Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Vegas, Inc.
d/b/a Vegas Liquor and Wine Shoppe,

Respondent.

Docket No. C-15-3075
FDA No. FDA-2015-H-2298

Decision No. CR4499

Date: January 6, 2016

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated a $5,000 civil money penalty (CMP)
action against Respondent for unlawfully selling cigarettes to minors, on three separate
occasions, and failing to verify, by means of photo identification containing a date of
birth, that the purchasers were 18 years of age or older, on two separate occasions, in
violation 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. During the hearing process,
Respondent failed to comply with a judicial direction regarding CTP’s discovery request.
I therefore strike Respondent’s answer and issue this decision of default judgment.

I. Procedural History

Respondent timely answered CTP’s complaint. I issued an Acknowledgement and
Prehearing Order (APHO) that set deadlines for parties’ submissions, including the
September 24, 2015 deadline to request that the opposing party provide copies of
documents relevant to this case. Additionally, the APHO stated that a party receiving
such a request must provide the requested documents no later than 30 days after the
request.

CTP served Respondent with its request for documents on September 23, 2015.' On
November 3, 2015, CTP filed a motion to compel discovery indicating that CTP had not
received a response to its request for production of documents. See 21 C.F.R. § 17.23(a).
On November 3, 2015, CTP also filed a motion to extend the deadlines. Pursuant to my
direction, a November 5, 2015 letter allowed Respondent until November 20, 2015 to file
a response to CTP’s motion to compel discovery. On November 5, 2015, I also issued an
Order that extended the parties’ pre-hearing exchange deadlines.

On November 25, 2015, CTP filed an updated status report requesting that I grant its
motion to compel and extend CTP’s deadlines. The status report stated that Respondent
had not filed an objection to the motion to compel and that Respondent had not produced
any documents in response to CTP’s request for production of documents.

On November 30, 2015, I issued an Order that granted CTP’s motion to compel
discovery. I noted that Respondent had not filed a response to CTP’s motion to compel
discovery. In that Order, I stated that Respondent shall comply with CTP’s request for
production of documents by December 16, 2015. I further stated that:

Failure to do so 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. Within five (5)
days of Respondent’s deadline to comply with discovery, CTP must file a
status report notifying me whether Respondent has complied with
discovery.

On December 21, 2015, CTP filed an updated status report advising me that Respondent
had not complied with my November 30, 2015 Order. On December 21, 2015, CTP also
filed a motion to impose sanctions that asked me to strike the Respondent’s answer and
issue a default judgment in this case.

Il. Striking Respondent’s Answer

Respondent failed to file a response to CTP’s motion to compel discovery, and to comply
with the November 30, 2015 Order compelling discovery responses to be provided by

' In its motion to compel, CTP stated that 4 attempts were made by UPS to deliver the
request for production of documents to Respondent’s counsel but that those attempts
were unsuccessful because the business was closed at the time of each delivery attempt.
CTP stated that on October 19, 2015 it emailed a copy of the request for production of
documents to Respondent’s counsel.
December 16, 2015. Respondent did not comply with CTP’s discovery requests.
Respondent has not made any contact with this Court since August 13, 2015, the date
Respondent timely filed its answer and notice of appearance. Respondent’s failure to
effectively prosecute and defend actions taken over the course of the proceedings have
interfered with the orderly and speedy processing of this case, further warranting
imposition of sanctions. See 21 C.F.R. § 17.35(a) (1)(2) and (3).

Due to Respondent’s noncompliance with the November 30, 2015 Order, I am striking
Respondent’s Answer, issuing this default decision, and assuming the facts alleged in
CTP’s complaint to be true. See 21 C.F.R. § 17.35(c) (3), 17.11(a). The harshness of the
sanctions I impose upon either party must relate to the nature and severity of the
misconduct or failure to comply, and I find the failure to comply here sufficiently
egregious to warrant striking the answer and issuing a decision without further
proceedings. See 21 C.F.R. § 17.35(b). Respondent failed to comply with the November
30, 2015 Order, nor did it provide any adequate justification for not doing so.

III. Default Decision

Striking Respondent’s answer leaves the Complaint unanswered. Therefore, I am
required to issue an initial decision by default if the complaint is sufficient to justify a
penalty. 21 C.F.R. § 17.11(a). Accordingly, I must 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 and
conclude that default judgment is merited based on the allegations of the Complaint and
the sanctions imposed on Respondent for failure to comply with my orders. 21 C.F.R.
§ 17.11. Specifically:

e Respondent owns Vegas Liquor and Wine Shoppe, an establishment that sells
tobacco products and is located at 8024 Greenfield Road, Detroit, Michigan
48228. Complaint § 3.

e CTP previously initiated a civil money penalty action, CRD Docket Number
C-15-547, FDA Docket Number FDA-2014-H-2068, against Respondent for three
violations of 21 C.F.R. pt. 1140 within a 24-month period. Specifically, those
violations included one violation on January 11,2014, when Respondent sold
cigarettes to a minor; and two violations on June 6, 2014, when Respondent sold
cigarettes to a minor, and failed to verify, by means of photographic identification,
that the tobacco purchaser was 18 years of age or older. Complaint § 10;
December 1, 2014 Complaint § 10.

e The previous civil money penalty action concluded when Khalaf Alquad,
Respondent’s authorized representative, settled the action with CTP on
Respondent’s behalf. Mr. Alquad signed an Acknowledgment Form, dated
December 18, 2014 in which he “admitt[ed] that the violations . . . occurred,
waiv[ed] his ability to contest the violations in the future, and stat[ed] that he
understood that the violations may be counted in determining the total number of
violations for purposes of future enforcement actions.” The Administrative Law
Judge closed the case on January 13,2015. Complaint § 11.

e During a subsequent inspection of Respondent’s establishment conducted on
March 14, 2015, at approximately 11:30 AM, FDA-commissioned inspectors
documented that “a person younger than 18 years of age was able to purchase a
package of Newport Box 100s cigarettes... .” Complaint J 1. The inspectors
also documented that “the minor’s identification was not verified before the sale . .
. LJ? Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the regulations at
21 CFR. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1; see 21 U.S.C.

§ 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). The regulations prohibit the
sale of cigarettes to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a).
The regulations also require retailers to verify, by means of photo identification
containing a purchaser’s date of birth, that no cigarette purchasers are younger than 18
years of age. 21 C.F.R. § 1140.14(b)(1).

Taking the above alleged facts as true, Respondent violated the prohibition against selling
tobacco to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on January 11,
2014, June 6, 2014, and March 14, 2015. On June 6, 2014 and March 14, 2015,
Respondent also violated the requirement that retailers verify, by means of photo
identification containing a purchaser’s date of birth, that no tobacco purchasers are
younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s
actions constitute violations of law that merit a civil money penalty.

CTP has requested a fine of $5,000, which is a permissible fine under the regulations.
21 C.F.R. § 17.2. Therefore, I find that a civil money penalty of $5,000 is warranted and
so order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


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

(FDA No. FDA-2017-H-6876)
Complainant,

v.

Stowers Enterprises, Inc.
d/b/a BP,

Respondent.
Docket No. T-18-668
Decision No. TB3389

Date: December 31, 2018

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks to impose a civil money penalty (CMP) of
$5,591 against Respondent, Stowers Enterprises, Inc. d/b/a BP, located at 807 West
Atkinson Avenue, Milwaukee, Wisconsin 53206, for five violations of the Federal Food,
Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seqg., and its implementing regulations,
21 C.F.R. pt. 1140, within a 36-month period. Specifically, CTP alleges that BP violated
the Act by impermissibly selling covered 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. For the reasons discussed below, I find in favor of CTP
and impose a $5,591 CMP against Respondent.

L BACKGROUND AND PROCEDURAL HISTORY

CTP began this matter by serving an administrative complaint (Complaint) seeking a
$5,591 CMP on Respondent, at 807 West Atkinson Avenue, Milwaukee, Wisconsin
53206, and by filing a copy of the Complaint with the Departmental Appeals Board
(DAB). See DAB E-File Docket (Dkt.) Nos. 1-1b.

On January 16, 2018, Respondent, represented by counsel, timely filed an Answer and
motion for extension requesting additional time within which to file an Amended
Answer. Dkt. No. 3. I granted Respondent’s motion and provided Respondent until
February 15, 2018, to file an Amended Answer. Dkt. No. 4. On January 26, 2018,
Respondent served CTP with a Discovery Demand for production of documents, seeking
two categories of documents. Dkt. No. 6a. On February 5, 2018, CTP filed a Motion for
a Protective Order concerning the document requests. Dkt. No. 6. Respondent did not
file a response to CTP’s motion. On February 26, 2018, CTP filed a Memorandum of
Law in support of its Motion for a Protective Order and six attachments (CTP Attach. 1-
6) in support thereof, including a Privilege Log (CTP Attach. 1). Dkt. Nos. 8-8f.

On March 13, 2018, I granted CTP a limited protective order. Dkt. No. 9. Accordingly,
CTP was not required to produce unredacted copies of documents responsive to
Respondent’s requests. Jd.

On March 13, 2018, I issued an Acknowledgement and Pre-Hearing Order (APHO) that
set deadlines for discovery and the parties’ pre-hearing exchanges. Dkt. No. 10. On 34
4, 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 Inspector Jason
Laurin (CTP Exs. 3-4). Dkt. Nos. 12-120. On June 25, 2018, Respondent filed a pre-
hearing brief, (Dkt. No. 14a) and on August 6, 2018, Respondent filed an amended list of
proposed witnesses and exhibits, which included five exhibits (Respondent (Resp.) Exs.
1-5) four proposed witnesses, and written direct testimony of the four proposed
witnesses. Dkt. Nos. 20-20e. Respondent’s proposed witnesses included: Benny Wilson,
Respondent’s stocking clerk; Isaiah Wilson, Respondent’s cashier; Steven Gabrish, a
private investigator retained by Respondent; and Diane Stowers, Respondent’s owner.

Id.

On August 8, 2018, I held a pre-hearing conference in this case. See Dkt. No. 22. I
explained to the parties that the purpose of an administrative hearing under the applicable
regulations is to afford the parties an opportunity for cross-examination of witnesses. I
further explained that I must determine whether Respondent is liable for the violations
alleged in the complaint as well as the appropriate penalty. At the pre-hearing
conference, Respondent waived its right to cross-examine CTP’s proposed witnesses.
Consequently, CTP indicated that it did not wish to cross-examine Respondent’s
proposed witnesses. Both parties indicated that they did not see the necessity for an in-
person telephone hearing and agreed to a decision based on the documents entered into
the record.
After I informed the parties that I would make a decision based on the evidence in the
record, both parties requested the opportunity to submit additional evidence. I informed
the parties that I would allow them to submit additional evidence and file any objections
to an opposing party’s additional evidence. Dkt. No. 22.

On August 13, 2018, CTP filed two additional exhibits (CTP Exs. 15-16), which included
a supplemental declaration of Inspector Jason Laurin and Minor A’s redacted
identification. Respondent did not file any objection to these exhibits. The parties were
given the opportunity to submit final briefs with any arguments they wished for me to
consider. On October 5, 2018, Respondent filed its final brief (Resp. Final Brief). CTP
did not file a final brief. As the briefing period is over, I now render my decision.

Il. ISSUES

A. Whether Respondent sold covered tobacco products to a minor and failed to verify
by means of photographic identification that the covered tobacco products
purchaser was of sufficient age on November 30, 2017, in violation of 21 C.F.R.

§ 1140.14(b)(1) and (b)(2)(i); and

B. Ifso, whether the CMP amount of $5,591 sought by CTP is appropriate.
Ill. 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 covered tobacco products 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(b)(1) and (b)(2).
In its Complaint, CTP alleges that Respondent BP committed five violations of the Act
and its implementing regulations within a 36-month period. Dkt. No. 1 41. Specifically,
CTP alleges that on November 30, 2017, Respondent sold covered tobacco products to a
minor and failed to verify the photographic identification of the minor. CTP further
alleges that Respondent previously admitted to three! violations of regulations found at
21 CFR. pt. 1140. Id. § 9, 11-12. 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. § 12; see
also Dkt. No. 12 at 2-3. Accordingly, the only issue before me is whether Respondent
sold covered tobacco products to a minor and failed to verify the photographic
identification of the minor on November 30, 2017, in violation of 21 C.F.R.

§ 1140.14(b)(1) and (b)(2)(i), as alleged in the Complaint.

CTP’s case against Respondent rests on the testimony of Ms. Sternberg and Inspector
Laurin, supported by corroborating evidence. See CTP Exs. 3-4. Ms. Sternberg testified
that the Swisher Sweets cigars purchased during the November 30, 2017 inspection were
manufactured or processed for commercial distribution at facilities in Kentucky and West
Virginia. CTP Ex. 3 §§ 7-8. The manufacturer of Swisher Sweets cigars does not have
production facilities in Wisconsin, where the covered tobacco products were purchased.
Id. §9. Respondent did not challenge Ms. Sternberg’s testimony and did not dispute that
Respondent held Swisher Sweets cigars for sale at its business establishment on
November 30, 2017. See Dkt. Nos 14a, 26a. Accordingly, I find that Respondent’s
establishment received Swisher Sweets cigars in interstate commerce and held them for
sale on November 30, 2017, after shipment in interstate commerce.

Inspector Laurin is an FDA-commissioned officer for the state of Wisconsin 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 3-4. 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. 45.

Inspector Laurin testified that on November 30, 2017, he conducted such an inspection of
Respondent’s establishment, located at 807 West Atkinson Avenue, Milwaukee,
Wisconsin 53206. CTP Ex. 448. Minor A, whose date of birth is March 24, 2000, was
17 years old at the time the minor accompanied Inspector Laurin on the November 30,
2017 inspection. See CTP Ex. 5. Minors in the tobacco program are trained to carry

' Two violations were documented on October 25, 2016, and two on May 31, 2017 (sale
to a minor and failure to verify date of birth). Dkt. No. 1 § 11. In accordance with
customary practice, CTP counted the violations at the initial inspection as a single
violation, and subsequent violations as separate individual violations.
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] 6.
Before the inspection, Inspector Laurin confirmed that Minor A was under the age of 18,
that Minor A possessed photographic identification showing her actual date of birth, and
that Minor A did not have any tobacco products in her possession. CTP Ex. 44 8. I note
that Inspector Laurin’s June 4, 2018 written direct testimony does not reflect Minor A’s
gender. /d. On August 13, 2018, CTP submitted a partially redacted copy of Minor A’s
driver’s license. The driver’s license documents that Minor A is female. CTP Ex. 16.

Inspector Laurin testified that he parked his car near Respondent’s establishment and
remained in the vehicle during the inspection, because he felt his presence would
compromise the undercover nature of the inspection. CTP Ex. 49. Inspector Laurin
had an unobstructed view of Minor A exiting the vehicle, entering Respondent’s
establishment, exiting the establishment less than five minutes later, and immediately
returning to the vehicle. CTP Ex. 4 §§ 9-10. Inspector Laurin testified that upon entering
the vehicle, Minor A handed him a package of Swisher brand cigars. CTP Ex. 4 § 10.

Inspector Laurin testified that Minor A reported to him that during the inspection, Minor
A was able to purchase a package of cigars from an employee at Respondent’s
establishment. CTP Ex. 4 10. Minor A also reported to Inspector Laurin 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.

Inspector Laurin processed the evidence in accordance with standard procedures. CTP
Ex. 44 10. Shortly after the inspection, Inspector Laurin recorded the inspection in the
FDA’s Tobacco Inspection Management System (TIMS) and created a Narrative Report.
Id. § 11. CTP corroborated Inspector Laurin’s testimony by offering as evidence
photographs that Inspector Laurin made of the cigars that Minor A purchased on the date
in question. CTP Exs. 8-9. CTP also submitted the TIMS form and Narrative Report
created by Inspector Laurin shortly after the inspection. CTP Exs. 6-7.

Respondent filed an Answer, informal brief, and final brief. See Dkt. Nos. 3, 14a, and
26a. In its filings, Respondent argues that CTP should not hold the owner responsible for
the actions of others. In Respondent’s informal brief filed on June 25, 2018, Respondent
also contends that Minor A “[was] the only CTP witness to the sale and his statement is
the sole factual basis for the Complaint.” Dkt. No. 14a, at 2. Further, Respondent argues
that Inspector Laurin was not present at BP at the time of the alleged purchase and that he
could not see the purchase from outside the store. /d. In its informal and final briefs,
Respondent challenges the integrity of the undercover inspection by attacking the
credibility of Minor A.
Respondent presents a different scenario of what occurred in the store on November 30,
2017, by submitting a statement from a private investigator who represents that he
interviewed two employees and the store’s owner on February 15, 2018. Resp. Ex.3,
Dkt. No. 20c. The investigator’s detailed report discusses information that the
investigator asserts that he received during interviews with employees Benny and Isaiah
Wilson concerning the events of November 30, 2017. The report includes a lengthy
explanation of a juvenile’s attempt to purchase a “blunt cigar” and describes in detail the
interaction between the juvenile and the cashier, the juvenile’s behavior, and the
juvenile’s solicitation of another customer to buy the cigar.

Respondent also submitted the written statements of Benny and Isaiah Wilson, the
employees on duty on the evening of November 30, 2017. Resp. Ex. 1 and 2. In a hand-
written statement dated December 27, 2017, Isaiah Wilson testified that “a young man
came to buy a Tobago [sic] item[.] I told him he needed A ID. He left the Register Went
back by coolers.” Resp. Ex. 2.

Additionally, in a handwritten statement dated December 27, 2017, Benny Wilson, who
was working in the store at the time of the inspection testified that “young man walk [sic]
in and ask Chasher [sic] for a blunt and Chasher [sic] ask for I.d.” The testimony
continues, “the young man got mad and started curseing [sic].” Mr. Wilson further stated
that afterwards, “...the young man walk [sic] back by the cooler and ask [sic] a man who
was back there and that man bought the blunt for him.” Resp. Ex. 3.

Unlike the more comprehensive statement prepared by the private investigator, the
statements submitted by these witnesses contain no information about the juvenile’s
specific comments while in the store, nor do they include a physical description of the
ethnicity or age of the man at the back of the store.

I note that Isaiah and Benny Wilson repeatedly refer to the minor as “he,” or “him,” in
not only their December 27, 2017 statements that were prepared less than a month after
the November 30, 2017 incident, but also in their August 6, 2018 sworn declarations.
Clearly at no point did Isaiah and Benny Wilson describe the minor attempting to
purchase a tobacco product during the relevant time period as female.

Despite Respondent’s arguments, I do not find the testimony of Isaiah and Benny Wilson
to discredit the testimony of Inspector Laurin. Inspector Laurin testified credibly and
comprehensively about his observations during the November 30, 2017, inspection.” I
also find Inspector Laurin’s testimony is corroborated by photographic proof that
Respondent sold a package of Swisher Sweets cigars to Minor A on November 30, 2017,

2 While it is undisputed that Inspector Laurin did not directly witness the alleged
transactions on November 30, 2017, the regulations do not require such a direct
eyewitness.
in violation of 21 C.F.R. § 1140.14(b)(1). Inspector Laurin’s testimony establishes that
Minor A did not have covered tobacco products in her possession before entering the
store and had covered tobacco products upon leaving the establishment. Consequently,
the only reasonable inference that I can draw from the evidence is that Minor A
purchased covered tobacco products in the store. Minor A’s statement to Inspector
Laurin further confirms that during the inspection, Minor A was able to purchase a
package of Swisher Sweets cigars from an employee at Respondent’s establishment.

Witnesses Isaiah and Benny Wilson consistently refer to the minor as male, even though
Minor A was actually female. See CTP Exs. 15, 16. Although CTP initially followed its
standard practice of redacting the gender of the minor, once it became clear that
Respondent’s arguments were focused on attacking the credibility of a minor who
Respondent’s witnesses thought was male, CTP proffered an exhibit showing the gender
of Minor A as specified on her state driver’s license. Compare CTP Exs. 5 and 16.
Inspector Laurin also testified that Minor A is female. CTP Exs. 15.

I give the private investigator’s report (Resp. Ex. 3) little weight. The private
investigator compiled the information contained in the report on or after February 15,
2018, for events that occurred on November 30, 2017. CTP initiated its Complaint on
December 20, 2017 (Dkt. No. 1) and Respondent requested a hearing in its January 16,
2018 Answer (Dkt. No. 3). Therefore, it is reasonable that the investigator most likely
prepared the report in part in anticipation of a hearing in this matter. Furthermore, the
information provided in the report is primarily hearsay. Fed. R. Evid. 801. I find the
December 27, 2017 hand-written statements of Isaiah and Benny Wilson to be the most
reliable account offered by these two witnesses.

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. Therefore, while most of the information in the report does not shed
additional light on this case, I do note that Benny Wilson reported to the investigator that
there were at least six other people in the store at the time of the incident. If Benny
Wilson’s statement to the investigator about the number of customers in BP is accurate, it
is entirely possible that two minors may have tried to purchase covered tobacco products
at the store around the same time. Respondent’s assertion that a male customer attempted
to purchase a covered tobacco product does not preclude the fact that Minor A, who is
female, was able to purchase a covered tobacco product at approximately 6:06 PM on
November 30, 2017. This would provide a reasonable explanation as to why
Respondent’s two witnesses testified that a male tried to purchase covered tobacco
products, while the minor that was part of the investigation is actually female.? Thus, it is

3 On August 13, 2018, Respondent’s counsel proffered a declaration where he stated that
he drafted the documents signed by Respondent’s witnesses and that “[t]he use of the
male gender to refer to the CI is a default to the alternative ‘he/she’ or ‘she’.” Dkt. No.
not necessary that I discredit the testimony of Isaiah Wilson or Benny Wilson to find that
Respondent violated the Act on November 30, 2017, as alleged.

It is also reasonable to infer that a store employee failed to check the minor’s
identification on November 30, 2017, in violation of 21 C.F.R. § 1140.14(b)(2)(i). It is
undisputed that Minor A was 17 years old at the time of the inspection on November 30,
2017. Minor A reported to Inspector Laurin that Respondent’s employee did not request
to see her identification prior to purchasing the covered tobacco products on November
30, 2017.

The testimony of both Ms. Sternberg and Inspector Laurin, supported by corroborating
evidence, is sufficient to establish that it is more likely than not that on November 30,
2017, Respondent unlawfully sold covered tobacco products to Minor A, in violation of
21 C.F.R. § 1140.14(b)(1), and failed to verify the photographic identification of Minor
A, in violation of 21 C.F.R. § 1140.14(b)(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
five violations of the Act.

B. Civil Money Penalty

Pursuant to 21 U.S.C. § 333(f)(9), Respondent BP 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 $5,591 against Respondent for five violations of
the Act and its implementing regulations within a 36-month period. Dkt. No. 1 § 1. In its
informal brief, CTP continued to assert that a $5,591 CMP is appropriate. Dkt. No. 12, at
9-13.

Respondent’s position is that the CMP is “too high,” and should be reduced “due to
Respondent’s efforts at recruitment, training, and monitoring employees.” Dkt. No. 3, at
3. In its informal brief, Respondent requests an opportunity to submit financial
information on ability to pay if it is ordered to pay a CMP. Dkt. No. 14a, at 3. Section 3c
of the March 13, 2018 Order directed the Respondent to submit all pre-hearing proposed
exhibits by June 25, 2018. Dkt. No 10. In an Order dated June 28, 2018, I reminded the
parties of the deadline set forth in the March 13, 2018 Order. Dkt. No. 16. In an Order

23. Counsel’s declaration appears to refer to the typewritten statements of Isaiah and
Benny Wilson dated August 6, 2018. In both statements, Isaiah and Benny Wilson refer
to the minor as a “young man.” Resp. Ex. 1 and 2. Accordingly, I find Respondent’s
declaration unpersuasive.
dated July 30, 2018, I extended the deadline to submit all supplemental prehearing
exchange filings to August 6, 2018. Despite several opportunities to do so, to date,
Respondent has not provided any financial information on its ability to pay.

I find that CTP met its burden by a preponderance of the evidence and concluded that
Respondent committed five violations of the Act and its implementing regulations within
a 36-month period. Accordingly, I now turn to whether a $5,591 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(f)(5)(B).

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

I find that Respondent committed a total of five 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 $5,591 CMP sought
by CTP. 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 July 31,
2017, for violations of the Act and its implementing regulations. In the first CMP action,
CRD Docket Number T-17-5541, FDA Docket Number FDA-2017-H-4505, Respondent
twice violated the prohibition against selling covered tobacco products to persons
younger than 18 years of age, 21 C.F.R. § 1140.14(b), 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(b)(2)]@). See CTP Ex. 1. Respondent settled the prior complaint with CTP for
an undisclosed penalty amount on August 31, 2017. See CTP Ex. 2. Yet, three months
later, on November 30, 2017, Respondent once again sold a covered tobacco product to a
minor and failed to verify the identification of the purchaser. 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.
10

4. Degree of Culpability

Respondent alleges that “[i]t is not clear if the allegation is against the owner or an
employee,” and “[i]f the person engaged in the wrongful contact was not the owner, that
person should be sued[,] not the owner.” Dkt. No. 3 §§ 2.3, 2.4. 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 five violations as alleged in the
Complaint, and I hold it fully culpable for all five 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 the
cashier, Isaiah Wilson, showed the private investigator an FDA-sponsored cell phone app
that he uses to scan customer’s identification. However, 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 $5,591 to be reasonable
and appropriate under 21 U.S.C. §§ 303(£)(5)(B) and 333(f)(9).

Vv. CONCLUSION

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $5,591 against
Respondent, Stowers Enterprises, Inc. d/b/a BP, for five violations of the Act, 21
U.S.C.§ 301 et seg., and its implementing regulations, 21 C.F.R. pt. 1140, within a 36-
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,
Complainant
v.

Hanna Zamunda, Inc.
d/b/a Ecorse Market,

Respondent.

Docket No. T-18-856
FDA Docket No. FDA-2018-H-0109

Decision No. TB3349
Date: December 21, 2018
INITIAL DECISION

The Center for Tobacco Products (CTP) seeks to impose a civil money penalty (CMP)
against Respondent, Hanna Zamunda, Inc. d/b/a Ecorse Market, located at 585 Visger
Road, Ecorse, Michigan 48229, 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, in this instance, CTP alleges that
Respondent violated the Act by impermissibly selling covered tobacco products to a
minor.

' Previously, on June 28, 2017, CTP initiated the first CMP action for three violations,
which was resolved after Respondent admitted all of the allegations in the complaint and
paid the agreed upon penalty. In acknowledging that the alleged violations occurred,
Respondent expressly waived its right to contest such violations in subsequent actions.
See Notice of Settlement Agreement FDA Docket FDA-2017-H-3890, CRD Docket T-
17-4989 (First CMP Acknowledgment Form documenting admission of liability).
Procedural History

CTP began this case by serving an administrative complaint seeking a $2,236 civil money
penalty on Respondent, at 585 Visger Road, Ecorse, Michigan 48229, and by filing a
copy of the complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. Respondent timely answered CTP’s Complaint. In its answer,
Respondent denied the allegation. Respondent’s Answer (Answer) at 2.

On February 9, 2018, I issued an Acknowledgment and Pre-Hearing Order, which
established the procedure and deadlines in this case. CTP filed its pre-hearing exchange
on May 30, 2018. CTP’s pre-hearing exchange included 11 numbered exhibits (CTP
Exs. 1-11) and declaration of one witness. Respondent filed its pre-hearing exchange on
June 18, 2018, which included four exhibits originally labeled A-D, (R. Exs. 1-4),? and a
declaration of one witness.

On July 11, 2018, I held a pre-hearing conference in this case. During the prehearing
conference call, we discussed the procedural history of the case as well as the prehearing
exchanges submitted by both parties. CTP offered one witness in this case, Inspector
Hiram Harris. Respondent also offered one witness, Respondent’s manager, Danny
Samona. Both parties communicated its desire to cross-examine the opposing party’s
witness.

On August 9, 2018, I held a hearing in this case. During the hearing, I admitted the
exhibits (CTP Exs. 1-11, Respondent Exs. 2-5), and allowed Respondent to cross-
examine Inspector Harris and CTP to cross-examine Mr. Samona.

On August 30, 2018, I informed the parties that the Court had received the transcript of
the hearing, and set the deadline for the parties’ post-hearing brief submissions as
October 5, 2018. Both parties filed post-hearing briefs.

Analysis

In order to prevail, CTP must prove Respondent’s liability by a preponderance of the
evidence. 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. Jn re Winship, 397 U.S. 358, 371-72 (1970); Concrete Pipe
and Products of California, Inc. v. Construction Laborers, 508 U.S. 602, 622 (1993).

Respondent submitted and labeled its exhibits as A-D, and then later submitted an
amended exhibit A, a declaration of Respondent’s manager, Danny Samona, entitled
exhibit E. I retitled Respondent’s exhibits (R. Ex. 1-5), and admitted Respondent’s
exhibits 2-5, as exhibit E is an amended version of exhibit A (Ex. 1.).
I. Alleged Violation

CTP determined to impose a CMP against Respondent pursuant to the authority conferred
by the Federal Food, Drug, and Cosmetic Act (Act) and implementing regulations at Part
21 of the Code of Federal Regulations. The Act prohibits the misbranding of tobacco
products while they are held for sale after shipment in interstate commerce. 21 U.S.C.

§ 331(k). FDA and its agency, CTP, may seek civil money penalties from any person
who violates the Act’s requirements as they relate to the sale of tobacco products. 21
U.S.C. § 331(£)(9). The sale of covered tobacco products to an individual who is under
the age of 18 years is a violation of implementing regulations. 21 C.F.R.

§ 1140.14(b)(1).

In the instant case, CTP alleged that on December 18, 2017, an FDA-commissioned
inspector conducted an inspection of Ecorse Market, and that during this inspection,
Respondent committed a violation for selling covered tobacco products to a minor, in
violation of 21 C.F.R.§ 1140.14(b)(1). Specifically, a person younger than 18 years of
age was able to purchase a package of two Swisher Sweets cigars on December 18, 2017,
at approximately 7:27 pm. Complaint at 4 9.

A. Parties’ Contentions and Evidence
i. CTP’s Position

In its Complaint, CTP alleges that Respondent committed four violations of the Act and
its implementing regulations within a 24-month period. Complaint at 4 1. Respondent
filed an answer, denying that it had sold covered tobacco products to a minor on the date
at issue, December 18, 2017. Answer at 2. Respondent argues that CTP provided no
proof of the acts or events whatsoever nor did it provide Respondent with documents
establishing such allegations. Answer at 2.

CTP’s case against Respondent rests on the testimony of Inspector Harris plus
corroborating evidence. CTP Exs. 4, 8-9. Inspector Harris is an FDA-commissioned
officer with the Michigan Department of Health and Human Services, whose duties
include determining whether retail outlets are unlawfully selling tobacco products to
minors. CTP Ex. 4. Inspector Harris’s inspections entail accompanying minors who
attempt to purchase tobacco products from retail establishments such as the one operated
by Respondent. Jd.

Inspector Harris testified that on December 18, 2017, at approximately 7:27 pm, he
conducted a follow-up compliance check inspection at Ecorse Market, located at 585
Visger Road, Ecorse, Michigan 48229. CTP Ex. 449. Inspector Harris further testified
that during the inspection, he was accompanied by Minor A, and with a clear and
unobstructed view of both the sales counter and Minor A, he observed Minor A purchase
a package of cigars from an employee at the establishment. CTP Ex. 4 § 10, Transcript
(T.) at 12.

Inspector Harris testified that once he and Minor A exited the store, they returned to
Inspector Harris’s vehicle where he immediately obtained the package of cigars from
Minor A. Inspector Harris observed that the package contained two Swisher Sweets
cigars. Inspector Harris labeled the cigars as evidence, photographed both sides of the
package, and then processed the evidence in accordance with standard procedures. CTP
Ex.44 11.

ii. Respondent’s Position

Respondent vehemently denies CTP’s allegation that it sold tobacco products to a minor
on December 18, 2017, at approximately 7:27 pm, stating that “[n]o such tobacco
violations occurred at Ecorse Market on December 18, 2017.” Respondent’s Pre-Hearing
Brief (Br.) at 3. Respondent questions the reliability of CTP’s evidence to support its
allegation. Respondent argues that CTP has not satisfied its burden as CTP failed to
proffer a sales receipt for confirmation that the illegal sale occurred and that “[Inspector
Harris’s] recollection of his time spent in Ecorse Market lacks depth.” Respondent’s
Post-Hearing Br. at 4.

Respondent submits that Inspector Harris was unable to recall details about the incident
during the hearing. Respondent’s Post-Hearing Br. at 3. Respondent notes that Inspector
Harris described the cashier, who allegedly sold tobacco to the minor, as an older
gentleman with grayish white hair. /d. at 4; T. 14. Danny Samona, Respondent’s
manager, testified that on December 18, 2017, at the time of the alleged tobacco
violation, there was no employee on staff fitting the description as stated by the FDA-
commissioned officer.” Respondent’s Ex. 5 4 3.

Respondent argues that, in addition to Inspector Harris’s inability to recall the details of
the date in question, a sales receipt for the cigars was not provided. Respondent’s Post-
Hearing Br. at 3. Respondent further argues that the “tobacco product in this case...is not
a novel item and can be purchased at virtually any tobacco retailer in Michigan.
Respondent asserts that a purchase receipt would have bolstered [Inspector] Harris’s
claims that tobacco was sold to the decoy that evening.” Jd.

Moreover, Respondent contends that “‘[h]ad Respondent immediately been notified of the
offense, Respondent could have taken the necessary steps to preserve surveillance
footage from the business to verify or refute CTP’s allegations.” Respondent’s Pre-
Hearing Br. at 4. According to Respondent, “CTP sent a notice to Respondent nearly two
weeks later ... [b]eing notified of the incident almost two weeks after the alleged
occurrence left Respondent in no position to verify that any offense occurred on that date
w” Id. at 3.
B. Findings of Fact

I find Respondent’s arguments to be without merit. Respondent attacks Inspector
Harris’s credibility by criticizing Inspector Harris’s inability to remember insignificant
details of the incident, including a detailed description of the cashier, the number of sale
registers behind the counter, and the number of staff members behind the counter.
Respondent’s Post-Hearing at 3; T. at 13-14. Such extraneous factors about the store and
incident are irrelevant to the issue at hand, especially considering the voluminous number
of inspections conducted by inspectors. During the hearing, Inspector Harris revealed
that a significant number of inspections are conducted “‘... maybe about 120 inspections
ona monthly basis.” T. 12. As it is possible that Inspector Harris could have conducted
as many as 800 inspections during the intervening seven months between the December
18, 2017 inspection and his August 9, 2018 hearing testimony, his inability to
independently recall specific details of the cashier’s physical features or the layout of the
store is not enough to discredit his testimony. Inspector Harris testified that he was in the
store no more than five minutes. T. 14. It is reasonable to assume that during this short
time period, the Inspector primarily focused on the interaction between the cashier and
the minor rather than observing such things as the number of cash registers or the number
of staff members behind the counter.

Additionally, Respondent’s assertion that the Inspector could not see the actual
transaction take place is not sufficient to rebut the allegations. Inspector Harris testified
that he was within five feet of the minor and in view of the register and cashier. T. at 13.
When questioned as to whether the cigars may have been purchased elsewhere, Inspector
Harris testified:

A That's not possible.
Q How so?

A The minor went into -- well, number one, we pick

the minors up at the start of the day. We confirm that
they have their ID on their person. We also confirm that
they have no tobacco products on their person. So, no,
it — it is not possible that, you know, we had a decoy
who for whatever reason would like to, you know, I
guess fake — fake a purchase at a location and say that
something was sold to them that was not. Along with
that, you have myself, you know, a commissioned
officer of the FDA, who visually saw the sale, and we
began the immediate documentation of that purchase as
soon as we left the location.
T. at 22. Furthermore, Respondent’s notion that CTP failed to prove the sale by a sales
receipt is also insufficient to rebut the allegation. There is no provision in the applicable
regulations requiring proof of purchase in the form of a cash register receipt.

Respondent also argues that a discrepancy in the testimony of Inspector Harris and
Respondent’s owner and manager further supports Respondent’s position. In Inspector
Harris’s December 18, 2017 narrative summary of the transaction, Inspector Harris
describes the cashier as an adult male with gray/white hair. During Inspector’s Harris’s
testimony, he also recalled the cashier as an older gentleman with grayish white hair. He
did not recall the cashier’s ethnicity, however, he testified that he didn’t believe that
cashier was African American. Tr. At 15. Danny Samona; Respondent’s owner and
manager, testified that he does not have gray hair and that he was the only employee on
staff that night who was not African American. Tr. At 27. Prior to the hearing and in
response to CTP’s request for production of documents, Respondent submitted a schedule
for the persons working at the establishment on December 18, 2017. The document
included a list of the first names of four individuals who were scheduled to work at 7:27
p.m.; the time of the alleged sale. Respondent submitted no employee or personnel
records to document the age or ethnicity of the individuals working at 7:27 p.m. on
December 18, 2017. Thus, I do not find the argued discrepancy in testimony sufficient to
discredit Inspector Harris’s testimony.

Respondent suggested that video surveillance of the alleged violation could have been
preserved had earlier notice been provided. The incident took place on December 18,
2017, CTP issued a notice of inspection on December 22, 2017. According to
Respondent’s Policy and Procedures, “...cameras continuously record sales transaction at
the cash register and such recording will retained for at least thirty (30) days.”
Respondent Ex. 4 at 4. When questioned on when that provision was included in the
manual, Mr. Samona testified:

A It would have been done after the first alleged offense
that we received from CTP.

T. at 24. The first CMP initiated by CTP was on June 28, 2017. Complaint § 11.
Therefore, Respondent had ample time to preserve any recording related to this incident
and submit as evidence to support its argument. However, Respondent failed to do so.

The evidence of record establishes to my satisfaction that the violation charged in this
case in fact took place on the date in question. The testimony of Inspector Harris, plus
the corroborating evidence is sufficient to establish that it is more likely than not that
Respondent unlawfully sold a package of cigars to a minor in violation of 21 C.F.R.

§ 1140.14(b)(1).
Therefore, I find that the facts as outlined above establish Respondent, Hanna Zamunda,
Inc. d/b/a Ecorse Market’s liability under the Act for four violations within a 24-month
period.
I. Civil Money Penalty

Pursuant to 21 U.S.C. § 333(f)(9), Respondent Ecorse Market is liable for a civil money
penalty not to exceed the amounts listed in FDA’s civil money penalty regulations at 21
C.F.R. § 17.2. In its Complaint, CTP sought to impose the penalty amount of $2,236,
against Respondent for four violations of the Act and its implementing regulations within
a twenty-four month period. Complaint at § 1.

In its Answer and Pre-Hearing Brief, Respondent asserted tl
assessed as Respondent’s position is that no violations occu
Respondent’s Pre-Hearing Br. at 3.

at no penalty should be
red. Answer at 2;

I have found that Respondent committed four violations of the Act and its implementing
regulations within a 24-month period. When determining the amount of a civil money
penalty, I am required to take into account “the nature, circumstances, extent and gravity
of the violations and, with respect to the violator, ability to pay, effect on ability to
continue to do business, any history of prior such violations, the degree of culpability,
and such other matters as justice may require.” 21 U.S.C. § 333(f)(5)(B).

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

I find that Respondent sold t
federal regulations. This is t
Respondent to comply with

e cigars to the minor on December 18, 2017, in violation of
e second CMP initiated by CTP. The repeated inability of
‘ederal tobacco regulations is serious in nature and the civil

money penalty amount should be set accordingly.

ii. Respondent's Ability to Pay And Effect on Ability to do Business
Respondent maintains that it has already suffered a major financial loss resulting from
this Complaint and requests the Court to assess the detriment that would be incurred by
the Respondent if it is found liable for the $2,236 penalty. Respondent’s Post-Hearing
Br. at 2,6. Although Respondent argues that the penalty amount is detrimental to its
business, Respondent has not provided adequate evidence to substantiate this argument,
including, but not limited to, annual tax documents, income statements, etc. Respondent
as not presented any evidence that it does not have the ability to pay the $2,236 CMP
sought by CTP.

iii. History of Prior Violations

Respondent contends that it has proven to treat this as a serious matter — as Respondent
has spent tremendous resources on re-training staff, adding adequate camera systems and
computers, and has spent a considerable amount of time and resources related directly to
this Complaint. Respondent’s Post-Hearing Br. at 6. However, the current action is the
second civil money penalty action brought against Respondent for violations of the Act
and its implementing regulations.

As noted, this is Respondent’s second CMP. Respondent has three times violated the
prohibition against selling covered tobacco products or cigarettes to persons younger than
18 years of age, and twice violated the requirement that retailers verify, by means of
photo identification containing a purchaser’s date of birth, that no cigarette or covered
tobacco product purchasers are younger than 18 years of age. 21 C.F.R. § 1140.14(a)(1),
(b)(1); 21 C.F.R § 1140.14(a)(2)(i), (b)(2)(i).

iv. Degree of Culpability

Based on my finding that Respondent committed the most recent violation in the current
complaint, I hold it fully culpable for all four violations of the Act and its implementing
regulations.

y. 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 argued that it did not
commit the alleged violation and has devoted considerable time and resources to rebut
this allegation. While I understand Respondent’s position, the record of evidence
establishes that it is more likely than not that Respondent unlawfully sold a package of
cigars to a minor. This violation, coupled with the prior violations, proves that
Respondent committed 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. The regulations were created as an initiative to avert minors
from purchasing tobacco products.

The purpose of The Family Smoking Prevention and Tobacco Control Act is to prevent
unlawful sales of tobacco products to minors. Tobacco is a highly addictive and
langerous product. The reason that sales of tobacco products to minors is unlawful is
that consumption of these products at an early age can lead to a lifetime of addiction, to
illness, and ultimately to premature death. Sales of tobacco products to minors are
unlawful because younger individuals often lack the maturity and judgment to make
informed decisions about whether to consume such inherently dangerous and addictive

products. Selling tobacco products to these individuals puts them at risk for all of the
adverse consequences that addiction can cause.

Thus, I find no reason to mitigate the penalty amount as the evidence proves the
violations were a repeated occurrence.

vi. Penalty

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

Conclusion

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $2,236 against
Respondent, Hanna Zamunda, Inc. d/b/a Ecorse Market, 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. 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/
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-2018-H-2109)

Complainant
v.

First Choice Grocery Inc.
d/b/a First Choice Food and Deli 2,

Respondent.
Docket No. T-18-2404
Decision No. TB3348

Date: December 19, 2018

ORDER DENYING RESPONDENT’S MOTION FOR EXTENSION AND
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, First Choice Grocery Inc. d/b/a First Choice Food and Deli 2,
located at 1714 Country Road 1, Dunedin, Florida 34698, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that First Choice Food and Deli 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
seq., and its implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to impose an
$11,182 civil money penalty against Respondent First Choice Food and Deli 2. During
the hearing process, Respondent has failed to comply with multiple judicial directions. I
therefore strike Respondent’s answer and issue this decision of default judgment.
I. Procedural History

CTP began this matter by serving an administrative complaint, seeking an $11,182 civil
money penalty, on Respondent First Choice Grocery Inc. d/b/a First Choice Food and
Deli 2, at 1714 Country Road 1, Dunedin, Florida 34698. Respondent filed an answer to
CTP’s complaint on July 3, 2018. I issued an Acknowledgement and Prehearing Order
(APHO) on July 11, 2018 that set deadlines for the parties’ submissions including an
August 13, 2018 deadline to request that the opposing party provide copies of documents
relevant to this case. Additionally, the APHO stated that a party receiving such a request
must provide the requested documents no later than 30 days after the request. CTP
served Respondent with its request for documents on July 18, 2018.

On September 4, 2018, CTP filed a Motion to Compel Discovery indicating that
Respondent did not respond to its request within the time limit. See 21 C.F.R. § 17.23(a).
In an Order issued on September 12, 2018, Respondent was given until September 19,
2018 to respond to CTP’s motion. Respondent did not file a response.

In a September 28, 2018 Order, I granted CTP’s Motion to Compel Discovery and
extended the pre-hearing exchange deadlines. The Order allowed Respondent until
October 15, 2018 to comply with CTP’s discovery request. In granting CTP’s Motion to
Compel Discovery, I explained that failure to comply with CTP’s discovery request 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. CTP subsequently filed a Motion to Impose Sanctions on October 22,
2018, indicating that Respondent did not comply with the Order Granting CTP’s Motion
to Compel. In an October 25, 2018 letter issued by my direction, Respondent was given
until November 6, 2018 to object to CTP’s motion.

On or around October 25, 2018, Respondent sent a letter to CTP in response to the
motion to compel explaining that his employees do not remember selling tobacco
products to anyone underage. The letter did not otherwise respond to CTP’s request for
documents. A letter was issued by my direction on November 2, 2018, requesting that
CTP let the court know if it was continuing to pursue sanctions by November 16, 2018.
On November 16, 2018, CTP renewed its Motion for Sanctions and indicated that it had
not received a response to its request for documents. A letter was issued under my
direction on that same date giving Respondent until December 3, 2018 to file a response
to CTP’s renewed Motion for Sanctions. The letter warned Respondent again that failure
to comply may result in sanctions including the issuance of an Initial Decision and
Default Judgment.

On or around November 29, 2018, Respondent filed a letter requesting additional time to
provide the requested documents to CTP.
Il. Respondent’s Request for an Extension of Time is Denied and Respondent’s
Answer is Struck

Respondent’s request for an extension of time to produce documents in response to
CTP’s discovery request is unsupported. The letter does not provide any reasoning for
the request. Respondent was served with CTP’s request for documents on July 18, 2018.
That was approximately 5 months ago. The standard time for production is 30 days.
Respondent did not request a protective order and no argument has been made that
complying with the request would be unduly burdensome or otherwise prohibited. As a
result, I find that Respondent has had more than ample time to gather any responsive
documents for production. Therefore, the request for extension is denied.

Due to noncompliance with my Acknowledgement and Pre-Hearing Order (APHO), my
Order granting CTP’s Motion to Compel, and my by direction letters ordering a response
to CTP’s motions for sanctions, I am striking Respondent’s Answer, issuing this default
decision, and assuming the facts alleged in CTP’s complaint to be true. See 21 C.F.R.

§§ 17.35(a)(1), 17.35(c) (3), 17.11(a). The harshness of the sanctions I impose upon
either party must relate to the nature and severity of the misconduct or failure to comply,
and I find the failure to comply here sufficiently egregious to warrant striking the answer
and issuing a decision without further proceedings. See 21 C.F.R. § 17.35(b).

Ill. Default Decision

Striking Respondent’s Answer leaves the Complaint unanswered. Therefore, I am
required to issue an initial decision by default if the complaint is sufficient to justify a
penalty. 21 C.F.R. § 17.11(a). Accordingly, I must 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 and
conclude the default judgment is merited based on the allegations of the Complaint and
the sanctions imposed on Respondent for failure to comply with the orders. 21 C.F.R.
§ 17.11. Specifically:

e On September 26, 2016, CTP initiated a previous civil money penalty action, CRD
Docket Number T-16-2131, FDA Docket Number FDA-2016-H-2953, against
Respondent for five! violations of 21 C.F.R. pt. 1140 within a thirty-six month
period. CTP alleged those violations to have occurred at Respondent’s business

' Two violations were documented on October 27, 2014, two violations were
documented on March 20, 2015, and two on March 12, 2016. 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.
establishment, 1714 Country Road 1, Dunedin, Florida 34698, on October 27,
2014, March 20, 2015, and March 12, 2016;

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 5:28 p.m. on January 29, 2018, at Respondent’s business
establishment, 1714 Country Road 1, Dunedin, Florida 34698, an
FDA-commissioned inspector documented Respondent’s staff selling a package of
Marlboro Gold Pack cigarettes to a person younger than 18 years of age.

These facts establish Respondent First Choice Food and Deli 2’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. § 387¢(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, 28975-76 (May 10, 2016). Under 21 C.F.R. § 1140.14(a)(1), no retailer may sell
cigarettes or smokeless tobacco to any person younger than 18 years of age. Under 21
C.F.R. § 1140.14(a)(2)(i), retailers must verify, by means of photographic identification
containing a purchaser’s date of birth, that no cigarette or smokeless tobacco purchasers
are younger than 18 years of age.

An $11,182 civil money penalty is permissible under 21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $11,182 against First Choice
Grocery Inc. d/b/a First Choice Food and Deli 2. Pursuant to 21 C.F.R. § 17.11(b), this
order becomes final and binding upon both parties after 30 days of the date of its
issuance.

/s/
Wallace Hubbard
Administrative Law Judge


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

Center for Tobacco Products,
Complainant,

v.
GHA Enterprises Inc.
d/b/a Exxon 152,

Respondent.

FDA Docket No. FDA-2018-H-1655
CRD Docket No. T-18-2052

Decision No. TB3296

Date: November 30, 2018

INITIAL DECISION AND DEFAULT JUDGMENT

Found:
1) Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R.
§ 1140.14(a)(1) and (a)(2)(i) as charged in the Complaint;
2) Respondent committed three violations in a 24-month period as set forth
hereinabove; and
3) Respondent is hereby assessed a civil penalty in the amount of $559.
Glossary:
ALJ administrative law judge!
CMP civil money penalty
CTP/Complainant Center for Tobacco Products
FDCA Federal Food, Drug, and Cosmetic Act (21 U.S.C.A.
Chap. 9)
FDA Food and Drug Administration
HHS Department of Health and Human Services

' See 5 C.F.R. § 930.204.
Respondent GHA Enterprises Inc. d/b/a Exxon 152

OSC Order to Compel Discovery and Order to Show Cause
to Respondent
TCA The Family Smoking Prevention and Tobacco Control

Act, Pub. L. No. 111-31, 123 Stat. 1776 (2009)

I. JURISDICTION

I have jurisdiction to hear this case pursuant to my appointment by the Secretary
of Health and Human Services and my authority under the Administrative Procedure Act
(5 U.S.C. §§ 554-556), 5 U.S.C.A. § 3106, 21 U.S.C. § 333(f)(5), 5 C.F.R. §§ 930.201 et
seq. and 21 C.F.R. Part 17.7
II. PROCEDURAL BACKGROUND

The Center for Tobacco Products (Complainant or CTP) filed a Complaint on May
2, 2018, alleging that FDA documented three violations within a 24-month period.’

GHA Enterprises Inc. d/b/a Exxon 152 (Respondent or Exxon 152) was served
with process on May 1, 2018, by United Parcel Service (UPS). On May 30, 2018, Robert
D. Fingar and Michael J. Gabor noticed their appearances as counsel of record for
Respondent. On the same day, Respondent, through counsel, filed an Answer.

On May 31, 2018, I issued a Pre-Hearing Order (PHO) establishing deadlines for
parties’ submissions, including a July 5, 2018 deadline to request documents from the

opposing party. The PHO further set forth that, pursuant to 21 C.F.R. § 17.23(a), any

2 See also Butz v. Economou, 438 U.S. 478, 513 (1978); Marshall y. Jerrico, Inc., 446
U.S. 238 (1980); Fed. Maritime Com’n vy. S.C. State Ports Auth., 535 U.S. 743, 744
(2002).

3 CTP did not include prior violations that occurred outside of the relevant timeframe in
the Complaint. See Complaint § 1 n.1.
documents requested must be provided to the opposing party within 30 days of the
request. The PHO also instructed that a party may move to compel or for sanctions if
requested documents are not received within 30 days. Pursuant to my PHO, CTP served
Respondent with a Request for Production of Documents on July 5, 2018.4

On August 3, 2018, Mr. Fingar filed a motion to withdraw Mr. Gabor as counsel
of record for Respondent, asserting that Mr. Gabor is no longer employed with the firm,
and as such, no longer represents Respondent and should be withdrawn as Respondent’s
counsel of record. On August 6, 2018, I granted the motion to withdraw ordering the
appearance of Mr. Gabor to be withdrawn from this matter.

On August 23, 2018, CTP filed motions to compel discovery and extend deadlines
indicating Respondent failed to respond to CTP’s Request for Production of Documents.
Respondent did not file a response to CTP’s motions.

On September 27, 2018, I issued an Order to Compel Discovery and Order to
Show Cause to Respondent (OSC). In the OSC, I granted CTP’s Motion to Compel
Discovery, and ordered Respondent to comply with CTP’s Request for Production of
Documents by October 12, 2018. I further warned Respondent that “[f]ailure to comply

will result in sanctions, which may include issuance of an Initial Decision and Default

4 Respondent also timely served CTP with a Request for Production of Documents on
July 2, 2018. Notably, Respondent’s Request for Production of Documents was signed
by Mr. Fingar. See Dkt. No. 7. On July 12, 2018, CTP filed a Motion for a Protective
Order arguing disclosure is irrelevant, exempt under 21 C.F.R. Part 20, and/or otherwise
privileged. Respondent failed to respond to CTP’s Motion for Protective Order. On
August 30, 2018, I issued an Order granting and denying in part CTP’s Motion for
Protective Order. In the Order, I also extended the simultaneous pre-hearing exchange
deadlines until October 4, 2018.
Judgment finding Respondent liable for the violations listed in the Complaint and
imposing a civil money penalty.” (Citation omitted). I also directed Respondent to show
cause no later than October 12, 2018 why a default judgment should not be entered in
favor of CTP.°
On November 8, 2018, CTP filed a Status Report and Motion for Default

Judgment asserting Respondent failed to comply with my September 27, 2018 OSC.
Because of Respondent’s non-compliance, CTP argued that I should strike Respondent’s
May 30, 2018 Answer and issue a default judgment in the amount of $559.

To date, Respondent has not provided any response to my September 27, 2018
OSC as to why it failed to provide CTP with timely discovery nor has it responded to
CTP’s Motion for Default Judgment.
Ill. STRIKING RESPONDENT’S ANSWER

Pursuant to 21 C.F.R. § 17.35(a)(1), I may sanction a party for failing to comply
with an order, subpoena, rule, or procedure governing the proceeding. As outlined above,
Respondent did not provide any response to CTP’s Request for Production of
Documents. See 21 C.F.R. § 17.23(a) (requiring document production within 30 days
after receiving a request for production). Respondent also failed to comply with my May

31, 2018 PHO and my September 27, 2018 OSC.° Respondent, therefore, failed to

5 My September 27, 2018 Order also extended the simultaneous pre-hearing exchange
deadline to November 13, 2018, in case Respondent was able to show cause.

6 In fact, neither Mr. Fingar nor Respondent has made any contact with this Court since
the motion to withdraw Mr. Gabor as Respondent’s counsel filed on August 3, 2018.

4
comply with my orders and procedures governing this proceeding. 21 C.F.R.
§ 17.35(a)(1). Accordingly, I find that sanctions are appropriate.

The harshness of the sanctions I impose upon either party must relate to the nature
and severity of the misconduct or failure to comply. 21 C.F.R. § 17.35(b). I find and
conclude that Respondent’s noncompliance with my orders is sufficiently egregious to
warrant striking Respondent’s Answer. 21 C.F.R. § 17.35(c)(3). Accordingly, I am
striking Respondent’s Answer, assuming the facts alleged in CTP’s Complaint to be true,
and issuing this default decision without further proceeding. 21 C.F.R. § 17.11(a).

IV. BURDEN OF PROOF

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

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

VI. ISSUE

Did Respondent violate 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(a)(1) and
(a)(2)(i) as alleged in the Complaint?

VII. DEFAULT

I find Respondent was served and is subject to the jurisdiction of this forum, as
established by the UPS Delivery Notification and Notice of Filing filed by CTP. My
September 27, 2018 OSC instructed Respondent to comply with CTP’s request for
document production on or before October 12, 2018. I also directed Respondent to show
cause no later than October 12, 2018, why a default judgment should not be entered in

favor of CTP. Respondent failed to file any response or otherwise comply with my

5
September 27, 2018 OSC.
As a sanction, I hereby strike Respondent’s Answer pursuant to 21 C.F.R.

§ 17.35(c)(3). Striking Respondent’s Answer leaves the Complaint unanswered.

VIII. ALLEGATIONS

A. Agency’s recitation of facts

CTP alleged that Respondent owns an establishment, doing business under the
name Exxon 152, located at 13695 Southwest 42nd Street, Miami, Florida 33175.
Respondent’s establishment receives tobacco products in interstate commerce and holds
them for sale after shipment in interstate commerce.

CTP’s Complaint alleged that on July 28, 2016, CTP issued a Warning Letter to

Respondent, alleging that Respondent committed the following violation:

1. Selling tobacco products to a minor, in violation of 21 C.F.R. § 1140.14(a)(1).”
Specifically, a person younger than 18 years of age was able to purchase a
package of Pall Mall Menthol cigarettes on April 30, 2016, at approximately
10:29 AM.

Because no opportunity for a hearing was provided before the Warning Letter was

issued, Respondent had a right to challenge the allegations in the Warning Letter in the
instant case. See Orton Motor Co. d/b/a Orton’s Bagley v. HHS, 884 F.3d 1205 (D.C.

Cir. 2018).

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

6

Further, during an inspection of Exxon 152 conducted on April 14, 2018, an FDA-
commissioned inspector documented the following violations:
1. Selling tobacco products to a minor, in violation of 21 C.F.R. § 1140.14(a)(1).
Specifically, a person younger than 18 years of age was able to purchase a
package of Newport Box cigarettes on April 14, 2018, at approximately

9:45 AM; and

2. Failing to verify the age of a person purchasing tobacco products by means of
photographic identification containing the bearer’s date of birth, as required by
21 C.F.R. § 1140.14(a)(2)(i). Specifically, the minor’s identification was not
verified before the sale, as detailed above, on April 14, 2018, at approximately
9:45 AM.

B. Respondent’s recitation of facts

I struck Respondent’s Answer filed on May 30, 2018 from the record.
Accordingly, Respondent filed no responsive pleadings that I may consider.
C. Violations

Under the current FDA policy, the violations described in the Complaint count as
three violations for purposes of computing the civil money penalty (CMP) in the instant
case.

I find and conclude Respondent committed three violations of 21 U.S.C. § 331,
specifically 21 C.F.R. § 1140.14(a)(1) and (a)(2)(i) within a 24-month period as set

forth in the Complaint.
IX. FAMILY SMOKING PREVENTION AND TOBACCO CONTROL ACT

The “relevant statute” in this case is actually a combination of statutes and
regulations: The Family Smoking Prevention and Tobacco Control Act, Pub. L. No.
111-31, 123 Stat. 1776 (2009) (TCA), amended the Food, Drug, and Cosmetic Act (21
U.S.C.A. Chap. 9) (FDCA) and created a new subchapter of that Act that dealt
exclusively with tobacco products, (21 U.S.C. §§ 387-387u), and it also modified other
parts of the FDCA explicitly to include tobacco products among the regulated products
whose misbranding can give rise to civil, and in some cases criminal, liability. The 2009
amendments to the FDCA contained within the TCA also charged the Secretary of Health
and Human Services with, among other things, creating regulations to govern tobacco
sales. The Secretary’s regulations on tobacco products appear in Part 1140 of Title 21,
Code of Federal Regulations.

Under the FDCA, “[a] tobacco product shall be deemed to be misbranded if, in the
case of any tobacco product sold or offered for sale in any State, it is sold or distributed
in violation of regulations prescribed under section 387f(d).” 21 U.S.C. § 387c(a)(7)(B)
(2012). Section 387a-1 directed FDA to re-issue, with some modifications, regulations
previously passed in 1996. 21 U.S.C. § 387a-1(a) (2012). These regulations were passed
pursuant to section 387f(d), which authorizes FDA to promulgate regulations on the sale
and distribution of tobacco products; 75 Fed. Reg. 13,225 (Mar. 19, 2010), codified at 21
C.F.R. Part 1140 (2015); 21 U.S.C. § 387f(d)(1) (2012). Accordingly, 21 C.F.R.

§ 1140.1(b) provides that “failure to comply with any applicable provision in this part in

the sale, distribution, and use of cigarettes and smokeless tobacco renders the product

8
misbranded under the act.”

Under 21 U.S.C. § 331(k), “[t]he alteration, mutilation, destruction, obliteration, or
removal of the whole or any part of the labeling of, or the doing of any other act with
respect to, a food, drug, device, tobacco product, or cosmetic, if such act is done while

such article is held for sale (whether or not the first sale) after shipment in interstate

commerce and results in such article being adulterated or misbranded” is a prohibited act
under 21 U.S.C. § 331. Thus, when a retailer such as Respondent misbrands a tobacco
product by violating a requirement of 21 C.F.R. Part 1140, that misbranding in turn
violates the FDCA, specifically 21 U.S.C. § 331(k). FDA may seek a CMP from “any
person who violates a requirement of this chapter which relates to tobacco products.” 21
U.S.C. § 333(f)(9)(A) (2012). Penalties are set by 21 U.S.C. § 333 note and 21 C.F.R.
§ 17.2.

Under current FDA policy, the first time FDA finds violations of 21 C.F.R. Part
1140 at an establishment, FDA only counts one violation regardless of the number of
specific regulatory requirements that were actually violated, but if FDA finds violations
on subsequent occasions, it will count violations of specific regulatory requirements
individually in computing any CMP sought. This policy is set forth in detail, with
examples to illustrate, at U.S. Food & Drug Admin., Guidance for Industry and FDA
Staff, Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers,
Responses to Frequently Asked Questions (Revised) (2016), available at

http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulations Guidance/U

CM447310.pdf [hereinafter Guidance for Industry], at 13-14. So, for instance, if a

9
retailer sells a tobacco product on a particular occasion to a minor without checking for
photographic identification, in violation of 21 C.F.R. § 1140.14(a)(1) and (a)(2)(i), this
will count as two separate violations for purposes of computing the CMP, unless it is the
first time violations were observed at that particular establishment. This policy of
counting violations has been determined by the HHS Departmental Appeals Board to be
consistent with the language of the FDCA and its implementing regulations, see Orton
Motor Co. d/b/a Orton’s Bagley v. HHS, 884 F.3d 1205 (D.C. Cir. 2018).
X. LIABILITY
When a retailer such as Respondent is found to have “misbranded” a tobacco
product in interstate commerce, it can be liable to pay a CMP. 21 U.S.C. §§ 331, 333.
A retailer facing such a penalty has the right, set out in statute, to a hearing under the
Administrative Procedure Act. 21 U.S.C. § 333(f)(5)(A). A retailer can forfeit its
rights under the statute and regulations by failing to participate in the process, a failure
known as a “default.” 21 C.F.R. § 17.11.
As Respondent failed to respond to my orders, I strike Respondent’s Answer and
find Respondent waived its right to a hearing.
XI. IMPACT OF RESPONDENT’S DEFAULT
Because striking a Respondent’s answer leaves the complaint unanswered, an ALJ
must assume as true all factual allegations in the complaint and issue an initial decision,
imposing “the maximum amount of penalties provided for by law for the violations
alleged” or “the amount asked for in the complaint, whichever is smaller” if “liability

under the relevant statute” is established. 21 C.F.R. § 17.11(a)(1), (2). But see 21 C.F.R.

10
§ 17.45 (initial decision must state the “appropriate penalty” and take into account
aggravating and mitigating circumstances).

Two aspects of Rule 17.11 are important in default cases.

First, the Complainant benefits from a regulatory presumption (the ALJ shall
assume that the facts alleged in the Complaint are true) that relieves it from having to put
on evidence.

The presumption affords a party, for whose benefit the presumption runs, the
luxury of not having to produce specific evidence to establish the point at issue. When
the predicate evidence is established that triggers the presumption, the further evidentiary
gap is filled by the presumption. See 1 Weinstein’s Federal Evidence § 301.02[1], at
301-7 (2d ed. 1997); 2 McCormick on Evidence § 342, at 450 (John W. Strong ed., 4th
ed. 1992). Routen v. West, 142 F.3d 1434, 1440 (Fed. Cir. 1998).®

Second, as far as the penalty is concerned, my discretion is limited by the language
of the regulation. I may not tailor the penalty to address any extenuation or mitigation,
for example, nor, because of notice concerns, may I increase the penalty beyond the

smaller of (a) the Complainant’s request or (b) the maximum penalty authorized by law.

8 However, when the opposing party puts in proof to the contrary of that provided by the
presumption, and that proof meets the requisite level, the presumption disappears. See
Tex. Dep’t of Cmty. Affairs v. Burdine, 450 U.S. 248, 254-55 (1981); A.C. Aukerman,
960 F.2d at 1037 (“[A] presumption ... completely vanishes upon the introduction of
evidence sufficient to support a finding of the nonexistence of the presumed fact.”); see
also Weinstein’s Federal Evidence § 301App. 100, at 301 App.—13 (explaining that in the
“bursting bubble” theory once the presumption is overcome, then it disappears from the
case); 9 Wigmore on Evidence § 2487, at 295-96 (Chadbourn rev. 1981). See generally
Charles V. Laughlin, Jn Support of the Thayer Theory of Presumptions, 52 Mich. L. Rev.
195 (1953); Routen v. West, 142 F.3d 1434, 1440 (Fed. Cir. 1998).

11
XII. LIABILITY UNDER THE RELEVANT STATUTE

Taking the CTP’s allegations as set forth in the Complaint as true, the next step is
whether the allegations make out “liability under the relevant statute.” 21 C.F.R.

§ 17.11 (a).

As striking Respondent’s Answer has left the Complaint unanswered, I assume
all the allegations in the Complaint to be true.

I find and conclude that the evidentiary facts, by a preponderance of the evidence
standard, support a finding Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R.
§ 1140.14(a)(1), in that a person younger than 18 years of age was able to purchase
cigarettes on April 30, 2016, and April 14, 2018.

I find and conclude that the evidentiary facts, by a preponderance of the evidence
standard, support a finding Respondent violated 21 U.S.C. § 331, specifically 21 C.F.R.
§ 1140.14(a)(2)(i), on April 14, 2018, in that Respondent failed to verify, by means of
photo identification containing a purchaser’s date of birth, that no cigarette purchaser is
younger than 18 years of age.

The conduct set forth above on April 30, 2016, and April 14, 2018 counts as three
violations under FDA policy for purposes of computing the CMP.

XIII. PENALTY

There being liability under the relevant statute, I must now determine the amount
of penalty to impose. My discretion regarding a penalty is constrained by regulation. I
must impose either the maximum amount permitted by law or the amount requested by

the CTP, whichever is lower. 21 C.F.R. § 17.11(a)(1), (a)(2).

12
In terms of specific punishments available, the legislation that provides the basis
for assessing civil monetary penalties divides retailers into two categories: those that
have “an approved training program” and those that do not. Retailers with an approved
program face no more than a warning letter for their first violation; retailers without
such a program begin paying monetary penalties with their first. TCA § 103(q)(2), 123
Stat. 1839, codified at 21 U.S.C. § 333 note. See 21 C.F.R. § 17.2. The FDA has
informed the regulated public that “at this time, and until FDA issues regulations setting
the standards for an approved training program, all applicable CMPs will proceed under
the reduced penalty schedule.” FDA Regulatory Enforcement Manual, Aug. 2015,

{| 5-8-1. Because of this reasonable exercise of discretion, the starting point for
punishments and the rate at which they mount are clear — the lower and slower
schedules.
XIV. MITIGATION

Because Respondent is found to be in default, I am required to impose the
maximum amount of penalties provided for by law for the violations alleged.
Therefore, no mitigation is considered.

XV. CONCLUSION

Respondent committed three violations in a 24-month period and so, Respondent
is liable for a CMP of $559. See 21 C.F.R. § 17.2.

WHEREFORE, evidence having read and considered it be and is hereby

ORDERED as follows:

13
. I find Respondent has been served with process herein and is subject to
this forum.

. I find Respondent failed to comply with my May 31, 2018 Pre-Hearing
Order and my September 27, 2018 Order to Compel Discovery and Order

to Show Cause to Respondent.

. Due to Respondent’s noncompliance, I strike Respondent’s Answer filed
on May 30, 2018, as a sanction pursuant to 21 C.F.R. § 17.35(c)(3).

. I find Respondent is in default.
. Lassume the facts alleged in the Complaint to be true.

I find the facts set forth in the Complaint establish liability under the
relevant statute.

. Lassess a monetary penalty in the amount of $559.

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

14


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

Center for Tobacco Products,
(FDA No. FDA-2018-H-1413)

Complainant
v.

Stogie’s, Inc.
d/b/a Stogie’s,

Respondent.
Docket No. T-18-1863
Decision No. TB3211
Date: November 2, 2018
INITIAL DECISION AND DEFAULT JUDGMENT

I hereby impose a civil money penalty (CMP) in the amount of $5,591, against
Respondent, Stogie’s, Inc. d/b/a Stogie’s (Respondent), for five violations of federal
tobacco regulations over a period of 36months.

I. Background

The Center for Tobacco Products (“Complainant” or ““CTP”) seeks to impose a civil
money penalty (CMP) in the amount of $5,591, against Respondent, located at 17
Washington Avenue, Huntington, West Virginia 25701, for five violations of the Federal
Food, Drug, and Cosmetic Act (the Act), 21 U.S.C. § 301 et seq., and its implementing
regulations, 21 C.F.R. pt. 1140, within a 36-month period. The complaint alleges that
Respondent impermissibly sold cigarettes and smokeless tobacco to minors, failed to
verify, by means of photo identification containing a date of birth, that the purchasers
were 18 years of age or older, and used a self-service display in a non-exempt facility,
thereby violating the Act, and its implementing regulations at 21 C.F.R. pt. 1140.
As provided in 21 C.F.R. §§ 17.5 and 17.7, on April 9, 2018, Complainant served the
complaint on Respondent Stogie’s by United Parcel Service. On May 11, 2018, the Civil
Remedies Division received Respondent’s answer, which was forwarded by the Food and
Drug Administration (FDA). Respondent requested that the complaint be dismissed for
failure to state a claim upon which relief may be granted. On May 16, 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 June 15, 2018, to
request that the other party provide copies of documents relevant to this case. The order
also stated that a party receiving such a request must provide the requested documents no
later than 30 days after the request has been made, pursuant to 21 C.F.R. § 17.23(a).

On July 13, 2018, Complainant filed a Motion to Compel Discovery stating that it served
its Request for Production of Documents on Respondent on May 25, 2018. It also stated
that it had not received a response from Respondent regarding its Request for Production
of Documents and requested that I issue an order requiring Respondent to comply with its
Request for Production of Documents. In a July 17, 2018 letter issued by my direction,
Respondent was given until August 2, 2018, to file a response to Complainant’s Motion
to Compel Discovery.

Respondent failed to file a response to Complainant’s Motion to Compel Discovery.
Accordingly, in an order dated August 15, 2018, I granted Complainant’s Motion to
Compel Discovery and ordered Respondent to comply with Complainant’s Request for
Production of Documents by August 30, 2018.! Respondent was warned that failure to
do so 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 penalty.

On September 18, 2018, Complainant filed a Motion to Impose Sanctions indicating that
Respondent had not complied with my August 15, 2018 order. On September 18, 2018,
CTP also filed a Motion to Extend Deadlines. In a September 24, 2018 letter issued by
my direction, Respondent was given until October 9, 2018, to file a response to
Complainant’s Motion to Impose Sanctions. Also, by Order dated September 24, 2018, I

' On September 10, 2018, Respondent filed a Motion to Withdraw. In the motion,
Respondent requested that the order granting CTP’s Motion to Compel Discovery be
withdrawn, and it be given an opportunity to respond to CTP’s motion. Respondent
claimed that it never received a copy of the letter issued at my direction on July 17, 2018,
allowing for an earlier opportunity to respond to CTP’s Motion to Compel Discovery. In
support of this assertion, Respondent submitted a document not related to this case,
which he states he received and ignored. On September 12, 2018, I denied Respondent’s
Motion to Withdraw.
granted CTP’s Motion to Extend Deadlines. To date, Respondent has not responded to
Complainant’s Motion to Impose Sanctions or the September 24, 2018 letter.

Therefore, pursuant to 21 C.F.R. § 17.35, am granting Complainant’s Motion to Impose
Sanctions, and striking Respondent’s answer for failing to comply with multiple judicial
directives. Specifically, Respondent failed to comply with the deadline set forth in the
APHO for responding to a discovery request, and the order granting Complainant’s
motion to compel discovery issued on August 15, 2018. Respondent also did not respond
to the letter sent by my direction on September 24, 2018. 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 5:21 PM on May 28, 2015, at Respondent’s business
establishment, 17 Washington Avenue, Huntington, West Virginia 25701, an
FDA-commissioned inspector documented Respondent’s staff selling a package of
Marlboro 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;

e Ina warning letter dated July 2, 2015, CTP informed Respondent of the
inspector’s May 28, 2015 documented violations, and that such actions violate
federal law. The letter further warned that Respondent’s failure to correct its
violations could result in a civil money penalty or other regulatory action;

e During a subsequent inspection, at approximately 6:57 PM on July 11, 2017, at
Respondent’s business establishment, 17 Washington Avenue, Huntington, West
Virginia 25701, an FDA-commissioned inspector documented Respondent’s staff
selling a package of Sonoma 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;

e Ina warning letter dated August 31, 2017, CTP informed Respondent of the
inspector’s July 11, 2017 documented violations, and that such actions violate
federal law. The letter further warned that Respondent’s failure to correct its
violations could result in a civil money penalty or other regulatory action;
¢ On March 19 and 28, 2018, a two-part inspection was conducted at Respondent’s
business establishment, 17 Washington Avenue, Huntington, West Virginia
25701. Specifically on March 19, 2018, an FDA-commissioned inspector
documented Respondent’s staff selling a package of Skoal Long Cut X-tra
Wintergreen smokeless tobacco into 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. Further, on March 28, 2018, an inspector observed customer-accessible
shelves containing multiple varieties of smokeless tobacco, including but not
limited to Red Man smokeless tobacco, Beech-Nut smokeless tobacco, and Trophy
smokeless tobacco, located on the main sales floor of the establishment.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if sold or distributed in violation of regulations issued under section 906(d) of the Act.

21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). The Secretary of the U.S. Department
of Health and Human Services issued the regulations at 21 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)(i), retailers must
verify, by means of photographic identification containing a purchaser’s date of birth,
that no cigarettes or smokeless tobacco purchasers are younger than 18 years of age.
Under 21 C.F.R. § 1140.16(c), retailers may sell cigarettes and smokeless tobacco only in
a direct, face-to-face exchange between the retailer and the consumer and refrain from
using a self-service display in a non-exempt facility.

A $5,591 civil money penalty is permissible under 21 C.F.R. § 17.2.

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

Order

For these reasons, | enter default judgment in the amount of $5,591 against Respondent
Stogie’s, Inc. d/b/a Stogie’s. 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