Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2018-H-1030)

Complainant
v.

Kamrul C. Inc.
d/b/a 7-Eleven Store 34590A,

Respondent.
Docket No. T-18-1568
Decision No. TB3190

Date: October 24, 2018

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint (Complaint) on Respondent, Kamrul C. Inc. d/b/a 7-Eleven Store 34590A, at
4048 Forest Hill Boulevard, Palm Springs, Florida 33406, and by filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that 7-Eleven Store 34590A impermissibly sold
cigarettes or smokeless tobacco to minors and failed to verify, by means of photo
identification containing a date of birth, that a purchaser was 18 years of age or older,
thereby violating 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. CTP seeks to impose a $2,236
civil money penalty against Respondent 7-Eleven Store 34590A.

During the course of the administrative proceedings, despite being apprised of the
potential consequences, Respondent failed to comply with two separate judicial orders,
and failed to defend its case. These actions interfered with the speedy, orderly, fair
conduct of a hearing in this matter. 21 C.F.R. § 17.35(a). Accordingly, pursuant to

21 C.F.R. § 17.35(c)(3), I strike Respondent’s Answer and issue this decision of default
judgment.

I. Procedural History

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on March 12, 2018, CTP served the
Complaint on Respondent 7-Eleven Store 34590A by United Parcel Service. On

April 10, 2018, Donald C. Anderson, III, filed what he termed an Answer purportedly
requesting a hearing on behalf of Respondent, Kamrul C. Inc. d/b/a 7-Eleven Store
34590A. Mr. Anderson signed the purported Answer, but included no identification as to
his relationship to Respondent, nor did he include any contact information.

On April 12, 2018, I issued an Acknowledgement and Pre-Hearing Order (APHO) that
set deadlines for the parties’ filings and exchanges and warned that:

I may impose sanctions including, but not limited to, dismissal
of the complaint or answer, if a party fails to comply with any
order (including this order), fails to prosecute or defend its
case, or engages in misconduct that interferes with the speedy,
orderly, or fair conduct of the hearing. 21 C.F.R. § 17.35.

APHO 4 16. Specifically, I ordered counsel representing either party to file a signed
Notice of Entry of Appearance by May 4, 2018. APHO § 1. CTP filed its Notice of
Appearance on May 14, 2018. However, Mr. Anderson failed to file a Notice of
Appearance.

On May 15, 2018, I ordered Mr. Anderson to file a Notice of Appearance to comply with
the APHO and to complete the requirements of 21 C.F.R. § 17.9(b). I stated:

I warn Mr. Anderson that if he is unable to file a Notice of
Entry of Appearance to complete the answer requirements
of 21 C.F.R. § 17.9(b) by the May 23, 2018 deadline, the
Complaint will be unanswered and I will move to default
judgement. 21 C.F.R. § 17.11.

May 15, 2018, Order (emphasis in original). On May 23, 2018, Mr. Anderson filed a
Notice of Appearance and an Amended Notice of Appearance. Each document contained
the correct case caption but listed an incorrect respondent in the body of the filing. The
filings nonetheless met the requirements of 21 C.F.R. § 17.9(b), and my orders. See
APHO §j 1; May 15, 2018, Order. Accordingly, I accepted Mr. Anderson’s appearance
on behalf of Respondent Kamrul C. Inc. d/b/a 7-Eleven Store 34590A.
On June 19, 2018, CTP counsel filed an Unopposed Motion to Extend Deadlines and
Notice of Pending Settlement. CTP asserted that the parties agreed to a settlement and
sought an extension of the pre-hearing exchange deadlines to effectuate the settlement
agreement. On June 20, 2018, I granted the motion and extended the pre-hearing
exchange deadlines. CTP timely filed its pre-hearing exchange. Respondent did not file
a pre-hearing exchange by its September 7, 2018 deadline, or at any time thereafter.

On September 26, 2018, I issued an Order Scheduling Pre-Hearing Conference. I ordered
the parties to appear for a telephone pre-hearing conference on October 3, 2018, at

11:00 AM Eastern Time, to resolve certain issues and schedule a hearing for this case.
Counsel for Respondent did not respond to my order or indicate that he was unable to
appear. Yet, counsel for Respondent did not appear at the pre-hearing conference as I
ordered.

Accordingly, on October 3, 2018, I issued an Order to Show Cause, in which I provided
Respondent until October 10, 2018, to show cause for its failure to comply with my
Order Scheduling Pre-Hearing Conference and failure to defend this case. I warned that:

. .. failure to show cause may result in sanctions, including
striking Respondent’s Answer and issuing an Initial Decision
and Default Judgment finding Respondent liable for the
violations listed in the Complaint and imposing a civil money
penalty.

October 3, 2018, Order to Show Cause (emphasis in original).

Respondent did not file a response to my Order to Show Cause.
I. Striking Respondent’s Answer

Pursuant to 21 C.F.R. § 17.35(a), I may sanction a party for:

() Failing to comply with an order, subpoena, rule, or procedure
governing the proceeding;
(2) Failing to prosecute or defend an action; or

(3) Engaging in other misconduct that interferes with the speedy, orderly,
or fair conduct of the hearing.

21 C.F. § 17.35(a).

Here, Respondent failed to comply with my September 26, 2018, Order Scheduling Pre-
Hearing Conference, and failed to respond to the subsequent Order to Show Cause, or to
demonstrate good cause for its failure to appear at the pre-hearing conference. 21 C.F.R.
§ 17.35(a)(1), (2).

I find that Respondent failed to comply with two separate judicial orders governing this
proceeding and failed to defend its action. 21 C.F.R. § 17.35(a)(1), (2). These actions
interfered with the speedy, orderly, and fair conduct of a hearing in this matter. 21 C.F.R.
§ 17.35(a)(3). I conclude that Respondent’s conduct establishes a basis for sanctions and
is sufficiently egregious to warrant them. 21 C.F.R. § 17.35.

The harshness of the sanctions I impose must relate to the nature and severity of the
misconduct or failure to comply. 21 C.F.R. § 17.35(b). Here, Respondent failed to
comply with my order to appear for a pre-hearing conference and failed to demonstrate
good cause for this failure, despite my explicit warning that this failure could result in
sanctions. October 3, 2018, Order to Show Cause. I specified that those sanctions might
include “striking Respondent’s Answer and issuing an Initial Decision and Default
Judgment finding Respondent liable for the violations listed in the Complaint and
imposing a civil money penalty.” /d. Respondent also failed to defend its action of
failing to appear at the pre-hearing conference. In fact, counsel for Respondent did not
file a pre-hearing exchange, and has had no participation in this case since filing his
notice of appearance on May 23, 2018.

I find that Respondent’s actions are sufficient to warrant striking Respondent’s Answer
and issuing a decision by default, without further proceedings. 21 C.F.R. § 17.35(b),
(c)(3). Accordingly, I strike Respondent’s Answer, and issue this Initial Decision and
Default Judgment, assuming the facts alleged in CTP’s Complaint to be true. 21 C.F.R.
§§ 17.35(c)(3), 17.11(a).

Ill. Default Decision

Striking Respondent’s Answer leaves the Complaint unanswered. Therefore, I am
required to issue an initial decision by default, provided that the Complaint is sufficient to
justify a penalty. 21 C.F.R. § 17.11(a). Accordingly, I must first determine whether the
allegations in the Complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true (but not
its conclusory statements) and I conclude that default judgment is merited based on the
allegations of the Complaint. 21 C.F.R. § 17.11. Specifically:

¢ On June 29, 2017, CTP initiated a previous civil money penalty action, CRD
Docket Number T-17-4934, FDA Docket Number FDA-2017-H- 3828, against
Respondent for two violations of 21 C.F.R. pt. 1140. CTP alleged those violations
to have occurred at Respondent’s business establishment, 4048 Forest Hill
Boulevard, Palm Springs, Florida 33406, on October 10, 2016, and May 20, 2017;
e The previous action concluded when an Initial Decision and Default Judgment
was entered by an Administrative Law Judge, “finding that all of the violations
alleged in the Complaint occurred”;

e At approximately 5:11 PM on February 26, 2018, at Respondent’s business
establishment, 4048 Forest Hill Boulevard, Palm Springs, Florida 33406, an
FDA-commissioned inspector documented Respondent’s staff selling a package of
Newport Box cigarettes to a person younger than 18 years of age. 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.

These facts establish Respondent 7-Eleven Store 34590A’s liability under the Act. The
Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product
is misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).
The Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1;
see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010); 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)(), 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.

A $2,236 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $2,236 against Respondent
Kamrul C. Inc. d/b/a 7-Eleven Store 34590A. 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/
Catherine Ravinski
Administrative Law Judge


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

Center for Tobacco Products,
(FDA No. FDA-2018-H-0798)

Complainant
v.

OM Shiv Groceries Inc.
d/b/a Bodie’s Dairy Markets,

Respondent.
Docket No. T-18-1383
Decision No. TB3174
Date: October 16, 2018
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, OM Shiv Groceries Inc. d/b/a Bodie’s Dairy Markets, at 33306
Main Street, Dagsboro, Delaware 19939, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Bodie’s Dairy Markets impermissibly sold smokeless tobacco to
minors and failed to verify, by means of photo identification containing a date of birth,
that a purchaser was 18 years of age or older, thereby violating 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. CTP seeks to impose a $559 civil money penalty against Respondent
Bodie’s Dairy Markets. During the hearing process, Respondent failed to comply with
four judicial directions regarding CTP’s discovery request. I therefore strike
Respondent’s answer and issue this decision of default judgment.

I. Background

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on February 23, 2018, CTP served the
complaint on Respondent Bodie’s Dairy Markets by United Parcel Service. Respondent
timely filed an answer denying the allegations.
On March 15, 2018, I issued an Acknowledgment and Pre-hearing Order (APHO)
acknowledging receipt of Respondent’s answer and setting forth case procedures and
deadlines. The APHO contained a provision that set out instructions regarding a party's
request for production of documents. That provision states, in part, that a party had until
April 16, 2018, to request that the other party provide copies of documents relevant to
this case. The order also stated that, pursuant to 21 C.F.R. § 17.23(a), a party receiving
such a request must provide the requested documents no later than 30 days after the
request has been made.

On May 23, 2018, CTP filed a Motion to Compel Discovery stating that it served its
Request for Production of Documents (RFP) on Respondent on April 16, 2018. CTP
stated that it did not receive a response from Respondent regarding its RFP, and
requested that I issue an order requiring Respondent to comply. On June 14, 2018, I
granted CTP’s Motion to Compel Discovery and ordered Respondent to comply with
CTP’s RFP by July 5, 2018.

On July 3, 2018, Respondent filed a response to CTP’s RFP. However, on July 18, 2018,
CTP filed a Motion to Compel Further Responses stating that Respondent’s response to
CTP’s RFP was “incomplete and does not properly respond to Complainant’s requested
documents for production.” CTP’s Motion to Compel Further Responses requested I
order Respondent to comply with CTP’s RFP in its entirety. On August 13, 2018, I
granted CTP’s Motion to Compel Further Responses and ordered Respondent to comply
with CTP’s RFP by August 29, 2018. I warned Respondent that failure to comply may
result in sanctions, including the issuance of an Initial Decision and Default Judgment
finding Respondent liable for the violations listed in the Complaint and imposing a civil
money penalty.

On September 21, 2018, CTP filed a Motion to Impose Sanctions stating that Respondent
has not produced any additional documents as ordered. CTP requested I strike
Respondent’s answer, and issue an initial decision and default judgment imposing a civil
money penalty against Respondent. In a September 21, 2018 letter issued by my
direction, Respondent was given until October 5, 2018 to file a response to CTP’s Motion
to Impose Sanctions. To date, Respondent has not responded to the Motion to Impose
Sanctions or to the September 21, 2018 letter.

Therefore, pursuant to 21 C.F.R. § 17.35, 1am granting CTP’s Motion to Impose
Sanctions, and striking Respondent’s answer for failing to comply with four separate
judicial directions. Specifically, Respondent failed to comply with my March 15, 2018
APHO, Respondent failed to comply with my June 14, 2018 order, and Respondent failed
to comply with my August 13, 2018 order requiring it to comply with CTP’s RFP.
Additionally, Respondent failed to respond to CTP’s Motion to Impose Sanctions or the
September 21, 2018 letter. This repeated conduct is sufficiently egregious to warrant
striking Respondent’s answer and issuing an initial decision by default.
I. Default Decision

Striking Respondent’s answer leaves the complaint unanswered. Pursuant to 21 C.F.R.
§ 17.11, Lassume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e At approximately 4:38 p.m. on May 31, 2017, at Respondent’s business
establishment, 33306 Main Street, Dagsboro, Delaware 19939, an
FDA-commissioned inspector documented Respondent’s staff selling a package of
Skoal Pouches Classic Mint smokeless tobacco to a person younger than 18 years
of age;

e Ina warning letter dated June 22, 2017, CTP informed Respondent of the
inspector’s May 31, 2017 documented violation, and that such action violates
federal law. The letter further warned that Respondent’s failure to correct its
violation could result in a civil money penalty or other regulatory action;

e At approximately 8:36 p.m. on February 2, 2018, at Respondent’s business
establishment, 33306 Main Street, Dagsboro, Delaware 19939, an
FDA-commissioned inspector documented Respondent’s staff selling a package of
Skoal Long Cut Classic Mint smokeless tobacco to a person younger than 18 years
of age. 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.

These facts establish Respondent Bodie’s Dairy Markets’ liability under the Act. The
Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product
is misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).
The Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1;
see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010); 81 Fed. Reg.
28,974, 28,975-76 (May 10, 2016). Under 21 C.F.R. § 1140.14(a)(1), no retailer may sell
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 smokeless tobacco purchasers are younger
than 18 years of age.

A $559 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, | enter default judgment in the amount of $559 against Respondent
OM Shiv Groceries Inc. d/b/a Bodie’s Dairy Markets. 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/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2017-H-6135)

Complainant,
v.

Maya Grocery LLC
d/b/a Maya Grocery and Deli,

Respondent.
Docket No. T-18-126
Decision No. TB3151

Date: October 5, 2018

INITIAL DECISION

I hereby sustain the determination of Complainant, Center for Tobacco Products (“CTP”)
of the United States Food and Drug Administration (“FDA”) to impose an $11,182 civil
money penalty against Respondent, Maya Grocery LLC d/b/a Maya Grocery and Deli,
for six violations of federal tobacco regulations within a 48-month period.

I. Background

CTP began this matter by serving an administrative complaint on Respondent, Maya
Grocery LLC d/b/a Maya Grocery and Deli, at 284 Trenton Avenue, Paterson, New
Jersey 07503, and by filing a copy of the complaint with the FDA’s Division of Dockets
Management. CTP seeks to impose an $11,182 civil money penalty against Respondent
for six 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. CTP alleges that Respondent
violated the Act by impermissibly selling cigarettes or smokeless tobacco to minors,
failing to verify, by means of photo identification containing a date of birth, that the
purchasers were 18 years of age or older, and opening packages of cigarettes intended for
the sale of individual cigarettes. During an inspection conducted September 17, 2017, an
FDA-commissioned inspector documented the two current violations. CTP further
alleges that Respondent Maya Grocery and Deli previously admitted to four violations of
regulations found at 21 C.F.R. pt. 1140.

I. Procedural History

On October 17, 2017, CTP served the complaint on Respondent Maya Grocery and Deli
by United Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. On November 1, 2017,
Respondent timely filed an answer denying the current allegations in the complaint.! See
Answer {J 1-2. Specifically, Respondent stated, it “did not sell to any minor.” /d. 2. In
a letter accompanying the Answer, dated October 23, 2017, Respondent indicated that it
did “not have access for e-filing.””, CRD Docket Nos. 3, 5 at 1. On November 13, 2017, I
issued an Acknowledgment and Pre-Hearing Order (APHO) that set out the deadlines for
the parties’ submissions in this case, and informal briefs for the parties to complete and
submit.” In the APHO, I also granted Respondent a waiver from the electronic filing
requirement. APHO § 2.

On March 5, 2018, CTP timely filed its pre-hearing exchange. CTP’s exchange included
an Informal Brief of Complainant (“CTP Br.”), a list of proposed witnesses and exhibits,
and fourteen (14) numbered exhibits (“CTP Ex. 1- Ex. 14”). CTP’s exhibits included the
written direct testimony of two witnesses: Ms. Laurie Sternberg, Senior Regulatory
Counsel, Office of Compliance and Enforcement, CTP, FDA (‘Sternberg Declaration”,
“CTP Ex. 3”), and Ms. Tyhesia Evans (“Inspector Evans”), former FDA-commissioned
inspector for the state of New Jersey (“Evans Declaration”, “CTP Ex. 4”). Respondent
did not file a pre-hearing exchange.

A. Pre-Hearing Conferences (PHCs) and Respondent’s Request for a Spanish
Language Interpreter

On April 17, 2018, I scheduled a pre-hearing conference in this case by telephone. Ms.
Miguela Urena appeared for Respondent Maya Grocery and Deli, and requested the
assistance of a Spanish Language Interpreter for any further proceedings in the case.
Complainant CTP did not appear for the PHC but provided good cause in response to my
Order.

On May 22, 2018, I held the rescheduled pre-hearing conference by telephone. Both
parties appeared and the court provided a Spanish Language Interpreter to assist Ms.
Urena. During the prehearing conference call, we discussed the roles of the parties, the
reasons for a prehearing conference and hearing, the exhibits submitted during the

' The Departmental Appeals Board, Civil Remedies Division, received Respondent’s
Answer by U.S. Mail and e-mail from CTP on November 1, 2017.

2 T note that during the course of this proceeding, I ruled on discovery matters: CTP’s
Motion to Compel Discovery (CRD Docket Nos. 9, 9a-9c.) and Motion to Extend
Deadlines (CRD Docket No. 10).
exchange, and the cross-examination of witnesses that CTP offered. I clarified that
although Ms. Urena is not an attorney, she can represent Respondent. I noted that CTP
offered two witnesses in this case, Ms. Sternberg and Inspector Evans. | also noted that
Respondent did not submit an exchange or offer any witnesses by the exchange deadline.

1 explained that the sole purpose for holding a hearing in this case was to allow the
parties an opportunity to cross-examine witnesses, proposed by the other party, on their
sworn direct testimony of record. Respondent declined to cross-examine Ms. Sternberg,?
but wished to cross-examine Inspector Evans. I emphasized that cross-examination of a
witness is intended show that direct testimony of record is not worthy of belief.
Respondent’s questions should be limited in scope and related to statements made in
Inspector Evans’s sworn declaration. Respondent may not testify, argue with, or engage
in dialogue with the witness. Finally, I suggested that Respondent review CTP Ex. 4
(Evans Declaration), CTP Ex. 8 (photograph of tobacco product sold to Minor A), and
CTP Ex. 9 (photograph of evidence in a bag), to determine what questions she would like
to ask Inspector Evans on cross-examination.

B. In Person Telephone Hearing

On June 26, 2018, I held a hearing in this case. Both parties appeared, and a Spanish
Language Interpreter assisted Ms. Urena with translation. In the absence of objections to
CTP’s proposed exhibits, I admitted CTP Ex. 1 through CTP Ex. 14 into the record. See
Hearing Transcript (“Tr.”) at 8. Respondent cross-examined Inspector Evans. Tr. at 9-
29. CTP’s attorney had no questions on redirect for Inspector Evans. Jd. at 29.

On July 17, 2018, I issued an order informing the parties that the Civil Remedies
Division had received the transcript of the hearing, and set the deadline for the parties’
post hearing brief submissions as August 15, 2018. On July 20, 2018, CTP filed a Notice
of Waiver of Post-Hearing Brief. Respondent did not file a post-hearing brief. As the
briefing period has elapsed, I now render my decision.

Til. Issues

a. Whether Respondent Maya Grocery and Deli sold cigarettes to a minor, and failed
to verify that the cigarette purchaser was of sufficient age, on September 17, 2017,
in violation of 21 C.F.R. § 1140.14(a)(1) and 21 C.F.R. § 1140.14(a)(2)(i).*

b. Whether the civil money penalty of $11,182 is a reasonable remedy.

3 Ms. Sternberg’s declaration is undisputed.
4 On August 8, 2016, the citations to certain tobacco violations changed. For more
information see: https://federalregister.gov/a/2016-10685.
Iv. Applicable Regulations

The Act prohibits the misbranding of tobacco products while they are held for sale after
shipment in interstate commerce. 21 U.S.C. § 331(k). The 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). 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.
Under 21 C.F.R. § 1140.14(a)(4) no retailer may open packages of cigarettes intended for
the sale of individual cigarettes.

The Act establishes factors that a presiding officer must consider in determining the civil
money penalty amount. The presiding officer must “take into account the nature,
circumstances, extent, and gravity of the violation or violations and, with respect to the
violator, ability to pay, effect on ability to continue to do business, any history of prior
such violations, the degree of culpability, and such other matters as justice may require.”
21 U.S.C. § 333(f)(5)(B).

Vv. Analysis

A. Allegations, Parties’ Contentions, Hearing/Scope of Cross-Examination, and
Findings of Fact

1. Allegations

After a thorough review of the evidence submitted by the parties and the information
elicited during the hearing, I find that Respondent committed six violations of the Act
and its implementing regulations as alleged in the Complaint. The sale of cigarettes or
smokeless tobacco to an individual who is under the age of 18, failure to verify the
photographic identification of an individual who is not over the age of 26 , and opening
packages of cigarettes intended for the sale of individual cigarettes, are violations of
implementing regulations. 21 C.F.R. § 1140.14(a)(1), (a)(2)(i), (a)(4).

2. Parties’ Contentions

CTP’s case relies on the testimony of former FDA-commissioned Inspector Evans, whose
duties included undercover buy inspections to determine retailers’ compliance with age
and photograph identification requirements relating to the sale of tobacco products. CTP
Ex. 4 §§ 2-4. The Evans Declaration (CTP Ex. 4), Narrative Report (“CTP Ex. 6”), and
Inspection Results (“TIMS Form”, “CTP Ex. 7”), corroborate CTP’s current allegations.

CTP alleged that Respondent committed six violations of the Act and its implementing
regulations over a 48-month period. See Complaint § 1; CTP Br. at 9, 12. Specifically,
CTP alleges that at approximately 10:59 a.m. on September 17, 2017, at Respondent’s
business establishment, 284 Trenton Avenue, Paterson, New Jersey 07503, Inspector
Evans documented Respondent’s staff selling a package of Newport Box cigarettes to a
person younger than 18 years of age. Complaint §j 7; CTP Ex. 4 §j 9-10; CTP Br. at 5.
Inspector Evans 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.
Complaint § 7; CTP Ex. 499; CTP Br. at 6. Inspector Evans testified that while she
remained outside the establishment during the transaction, she “maintained a direct line
of sight to Minor A and the sales counter.” CTP Ex. 449. Inspector Evans also testified
that shortly after the inspection, she processed the evidence in accordance with the
standard procedures at the time of the inspection, and recorded the inspection results in
the TIMS form. Jd. {§ 10-11.

CTP also alleged that in a previous civil money penalty action, Respondent admitted to
four violations of the Act. Complaint §§ 9-10; see CTP Br. at 2-3. The previous action
concluded when Respondent admitted the allegations contained in the Complaint and
paid the agreed upon civil money penalty. See Complaint § 10; CTP Ex. 2. Respondent
denied the current allegations, and requested a hearing to cross-examine Inspector Evans.
See Answer ff 1-2.

3. Hearing and Scope of Cross-examination

Before cross-examination, I gave the Spanish Language Interpreter a thorough overview
of the issues discussed at the pre-hearing conference. See Tr. at 4-7. As Ms. Urena was
proceeding without legal representation, and with the assistance of a court-provided
Spanish Language Interpreter, I gave her considerable leeway during the cross-
examination. However, Ms. Urena repeatedly asked questions that went beyond the
scope of Inspector Evans’s sworn direct testimony. See generally id. at 21-24, 26.

In addition, Ms. Urena persisted in asking the same questions “over and over” after
Inspector Evans had provided answers. See e.g. Tr. at 25. Counsel for CTP made a
number of objections during the hearing. Thus, I was obligated on several occasions to
instruct Ms. Urena to limit the scope of her questions to the statements made in Inspector
Evans’s declaration, and to discontinue repeating the same questions that she already
asked and Inspector Evans had answered. Id.

During the June 26, 2018 hearing, Ms. Urena cross-examined Inspector Evans regarding
her sworn direct testimony (CTP Ex. 4), as well as the contents of the accompanying the
TIMS (CTP Ex. 6), and Inspection Results (CTP Ex. 7). I will not recite every detail of
Ms. Urena’s cross-examination; rather I will present relevant excerpts. It appears that
Ms. Urena was primarily concerned with whether Inspector Evans had other evidence
beyond that already contained in the record proving that Respondent sold cigarettes to a
minor on September 17, 2017. For example, Ms. Urena asked Inspector Evans whether
she has “a video that proves that [Respondent] sold cigarettes to a minor.” Tr. at 9. Ms.
Urena also asked whether Inspector Evans had another witness to the sale. Jd. at 9-10.
Then she asked whether Inspector Evans took pictures of Respondent selling cigarettes to
a minor or whether Inspector Evans had a recording or audio of the sale. Jd. at 10. She
also asked whether the minor mentioned her by name as the person who sold the
cigarettes. /d. at 11. Inspector Evans answered “no” to these questions. Jd. at 9-11.

Ms. Urena also asked whether Inspector Evans had an independent recollection of the
time that she came to the store. Tr. at 11. Inspector Evans testified that other than the
actual report, she does not have a personal recollection of the time. /d. Ms. Urena then
asked Inspector Evans about why she did not make a recording of the inspection. Jd. at
11-12. Inspector Evans explained, “Recording is not part of my job, only picture-taking.”
Id. at 12. When Ms. Urena attempted to press further, CTP’s counsel objected based on
“asked and answered” and I sustained the objection. Jd.

Ms. Urena asked Inspector Evans whether she was aware of the video recording of the
sale and whether she checked it. Tr. at 14-15. CTP’s counsel objected to the question as
beyond the scope of the Evans Declaration. Jd. at 15. CTP’s counsel further objected
because while Ms. Urena responded to a request for production of documents earlier in
the case, she did not produce a videotape of the alleged sale to CTP. Jd. I explained to
Ms. Urena that Inspector Evans had no obligation to question her about the video during
the inspection, and that if she wanted the video to be part of the evidence, she should
have produced it when she responded to CTP’s production request. Jd. at 16.

4. Findings of Fact

Inspector Evans testified credibly and thoroughly about the September 17, 2017
inspection at which she observed Respondent selling cigarettes to a minor. Inspector
Evans testified that based on the report, “. . . | observed the minor. I witnessed the minor
entering that establishment, and I observed the sale.” Tr. at 19. Inspector Evans also
confirmed, “[t]he brand of cigarettes was Newport, and also was stated and photographed
as part of my report.” Jd. at 20. Ms. Urena then attempted to ask additional questions
outside the scope of the Evans Declaration, CTP’s counsel objected, and in order to avoid
undue delay, I read the relevant part of sworn testimony from the record:

THE COURT: Let me read to you, because I can’t believe that anybody
really read this report, but here it is.

The inspector’s report says that she stood outside of the store; that she had a
clear, unobstructed view into the store. She did not enter because she did not
wish to suggest that it was an undercover buy by a minor and put a damper
on it. She said that she had a direct line of sight of Minor A, and she saw a
female adult employee with black or dark brown hair selling a package of
Newport cigarettes to the minor, not asking the minor for identification, and
not providing the minor with a receipt. After that, she left the store and
prepared a report in the car and made the photographs that are also contained
as part of her testimony.

Tr. at 20-21. Ultimately, Ms. Urena was unable to elicit any information during the
cross-examination to show that Inspector Evans’ sworn testimony was unworthy of
belief. Ms. Urena did not submit any evidence during the pre-hearing exchange to rebut
CTP’s evidence.

At the close of the hearing, I informed Ms. Urena that next, a transcript of the
proceedings would be prepared. She would be notified when the transcript was available
for review. At that time, she would have ample opportunity submit a post-hearing final
brief. In that brief, she would be able to make any arguments she wished, including her
reasons for believing that the process is unfair, why it should be conducted in a different
way, and why videos should be required. Tr. at 23-24. Despite due notification, Ms.
Urena did not file a post-hearing final brief.

Based on all of the evidence and testimony in the record as currently constituted, I find
that Respondent committed six violations of the Act and its implementing regulations
over a 48-month period. As Respondent conceded the previous allegations, there is no
dispute as to the material facts of the previous civil money penalty action. Accordingly,
the only issue before me is whether the CMP of $11,182 that CTP seeks is a reasonable
remedy.

B. Civil Money Penalty

After considering the factors under the applicable statute, I find that the CMP of $11,182
that CTP seeks against Respondent, for six violations of the Act and its implementing
regulations over a 48-month period, is reasonable. CTP can seek a civil money penalty
from Respondent for violating the Act. 21 U.S.C. § 333(f)(9). When determining an
appropriate penalty, the presiding officer shall evaluate any circumstances that mitigate
or aggravate the violation referring to the factors identified in (but not limited to) the
applicable statute. 21 C.F.R. § 17.34. Under the applicable statute, I must consider “the
nature, circumstances, extent, and gravity of the violation or violations and, with respect
to the violator, ability to pay, effect on ability to continue to do business, any history of
prior such violations, the degree of culpability, and such other matters as justice may
require.” 21 U.S.C. § 333(f)(5)(B).

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

I find that Respondent committed six violations of the Act with a 48-month period.
While Respondent denies the September 17, 2017 allegations, Respondent did not
provide any evidence to rebut Inspector Evans’s testimony or the documentation in the
evidentiary record. I find Respondent’s repeated inability to comply with federal tobacco
regulations to be serious in nature. Accordingly, I find that the civil money penalty of
$11,182 is reasonable under these circumstances.

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

While Respondent submits that the civil money penalty is too high, Respondent has not
provided any evidence that it does not have the ability to pay the $11,182 penalty.
Further, Respondent has not presented any evidence regarding the effect of the civil
money penalty on its ability to do business. Respondent may continue to sell tobacco
products so long as it complies with the Act’s prohibition of selling tobacco products to
minors and opening packages of cigarettes intended for the sale of individual cigarettes.

3. History of Prior Violations

Respondent has a history of violating FDA tobacco regulations. This is the second civil
money penalty action against Respondent for violations of the Act and its implementing
regulations. On November 17, 2016, CTP initiated a previous civil money penalty
action, CRD Docket Number T-17-564, FDA Docket Number FDA-2016-H-3614, for
four violations of 21 C.F.R. pt. 1140 within a twenty-four month period. Complaint § 9;
see also CTP Ex.1 ff 1, 8, 10. CTP documented two violations on January 2, 2016 (sale
to minor and failure to verify age of purchaser), two on April 23, 2016 (sale to minor and
failure to verify age of purchaser), and one on April 25, 2016 (open packages of
cigarettes intended for individual cigarettes). Complaint § 9; CTP Ex.1 98, 10. In
accordance with customary practice, CTP counted the violations at the initial inspection
as a single violation, and all subsequent violations as separate individual violations.
Respondent admitted the prior violations, paid the agreed upon penalty, and expressly
waived its right to contest such violations in subsequent actions. Complaint § 10; CTP
Ex. 2. While I commend Respondent for taking responsibility for its prior violations,
Respondent’s repeated inability to comply with FDA tobacco regulations is troubling and
supports the imposition of a higher penalty.

4. Degree of Culpability

I find that Respondent committed six violations of the Act as alleged in the complaint.
The record shows that Respondent sold cigarettes or smokeless to minors in violation of
21 C.F.R. § 1140.14(a)(1) on January 2, 2016, April 23, 2016, and September 17, 2017.
The record also shows that on those same dates, Respondent failed to verify the
identification of the purchasers in violation of 21 C.F.R. § 1140.14(a)(2)(ii). Finally, the
record shows that Respondent had open packages of cigarettes intended for the sale of
individual cigarettes on April 25, 2016. Based on Respondent’s admissions regarding the
previous civil money penalty action, the documentary evidence of record, and the
additional testimony given at the June 26, 2018 hearing, I find Respondent fully culpable
for six violations of the Act and its implementing regulations.

5. Additional Mitigating Factors

After reviewing Respondent’s evidence in the record and the information elicited during
hearing, I do not find any mitigating factors. While Respondent checked a box in the
answer that the civil money penalty was too high, it did not provide any additional
evidence for me to evaluate. See Answer 3. Respondent did not submit any evidence
during pre-hearing exchange, for example, policies and procedures to deter violations of
the Act, evidence of employee training, or evidence of financial hardship. Furthermore,
Respondent did not avail itself of the opportunity to present arguments of any unfairness
of the process by submitting a post-hearing brief. Based on the gravity of Respondent’s
violations, lack of evidence regarding respondent’s ability to pay and continue business,
history of prior violations, culpability, and lack of mitigating factors, I find the full
penalty is appropriate and supported by the evidence.

VI. Penalty

Based on the foregoing reasoning, | find a penalty in the amount of $11,182 to be
appropriate under 21 U.S.C. §§ 333(f)(5)(B) and 333(f)(9).

VII. Conclusion

For these reasons and pursuant to 21 C.F.R. § 17.45, | impose a civil money penalty of
$11,182 against Respondent Maya Grocery LLC d/b/a Maya Grocery and Deli, for six
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 48-month period. Pursuant
to 21 C.F.R. § 17.45(d), this decision becomes final and binding upon both parties after
30 days of the date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2017-H-5851)

Complainant,
v.

Chit-Chat Inc.
d/b/a Scuttlebutts,

Respondent.
Docket No. T-17-6681
Decision No. TB3144

Date: October 1‘ 2018

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks to impose a civil money penalty (CMP) of
$2,236 against Respondent, Chit-Chat Inc. d/b/a Scuttlebutts, located at 590 Main Street,
Acushnet, Massachusetts 02743, for four violations of the Federal Food, Drug, and
Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R.
pt. 1140, within a 24-month period. Specifically, CTP alleges that Scuttlebutts violated
the Act by impermissibly selling cigarettes to minors and failing to verify, by means of
photo identification containing a date of birth, that the purchasers were 18 years of age or
older. For the reasons discussed below, I find in favor of CTP and impose a $2,236 CMP
against Respondent.

L BACKGROUND AND PROCEDURAL HISTORY

CTP began this matter by serving an administrative complaint (Complaint) seeking a
$2,236 CMP on Respondent, at 590 Main Street, Acushnet, Massachusetts 02743, and by
filing a copy of the Complaint with the Departmental Appeals Board. See DAB E-File

Docket (Dkt.) Nos. 1-1b.

On October 24, 2017, Respondent, represent

‘ed by its owner Gary Hathaway, timely

answered CTP’s Complaint. Dkt. No. 3. On November 2, 2017, I issued an
Acknowledgement and Pre-Hearing Order that set deadlines for discovery and the

parties’ pre-hearing exchanges. Dkt. No. 4.

Subsequently, parties filed separate motions

for a protective order. Dkt. Nos. 7-9a and 13-13e. After outstanding discovery disputes

were resolved, see Dkt. Nos. 14 and 16-19a,
deadlines, see Dkt. No. 20.

I modified the pre-hearing exchange

On March 29, 2018, CTP timely filed a pre-hearing brief, a list of proposed witnesses and

exhibits, and 14 exhibits (CTP Exhibits (Exs

.) 1-14) including the written direct

testimony of two proposed witnesses, Senior Regulatory Counsel Laurie Sternberg and

Insp
bein,
brie

ig granted an extension of time, see Dkt.

On
During the pre-hearing conference, we discu.
See Dkt. No. 27, at 1. Respondent advised o
Pollock. Jd.

On July 10, 2018, I held a hearing in this cas
Transcript (Hr’g Tr.). During the course of t
exhibits
examined Inspector Pollock. See Hr’g Tr. 2
Thompson, then conducted a re-direct exami
26:1-27:

On July 19, 2018, I informed the parties that

through 14 without objection. See

ector Pamela Pollock (CTP Exs. 3-4). Dkt. Nos. 21-210. On April 27, 2018, after

Nos. 23-24, Respondent filed a pre-hearing

f, but submitted no exhibits and proposed no witnesses, see Dkt. No. 25.

une 1, 2018, I held a pre-hearing conference in this case. See Dkt. Nos. 26-27.

ssed the purpose and function of the hearing.
its intent to cross-examine Inspector

e. See Dkt. No. 28, July 10, 2018 Hearing
e hearing, I admitted into evidence CTP’s
Hr’g Tr. 14:3-21. Respondent cross-
:1-25:10. CTP’s counsel, Anna K.

nation of Inspector Pollock, see Hr’g Tr.

, and Respondent conducted a re-cross examination, see Hr’g Tr. 27:9-32:11.

the Civil Remedies Division had received

the transcript of the hearing, and set the dea

line for the parties’ simultaneous post-

hearing brief submissions as August 20, 2018. Dkt. No. 29. On August 20, 2018, both

parties timely filed post-hearing briefs. Dkt.
now render my decision.

IL. ISSUES

Nos. 30-31. As the briefing period is over, I

A. Whether Respondent sold cigarettes to a minor and failed to verify by means of

photographic identification that the ci

August 23, 2017, in violation of 21 C.

B. If so, whether the CMP amount of $2,

garette purchaser was of sufficient age, on
F.R. § 1140.14(a)(1) and (a)(2)(i); and

236 sought by CTP is appropriate.
I. ANALYSIS

In order to prevail, CTP must prove Respondent’s liability by a preponderance of the
evidence. 21 C.F.R. § 17.33(b). The U.S. Supreme Court has described the
preponderance of the evidence standard as requiring that the trier-of-fact believe that the
existence of a fact is more probable than not before finding in favor of the party that had
the burden to persuade the judge of the fact’s existence. In re Winship, 397 U.S. 358,
371-72 (1970); Concrete Pipe and Prods. of Cal., Inc. v. Constr. Laborers, 508 U.S. 602,
622 (1993).

A. Violations

CTP determined to impose a CMP against Respondent pursuant to the authority conferred
by the Act and implementing regulations at Part 21 of the Code of Federal Regulations.
The Act prohibits the misbranding of tobacco products while they are held for sale after
shipment in interstate commerce. 21 U.S.C. § 331(k). FDA and its agency, CTP, may
seek CMPs from any person who violates the Act’s requirements as they relate to the sale
of tobacco products. 21 U.S.C. § 331(f)(9). The sale of cigarettes to an individual who is
under the age of 18 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) and (a)(2).

In its Complaint, CTP alleges that Respondent Scuttlebutts committed four violations of
the Act and its implementing regulations within a 24-month period. Dkt. No. 1 § 1.
Specifically, CTP alleges that on August 23, 2017, Respondent sold cigarettes to a minor
and failed to verify the photographic identification of the minor, and previously admitted
to two! violations of regulations found at 21 C.F.R. pt. 1140. Jd. 47, 9-10. In settling
the prior complaint, Respondent not only admitted the violations occurred, but also
waived the right to contest the violations in the future and stated that it understood that
the admitted violations may be counted in determining the total number of violations for
future enforcement actions. Jd. J 10; see also Dkt. No. 21, at 2-3 and CTP Ex. 2.
Accordingly, the only issue before me is whether Respondent sold cigarettes to a minor
and failed to verify the photographic identification of the minor, on August 23, 2017, in
violation of 21 C.F.R. § 1140.14(a)(1) and (a)(2)(i), as alleged in the Complaint.

CTP’s case against Respondent rests on the testimony of Ms. Sternberg and Inspector
Pollock, supported by corroborating evidence. See CTP Exs. 3-4. Ms. Sternberg testified
that the Marlboro cigarettes purchased during the August 23, 2017 inspection were

' Two violations were documented on May 3, 2016 (sale to a minor and failure to verify
date of birth), and one on December 27, 2016 (sale to a minor). Dkt. No. 1 49. In
accordance with customary practice, CTP counted the violations at the initial inspection
as a single violation, and subsequent violation as a separate individual violation.
manufactured or processed for commercial distribution at facilities in Virginia. CTP Ex.
3 §§ 7-8. The manufacturer of Marlboro cigarettes does not have production facilities in
Massachusetts, where the cigarettes were purchased. Jd. § 9. Respondent did not
challenge Ms. Sternberg’s testimony and did not dispute that Respondent held Marlboro
cigarettes for sale at its business establishment on August 23, 2017. See Dkt. No. 27, at
1; see also Hr’g Tr. 15:11-16; Dkt. No. 25, at 3. Accordingly, I find that Respondent’s
establishment received Marlboro cigarettes in interstate commerce and held them for sale
on August 23, 2017, after shipment in interstate commerce.

Inspector Pollock is an FDA-commissioned officer for the state of Massachusetts whose
duties include performance of undercover buy (UB) inspections to determine a retailer’s
compliance with the age and photo identification requirements relating to the sale of
tobacco products. CTP Ex. 4 {fj 2-3. The UB inspections are conducted with trained
minors by providing “direct field oversight of the minors to ensure that they follow FDA
inspection protocol.” Id. J§ 4, 6.

Inspector Pollock testified that on August 23, 2017, she conducted such an inspection of
Respondent’s establishment, located at 590 Main Street, Acushnet, Massachusetts 02743.
CTP Ex. 497. Minor A accompanied Inspector Pollock on prior UB inspections and
accompanied her on the August 23, 2017 inspection. Jd. Minor A, whose date of birth is
April 29, 2000, was 17 years old at the time of the August 23, 2017 inspection. See CTP
Ex. 5. Minors in the tobacco program are trained not to carry photographic identification
with them during an inspection, and are instructed to tell the truth if they are asked about
their age or whether they have identification. CTP Ex. 4 4 6.

Before the inspection, Inspector Pollock verbally confirmed that Minor A was under the
age of 18, that Minor A did not possess any photographic identification showing his/her
actual date of birth, and that Minor A did not have any tobacco products in his/her
possession. CTP Ex. 4 § 8; see also Hr’g Tr. 26:2-5. Minor A carried only his/her phone
and the cash provided by Inspector Pollock to purchase the tobacco products. CTP Ex. 4

q8.

Inspector Pollock testified that she parked her car near Respondent’s establishment and
remained in the vehicle during the inspection, because she felt her presence would
compromise the undercover nature of the inspection. CTP Ex. 4 § 9; see also Hr’g Tr.
21:2-7; accord Hr’g Tr. 24:22-25:7 (confirming Inspector Pollock had no safety concerns
with respect to entering the store). Inspector Pollock had an unobstructed view of Minor
A exiting the vehicle, entering Respondent’s establishment, exiting the establishment
minutes later, and immediately returning to the vehicle. CTP Ex. 4 § 9-10; see also Hr’g
Tr. 24:7-19, 26:6-9. Inspector Pollock testified that upon entering the vehicle, Minor A
handed her a package of cigarettes and the change from the purchase. CTP Ex. 4 § 10;
see also Hr’g Tr. 26:10-14. Inspector Pollock observed that the package of cigarettes
were Marlboro cigarettes. CTP Ex. 4 § 10.
Inspector Pollock testified that Minor A reported to her that during the inspection, Minor
A was able to purchase a package of cigarettes from an employee at Respondent’s
establishment. CTP Ex. 411. Minor A also reported to Inspector Pollock that prior to
the purchase, the employee did not ask for Minor A’s identification, Minor A did not
present any identification to the employee, and the employee did not provide Minor A
with a receipt after the purchase. Jd.; see also Hr’g Tr. 26:15-21.

Inspector Pollock labeled the cigarettes as evidence, photographed all of the panels of the
package, and processed the evidence in accordance with standard procedures. CTP Ex. 4
1. Shortly after the inspection, Inspector Pollock recorded the inspection in the FDA’s
obacco Inspection Management System (TIMS) and created a Narrative Report.

Id. 4 12. CTP corroborated Inspector Pollock’s testimony by offering as evidence
photographs that Inspector Pollock made of the cigarettes that Minor A purchased on the
ate in question. CTP Exs. 8-9. CTP also submitted the TIMS form and Narrative
Report created by Inspector Pollock shortly after the inspection. CTP Exs. 6-7.

—=

On cross-examination, Inspector Pollock testified that because she was not present inside
the store, she does not know what was said between the cashier and Minor A during the
inspection. Hr’g Tr. 22:1-10. Inspector Pollock also testified, in response to a question
posed by Respondent, that it was possible that the cashier asked Minor A for an
identification, and, despite that no identification was provided, the cashier proceeded with
the sale. Hr’g Tr. 31:22-32:7.

Respondent filed an answer, informal brief, and post-hearing brief. See Dkt. Nos. 3, 25,
and 31. In its filings, Respondent argues that the inspection notice was untimely, and, as
a result, Respondent had no opportunity to review security camera tapes or interview the
cashier close to the time of the inspection. Dkt. No. 3 fj 1, 3 and Defenses 1, 4.
Respondent posits that the inspection notice was received six days after the inspection, at
which point the camera data was overwritten and the cashier had no recollection of the
sale. Dkt. No. 25, at 3; see also Dkt. No. 31, at 1-2.

There is, however, no requirement to notify Respondent of alleged violations at the time
of the inspection. Instead, the Family Smoking Prevention and Tobacco Control Act
(TCA) Pub. L. No. 111-31, 123 Stat. 1776 (2009), requires “timely and effective notice
by certified or registered mail or personal delivery to the retailer of each alleged violation
at a particular retail outlet prior to conducting a follow-up compliance check” and notice
of “all previous violations at the outlet” prior to charging a person with a violation. TCA
§ 103(q)(1)(B), (D).

Based on the evidence of record, CTP issued a Compliance Check Inspection Notice
(Notice) to Respondent, stating that an inspection was conducted on August 23, 2017,
and that during the inspection, a minor was able to enter the establishment and purchase
cigarettes in a package. CTP Ex. 10. The Notice also stated that “[o]ther potential
violations of federal tobacco laws may have also been reported” and that violations “may
result in a Warning Letter, a Civil Money Penalty or No-Tobacco-Sale Order.” Jd. The
UPS Delivery Notification shows that the Notice was shipped on August 25, 2017, and
delivered to Respondent’s address of 590 Main Street, Acushnet, Massachusetts 02743,
on August 29, 2017, six days after the inspection. CTP Ex. 11.

As discussed above, the evidence shows that CTP sent Respondent the Notice on August
25, 2017, and Respondent received the Notice on August 29, 2017; which I find to be
sufficiently timely. Respondent contends that its security camera overwrites the video
tape every 4-5 days and thus Respondent was unable to review the sale footage.
Respondent, however, provided no evidence that receiving the Notice on the sixth day
rather than the fourth or fifth day prevented the necessary review as asserted. Even if I
accept Respondent’s allegations as true, given Respondent’s history of past violations,
Respondent had notice of the significance in preserving evidence and ample opportunity
to change how it preserves its security camera tapes prior to the current violations.
Indeed, on June 5, 2017, CTP filed a complaint in the prior CMP action, CRD Docket
Number T-17-4495, FDA Docket Number FDA-2017-H-3353, alleging that Respondent
unlawfully sold tobacco products to minors and unlawfully failed to verify a purchaser’s
date of birth before the sale. See CTP Ex. 1. On July 5, 2017, Respondent signed an
Acknowledgment Form, acknowledging that the violations occurred and waiving the
ability to contest the violations in the future. See CTP Ex. 2. It is reasonable that within
the next seven weeks, Respondent would have been sensitive to the potential for
inspections and the need to preserve evidence in response to such inspections.

While Respondent concedes that based on the Notice and Inspector Pollock’s report, the
inspection “most likely ... took place,” Dkt. No. 25, at 4, Respondent argues that CTP
failed to provide a receipt indicating an exact time and proof of purchase of the product.
Dkt. No. 3 § 2 and Defense 2. Certainly, a receipt would be dispositive proof that the
transaction occurred, but Inspector Pollock’s observations? and the physical evidence that
was obtained on August 23, 2017, are, in and of themselves, adequate to prove CTP’s
case. The absence of receipt does not derogate from that evidence.

I find Inspector Pollock’s testimony to be credible and corroborated by photographic
proof that Respondent sold Marlboro cigarettes to Minor A on August 23, 2017, in
violation of 21 C.F.R. § 1140.14(a)(1). Inspector Pollock’s testimony establishes that
Minor A had no cigarettes in his/her possession before entering the store and had
cigarettes upon leaving the establishment. Consequently, the only reasonable inference
that I can draw from the evidence is that Minor A purchased cigarettes in the store.
Minor A’s statement to Inspector Pollock further confirms that during the inspection,

? While it is undisputed that Inspector Pollock did not directly witness the alleged
transactions on August 23, 2017, the regulations do not require such a direct eyewitness.
Minor A was able to purchase a package of cigarettes from an employee at Respondent’s
establishment.

It is also reasonable to infer that a store employee failed to check the minor’s
identification on August 23, 2017, in violation of 21 C.F.R. § 1140.14(a)(2)(i). It is
undisputed that Minor A was 17 years old at the time of the inspection on August 23,
2017. Minor A reported to Inspector Pollock that Respondent’s employee did not request
to see his/her identification prior to purchasing the cigarettes on August 23, 2017.

Indeed, it would have been impossible to verify Minor A’s identification and age.
Consistent with Massachusetts training procedures for undercover buys of tobacco
products, Inspector Pollock confirmed that Minor A did not possess any photographic
identification when he/she entered the establishment on August 23, 2017. Respondent’s
argument that Inspector Pollock agreed that it was possible for the cashier to ask for an
identification from Minor A, and proceed with the sale without Minor A providing an
identification, further supports that the cashier failed to verify the photographic
identification of Minor A.

Respondent offered no evidence to rebut Inspector Pollock’s testimony. Instead,
Respondent argues that minor’s recollection of what occurred in its establishment is
unreliable hearsay. Dkt. No. 25, at 5. I agree that Minor A’s accounts that he/she gave to
Inspector Pollock of his/her experiences inside Respondent’s establishment are hearsay.
However, under 21 C.F.R. Part 17, the Administrative Law Judge determines the
admissibility of evidence and has discretion to apply the Federal Rules of Evidence when
deemed appropriate. Indeed, the Federal Rules of Evidence are not controlling in an
administrative hearing, and I am not bound by the Federal Rules of Evidence in these
proceedings. 21 C.F.R. § 17.39(b); see also Deli-icious Catering, Inc. d/b/a Convenient
Food Mart, DAB No. 2812, 2017 WL 7734834, at *10-11 & n.10 (H.H.S. Aug. 21, 2017)
(noting that hearsay is not inadmissible in tobacco civil money penalty administrative
proceedings). Still further, even without relying on the Minor A’s accounts, CTP
sufficiently established its case based entirely on what Inspector Pollock observed
personally, coupled with the corroborating evidence obtained on August 23, 2017.
Inspector Pollock’s testimony is that she observed Minor A enter Respondent’s
establishment with cash and without his/her identification or cigarettes and subsequently
emerge from the store with a package of Marlboro cigarettes and the change from the
purchase. That testimony, plus the corroborating evidence, leads to the only reasonable
inference that Minor A purchased cigarettes at Respondent’s establishment. Still further,
given the unrefuted evidence that Minor A had no photographic identification at the time
of the cigarette purchase, it is impossible that Respondent could have verified the age of
Minor A by means of photographic identification.

Respondent questions the appropriateness of counting multiple violations during a single
inspection. Dkt. No. 3 § 8 and Defense 7. Respondent argues it cannot be held liable for
failure to verify identification because minors are trained not to carry identification
during undercover inspections in Massachusetts. Dkt. No. 25, at 2-3; see also Dkt. No.
31, at 2. While Respondent’s assertion is factually consistent with Inspector Pollock’s
declaration that minors in the tobacco program are trained not to carry photographic
identification with them during an UB inspection, Respondent’s argument is legally
incorrect. Indeed, CTP’s method of counting violations was recently upheld by the
District of Columbia Circuit. See Orton Motor, Inc. v. U.S. Dep’t of Health & Human
Servs., 884 F.3d 1205 (D.C. Cr. 2018) (concluding that FDA’s methodology of counting
violations is proper).

Under 21 C.F.R. § 1140.14(a)(2)(), “[e]ach retailer must verify by means of
photographic identification containing the bearer’s date of birth that no person purchasing
the product is younger than 18 years of age.” Section 1140.14(a)(2)(ii) further provides
that “[nJo such verification is required for any person over the age of 26.” The plain
language of the regulation contemplates that the first step for each retailer to follow is to
ask for an identification and the second step is to verify the purchaser’s date of birth by
examining the photographic identification. A failure to provide an identification should
result in no sale because no verification is possible without a photographic identification.

The effective enforcement of minimum age restriction is the most important element in
reducing youth access to tobacco products. For this reason, age verification is required
through an examination of a valid government-issued photographic identification card
showing a photograph and at least the minimum age established by applicable law for the
purchase of a tobacco product. This exchange between a retailer and a consumer ought to
prevent the sale of tobacco products to individuals who have not attained the minimum
age established by applicable law for the purchase of such products.

The fact that minors in Massachusetts are trained not to carry photographic identification
with them during an inspection only supports my finding that Respondent failed to verify
that a person purchasing the product is younger than 18 years of age. In this case,
Inspector Pollock’s affidavit attests that Minor A had no identification in his/her
possession, but was able to purchase a package of cigarettes. Accordingly, the
Inspector’s affidavit provides a sufficient basis for finding that the age of Minor A was
not and could not have been verified by means of photographic identification, in violation
of section 1140.14(a)(2).

Respondent further argues that a sale to a minor only constitutes a violation of 21 C.F.R.
§ 1140.14(a)(1) and the same sale cannot be a violation of section 1140.14(a)(2). Dkt.
No. 25, at 2-3. Respondent avers that when a minor carries no identification, verification
is not possible, and thus there can only be a violation of section 1140.14(a)(1). Jd.
Respondent’s argument is inconsistent with the applicable case law. Indeed, in Orton
Motor, the District of Columbia Circuit stated that “[g]enerally speaking, a retailer who
sells a tobacco product to a minor, in violation of 21 C.F.R. § 1140.14(a)(1), likely only
would do so without checking identification first, in violation of 21 C.F.R.
§ 1140.14(a)(2).” Jd. at 1212. The Court further indicated that the sale and verification
each has independent significance explaining that “the requirement that a retailer verify
age applies with respect to prospective tobacco purchasers up to 26 years old, while the
sales restriction relates only to would-be purchasers under the age of 18.” Id.
Accordingly, Respondent in this case first committed a violation of section 1140.14(a)(2)
when it failed to verify the purchaser’s age, and then, since the minor was permitted to
purchase a package of cigarettes, Respondent committed a violation of section
1140.14(a)(1).

The testimonies of both Ms. Sternberg and Inspector Pollock, supported by corroborating
evidence, is sufficient to establish that it is more likely than not that on August 23, 2017,
Respondent unlawfully sold cigarettes to Minor A, in violation of 21 C.F.R.

§ 1140.14(a)(1), and failed to verify the photographic identification of Minor A, in
violation of 21 C.F.R. § 1140.14(a)(2)(i). 21 C.F.R. § 17.33(b). Further, Respondent
failed to establish any affirmative defense by a preponderance of the evidence. 21 C.F.R.
§ 17.33(c).

Accordingly, I find that the facts as outlined above establish Respondent’s liability for
four violations of the Act.

B. Civil Money Penalty

Pursuant to 21 U.S.C. § 333(f)(9), Respondent Scuttlebutts is liable for a CMP not to
exceed the amounts listed in FDA’s CMP regulations at 21 C.F.R. § 17.2. In its
Complaint, CTP sought to impose the penalty amount of $2,236 against Respondent for
four violations of the Act and its implementing regulations within a 24-month period.
Dkt. No. 1 § 1. In its pre- and post-hearing briefs, CTP continued to assert that a $2,236
CMP is appropriate. Dkt. No. 21, at 10-15; Dkt. No. 30, at 1, 6.

Respondent’s position is that the CMP is unfair and should be reduced to $559 because
Respondent should only be liable for three violations instead of four. See Dkt. No. 25, at
5. In its response to CTP’s Request for Production of Documents, Respondent certified
that it has the ability to pay the $2,236 CMP, but asked for a payment plan to pay. Dkt.
No. 17.

I have found that CTP met its burden by a preponderance of the evidence and concluded
that Respondent committed four violations of the Act and its implementing regulations
within a 24-month period. Accordingly, I now turn to whether a $2,236 CMP is
appropriate. When determining the amount of a CMP, 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(£)(5)(B).
10

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

I find that Respondent committed a total of four violations of selling tobacco products to
minors, and failing to verify, by means of photo identification containing a date of birth,
that the purchasers were 18 years of age or older. The repeated inability of Respondent
to comply with federal tobacco regulations is serious in nature and the CMP amount
should be set accordingly.

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

Respondent has not argued that it does not have the ability to pay the $2,236 CMP sought
by CTP. In fact, the opposite is true. As noted above, Respondent previously certified
that it has the ability to pay the $2,236 CMP. Dkt. No. 17. Respondent has not presented
any evidence that the penalty will affect the Respondent’s ability to continue to do
business.

3. History of Prior Violations

The current action is the second CMP action brought against Respondent since June 5,
2017 for violations of the Act and its implementing regulations. In the first CMP action,
CRD Docket Number T-17-4495, FDA Docket Number FDA-2017-H-3353, Respondent
twice violated the prohibition against selling cigarettes to persons younger than 18 years
of age, 21 C.F.R. § 1140.14(a), and 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(a)(2)(i).2. See CTP Ex.
1. Respondent settled the prior complaint with CTP for an undisclosed penalty amount
on July 5, 2017. See CTP Ex. 2. Yet, seven weeks later, on August 23, 2017,
Respondent once again sold cigarettes to a minor and failed to verify the identification of
a purchaser of a tobacco product.

Respondent disputes the prior settlement acknowledged any violation. Dkt. No. 3 § 4.
Respondent, however, has already admitted that the prior violations occurred, paid a
penalty, and waived its right to contest such violations in subsequent actions. CTP Ex. 2.
The prior violations are administratively final, and Respondent cannot contest them here.

3 Respondent is only being held liable for two of prior violations. See 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),
at 13-14, available at http://(www.fda.gov/downloads/TobaccoProducts/Labeling/Rules
Regulations Guidance/UCM447310.pdf (2016); see also Orton Motor, Inc. v. U.S. Dep’t
of Health & Human Servs., 884 F.3d 1205 (D.C. Cr. 2018).

11

l agree with CTP that “[t]hese repeated violations show an unwillingness or inability to
sell tobacco products in accordance with federal tobacco regulations.” Dkt. No. 21, at 13.
While Respondent has already paid a CMP for its previous violations, its continued
inability to comply with the federal tobacco regulations calls for a more severe penalty.

4. Degree of Culpability

Respondent alleges that “[d]eciding whether to card someone or not is an individual
decision and therefore the penalty should lie with the individual.” Dkt. No. 3 § 7 and
Defenses 3, 5. As a retailer, however, Respondent is liable for its employees’ violations
of the Act and responsible for the CMP sought by CTP. I find that Respondent
committed the four violations as alleged in the Complaint, and I hold it fully culpable for
all four violations of the Act and its implementing regulations.

5. Additional Mitigating Factors

Mitigation is an affirmative defense for which Respondent bears the burden of proof.
Respondent must prove any affirmative defenses and any mitigating factors by a
preponderance of the evidence. 21 C.F.R. § 17.33(c). Respondent asserts that it “just
purchased a[n] ID scanner for $900 ... so that reading the license incorrectly is
eliminated.” Dkt. No. 3, at 3. Respondent also alleges that it added an ID checking
machine, ordered ID checking calendars, and “is adding newer video technology.” Dkt.
No. 25, at 5. Respondent also avers that Respondent’s other store has had no violations
and the store in question was clean for five years before the first inspection. Jd.

However, Respondent’s mere assertions are not enough. Although Respondent’s alleged
attempts to deter tobacco sales to minors are commendable, Respondent failed to provide
any evidence of the remedial measures it has taken or evidence to show when Respondent
took such measures. Moreover, this is Respondent’s second CMP action, and
Respondent has had ample opportunity to correct its violations and come into

compliance.

Thus, I find and conclude there is no basis in the record before me to find mitigating
factors that would allow me to reduce the penalty requested by CTP, which I find
proportional and appropriate in this case.

IV. PENALTY

Based on the foregoing reasoning, I find the penalty amount of $2,236 to be reasonable
and appropriate under 21 U.S.C. §§ 303(f)(5)(B) and 333(f)(9).
12
Vv. CONCLUSION

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $2,236 against
Respondent, Chit-Chat Inc. d/b/a Scuttlebutts, for four violations of the Act, 21 U.S.C.

§ 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140, within a 24-month
period.

/s/
Margaret G. Brakebusch
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2017-H-5815)

Complainant,
v.

Brookdale Liquors, Inc.
d/b/a Brookdale Liquors,

Respondent.
Docket No. T-17-6648
Decision No. TB3120

Date: September 24, 2018

INITIAL DECISION

I hereby sustain the determination of Complainant, Center for Tobacco Products (“CTP”)
of the United States Food and Drug Administration (“FDA”) to impose a civil money
penalty of $5,591 against Respondent, Brookdale Liquors, Inc. d/b/a Brookdale Liquors,
for five violations of federal tobacco regulations within a thirty-six month period.

I. Background

CTP began this matter by serving an administrative complaint on Respondent, Brookdale
Liquors, Inc. d/b/a Brookdale Liquors, at 2519 8th Street South, Moorhead, Minnesota
56560, and by filing a copy of the complaint with the FDA’s Division of Dockets
Management. CTP alleges that Brookdale Liquors impermissibly sold cigarettes or
smokeless tobacco to minors and failed to verify, by means of photo identification
containing a date of birth, that the purchasers were 18 years of age or older, thereby
violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seg., and
its implementing regulations, 21 C.F.R. pt. 1140. CTP further alleges that Respondent
Brookdale Liquors previously admitted to three violations of regulations found at 21
C.F.R. pt. 1140 and, therefore, CTP seeks to impose a $5,591 civil money penalty against
Respondent Brookdale Liquors.

I. Procedural History

On September 29, 2017, I issued an order granting Respondent’s September 22, 2017
request for an extension of the time within which to file an answer. On October 18, 2017,
Respondent timely filed an answer admitting all the allegations in the complaint. See
Answer § 1. In its answer, Respondent stated, “one of [its] employees did sell tobacco to
a minor without asking for the proper identification. The employee involved was only on
the job for his second day and his supervisor for the shift was busy with another customer
at the time and not able to assist the trainee with the proper procedure for the sale of
tobacco products.” Jd. Respondent submits that it has “always provided the proper
training and materials to assist [its] employees in asking for the proper ID for all of [its]
products.” Jd. 42. Respondent further submits that “[t]here is print material on how to
identify fake ID’s and they are all required to attend all server training courses that are
offered.” Jd. Finally, Respondent asked for a reduction of the civil money penalty
because Respondent has a policy of making employees responsible for “any penalty
enforced due to their negligence to follow all proper procedures of the sale... .” Id. § 3.

It appears that Respondent is requesting a reduction because the civil money penalty will
cause its employee financial hardship. I want to clarify that CTP is seeking the civil
money penalty against Respondent Brookdale Liquors, Inc. d/b/a Brookdale Liquors,
only. Accordingly, any decision on liability that I render in this matter must be against
Respondent only, and not Respondent’s employee.

Based on Respondent’s representations in its Answer, I inferred that the parties did not
intend to proceed to a hearing in this case and might reach a settlement agreement.
Accordingly, on October 25, 2017, I issued an Acknowledgment and Status Report Order
(ASRO). In the ASRO, I gave the parties sixty days to file a joint status report notifying
the court about whether the parties intend to proceed to a hearing. On December 26,
2017, CTP filed a Joint Status Report stating, “[t]he parties have been unable to reach a
settlement in this case and intend to proceed to a hearing.” On December 27, 2017, I
issued a Pre-Hearing Order that set out the deadlines for the parties’ submissions in this
case, and informal briefs for the parties to complete and submit.!

On June 18, 2018, CTP timely filed its pre-hearing exchange. CTP’s exchange included
an Informal Brief of Complainant (“CTP Br.”), a list of proposed witnesses and exhibits,
and 14 numbered exhibits (“CTP Ex. 1- Ex. 14”). CTP’s exhibits included the written

' T note that during the course of this proceeding, I ruled on discovery matters which are
no longer relevant to the disposition of the case: CTP’s Motion to Compel Discovery
(Docket No. 10), Motions to Extend Deadlines (Docket Nos. 11, 16), and Motion to
Impose Sanctions (Docket No. 15).
direct testimony of two witnesses: Ms. Laurie Sternberg, Senior Regulatory Counsel,
Office of Compliance and Enforcement, CTP, FDA (“Sternberg Declaration”, “CTP Ex.
4”), and Mr. Marc Baetsch (“Inspector Baetsch”), FDA-commissioned Inspector
(“Baetsch Declaration,” “CTP Ex. 6”). On July 9, 2018, Respondent timely filed its pre-
hearing exchange. Respondent’s exchange included an Informal Brief of Respondent and
Sworn Statement of David Lundeen (““Lundeen Declaration”), and five numbered
exhibits (“Respondent’s Ex. 1 - Ex. 5”).

Pre-Hearing Conference and Waiver of Hearing

On August 14, 2018, I held a pre-hearing conference by telephone. During the
prehearing conference call, we discussed the parties’ pre-hearing exchanges in this
matter. As a preliminary matter, I explained that the purpose of a hearing is to allow for
the cross-examination and re-direct of any witnesses who have provided sworn testimony
in exchanges. | also explained that a cross-examination was not required in this matter
because Respondent already admitted all of the allegations in the Complaint, and I could
admit the proposed exhibits during the conference, if the parties concurred. The parties
agreed to a decision based on the documents entered into the record.

asked the parties whether they objected to any of the proposed exhibits. Respondent did
not object to CTP’s proposed exhibits marked as CTP Ex. 1 to CTP Ex. 14. CTP did not
object to Respondent’s proposed exhibits marked as Respondent’s Ex. 1 to Ex. 5. In the
absence of objections, I admitted the parties’ proposed exhibits into the record. I
received Respondent’s brief (Lundeen Declaration) into evidence as written direct
testimony. I understood that the parties submitted their final briefs in their exchange
documents. The parties did not communicate any intent to supplement their briefs with
additional arguments for my consideration. On that same day, I issued an Order Granting
Waiver of Hearing and Admitting Exhibits. I hereby render my decision on the record.

Til. Issue

Whether the civil money penalty of $5,591 that CTP seeks to impose is a reasonable
remedy.

IV. Applicable Regulations

The Act prohibits the misbranding of tobacco products while they are held for sale after
shipment in interstate commerce. 21 U.S.C. § 331(k). The 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). Under
21 C.F.R. § 1140.14(a)(1)’, no retailer may sell cigarettes or smokeless tobacco to any

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

The Act establishes factors that a presiding officer must consider in determining the civil
money penalty amount. The presiding officer must “take into account the nature,
circumstances, extent, and gravity of the violation or violations and, with respect to the
violator, ability to pay, effect on ability to continue to do business, any history of prior
such violations, the degree of culpability, and such other matters as justice may require.”
21 U.S.C. § 333(£)(5)(B).

Vv. Analysis

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

After a thorough review of the evidence submitted by the parties, I find that Respondent
committed five violations of the Act and its implementing regulations as alleged in the
Complaint. See generally Complaint; CTP Br.; Answer; Lundeen Declaration. 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), (a)(2)(i).

CTP alleges that Respondent committed five violations of the Act and its implementing
regulations over a 36-month period. See Complaint at J 1; see CTP Br. at 10. The
Baetsch Declaration, CTP Ex. 6, corroborates CTP’s current allegations. Specifically,
CTP alleges that at approximately 9:19 p.m. on August 30, 2017, at Respondent’s
business establishment, 2519 8th Street South, Moorhead, Minnesota 56560, Inspector
Baetsch documented Respondent’s staff selling a package of Marlboro cigarettes to a
person younger than 18 years of age. Complaint § 7; CTP Ex. 6 §§ 8-9; CTP Br. 4.
Inspector Baetsch 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.
Complaint § 7; CTP Ex. 699; CTP Br. at 4. Finally, CTP alleged that in a previous civil
money penalty action, Respondent admitted to three violations of the Act. Complaint

4] 10; see CTP Br. at 2-3.

Respondent conceded that the five alleged violations occurred. See Answer § 1; Lundeen
Declaration at 1. Respondent submits that the August 30, 2017 violation was due to the
“carelessness of its new employee, for which that employee was charged of a crime and
plead guilty to, and paid a fine for, in recognition of the same.” Lundeen Declaration at
3; see also Answer § 1. Again, I note that the Court is not privy to or concerned with any
criminal actions regarding said employee. The Court’s jurisdiction and any judgment
rendered in this matter extends to Respondent Brookdale Liquors, only.
Based on the evidence in the record, there is no dispute that Respondent committed five
violations of the Act and its implementing regulations over a 36-month period. As
Respondent conceded to the current and previous allegations, there is no dispute as to the
material facts of the case before me. Accordingly, the only issue before me is whether
the CMP of $5,591 that CTP seeks to impose is a reasonable remedy.

B. Civil Money Penalty

After considering the factors under the applicable statute, I find that the CMP of $5,591
that CTP seeks against Respondent, for five violations of the Act and its implementing
regulations over a 36-month period, is reasonable. CTP can seek a civil money penalty
from Respondent for violating the Act. 21 U.S.C. § 333(f)(9). When determining an
appropriate penalty, the presiding officer shall evaluate any circumstances that mitigate
or aggravate the violation referring to the factors identified in (but not limited to) the
applicable statute. 21 C.F.R. § 17.34. Under the applicable statute, I must “take into
account the nature, circumstances, extent, and gravity of the violation or violations and,
with respect to the violator, ability to pay, effect on ability to continue to do business, any
history of prior such violations, the degree of culpability, and such other matters as
justice may require.” 21 U.S.C. § 333(f)(5)(B).

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

I find that Respondent committed five violations of the Act with a thirty-six month
period. Respondent admits that on August 30, 2017, a new employee, who was
temporarily unsupervised, sold cigarettes to a minor and failed to verify by means of
photographic identification containing a date of birth that the purchaser was 18 years of
age or older. See Answer § 1. I find Respondent’s repeated inability to comply with
federal tobacco regulations to be serious in nature. Accordingly, I find that the civil
money penalty of $5,591 is reasonable under these circumstances.

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

While Respondent submits that the civil money penalty is too high for the employee
whose actions caused the Complaint, Respondent has not provided any evidence that it
does not have the ability to pay the $5,591 penalty. Further, Respondent has not
presented any evidence regarding the effect of the civil money penalty on its ability to do
business. Respondent may continue to sell tobacco products so long as it complies with
the Act’s prohibition of selling tobacco products to minors. I reiterate that Respondent
and not its employee is responsible for any civil money penalty that I impose.

c. History of Prior Violations

Respondent is a repeated violator of FDA tobacco regulations prohibiting the sale of
cigarettes to minors. This is the second civil money penalty action against Respondent
for violations of the Act and its implementing regulations. On February 28, 2017, CTP
initiated a previous civil money penalty action, CRD Docket Number T-17-2389, FDA
Docket Number FDA-2017-H-1023, for three violations of 21 C.F.R. pt. 1140 within a
twenty-four month period.? See Complaint { 9; see also CTP Ex. 2 §§ 1, 7,9. CTP
alleged that on June 12, 2015, and September 6, 2016, Respondent sold cigarettes to
minors and failed to verify, by means of photo identification containing a date of birth,
that the purchasers were 18 years of age or older. CTP Ex. 2 J§ 1, 7, 9. Respondent has
admitted the prior violations and paid the agreed upon penalty. Complaint § 10; Lundeen
Declaration at 1. While I commend Respondent for taking responsibility for its prior
violations, Respondent’s repeated inability to comply with FDA tobacco regulations is
troubling and supports the imposition of a higher penalty.

d. Degree of Culpability

The record shows that Respondent sold cigarettes or smokeless tobacco to minors in
violation of 21 C.F.R. § 1140.14(a)(1) on June 12, 2015, September 6, 2016, and August
30, 2017. The record shows that on those same dates, Respondent failed to verify the
identification of the purchasers in violation of 21 C.F.R. § 1140.14(a)(2)(ii). Based on
Respondent’s admissions regarding the current and previous civil money penalty actions
and the evidence on the record, I find Respondent fully culpable for five violations of the
Act and its implementing regulations.

e. Additional Mitigating Factors

After reviewing Respondent’s evidence, I do not find any mitigating factors. In
requesting a lower civil money penalty, Respondent relies mainly on the fact that the
infraction was due to new employee, who had not gone to server training, and was
careless. Respondent implies that it should not be responsible for careless acts of its
employees. However, it is Respondent’s responsibility to train and supervise its
employees. Furthermore, it Respondent’s responsibility to establish policies that prevent
unlawful sales of cigarettes, and other tobacco products to minors. Respondent submitted
evidence that appears to be policies in place prior to hiring the new employee responsible
for the sale of the tobacco products. See Respondent’s Ex. 1- Ex. 3, Ex. 5. Respondent
has not submitted any evidence to show it has made changes to its policies and
procedures since the filing of this complaint. Respondent’s Ex. 4 concerns alcohol sales
policy, which is not an issue before me. This is the third inspection Respondent has
failed even though it argues that the August 30, 2017 violations arise out of a single
incident, it was still two violations and the third failed inspection. See Lundeen

3 CTP documented two violations on June 12, 2015 (sale to minor and failure to verify
age of purchaser), and two on September 6, 2016 (sale to minor and failure to verify age
of purchaser). In accordance with customary practice, CTP counted the violations at the
initial inspection as a single violation, and all subsequent violations as separate individual
violations.
Declaration at 2. Based on the gravity of Respondent’s violations, ability to pay and
continue business, history of prior violations, culpability, and lack of mitigating factors, I
find the full penalty is appropriate and supported by the evidence.

VI. Penalty

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

VII. Conclusion

For these reasons, and pursuant to 21 C.F.R. § 17.45, | impose a civil money penalty of
$5,591 against Respondent, Brookdale Liquors, Inc. d/b/a Brookdale Liquors, for five
violations of the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq.,
and its implementing regulations, 21 C.F.R. pt. 1140, within a thirty-six month period.
Pursuant to 21 C.F.R. § 17.45(d), this decision becomes final and binding upon both
parties after 30 days of the date of its issuance.

/s/
Wallace Hubbard
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Spanish Hills Wellness Center
(CCN: 29-5094),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-18-907
ALJ Ruling No. 2018-8
Date: September 10, 2018
DISMISSAL

For the reasons set forth below, I conclude that Petitioner, Spanish Hills Wellness Center,
is not entitled to Administrative Law Judge review. I therefore dismiss its hearing
request pursuant to 42 C.F.R. § 498.70(b).

Discussion

Petitioner has no right to a hearing because the Centers for Medicare &
Medicaid Services (CMS) did not impose a remedy.

Petitioner is a skilled nursing facility located in Las Vegas, Nevada, that participates in
the Medicare program as a provider of services. On February 14, 2018, the Nevada
Bureau of Health Care Quality and Compliance (state agency) completed a complaint
survey of the facility and found that it was not in substantial compliance with federal
requirements. By letter dated March 13, 2018, the state agency advised Petitioner that,
based on the survey findings, it was going to impose a denial of payment for new
admissions (DPNA), effective May 14, 2018, if the facility did not return to substantial
compliance by that date. Attachments to Request for Hearing, DAB E-file item #1a,

at 2-3. The state agency also recommended terminating Petitioner’s provider agreement
2

effective August 14, 2018, if the facility did not return to substantial compliance by that
date. Id. at 3.

Petitioner requested a hearing on May 11, 2018, to contest the deficiencies cited during
the February 14, 2018 survey. The case was assigned to me and I issued an
Acknowledgment and Prehearing Order on May 17, 2018, in which I directed the parties
to file prehearing exchanges by certain dates.

CMS moved to dismiss Petitioner’s request for hearing on August 6, 2018. In support of
its motion, CMS submitted a copy of its records showing that Petitioner achieved
substantial compliance effective March 20, 2018. CMS Exhibit 1. CMS claims that it
did not authorize a certification of noncompliance or impose any remedy as a result of the
February 14, 2018 survey. The previously threatened DPNA did not go into effect and,
as a result, Petitioner has no right to ALJ review. CMS also notes that Petitioner does not
oppose the motion to dismiss.

The hearing rights of a long-term care facility are established by federal regulations at

42 C.F.R. Part 498. A provider dissatisfied with an initial determination is entitled to
further review, but administrative actions that are not initial determinations are not
subject to appeal. 42 C.F.R. § 498.3(a), (d). The regulations specify which actions are
“initial determinations” and set forth examples of actions that are not. With an exception
not applicable here, a finding of noncompliance that results in the imposition of a remedy
specified in 42 C.F.R. § 488.406 is an initial determination for which a facility may
request an ALJ hearing. 42 C.F.R. § 498.3(b)(13). But a facility has no right to a hearing
unless CMS imposes one of the specified remedies. Lutheran Home - Caledonia, DAB
No. 1753 (2000); Schowalter Villa, DAB No. 1688 (1999); Arcadia Acres, Inc., DAB
No. 1607 (1997). The remedy, not the citation of a deficiency, triggers the right to a
hearing. Schowalter Villa, DAB No. 1688 at 3; Arcadia Acres, Inc., DAB No. 1607 at 3.
Where CMS withdraws the remedies or otherwise declines to impose one, Petitioner has
no hearing right. See, e.g., Fountain Lake Health & Rehab., Inc., DAB No. 1985 at 5-6
(2005).

Because CMS has imposed no remedies, Petitioner has no right to an ALJ hearing, and
this matter must be dismissed. 42 C.F.R. § 498.70(b). I therefore grant CMS’s motion.

/s/
Carolyn Cozad Hughes
Administrative Law Judge