant’s Post Hearing Br. at 5.

Respondent objects to the thirty (30) day NTSO. Respondent requests that the
NTSO be denied, or that I consider an NTSO of minimal duration in addition to an
appropriate CMP. Resp. Post Hearing Br. at 3.

As discussed, I found that Complainant met its burden by a preponderance of the
evidence and concluded that Respondent committed six (6) repeated violations of the Act
and its implementing regulations within a thirty-six (36) month period. When
determining the appropriate 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

21
U.S.C. § 333(f)(5)(B).

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

I have found that Respondent specifically committed three (3) repeated violations
of selling tobacco products to minors and three (3) repeated violations for failure to
verify, by means of photo identification containing a purchaser’s date of birth, that no
tobacco product purchasers are younger than 18 years of age, totaling six (6) repeated
violations of the tobacco violations. The repeated inability of Respondent to comply with
federal tobacco regulations is serious in nature and the penalty should be set accordingly.

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

Respondent has presented evidence regarding the effect of an NTSO on its ability
to do business. Respondent has argued that legitimate tobacco sales account for a large
majority of its profits. Respondent has presented evidence of its tax returns, indicating its
annual gross profits. However, none of the data presented by Respondent has shown
what portions of its profits are derived from the sale of tobacco products.

Cc. History of Prior Violations

The current action is the third brought against Respondent for violations of the Act
and its implementing regulations. On June 10, 2014, Complainant initiated the first civil
money penalty action, CRD Docket Number C-14-1217, FDA Docket Number FDA-
2014-H-0719, against Respondent. In the first action, Respondent violated the
prohibition against selling tobacco products to persons younger than 18 years of age, 21
C.F.R. § 1140.14(a)(1), and failed to verify the age of a person purchasing tobacco
products by means of photographic identification, 21 C.F.R. § 1140.14(a)(2)(i). The first

22
action concluded with an Initial Decision and Default Judgment finding Respondent
liable for the violations. Complaint § 8.

On April 6, 2015, Complainant initiated its second civil money penalty action
against Respondent, CRD Docket Number C-15-1875, FDA Docket Number FDA-2015-
H-1044, against Respondent. In the second action, Respondent again violated the
prohibition against selling tobacco products to persons younger than 18 years of age, 21
C.F.R. § 1140.14(a)(1), and failed to verify the age of a person purchasing tobacco
products by means of photographic identification, 21 C.F.R. § 1140.14(a)(2)(i).
Complaint § 9. Respondent settled the prior complaint with Complainant for $2,500. R.
Pre-Hearing Br. at 3.

Respondent’s history of noncompliance demonstrates its continued inability to
comply with the federal tobacco regulations.

D. Degree of Culpability

Respondent has been found liable for two (2), and admitted to two (2), repeated
violations of the Act. In addition, I have found Respondent committed the most recent
violations in the current complaint. Therefore, I hold it fully culpable for six (6) repeated
violations of the Act and its implementing regulations.

E. Additional Mitigating Factors

Mitigation is an affirmative defense for which Respondent bears the burden of
proof (21 C.F.R. § 17.33(c)). Respondent has provided unrebutted evidence of a new
VeriFone system installed on its register that will help ensure accuracy in checking
identification for the sale of tobacco products. Resp. Post-Hearing Br. at 2-3.

23
Specifically, the VeriFone system, installed in July 2016, requires the store clerk to enter
the purchaser’s date of birth or scan the purchaser’s license before completing a tobacco
product sale. Id.

In addition, Respondent presented unrebutted testimony it is unable to confirm or
deny that its employee sold tobacco to a minor under the age of 18 on February 13, 2016
because it did not receive the Notice of Compliance Check Inspection in a timely manner.
Specifically, Respondent argued that the Notice of Compliance Check was signed for by
an individual by the name of “ELI.” Respondent’s unrebutted testimony that EL] is not

the owner of the business nor the registered agent and that Respondent does not, nor has

it ever, employed anyone named ELI. Respondent also took issue that the Notice of
Compliance Check Inspection was not delivered for thirteen (13) days. Specifically,
Respondent argued that the thirteen (13) days substantially prejudiced Respondent’s
ability to defend the allegations because it was unable to preserve the videotapes from its
surveillance system. Complainant provided no evidence that ELI is related to
Respondent in any way.

In this instance, I find and conclude Complainant’s ineffective service of process
prejudiced Respondent’s ability to defend the claim. Had an objection to service of
process been raised as a preliminary objection to service and jurisdiction, we may have
reached a different conclusion. Respondent failed to raise the matter preliminarily and by
filing its answer waived objection to service of process and jurisdiction.

F. Penalty

Based on the foregoing reasoning, I conclude that a two (2) day NTSO and a

24
$7,500 civil money penalty is appropriate under 21 U.S.C. § 333(f)(8). I find a two (2)
day NTSO appropriate as Respondent was substantially prejudiced by not receiving
proper service of the February 13, 2016 Notice of Compliance Check Inspection.
Furthermore, I find that the CMP is appropriate as it is the amount of a CMP for six
violations of the regulations less the cost of installing the VeriFone system.®
XV. CONCLUSION

Respondent committed six (6) repeated violations in a thirty-six (36) month period
as set forth in the Complaint.

Respondent is liable for a two (2) day NTSO and a civil money penalty of $7,500.
See 21 C.F.R. § 17.2.

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

a. I find Respondent has been served with process herein and is subject to
this forum.

b. I find and conclude that the evidentiary facts, by a preponderance of the
evidence standard, support a finding Respondent violated 21 U.S.C.
§ 387f(d), specifically 21 C.F.R. §§ 1140.14(a)(1) and (a)(2)(i) on
February 13, 2016, in that a person younger than 18 years of age was able
to purchase a package of Newport Box 100s cigarettes as set forth in the
complaint.

c. I find and conclude that the evidentiary facts, by a preponderance of the
evidence standard, support a finding Respondent violated 21 U.S.C.
§ 387f(d), specifically 21 C.F.R. §§ 1140.14(a)(1) and (a)(2)(i) on March
9, 2013, November 2, 2013, and December 5, 2014, as stipulated in the
settlement agreement of the most recent action. CRD Docket Number C-
15-1875, FDA Docket Number FDA-2015-H-1044.

d. I find and conclude Respondent committed six (6) repeated violations of
the regulations within a thirty-six (36) month period.

8 Respondent presented evidence that it spent $3,500 to purchase and install the VeriFone
system.

25
e. I find and conclude Respondent was prejudiced in its ability to defend
against this claim by reason of Complainant’s ineffective service of
process, but waived objection to service and jurisdiction by filing an
answer which failed to raise the objections.

f. Lassess a two (2) day No-Tobacco-Sale-Order and a monetary penalty in
the amount of $7,500.

/s/
Richard C. Goodwin
U.S. Administrative Law Judge

26


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Center for Tobacco Products,
(FDA No. FDA-2017-R-0626)
Complainant
v.
Zoom Mini Mart, Inc.,
Respondent.
Docket No. T-17-2001
Decision No. TB2441
Date: February 14, 2018

INITIAL DECISION
Thereby impose a No-Tobacco-Sale Order against Respondent, Zoom Mini Mart, Inc.,
for a 30 consecutive calendar day period, for six repeated violations of federal tobacco
regulations over a period of 36 months.

I. Background

The Center for Tobacco Products (“CTP”) seeks to impose a No-Tobacco-Sale Order
(“NTSO”), for a period of 30 calendar days, against Respondent, Zoom Mini Mart, Inc.,
located at 14545 Plymouth Road, Detroit, Michigan 48227, for six repeated violations of
the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, 21 C.F.R. pt. 1140, within a thirty-six (36) month period.
CTP’s Complaint alleges that Respondent’s staff impermissibly sold cigarettes or
smokeless tobacco to minors and failed to verify that the cigarette or smokeless tobacco
purchasers were of sufficient age, thereby violating the Federal Food, Drug, and

Cosmetic Act (the Act), 21 U.S.C. § 301 et seq., and its implementing regulations,
Cigarettes and Smokeless Tobacco, 21 C.F.R. pt. 1140.
The complaint likewise alleges that Zoom Mini Mart, Inc. previously admitted to
violations of regulations found at 21 C.F.R. pt. 1140. Specifically, CTP alleges that
Respondent committed: (1) One original violation and three repeated violations of sale of
cigarettes or smokeless tobacco to a minor, in violation of 21 C.F.R. § 1140.14(a)(1),! on
December 31, 2013, July 9, 2014, April 18, 2015, and March 10, 2016; and (2) One
original violation and three repeated violations of failure to verify the age of a person
purchasing cigarettes or smokeless tobacco 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 those
same dates. See Complaint JJ 1,6, 9-12; see also Informal Brief of Complainant at 1-2.
Therefore, CTP seeks the imposition of an NTSO against Respondent for a period of 30
consecutive calendar days.

Il. Procedural History

CTP began this matter by serving an administrative complaint, seeking an NTSO for a
period of 30 calendar days, on Respondent, at 14545 Plymouth Road, Detroit, Michigan
48227, and by filing a copy of the complaint with the Food and Drug Administration’s
(FDA) Division of Dockets Management.

On March 2, 2017, Respondent, through counsel, timely filed a Response to
Administrative Complaint for No-Tobacco-Sale-Order (“Answer”). On March 7, 2017, I
issued an Acknowledgment and Pre-Hearing Order (“APHO”) that set out the deadlines?
for the parties’ submissions in this case and issued informal briefs for the parties to
complete and submit.

On June 13, 2017, CTP timely filed its pre-hearing exchange. CTP’s pre-hearing
exchange included an informal brief (“Informal Brief of Complainant”), a list of
proposed witnesses and exhibits, and twenty-one (21) numbered exhibits. CTP’s exhibits
included the declaration of one witness. On July 3, 2017, Respondent filed its pre-
hearing exchange. Respondent’s pre-hearing exchange included an informal brief
(“Respondent’s Informal Brief”), and a list of proposed witnesses and exhibits.

However, Respondent failed to upload any sworn witness statements or any of the
proposed exhibits.

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

2? On May 24, 2017, the CTP filed a Joint Motion to Extend Deadlines. On May 26,
2017, I issued an order extending the APHO deadlines as requested in the Joint Motion to
Extend Deadlines.

Pre-Hearing Conference

On August 3, 2017, I held a pre-hearing conference in this case. I explained that the
purpose of a hearing was to admit the parties’ exhibits and to allow for the cross-
examination and re-direct of any witnesses who have provided sworn testimony in
exchanges. I noted that while Respondent filed a list of proposed witnesses and exhibits,
Respondent neither filed the direct written testimonies of the proposed witnesses nor
copies of the proposed exhibits. I informed the parties that Inspector Justin Bishop was
the only witness who could appear for cross-examination at the hearing as only CTP
included written direct testimony, under oath, by the exchange date. Respondent’s
Counsel stated that he had submitted copies of the proposed exhibits and witness
testimony, did not know why it was not in the file, and communicated his desire to file a
motion regarding the Respondent’s proposed witnesses and exhibits. Respondent’s
Counsel also communicated his desire to cross-examine CTP’s Inspector Justin Bishop.

On August 4, 2017, I issued an Order to Show Cause Why Respondent’s Witnesses and
Exhibits were not Submitted in Accordance with C.F.R. §§17.25 (a), 17.37(b) (“OSC”).
In the OSC, I allowed Respondent until August 14, 2017, “to show cause: (1) why copies
of proposed exhibits and written declarations of any proposed witness testimony were not
furnished, and (2) why the proposed exhibits that Respondent uploaded were not properly
marked, as provided in the March 3, 2017 Order.” I also stated that “Respondent must
demonstrate that extraordinary circumstances prevented compliance with the March 3,
2017 Order and 21 C.F.R. §§ 17.25(a), 17.37(b).”> Finally, I allowed CTP until August
29, 2017, to respond to Respondent’s motion.

Respondent’s Motion

On August 14, 2017, Respondent filed a Motion for Leave to Call Witnesses and Have
Exhibits Admitted at the Hearing (“Respondent’s Motion”). Respondent attached twelve
(12) proposed exhibits, including a Sworn Statement of Nabil Hizam, with its motion.4
On August 29, 2017, CTP filed an Opposition to Respondent’s Motion for Leave to Call
Witnesses and Have Exhibits Admitted at the Hearing. After a careful review of the
parties’ submissions, I found that Respondent’s Motion was not responsive to my Order
to Show Cause because it failed to demonstrate that extraordinary circumstances
prevented Respondent from complying with the APHO provisions §§ 6, 9-10, and 21
CFR. §§ 17.25(a), 17.37(b). Accordingly, on September 8, 2017, I issued an Order
Denying Respondent’s Motion for Leave to Call Witnesses and Have Exhibits Admitted
at the Hearing and Scheduling In-Person Telephone Hearing (“September 8, 2017

3 The August 4, 2017 OSC refers to the March 3, 2017 Order through inadvertent
typographical error. Based on the language in the August 4, 2017 OSC the document
referred to is clearly the March 7, 2017 APHO.

4 Respondent failed to properly mark all the proposed exhibits. See APHO 9 6.

Order”). In that same order, I noted that Inspector Justin Bishop was eligible to appear at
the hearing and Mr. Nabil Hazim was not eligible to appear at the hearing.

In Person Telephone Hearing

On November 7, 2017, I held a hearing in this case. During the hearing, I admitted
CTP’s exhibits numbered 1 through 21. See Hearing Transcript at 8. Respondent’s
Counsel cross-examined Inspector Bishop. See Hearing Transcript at 9-14. CTP’s
counsel declined to conduct a redirect examination of Inspector Bishop. See Hearing
Transcript at 14. On November 29, 2017, I issued an Order informing the parties that the
Court had received the transcript of the hearing, and set the deadline for the parties’ post-
hearing brief submissions as December 28, 2017. CTP filed a post-hearing brief (“CTP’s
Post-hearing Brief”) and Respondent filed a post-hearing brief (“Respondent’s Post-
hearing Brief’). I now render my decision.

Ill. Issues

A. Whether Respondent Zoom Mini Mart, Inc. sold cigarettes or smokeless tobacco
to a minor, and failed to verify that the cigarette or smokeless tobacco purchaser
was of sufficient age, on March 10, 2016, in violation of 21 C.F.R.

§ 1140.14(a)(1) and 21 C.F.R. §1140.14(a)(2)q).
B. Whether the NTSO for a period of 30 calendar days is reasonable.

IV. Applicable Regulations and Guidelines

CTP determined to impose an NTSO 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 (C.F.R.). 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 Food and Drug Administration (FDA) and its
agency, CTP, may seek the imposition of remedies against any person who violates the
Act’s requirements as they relate to the sale of tobacco products. 21 U.S.C. § 333(f)(9).
The sale of cigarettes or smokeless tobacco to an individual who is under the age of 18
and the failure to verify the photographic identification of an individual who is not over
the age of 26 are violations of implementing regulations. 21 C.F.R. §§ 1140.14(a)(1),
(2).

The Act provides for civil money penalties (“CMPs”) and NTSOs. NTSOs are
authorized at 21 U.S.C. § 333(f)(8). The section allows for the imposition of an NTSO
against a person who has committed “repeated violations” of restrictions on the sale of
tobacco products. The term “repeated violations” is defined to mean “at least 5 violations
of particular requirements over a 36-month period at a particular retail outlet....” See
FDA Civil Money Penalties and No-Tobacco-Sale Orders For Tobacco Retailers:
Guidance for Industry (December 2016) at 3, 5-6, available at
https://www.fda.gov/TobaccoProducts/Labeling/RulesRegulationsGuidance/ucm447308.
htm. The Act also provides that “[p]rior to the entry of a no-sale order under this
paragraph, a person shall be entitled to a hearing... .” 21 U.S.C. § 333(f)(8).

The Act establishes the factors that must be considered in deciding on the length of an
NTSO, but it does not specify the NTSO duration:

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

21 U.S.C. § 333(f)(5)(B); see also Kat Party Store, Inc., d/b/a Mr. Grocer Liquor
Store, CRD No. T-16-1684, at 2 (2016).

CTP developed policy guidelines that establish maximum NTSO durations. For a first
NTSO, CTP recommends a maximum duration of 30 calendar days. See Determination
of the Period Covered by a No-Tobacco-Sale Order and Compliance with an Order:
Guidance for Tobacco Retailers (August 2015) at 4, available at
http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/U

CM460155.pdf.

I find that under 21 U.S.C. § 333(f)(8), I have the authority to impose an NTSO. While
the CTP guidance notes are not regulations and thus, are not binding, as a matter of law, I
consider them to be persuasive.

Vv. Analysis
A. Allegations, Parties’ Contentions, and Findings of Fact

CTP alleges that Respondent committed six repeated violations of the Act and its
implementing regulations over a 36-month period. See Complaint at § 1. CTP identified
Respondent’s original violations and Respondent’s repeated violations of those particular
regulations that occurred within a specified 36-month period after the original violations.
Id. § 1, note 1; see also id. § 1 (table).

CTP alleged that at approximately 6:13 p.m. on March 10, 2016, at Respondent’s
business establishment, 14545 Plymouth Road, Detroit, Michigan 48227, 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. Complaint § 6; see
Informal Brief of Complainant at 4. The inspector also documented that staff failed to
verify, by means of photographic identification containing a date of birth, that the
purchaser was 18 years of age or older. Id.

1. Parties’ Contentions and Evidence

Respondent denied the allegations at the outset, but now admits the allegations in its post-
hearing final brief. In its Answer, Respondent denied the current and previous
allegations stated in the Complaint as “untrue.” Answer {ff 1-4, 6, 9-12. Respondent
asserts that CTP is seeking an NTSO for violations pre-dating the adoption of the NTSO
sanction as a penalty. Id. § 12. Thus, Respondent denies that an NTSO is appropriate
“for the reason that the regulation providing for [an NTSO] was adopted after all prior
CMP violations.” Answer § 15. Respondent raised seven affirmative defenses in its
Answer. See Answer Affirmative Defenses §§ 1-7. First, Respondent challenged the
total number of alleged violations and asserted that CTP’s method of counting the
violations is contrary to the legislative intent of the Act and violates Respondent’s
substantive due process. Id. JJ 1-5. Then, Respondent reiterates that CTP is applying the
NTSO retroactively by including offenses that allegedly occurred prior to the adoption of
the regulation. Id. § 6. Finally, Respondent asserts that it was not obliged to check the
identification of the minor during the alleged improper sale because the minor was
accompanied by a person over the age of 26 years. Id. § 7.

Respondent, in subsequent briefs, appears to abandon some of the arguments and
defenses asserted in its Answer. See Respondent’s Informal Brief; Respondent’s Post-
Hearing Brief. Respondent denies that the March 10, 2016 sale to a minor and failure to
verify violations occurred because “an employee, who was subsequently dismissed . . .
maintains that the cigarettes were purchased at the directions of a male accompanying the
minor hired by CTP.” Respondent’s Informal Brief {J 3-4. Respondent asserts that an
NTSO is inappropriate because the violations were “‘a result of a renegade employee who
failed to do as he was trained.” Id. § 5. Respondent further asserts that its management
provides training to its staff, and posted signs “throughout the building stressing that
minors are not to buy tobacco.” Id. Respondent notes that a point of sales system
requires the clerk to ask for a birthdate before tobacco product sales. Id. Respondent
asserts that its establishment is one of three that are managed by Mr. Nabil Hizam, and
that the three gas stations participate in the City of Detroit Green Light Program, which
requires participants to invest in cameras that are monitored by the Detroit Police
Department. Id. Respondent further asserts that a video shows that within thirty minutes
of the current alleged violations, there was a similar attempt to purchase tobacco at
another store also managed by Mr. Hizam. Id. Respondent asserts that the other
undercover buy attempt was unsuccessful. Id. Respondent then concludes that CTP was
focused on this particular merchant and that the agent clearly drove “20 miles from one
store to the other in an attempt [to] harass the merchant.” Id.
CTP’s case against Respondent relies on the testimony of Inspector Bishop who
accompanied by a confidential state-contracted minor (“Minor 502”), conducted an
undercover buy portion of a follow-up compliance check inspection at Zoom Mini Mart,
Inc., on March 10, 2016. Informal Brief of Complainant at 4-5. As evidence to support
its current allegations, CTP provided a sworn declaration from Inspector Bishop. See
Bishop Declaration, CTP Ex. 21. Inspector Bishop is an FDA-commissioned officer with
the State of Michigan Department of Health and Human Services. Id. § 2. His duties
include conducting undercover inspections to determine whether retailers comply with
the age and photo identification requirements relating to the sale of tobacco. CTP Ex. 21
§§ 2-3. CTP also provided a copy of the Compliance Check Inspection Notice, CTP Ex.
18; Inspector Bishop’s Narrative Report of the March 10, 2016 undercover inspection,
Narrative Report, CTP Ex.17; the Tobacco Inspection Management System (“TIMS
Report”), CTP Ex. 16; and a redacted copy of the Minor 502’s identification (“ID”), CTP
Ex.5. Finally, Respondent cross-examined Inspector Bishop at the November 7, 2017
hearing. See Hearing Transcript at 9-14.

During the November 7, 2017 hearing, Respondent’s Counsel asked questions that were
outside the scope of Inspector Bishop’s declaration. For example, he asked about another
inspection that Inspector Bishop allegedly conducted before coming to Respondent’s
store.® See Hearing Transcript at 10-11. Respondent’s Counsel also questioned Inspector
Bishop about other attempts to purchase cigarettes at Respondent’s facility prior to March
10, 2016. See id. at 11-12. I sustained CTP’s objections to these questions on the
grounds that such evidence is irrelevant to the instant case. See id.

Finally, Respondent’s Counsel communicated his intent to make a record of some issues.
Id. at 14. Respondent’s Counsel informed the court that he had a witness present “who
would testify about mitigating factors related to the operation of the store and the
training.” Hearing Transcript at 15. He also informed the court that though he had
named the witness previously, he did obtain her sworn statement. Id. at 15. I ruled that
the proposed witness could not testify during the hearing as her sworn statement was not
submitted prior to the exchange date as required by the APHO. Id. Respondent’s
Counsel brought up my ruling, on his August 14, 2018 motion, denying him leave to have
the exhibits admitted at the hearing. Id. I reiterated that “they were not marked as
exhibits nor were they submitted to The Court marked as exhibits by the exchange date.”
Id. at 15-16. I informed Respondent’s Counsel that he may argue mitigating
circumstances in his post-hearing briefs pursuant to 21 C.F.R. § 17.34. Id. Ialso
clarified that he “may make reference to the case documents in the administrative record
although they are not exhibits.” Id.

5 The evidence discussed in this paragraph is not exhaustive.
® This is not an exhaustive list of the questions that Respondent’s Counsel asked.
Respondent in its post-hearing brief admits that the March 10, 2016 violations occurred.
See Respondent’s Post-Hearing Brief at 2. I find that Respondent’s main argument is that
an NTSO is inappropriate because the violations occurred because of a renegade
employee. See id. at 3.

CTP in its post-hearing brief answered Respondent’s argument about the other store
allegedly being inspected by this inspector on the same day and the sale being rejected.
Specifically, CTP contends that “the training and efforts of Respondent at the other
location, even if true and supported by admissible evidence, did not stop Respondent
from selling a tobacco product to a minor and failing to verify the purchaser’s age by
means of photographic identification on March 10, 2016, at the 14545 Plymouth Road
location.” CTP’s Post-hearing Brief at 3. CTP also asserts that the happenings at another
store are not relevant to the current alleged violations. See id.

2. Findings of Fact

I find that Inspector Bishop testified credibly about his observations during the March 10,
2016 inspection at which he observed Respondent selling tobacco products to Minor 502.
See Hearing Transcript at 12 -14; Bishop Declaration, CTP Ex. 21 §§ 7-11; see also
Narrative Report, CTP Ex. 17; TIMS Report CTP Ex. 16. During the cross-examination,
Respondent’s Counsel failed to rebut any of Inspector Bishops assertions regarding the
March 10, 2016 violations. As mentioned above, Respondent’s Counsel attempted to
elicit testimony about an alleged inspection that Inspector Bishop conducted at another
facility prior to the March 10, 2016 inspection:

Respondent’s Counsel: . . . Mr. Bishop, you arrived at the Zoom Mini Mart
at 6:13 p.m. on March 10, 2016; isn’t that right?

A. Correct.

Respondent’s Counsel: Immediately prior to this you were at a gas station
located at 11030 Morang in Detroit; isn’t that right?

CTP: I’m going to object, Your Honor, on the grounds that any inspections
unrelated to the establishment at issue in this case are irrelevant to the
issues in this case.

Respondent’s Counsel: Well, in response it is relevant because this is
another facility that’s managed by the same management. And the
evidence will show that attempt to purchase cigarettes were rejected. This
is what we’ve been arguing from the beginning that there have been
dramatic efforts made by the facility, indeed all of the three facilities
managed by my client. And instead of this being received it’s being
rejected and my client’s being silenced in an opportunity to provide
mitigating circumstances.

CTP: Your Honor ... again. I’m going to object to counsel’s testimony
and attempt to get testimony in this case which has been ordered it’s not
allowed to have. But reiterate my objection that this case is factually about
a sale of tobacco products at a facility located at 14545 Plymouth Road in
Detroit, Michigan. And any sales or non-sales by respondent at any other
locations are irrelevant to whether the sale occurred as alleged in the
complaint.

THE COURT: Okay. And I sustain that objection at this time.
Respondent’s Counsel: Now, Mr. Bishop, you made other attempts to
purchase cigarettes at this facility prior to March 10, 2016; isn’t that true?
CTP: Excuse me. I’m sorry. I have to object again because Mr. Bishop is
here to testify about what happened on March 10th, 2016, as alleged in the
complaint. And his observations on that day are what his declaration is
about, his sworn declaration. And so anything outside of that would be
outside of the scope of his declaration and also irrelevant to the issues in this
case.

Respondent’s Counsel: . . . One of the issues that this Court has to determine
is whether there are mitigating circumstances. And while the petitioner
would like to limit evidence to what they want the tribunal to hear I don’t
think it stops us from trying to ascertain whether there were other attempts
that were rejected.

THE COURT: I’m going to have to sustain the objection.

Hearing Transcript at 10 -11.

I reiterate that this line of questioning is not relevant to the issues before me, which is
whether Respondent Zoom Mini Mart, Inc. sold cigarettes or smokeless tobacco to a
minor and failed to verify that the cigarette or smokeless tobacco purchaser was of
sufficient age, on March10, 2016, in violation of 21 C.F.R. § 1140.14(a)(1) and 21 C.F.R.
§ 1140.14(a)(2)(i). Other than a denial in its Answer, Respondent has failed to provide
evidence that rebuts CTP’s evidence in support of its allegations that on March 10, 2016,
Respondent sold cigarettes or smokeless tobacco to Minor 502, and that Respondent
failed to verify that Minor 502 was of sufficient age.

My March 7, 2017 APHO contained provisions that set out instructions regarding a
party's preparation of proposed exhibits, and submission of written direct testimony. See
APHO 99 6, 9-10. I do not consider Mr. Hizam’s statement to be a proper rebuttal
because Respondent’s Counsel failed to submit it and other exhibits in accordance with
C.F R. § §17.25 (a), 17.37(b). Respondent’s Counsel failed to provide good cause, thus, I
excluded the documents as evidentiary exhibits in this case. See September 8, 2017
Order; Hearing Transcript at 15-17. Even if I were to consider Mr. Hizam’s statement, he
appears to concede that the March 10, 2016 violations occurred. See Hizam Declaration
4 15 (stating “[t]he incident involved in this case was caused entirely by a clerk that
ignored his training.”) Furthermore, Respondent in its post-hearing brief clearly
concedes that the March 10, 2016 violations occurred. See Respondent’s Post-Hearing
10

Brief at 2 (“On March 10, 2016 the Center for Tobacco Products utilized an undercover
confidential state-contracted minor to conduct a compliance check at the location. The
undercover minor was accompanied by FDA commissioned inspector Justin J. Bishop.
The undercover minor purchased a Newport box 100s cigarette product from a store
clerk.”) Accordingly, I find that the violations occurred as Inspector Bishop reported and
alleged in the Complaint.

I find that CTP has provided an abundance of evidence to support its allegation that
Respondent (1) sold cigarettes or smokeless tobacco to Minor 502 on March 10, 2016,
and (2) failed to verify that the cigarette or smokeless tobacco purchaser was of sufficient
age, in violation of 21 C.F.R. § 1140.14(a)(1) and 21 C.F R. § 1140.14(a)(2)(i). I find
that Respondent has failed to provide sufficient evidence to rebut CTP’s allegation.

The facts show that Respondent is a repeated violator who settled two prior CMPs. See
Complaint §§ 8-9. Respondent is aware of the FDA’s enforcement program regarding

cigarettes or smokeless tobacco sales to minors. Moreover, each complaint provides
information regarding the relevant statutes and increasing penalties for additional
violations, and a link to the guidance regarding penalties. See e.g., Complaint J§ 2-3.

The facts as outlined above, establish that Respondent Zoom Mini Mart, Inc., is liable
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 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 CFR. 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); 81 Fed. Reg. 28,974, 28,975-
76 (May 10,2016). 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.

B. No-Tobacco-Sale-Order Penalty

The second issue before me is whether an NTSO for a period of 30 consecutive calendar
days is a reasonable penalty. The undisputed facts of this case show that Respondent is a
repeated violator of FDA’s tobacco regulations. Respondent has been the subject of two
prior CMP actions. See CRD Docket Number C-15-862, FDA Docket Number FDA-
2015-H-0064; CRD Docket Number C-15-3445, FDA Docket Number FDA-2015-H-
2682. Between December 31, 2013 and March 10, 2016, Respondent sold cigarettes or
smokeless tobacco to minors and failed to verify, by means of photographic identification
containing a purchaser’s date of birth, that no cigarette or smokeless tobacco purchasers
11

are younger than 18 years of age, on four occasions. See Complaint at § | (Table), 6, 9-
Il.

The record shows that Respondent has conceded that the current violations occurred. See
Respondent’s Post-Hearing Brief at 2. Because Respondent already conceded the
violations underlying the two previous CMPs, and as part of the settlement processes that
concluded the prior CMPs, “expressly waived its right to contest such violation in
subsequent actions,” there is no basis for questioning whether the current allegations are
repeat violations. See also Complaint §§ 9-10. Thus, “Respondent committed six
repeated violations of FDA’s tobacco regulations within the 36-month period July 9,
2014, through March 10, 2016.” See id.§ 1.

CTP states the two previous CMPs did not deter Respondent from unlawfully selling
tobacco products to minors. See Complainant’s Post-Hearing Brief at 5-6. CTP
maintains that for Respondent’s six repeated violations within 36 months, an assessment
of a 30-day NTSO is appropriate. See id. Respondent’s Counsel argues for mitigation of
the NTSO because Respondent has provided training to all its employees, posted signs in
its stores prohibiting the sale of tobacco products to minors, and implemented a point of
sales system that requires a birthdate to be entered for tobacco sales. See Respondent’s
Post-hearing Brief at 3-4. Respondent’s Counsel also highlighted Respondent’s
involvement in various local programs within the community. Id. at 4. Respondent’s
Counsel alleges that CTP is biased against Respondent and is “focusing on this merchant,
rather than a geographic area.” Id. Finally, Respondent’s Counsel asserts that “the
unsuccessful attempt to buy tobacco products at the other store shows that the training
and efforts of the Respondent’s Mr. Nabil Hizam, is working.” Id.

=

When determining the period to be covered by an NTSO, 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).

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

The Respondent admits that a “renegade” employee failed to verify the age of Minor 502
by means of photo identification and sold cigarettes to a minor on March 10, 2016.
Therefore, I find that Respondent committed three (3) violations of selling cigarettes or
smokeless tobacco to minors, and three (3) violations of failing to verify, by means of
photo identification containing a date of birth, that the purchasers were 18 years of age or
older. Respondent’s repeated inability to comply with federal tobacco regulations is
serious in nature. Accordingly, I find that 30-day NTSO is a reasonable penalty.
12

2. Respondent’s Ability to Pay

This factor does not apply to the circumstances here because the penalty sought is
exclusion (NTSO).

3. Effect on Ability to do Business

Respondent has not presented any evidence about the effect of a 30-day NTSO on its
ability to conduct its business. I am not persuaded that the NTSO would severely hinder
Zoom Mini Mart, Inc.’s ability to continue other lawful retail operations during the
NTSO period. Moreover, “the need to protect the [minors] outweighs the adverse effects
that an NTSO may have on an individual retailer’s business .. . .” Kat Party Store, Inc.,
d/b/a Mr. Grocer Liquor Store, CRD No. T-16-1684, at 3-4 (2016).

4. History of Prior Violations

Respondent is a repeated violator of FDA’s tobacco regulations prohibiting the sale of
cigarettes or smokeless tobacco to minors. This is the first NTSO action against
Respondent for violations of the Act and its implementing regulations. As noted above,
in addition to the original violations on December 31, 2013, and the two current
violations on March 10, 2016, Respondent has previously twice violated the prohibition
against selling cigarettes or smokeless tobacco to persons younger than 18 years of age,
21 CFR. § 1140.14(a), and twice violated the requirement that retailers verify, by means
of photo identification containing a purchaser’s date of birth, that no tobacco purchasers
are younger than 18 years of age, 21 C.F.R. § 1140.14(b)(1). See Complaint §§ 1, 6, 9-
Il.

5. Degree of Culpability

Based on the Respondent’s admission and the preponderance of the evidence, which
shows the Respondent committed the two most recent violations in the current complaint,
Thold it fully culpable for six repeated violations of the Act and its implementing
regulations.

6. Additional Mitigating Factors

In its post-hearing brief, Respondent eventually admitted the violations occurred. In its
briefs, Respondent indicates that it posted multiple signs within the store. Respondent’s
briefs also allegedly state there is employee training and a point of sales system that
prompts the clerk to ask for a birthdate before tobacco product sales, and notes
Respondent’s involvement in various local programs within the community. While I
commend Respondent’s efforts, I do not find any mitigating factors. Although
Respondent has argued bias by CTP, Respondent has failed to provide any evidence of
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bias against Respondent’s establishments. I am not persuaded that Respondent’s efforts
have been effective for this store. As previously mentioned, Respondent’s training and
policies in another location are not relevant to the March 10, 2016 documented violations
for this location. Additionally, this is the sixth violation within a short period of time for
this store. Because Respondent is a habitual violator of the FDA tobacco regulations, I
find that a 30-day NTSO is necessary.

VI. Penalty

Under 21 U.S.C. § 333(f)(8), a No-Tobacco-Sale Order is permissible for six (6) repeated
violations of the regulations found at 21 C.F.R. pt. 1140. The maximum period of time
for the first No-Tobacco-Sale Order 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; Food & Drug Admin., Civil Money Penalties and No-Tobacco-Sale Orders For
Tobacco Retailers at 5-6, available at
http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/U
CM252955.pdf (last updated December 15, 2016).

Based on the foregoing reasoning, I find a penalty of a NTSO for 30 days to be
appropriate under 21 U.S.C. §§ 333(f)(5)(B) and 333(f)(9).

VII. Conclusion

For these reasons, I impose a No-Tobacco-Sale Order against Respondent Zoom Mini
Mart, Inc., for a period of 30 consecutive calendar days. During this period of time,
Respondent shall stop selling cigarettes, cigarette tobacco, roll-your-own tobacco,
smokeless tobacco, and covered tobacco products regulated under the Federal Food,
Drug, and Cosmetic Act. Pursuant to 21 C.F.R. § 17.11(b), this order becomes final and
binding upon both parties after 30 days of the date of its issuance.

/s/
Wallace Hubbard
Administrative Law Judge