Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Alena LLC
d/b/a Camelback Smoke Shop,

Respondent.

Docket No. C-13-1263
FDA Docket No. FDA-2013-H-1069

Decision No. CR2989
Date: November 8, 2013
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Alena LLC d/b/a Camelback Smoke Shop, that
alleges facts and legal authority sufficient to justify the imposition of a civil
money penalty of $250. Respondent did not answer the Complaint, nor did
Respondent request an extension of time within which to file an answer.
Therefore, I enter a default judgment against Respondent and assess a civil money
penalty of $250.

CTP began this case by serving the Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent impermissibly sold
cigarettes to minors and failed to verify that a cigarette purchaser was 18 years of
age or older, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21
U.S.C. § 301 et seq., and its implementing regulations, Cigarettes and Smokeless
Tobacco, 21 C.F.R. Part 1140 (2012). CTP seeks a civil money penalty of $250.
On September 18, 2013, CTP served the Complaint on Respondent by United
Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days, Respondent should
pay the proposed penalty, file an answer, or request an extension of time within
which to file an answer. CTP warned Respondent that if it failed to take one of
these actions within 30 days, an Administrative Law Judge could, pursuant to 21
C.F.R. § 17.11, issue an initial decision ordering Respondent to pay the full
amount of the proposed penalty.

Respondent has not filed an answer within the time provided by regulation, nor
has it requested an extension. Pursuant to 21 C.F.R. § 17.11(a), 1am required to
“assume the facts alleged in the [C]omplaint to be true” and, if those facts
establish liability under the Act, issue a default judgment and impose a civil
money penalty. Accordingly, I must determine whether the allegations in the
Complaint establish violations of the Act.

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Camelback Smoke Shop, an establishment that sells
tobacco products and is located at 650 East Camelback Road, Phoenix,
Arizona 85012. Complaint § 3.

e On December 4, 2012, at approximately 11:42 AM, an FDA-commissioned
inspector observed two violations of 21 C.F.R. Part 1140 at Respondent’s
establishment. The inspector observed a violation of 21 C.F.R.

§ 1140.14(a) when “a person younger than 18 years of age was able to
purchase a package of Marlboro 100’s cigarettes . . . [.]” The inspector also
observed a violation of 21 C.F.R. § 1140.14(b)(1) when “the minor’s
identification was not verified before the sale... .” Complaint ¥ 10.

e CTP issued a Notice of Compliance Check Inspection to Camelback Smoke
Shop on December 5, 2012, due to the December 4, 2012 inspection. The
Notice of Compliance Check Inspection specifically informed Respondent
that “a minor was able to . . . purchase a regulated tobacco product at
approximately 11:42 AM” on December 4, 2012. Complaint § 10.

e On January 3, 2013, CTP issued a Warning Letter to Respondent regarding
the inspector’s observations from December 4, 2012. The letter explained
that the observations constituted violations of regulations found at 21
C.F.R. § 1140.14(a) and 14(b)(1), and that the named violations were not
necessarily intended to be an exhaustive list of all violations at the
establishment. The Warning Letter went on to state that if Respondent
failed to correct the violations, regulatory action by the FDA or a civil
money penalty action could occur and that Respondent is responsible for
complying with the law. Complaint § 10.

e Mike Iskhakov responded to the Warning Letter for Respondent in a
January 21, 2013 email. “Mr. Iskhakov . . . stated that although all
employees alleged that they had not sold the tobacco product to the minor,
the establishment would take extra care to ensure that all employees would
check the identification of tobacco purchasers who appear to be under the
age of 27.” Complaint 11.

e¢ On March 14, 2013, at approximately 11:44 AM, FDA-commissioned
inspectors documented an additional violation of 21 C.F.R. Part 1140 at
Respondent’s establishment. The inspectors documented a violation of 21
C.F.R. § 1140.14(a) when “a person younger than 18 years of age was able
to purchase a package of Marlboro 100’s cigarettes... .” Complaint § 1.

e CTP issued a Notice of Compliance Check Inspection to Camelback Smoke
Shop on March 18, 2013, due to the March 14, 2013 inspection. The
Notice of Compliance Check Inspection specifically informed Respondent
that “a minor was able to . . . purchase a regulated tobacco product at
approximately 11:44 AM” on March 14, 2013. Complaint § 2.

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 issued the regulations at 21 C.F.R. Part 1140 under
section 906(d) of the Act. 21 U.S.C. § 387(a); 21 U.S.C. § 387f(d)(1); 75 Fed.
Reg. 13,229 (Mar. 10, 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 had three violations of
regulations contained in 21 C.F.R. Part 1140 within a four-month period.
Specifically, Respondent had two violations on December 4, 2012, and a violation
on March 14, 2013. Respondent’s actions on both occasions violated the
prohibition against selling cigarettes to persons younger than 18 years of age. 21
C.F.R. § 1140.14(a). Respondent’s actions on December 4, 2012, also violated the
requirement that retailers verify, by means of photo identification containing a
purchaser’s date of birth, that no cigarette purchaser is younger than 18 years of
age. 21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s actions constitute
violations of law for which a civil money penalty is merited.

The regulations require me to impose a civil money penalty in an amount that is
either the maximum provided for by law or the amount sought in the Complaint,
whichever is smaller. 21 C.F.R. § 17.11(a)(1)-(2). The regulations currently
allow a maximum penalty of $500 for a third violation within a four-month period.
21 C.F.R. § 17.2. CTP, however, has requested a fine of $250. Therefore, I find
that a civil money penalty of $250 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
Advanced Diabetic Solutions, LLC,
(PTAN: 56638600040),
Petitioner,

v.

Centers for Medicare & Medicaid Services.
Docket No. C-13-796
Decision No. CR2987

Date: November 7, 2013

DECISION

I grant the motion of the Centers for Medicare & Medicaid Services (CMS) for summary
disposition and sustain the CMS revocation of Petitioner Advanced Diabetic Solutions,
LLC’s enrollment as a supplier in the Medicare program.'

I. Background

Prior to the revocation at issue in this case, Petitioner was enrolled in the Medicare
program as a supplier of durable medical equipment, prosthetics, orthotics and supplies
(DMEPOS). Ina letter dated February 1, 2013, National Supplier Clearinghouse (NSC),
the CMS contractor, informed Petitioner that its billing number was revoked
retroactively, effective January 7, 2013. CMS Exhibit (Ex.) 1. The letter stated that an
NSC inspector twice attempted to conduct a site visit of Petitioner’s business location,
but was unsuccessful because the facility was closed during the posted hours of
operation, in violation of 42 C.F.R. §§ 424.57(c) and 424.535(a)(5)(ii). CMS Ex. 1. On
February 7, 2013, Petitioner requested reconsideration. CMS Ex. 4. In its

' A “supplier” is a “physician or other practitioner, or an entity other than a provider, that

furnishes health care services under Medicare.” 42 C.F.R. § 400.202.

reconsideration request, Petitioner acknowledged that the facility was closed on those
days, but offered explanations as to why its facility was not open on those two occasions.
CMS Ex. 4. The Medicare hearing officer issued an unfavorable reconsideration decision
on March 22, 2013. CMS Ex. 6. Petitioner timely filed a request for hearing (RFH)
before an administrative law judge (ALJ) by letter dated May 20, 2013, and I issued an
Acknowledgment and Initial Docketing Order (Order).

Pursuant to the Order, on June 5, 2013 CMS filed a Motion for Summary Judgment and
accompanied it with a memorandum (CMS Motion). CMS proffered six exhibits in
support of its Motion. On June 24, 2013, Petitioner filed its Response to the CMS
Motion (P. Response) and proffered two copies of its employee handbook that I reference
as P. Ex. 1. In the absence of objection from either party, I admit all the proffered
exhibits into the record.

Il. Controlling Statutes and Regulations

Pursuant to section 1834(j)(1)(A) of the Social Security Act, a DMEPOS supplier may
not be reimbursed for items provided to an eligible Medicare beneficiary unless the
supplier has a supplier number issued by the Secretary of the U.S. Department of Health
& Human Services. To receive a supplier number, a DMEPOS supplier must meet and
maintain each of the supplier enrollment standards set forth in 42 C.F.R.

§§ 424.57(c)(1)-(30). Among other things, a DMEPOS supplier must maintain a
physical facility on an appropriate site which is in a location that is accessible to the
public, staffed during posted hours of operation, and maintained with a visible sign and
posted hours of operation. 42 C.F.R. § 424.57(c)(7). Also, a DMEPOS supplier must
permit CMS or its agent to conduct on-site inspections to determine supplier compliance
with each of the enrollment standards. 42 C.F.R. § 424.57(c)(8). CMS will revoke a
currently-enrolled Medicare supplier’s billing privileges if CMS or its agent determines
that the supplier is not in compliance with any supplier enrollment standard. 42 C.F.R.
§ 424.57(d); see also 18661CPayday.com, DAB No. 22839, at 13 (2009) (“[FJailure to
comply with even one supplier standard is a sufficient basis for revoking a supplier's
billing privileges.”).

In addition, if an on-site visit reveals that a supplier is no longer operational, or
otherwise fails to meet one of the supplier standards, CMS may revoke the supplier's
Medicare billing privileges. 42 C.F.R. § 424.535(a)(5)(ii). A provider or supplier is
operational if it “has a qualified physical practice location, is open to the public for the
purpose of providing health care related services, is prepared to submit valid Medicare
claims, and is properly staffed, equipped, and stocked . . . to furnish these items or
services.” 42 C.F.R. § 424.502. The effective date of revocation is the date CMS
determines the supplier was no longer operational. 42 C.F.R. § 424.535(g).
Ill. Issues, Findings of Facts and Conclusions of Law
A. Issue

The issue before me in this case is whether CMS or its contractor had a basis to revoke
Petitioner’s enrollment as a supplier in the Medicare program.

B. Findings of Facts and Conclusions of Law

CMS is entitled to summary disposition because the undisputed facts
establish that Petitioner was not operational in violation of 42 C.F.R.
§ 424.57(c)(7).

Summary disposition is appropriate when a case presents no issue of material fact, and its
resolution turns on questions of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-
48 (1986). The Departmental Appeals Board (Board) has stated that, “[w]hile the Federal
Rules of Civil Procedure (FRCP) are not binding in this administrative appeal, we are
guided by those rules and by judicial decisions on summary judgment... .” Senior
Rehabilitation and Skilled Nursing Center, DAB No. 2300, at 3 (2010) (internal citation
omitted). The party moving for summary judgment carries the initial burden of showing
that there are no genuine issues of material fact and that it is entitled to judgment as a
matter of law. Jd. If the moving party carries its burden, then the non-moving party must
come forward with specific facts showing that there is a genuine issue for trial. Jd.

Furthermore, in determining whether there are genuine issues of material fact, I must
view the evidence in the light most favorable to the non-moving party, drawing all
reasonable inferences in that party’s favor. Jd. (citing United States v. Diebold, Inc., 369
U.S. 654, 655 (1962)). Finally, the Board has instructed that for purposes of summary
judgment, an ALJ should not engage in assessing credibility or evaluating the weight of
conflicting evidence. Holy Cross Village at Notre Dame, DAB No. 2291, at 5 (2009).

I find that summary disposition is appropriate in this case because there are no material
facts in dispute, and because this case turns entirely on questions of law. I conclude that
CMS’s position is correct as a matter of law.

In this case, the material and dispositive facts are not in dispute. Petitioner was a
DMEPOS supplier that participated in the Medicare program. Petitioner’s posted hours
of operation were Monday through Friday, 9:00 a.m. through 4:30 p.m. CMS Exs. 2-3.
On December 24, 2012, at approximately 12:32 p.m., an NSC site inspector attempted to
inspect Petitioner’s facility, but found the facility closed and unoccupied. Jd. The site
inspector attempted a second site visit on January 7, 2013, at approximately 10:20 a.m.,
but again Petitioner’s facility was closed and unoccupied. Jd.
Petitioner admits that the facility was closed on both December 24, 2012 and January 7,
2013 during posted business hours; however, Petitioner offers what it asserts is a

reasonable explanation for t
conducted on December 24,

e closures. Petitioner explains that the first site visit was
2012, Christmas Eve, which is a company-wide holiday. In

support of this assertion, Petitioner provides a copy of its employee handbook. P. Ex. 1.
Petitioner explains that on the day of the second site visit conducted on January 7, 2013,

the two employees who staf:

relevant supplier standards

of operation.” 42 C.F.R. § 4

DMEPOS supplier standard

IV. Conclusion

program.

the facility, a married couple, needed to close the facility to
tend to a family emergency (a critically ill parent).

For purposes of summary judgment, I accept Petitioner’s assertions as true. However, the
lo not permit exceptions to the regulation. The regulations
require suppliers to maintain facilities that are “accessible and staffed during posted hours
24.57(c)(7)(i)(C). The undisputed facts establish that
Petitioner’s facility was closed at the times the site inspector attempted a visit: at a bit
past noon on December 24, 2012 for Christmas Eve holiday; and on January 7, 2013 for a
family emergency that ostensibly required both employees to be absent and for which no
alternate arrangements could be made. Based on the undisputed facts then, Petitioner
failed to meet these applicable standards.

Thus, for the reasons stated above, I find that CMS had a basis to revoke Petitioner’s
enrollment as a supplier in the Medicare Program for failure to comply with the
at 42 C.F.R. § 424.57(c)(7)(i)(C).

Because the undisputed facts establish that Petitioner did not meet all the standards
required by 42 C.F.R. § 424.57(c), I grant CMS’s motion for summary disposition and
sustain the revocation of Petitioner’s enrollment as a DMEPOS supplier for the Medicare

/s/

Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Kot LLC
d/b/a Cigarettes and More,

Respondent.

Docket No. C-13-1266
FDA Docket No. FDA-2013-H-1071

Decision No. CR2985

Date: November 6, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Kot LLC d/b/a Cigarettes and More, that alleges
facts and legal authority sufficient to justify the imposition of a civil money
penalty of $500. Respondent did not answer the Complaint, nor did Respondent
request an extension of time within which to file an answer. Therefore, I enter a
default judgment against Respondent and assess a civil money penalty of $500.

CTP began this case by serving the Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent impermissibly sold
cigarettes to a minor, failed to verify that a cigarette purchaser was 18 years of age
or older, and utilized a self-service display to offer tobacco products for sale,
thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C.
§ 301 et seq., and its implementing regulations, Cigarettes and Smokeless
Tobacco, 21 C.F.R. Part 1140 (2012). CTP seeks a civil money penalty of $500.

On September 12, 2013, CTP served the Complaint on Respondent by United
Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days, Respondent should
pay the proposed penalty, file an answer, or request an extension of time within
which to file an answer. CTP warned Respondent that if it failed to take one of
these actions within 30 days, an Administrative Law Judge could, pursuant to

21 C.F.R. § 17.11, issue an initial decision ordering Respondent to pay the full
amount of the proposed penalty.

Respondent has not filed an answer within the time provided by regulation, nor
has it requested an extension. Pursuant to 21 C.F.R. § 17.11(a), 1am required to
“assume the facts alleged in the [C]omplaint to be true” and, if those facts
establish liability under the Act, issue a default judgment and impose a civil
money penalty. Accordingly, I must determine whether the allegations in the
Complaint establish violations of the Act.

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Cigarettes and More, an establishment that sells tobacco
products and is located at 7150 Leetsdale Drive, #202, Denver, Colorado
80224. Complaint § 3.

e On January 4, 2013, an FDA-commissioned inspector observed a violation
of 21 C.F.R. Part 1140 at Respondent’s establishment. The inspector
observed a violation of 21 C.F.R. § 1140.16(c) due to “a customer-
accessible display of cigarette tobacco on the main sales floor of the
establishment.” Complaint § 10.

e On January 17, 2013, CTP issued a Warning Letter to Respondent
regarding the inspector’s observations from January 4, 2013. The letter
explained that the observations constituted a violation of a regulation found
at 21 C.F.R. § 1140.16(c), and that the named violation was not necessarily
intended to be an exhaustive list of all violations at the establishment. The
Warning Letter went on to state that if Respondent failed to correct the
violation, regulatory action by the FDA or a civil money penalty action
could occur and that Respondent is responsible for complying with the law.
Complaint § 10.

e Anna Abdulmanova, Respondent’s owner, responded to the Warning Letter
with a January 21, 2013 letter of her own. Ms. Abdulmanova “stated that
the establishment was purchased shortly before the inspection, . . . the new
owners had believed that the establishment was in compliance with all
applicable tobacco regulations[,] . . . [and] the establishment planned to
move all tobacco products to behind the counters to ensure face-to-face
sales.” Complaint § 11.

e On March 28, 2013, at approximately 10:32 AM MT, FDA-commissioned
inspectors documented additional violations of 21 C.F.R. Part 1140 at
Respondent’s establishment. The inspectors documented a violation of
21 C.F.R. § 1140.14(a) when “a person younger than 18 years of age was
able to purchase a package of Camel Blue cigarettes . . . [.]” The inspectors
also documented a violation of 21 C.F.R. § 1140.14(b)(1) when “the
minor's identification was not verified before the sale... .” Complaint § 1.

e CTP issued a Notice of Compliance Check Inspection to Cigarettes and
More on April 1, 2013, due to the March 28, 2013 inspection. The Notice
of Compliance Check Inspection specifically informed Respondent that “‘a
minor was able to . . . purchase a regulated tobacco product at
approximately 10:32 AM” on March 28, 2013. Complaint § 2.

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 issued the regulations at 21 C.F.R. Part 1140 under
section 906(d) of the Act. 21 U.S.C. § 387(a); 21 U.S.C. § 387f(d)(1); 75 Fed.
Reg. 13,229 (Mar. 10, 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 purchaser is younger than 18 years of
age. 21 C.F.R. § 1140.14(b)(1). Finally, the regulations prohibit the use of self-
service displays as a method of sale of cigarettes and smokeless tobacco,

21 C.F.R. § 1140.16(c), except where the establishment does not permit any
person younger than 18 years of age to be present or enter at any time, 21 C.F.R.
§ 1140.16(c)(2)(ii).

Taking the above alleged facts as true, Respondent had three violations of
regulations contained in 21 C.F.R. Part 1140 within a three-month period.
Specifically, Respondent had a violation on January 4, 2013, and two violations on
March 28, 2013. Respondent violated the prohibition on the use of self-service
displays as a method of selling cigarettes or smokeless tobacco on January 4,
2013. 21 C.F.R. § 1140.16(c). Respondent’s actions on March 28, 2013, violated
the prohibition against selling cigarettes to persons younger than 18 years of age,

21 C.F.R. § 1140.14(a), and violated the requirement that retailers verify, by
means of photo identification containing a purchaser’s date of birth, that no
cigarette purchaser is younger than 18 years of age, 21 C.F.R. § 1140.14(b)(1).
Therefore, Respondent’s actions constitute violations of law for which a civil
money penalty is merited.

The regulations require me to impose a civil money penalty in an amount that is
either the maximum provided for by law or the amount sought in the Complaint,
whichever is smaller. 21 C.F.R. § 17.11(a)(1)-(2). The regulations currently
allow a maximum penalty of $500 for a third violation within a three-month
period, 21 C.F.R. § 17.2, and CTP has requested a fine of that amount. Therefore,
I find that a civil money penalty of $500 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,
Complainant
v.

West Seattle Tobacco Company LLC
d/b/a West Seattle Smoke Company,
Respondent.

Docket No. C-13-1141
FDA Docket No. FDA-2013-H-0935
Decision No. CR2981

Date: November 18, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, West Seattle Tobacco Company LLC d/b/a West
Seattle Smoke Company, that alleges facts and legal authority sufficient to justify
the imposition of a civil money penalty of $250. Respondent did not answer the
Complaint, nor did Respondent request an extension of time within which to file
an answer. Therefore, I enter a default judgment against Respondent and assess a
civil money penalty of $250.

CTP began this case by serving the Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent utilized a self-
service display to offer regulated tobacco products for sale, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, Cigarettes and Smokeless Tobacco, 21 C.F.R. Part 1140
(2012). CTP seeks a civil money penalty of $250.

On September 5, 2013, CTP served the Complaint on Respondent by United
Parcel Service (UPS), pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint
and accompanying cover letter, CTP explained that within 30 days Respondent
should pay the proposed penalty, file an answer, or request an extension of time
within which to file an answer. CTP warned Respondent that if it failed to take
one of these actions within 30 days, an Administrative Law Judge could, pursuant
to 21 C.F.R. § 17.11, issue an initial decision ordering Respondent to pay the full
amount of the proposed penalty.

Respondent has not filed an answer within the time provided by regulation, nor
has it requested an extension. Pursuant to 21 C.F.R. § 17.11(a), 1am required to
“assume the facts alleged in the complaint to be true” and, if those facts establish
liability under the Act, issue a default judgment and impose a civil money penalty.
Accordingly, I must determine whether the allegations in the Complaint establish
violations of the Act.

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns West Seattle Smoke Company, an establishment that
sells tobacco products and is located at 4748 California Avenue Southwest,
Seattle, Washington 98116. Complaint § 2.

¢ On October 24, 2012, an FDA-commissioned inspector observed a
violation of 21 C.F.R. Part 1140 at Respondent’s establishment. The
inspector observed a violation of 21 C.F.R. § 1140.16(c) due to
Respondent’s establishment utilizing “a self-service display in a non-
exempt facility. Complaint § 9.

e¢ On December 13, 2012, CTP issued a Warning Letter to Respondent
regarding the inspector’s observations from October 24, 2012. The letter
explained that the observations constituted a violation of a regulation found
at 21 C.F.R. § 1140.16(c), and that the named violation was not necessarily
intended to be an exhaustive list of all violations at the establishment. The
Warning Letter went on to state that if Respondent failed to correct the
violation, regulatory action by the FDA or a civil money penalty action
could occur and that Respondent is responsible for complying with the law.
Complaint § 9.

e The FDA did not receive a response to the Warning Letter. UPS records
reflect that on December 17, 2012, the letter was delivered and accepted by
“Amir.” Complaint § 10.

e During a subsequent inspection conducted on April 9, 2013, and May 1,
2013, FDA-commissioned inspectors documented additional violations of
21 C.F.R. § 1140.16(c) at Respondent’s establishment. “Specifically, the
establishment, which allows minors to enter when accompanied by an
adult, has a customer-accessible display containing ‘General’ smokeless
tobacco on the main sales floor.” 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 issued the regulations at 21 C.F.R. Part 1140 under
section 906(d) of the Act. 21 U.S.C. § 387(a); 21 U.S.C. § 387f(d)(1); 75 Fed.
Reg. 13,229 (Mar. 10, 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 purchaser is younger than 18 years of
age. 21 C.F.R. § 1140.14(b)(1). Finally, the regulations require retailers to sell
cigarettes exclusively in face-to-face exchanges, without the use of devices such as
self-service displays, 21 C.F.R. § 1140.16(c), except where the establishment does
not permit any person younger than 18 years of age to be present or enter at any
time, 21 C.F.R. § 1140.16(c)(2)(ii).

Taking the above alleged facts as true, Respondent had two violations of
regulations contained in 21 C.F.R. Part 1140 within a seven-month period.
Specifically, Respondent had a violation on October 24, 2012, and a second
violation during a two-part inspection conducted on April 9, 2013, and May 1,
2013. On October 24, 2012, Respondent violated the requirement that retailers
sell cigarettes or smokeless tobacco exclusively in face-to-face exchanges, without
the use of devices such as self-service displays, 21 C.F.R. § 1140.14(c); 21 C.F.R.
§ 1140.16(c), because Respondent’s establishment had a self-service display of
regulated tobacco products and permitted persons younger than 18 years of age to
enter with an adult, 21 C.F.R. § 1140.16(c)(2)(ii). Respondent’s actions on April
9, 2013, and May 1, 2013, were in violation of 21 C.F.R.

§ 1140.16(c), because the establishment utilized a display containing regulated
tobacco products that provided consumers direct access to smokeless tobacco
without restricting the facility to adults at all times. Therefore, Respondent has
committed violations of law for which a civil money penalty is merited.

The regulations require me to impose a civil money penalty in an amount that is
either the maximum provided for by law or the amount sought in the Complaint,
whichever is smaller. 21 C.F.R. § 17.11(a)(1)-(2). The regulations currently
allow a maximum penalty of $250 for a second violation within a seven-month
period, 21 C.F.R. § 17.2, and CTP has requested a fine of that amount. Therefore,
I find that a civil money penalty of $250 is warranted and so order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge