State Road Service Station Inc. d/b/a Valero, DAB TB4924 (2020)

INITIAL DECISION

The Center for Tobacco Products (CTP), of the United States Food and Drug Administration (FDA), seeks an $11,410 civil money penalty against Respondent, State Road Service Station Inc. d/b/a Valero (Respondent or Valero), for 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 at least seven times within a 48-month period.  For the reasons set forth in this decision, I find that Respondent Valero violated the Act as alleged in the Complaint, and impose a mitigated $4,000 civil money penalty against Respondent.

I. Background and Procedural History

CTP began this matter by serving a Complaint on Respondent Valero, at 100 Northwest 167th Street, Miami, Florida 33169, and by filing a copy of the Complaint with the FDA’s Division of Dockets Management.  On April 27, 2019, Respondent timely answered the Complaint.  In the Answer, Respondent checked the box indicating, “I deny

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the following allegations in the Complaint[,]” noting, “[t]here is no proof that the employee sold tobacco products to a minor.  No inspector ever provided documents of the incident to the employee.  I (the owner) was only made aware of the incident, and was provided with documentation, days after the complaint was made.” Answer ¶ 1.  As a defense, Respondent stated, “[w]e train employees under standard procedure[s] in accordance with the state law.”  Id. ¶ 2.  Respondent also noted, “I have made all the efforts to comply with the law through training and supervision.  We have all the signs required by law displayed on our store.”  Id.  Additionally, Respondent contested the civil money penalty.  Id. ¶ 3.  On May 1, 2019, I issued an Acknowledgment and Pre-Hearing Order (APHO) in which I set a schedule for the parties’ pre‑hearing exchanges and submission deadlines.  APHO ¶¶ 1, 3-4, 12. 

On May 31, 2019, CTP filed a Joint Status Report, stating, “[t]he parties have been unable to reach a settlement in this case.  CTP remains willing to engage in settlement discussions but, absent an executed settlement agreement, intends to proceed to a hearing.”

On June 18, 2019, CTP filed an Unopposed Motion to Extend Deadlines and Notice of Pending Settlement (Unopposed Motion), requesting, “that all deadlines in this case be extended for thirty (30) days, so that Respondent can pay the agreed-upon civil money penalty, and CTP can process the payment.”  Unopposed Motion at 1.  On June 20, 2019, I issued an Order Granting [CTP’s] Motion to Extend Deadlines.  I extended CTP’s pre-hearing exchange deadline to August 22, 2019, and Respondent’s pre-hearing exchange deadline to September 12, 2019.

On August 19, 2019, CTP filed a second Unopposed Motion to Extend Deadlines and Notice of Pending Settlement (Second Unopposed Motion), requesting, “that all deadlines in this case be extended for thirty (30) days, so that Respondent can pay the agreed-upon civil money penalty, and CTP can process the payment.”  Second Unopposed Motion at 1.  Also on August 19, 2019, I issued an Order Granting [CTP’s second] Motion to Extend Deadlines.  I extended CTP’s pre-hearing exchange deadline to September 23, 2019, and Respondent’s pre-hearing exchange deadline to October 15, 2019.

On September 23, 2019, CTP timely filed its pre-hearing exchange, consisting of its informal brief (CTP Br.), list of proposed witnesses and exhibits, and fifteen (15) numbered proposed exhibits (CTP Exs. 1-15).  CTP’s exhibits included the written direct testimony of two proposed witnesses, Mr. Elie Joseph, an FDA-commissioned inspector (CTP Ex. 6), and Ms. Laurie Sternberg, FDA Senior Regulatory Counsel (CTP Ex. 5).  On October 2, 2019, Respondent timely submitted its pre-hearing submission via e-mail (Docket Entries 13-17), which included the written direct testimony of one proposed witness, Ms. Rodna Jacques.  (Docket Entry 16). 

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Pre-Hearing Conferences, and Waiver of Hearing

On October 11, 2019, I scheduled an initial telephone pre-hearing conference with both parties, however the conference could not be conducted in its entirety.  Once the parties joined the conference, Mr. Jose Collado, appearing pro se for Respondent Valero, indicated that he required an English/Spanish interpreter to participate in the proceedings.  Based on his explanation, it appeared that all his previously submitted documents had been prepared by, or with the assistance of, an English speaking family member.  I thereupon adjourned the initial pre-hearing conference, and noted that it would be rescheduled for a future date with an interpreter.

On December 12, 2019, I held a second telephone pre-hearing conference.  A qualified Spanish/English interpreter was provided to assist Mr. Collado, who appeared pro se for Respondent.  At the pre-hearing conference, I explained my role as an impartial Administrative Law Judge (ALJ).  We discussed Respondent’s Answer and CTP’s pre-hearing exchange, including its proposed witness testimony.  I explained that the purpose of a hearing is to allow for the cross-examination and re-direct examination of any witnesses who have provided sworn testimony.  I asked Respondent whether he wished to cross-examine CTP’s proposed witnesses, Inspector Elie Joseph, and Senior Regulatory Counsel Laurie Sternberg.  Respondent declined to cross-examine the witnesses.  I noted that Respondent’s October 2, 2019 pre-hearing submission did not comply with the requirements set forth in my May 1, 2019 APHO.  Specifically, Respondent failed to submit its witness statement “in the form of a written declaration that is signed by the witness under penalty of perjury for false testimony.”  See APHO ¶ 9.  I then extended Respondent’s pre-hearing exchange deadline to December 30, 2019, to allow time for Respondent to re-submit its October 2, 2019 submission in accordance with the May 1, 2019 APHO.  Further, I granted CTP seven days from the date of Respondent’s submission to advise the court whether it seeks to file a written response to Respondent’s amended submission.  The parties then waived a formal hearing and agreed to a decision based on the documents entered into the record. 

On December 20, 2019, Respondent timely filed its amended pre-hearing submission.  On January 6, 2020, I issued an Order Admitting Evidence and Waiving Hearing.  As CTP did not file an objection or response to Respondent’s submission, I admitted Respondent’s amended pre-hearing submission into the record, and noted that the record was complete.  I advised the parties that they had until February 3, 2020, to file supplemental briefs.  However, I cautioned that this was not an opportunity to present any additional exhibits, evidence, or testimony.  In the absence of any objection from Respondent, I admit CTP’s Exs. 1-15 into the record.  Neither party submitted a supplemental brief.  As the briefing period has passed, I find that the record is complete, and render my decision on the record.

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II. Issues

1. Whether Respondent sold a regulated tobacco product to a minor and failed to verify the age of the purchaser on January 4, 2019, in violation of 21 C.F.R. § 1140.14(b)(1) and 21 C.F.R. § 1140.14(b)(2)(i); and if so,

2. Whether the civil money penalty amount of $11,410 that CTP seeks is appropriate, pursuant to the provisions of 21 C.F.R. § 17.33(a).

III. Applicable Regulations

The Act prohibits misbranding of a regulated tobacco product.  21 U.S.C. § 331(k).  A regulated 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 also 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 also 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(b)(1), no retailer may sell regulated tobacco products to any person younger than 18 years of age.  Under 21 C.F.R. § 1140.14(b)(2)(i), retailers must verify, by means of photographic identification containing a purchaser’s date of birth, that no regulated tobacco product purchasers are younger than 18 years of age. 

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

IV. Analysis

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

CTP seeks a civil money penalty against Respondent pursuant to the authority conferred by the Act and implementing regulations at Part 21 of the Code of Federal Regulations.  The Act prohibits the misbranding of tobacco products while they are held for sale after shipment in interstate commerce.  21 U.S.C. § 331(k).  The 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. § 333(f)(9).

The sale of regulated tobacco products to an individual who is under the age of 18 is a violation of the implementing regulations.  21 C.F.R. § 1140.14(b)(1).  The failure to verify, by means of photo identification containing the bearer's date of birth, that no

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regulated tobacco purchaser is younger than 18 years of age, is also a violation of the implementing regulations.  21 C.F.R. § 1140.14(b)(2)(i).

Prior Violations

The Complaint alleges that CTP previously initiated a civil money penalty action against Respondent Valero.  The prior action concluded after Respondent Valero admitted to at least five1 violations of the Act.  Specifically, Respondent admitted that it sold regulated tobacco products to minors and failed to verify, by means of photo identification containing a date of birth, that purchasers were 18 years of age or older on July 25, 2017, March 14, 2018, and May 25, 2018.  Complaint ¶ 11; CTP Br. at 2-3; see CRD Docket Numbers T-18-3006, T-18-1731.  These violations are administratively final.

Current Violations

The complaint further alleges that Respondent Valero subsequently committed two additional violations of the Act; selling a regulated tobacco product to a minor and failing to verify, by means of photo identification containing a date of birth, that the purchaser was 18 years of age or older.  Specifically, CTP alleges that on January 4, 2019, at approximately 1:23 PM, Inspector Joseph conducted an inspection of Respondent’s business establishment, located at 100 Northwest 167th Street, Miami, Florida 33169.  CTP alleges that during the inspection, Respondent impermissibly sold a Black & Mild cigar to a minor in violation of 21 C.F.R. § 1140.14(b)(1), and failed to verify, by means of photographic identification containing a date of birth, that the purchaser was 18 years of age or older, in violation of 21 C.F.R. § 1140.14(b)(2)(i).  Complaint ¶ 9; CTP Br. at 3-4. 

CTP’s case against Respondent rests on Inspector Joseph’s declaration, and is supported by corroborating evidence including contemporaneous notes and photographs.  CTP Exs. 6‑12.  In his declaration, Inspector Joseph states that, at approximately 1:23 PM on January 4, 2019, he conducted a follow-up undercover buy (UB) compliance check inspection at Respondent’s location, 100 Northwest 167th Street, Miami, Florida 33169.  CTP Ex. 6, at 2 ¶ 8.  Inspector Joseph noted:

During the inspection, I parked my car near the Valero and Minor A and I exited the vehicle.  I watched Minor A enter Valero and I entered the establishment moments after Minor A.  From my location, I had a clear, unobstructed view of the

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sales counter and Minor A.  During the inspection, I observed Minor A purchase a cigar from an employee at the establishment.  Prior to the purchase, I observed that Minor A did not present any identification to the employee. The employee did not provide Minor A a receipt after the purchase.

Id. at 3 ¶ 9.  Inspector Joseph stated that after Minor A exited the store, they both returned to the vehicle, and Minor A immediately handed him the Black & Mild cigar.  Id. ¶ 10.  Inspector Joseph then drove to a secure location where he labeled the cigar as evidence, photographed the package, and processed the evidence in accordance with the standard procedures.  Id.

CTP submitted copies of the following documents in support of the January 4, 2019 allegations:  Sternberg Declaration (CTP Ex. 5); Joseph Declaration (CTP Ex. 6); January 2019 Narrative Report (CTP Ex. 7); January 2019 Tobacco Inspection Management System (TIMS) Assignment Form (CTP Ex. 8); Minor A ID (CTP Ex. 9); Photographs of January 2019 Tobacco Product Sold to Minor A (CTP Ex. 10); Photographs of January 2019 Tobacco Product Sold to Minor A in Evidence Bag (CTP Ex. 11); January 2019 Notice of Compliance Check Inspection (CTP Ex. 12); January 2019 Notice of Compliance Check Inspection UPS Delivery Notification (CTP Ex. 13).  Complainant’s List of Proposed Witnesses and Exhibits.  (Docket Entry 12a).

In considering whether Respondent violated 21 C.F.R. § 1140.14(b)(1) and 21 C.F.R. § 1140.14(b)(2)(i) on January 4, 2019, I note that Respondent denies the allegations.  Answer ¶ 1.  Specifically, Respondent notes, “[t]here is no proof that the employee sold tobacco products to a minor.  No inspector ever provided documents of the incident to the employee.  I (the owner) was only made aware of the incident, and was provided with documentation, days after the complaint was made.”  Id.  Respondent asserts multiple defenses, indicating that he and his wife operate their small business from 7:00 AM to 6:00 PM, and “train employees under standard procedure[s] in accordance with the state law.”  Id. ¶ 2.  Additionally, Respondent contends that the person who “violated the law, in this case, the cashier, should be penalized.”  Id.  Finally, Respondent states that he has set forth significant effort to “comply with the law through training and supervision.  We have all the signs required by law displayed on our store.”  Id. 

With regard to Respondent’s assertion that he was not provided with documentation of the alleged violations until several days after the inspection occurred, I find that the Notice of Compliance Check Inspection and Proof of Service provided Respondent with adequate notice of the violations.  The Notice was delivered to Respondent on January 10, 2019; six days after Inspector Joseph’s visit to Respondent’s facility.  (CTP Exs. 12‑13).  Further, although Respondent contends that his employee should be penalized instead, the Board has indicated that employees are acting in the course of their employment when selling regulated tobacco products.  “The mere fact that Respondent

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instructed its clerks not to sell to minors is . . . an inadequate defense because the [business is] obligated to ensure that its policies are enforced and effective.”  TOH, Inc. d/b/a Ridgeville Serv. Ctr., DAB No. 2668, at 17-18 (2015) (citation omitted).

The written testimony of Inspector Joseph, in conjunction with the corroborating evidence (CTP Exs. 6-12) is sufficient to establish that it is more likely than not that Respondent violated the law on January 4, 2019.  Furthermore, Respondent submitted no evidence to rebut Inspector Joseph’s sworn testimony.  Respondent’s employee Rodna Jacques testified that she knows “the consequences for not following the right protocol when selling Tobacco without checking ID.”  (Docket Entries 16, 27, and 27a).  Although Ms. Jacques testified that she knows “for sure that I check [a]ll IDs during Tobacco and Alcohol purchases[,]” she provides no specific information concerning the sale of tobacco products on January 4, 2019.  Id.  In fact, Respondent presents no evidence to demonstrate that Ms. Jacques was in fact even working on January 4, 2019.  Therefore, I find that on January 4, 2019, at approximately 1:23 PM, Respondent sold a Black & Mild cigar to a minor, and failed to verify the age of the purchaser by means of photographic identification containing the bearer’s date of birth in violation of 21 C.F.R. § 1140.14(b)(1) and 21 C.F.R. § 1140.14(b)(2)(i).  Respondent’s five previous violations, in conjunction with the two additional violations, constitute seven violations of law within a 48‑month period. 

B. Civil Money Penalty

I have found that Respondent committed seven violations of the Act and its implementing regulations within a 48-month period.  The 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 regulated tobacco products.  21 U.S.C. § 333(f)(9).  In its Complaint, CTP seeks to impose the maximum penalty amount, $11,410, against Respondent.  Complaint ¶ 1.  Accordingly, the only issue remaining before me is whether the civil money penalty of $11,410 that CTP seeks is an appropriate amount. 

When determining an appropriate penalty, the presiding officer shall evaluate any circumstances that mitigate or aggravate the violation, and refer to the factors identified in the applicable statute.  21 C.F.R. § 17.34.  Under the applicable statute, I must “take into account the nature, circumstances, extent, and gravity of the violation or violations and, with respect to the violator, ability to pay, effect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other matters as justice may require.”  21 U.S.C. § 333(f)(5)(B).

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

Respondent failed to comply with the Act and its implementing regulations at least seven times in under two years.  Specifically, Respondent admitted that on July 25, 2017,

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March 14, 2018, and May 25, 2018, it sold regulated tobacco products to minors and failed to verify, by means of photo identification containing a date of birth, that purchasers were 18 years of age or older, in violation of 21 C.F.R. § 1140.14(b)(1) and 21 C.F.R. § 1140.14(b)(2)(i).  Additionally, as set forth above, I found that on January 4, 2019, Respondent sold a regulated tobacco product to a minor, and failed to verify by means of photo identification containing a date of birth, that purchaser was 18 years of age or older, in violation of 21 C.F.R. § 1140.14(b)(1) and 21 C.F.R. § 1140.14(b)(2)(i).  Respondent’s repeated inability to comply with federal tobacco regulations is serious in nature and the civil money penalty amount should be set accordingly.

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

In its Answer, Respondent indicates that a civil money penalty of $11,410 is “an extremely high amount for such a small business.”  Answer ¶ 3.  Respondent contends that it lacks the ability to pay the penalty amount and that Respondent has already been “forced to close our corporation, which was operating for over ten years.”  (Docket Entries 13 and 15).

At the pre-hearing conference, Mr. Collado noted that he had closed his business, and requested that I send any future mail to his home address because he was unable to receive mail sent to his (former) business location.  Indeed, on January 30, 2020, the Civil Remedies Division (CRD) received returned mail previously mailed to Respondent’s business establishment on December 17, 2019.  The mail was marked “RETURN TO SENDER” and “UNABLE TO FORWARD.”  At no point during this proceeding has CTP provided any evidence to rebut Respondent’s assertion that he closed his business.  While I acknowledge that Respondent provided little documentary evidence to support the claim that he closed his business establishment, I conclude that Mr. Collado’s assertion is credible and sufficient to support a finding of a reduction in penalty.

3. History of Prior Violations

Respondent has repeatedly violated FDA tobacco regulations.  Most recently, CTP brought a third civil money penalty action against Respondent for seven violations of the Act.  See CTP Br. at 1-4.  Specifically, CTP alleged that on January 4, 2019, Respondent sold a regulated tobacco product to a minor, and failed to verify, by means of photo identification containing a date of birth, that the purchaser was 18 years of age or older.  Complaint ¶ 9.  CTP previously filed the first civil money penalty complaint against Respondent on March 29, 2018, and a second civil money penalty complaint on July 26, 2018.  CTP Br. at 2-3.  Respondent’s continued inability to comply with federal tobacco regulations supports the imposition of a civil money penalty.

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4. Degree of Culpability

Based on the evidence in the record, and my findings that Respondent subsequently committed two additional violations of the Act, I find Respondent fully culpable for seven violations of the Act and its implementing regulations within a 48-month period.

5. Matters as Justice May Require and 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).  After reviewing the evidence, I find that Respondent has taken additional steps to mitigate the chance of additional violations.  Most importantly, as previously noted, Respondent indicated that he has closed his business. 

Moreover, it is apparent that Respondent has significant language limitations, and has likely experienced these communication issues throughout the entire administrative process.  This is evidenced by Respondent’s confusion and difficultly communicating with CTP, as reflected in the record.  In fact, this case was so attenuated and convoluted, that it required a telephone conference to ascertain the status of the parties’ communications.  The docket contains two separate notifications of pending settlement, in addition to a letter from Respondent explaining that he had agreed to a settlement with CTP.  Furthermore, Respondent’s letter indicated that he had, in fact, mailed CTP a check for an agreed upon settlement amount.  Given Respondent’s language and communication issues, a question remains as to Respondent’s comprehension of previous settlement negotiations.  

Based on the entire processing of this matter, it is apparent that Respondent did not fully comprehend the two-part settlement process.  Respondent was evidently unaware or could not understand that he was required to admit liability, and could not merely pay the agreed upon settlement amount-without admitting liability.  Given Respondent’s language limitations, and in light of Respondent’s unequivocal refusal to admit liability, it remains unclear whether Respondent could have meaningfully engaged in previous or current settlement discussions with CTP.  In fact, it was not until the status conference that Respondent’s difficulty with the English language became apparent.  There is no evidence that any accommodation for this language limitation was available to Respondent during the previous proceedings or in this matter prior to the initial status conference on October 11, 2019.  While Respondent credibly explained during the pre-hearing telephone conferences that he had relied on a family member to assist him in responding to some of the administrative documents, I am not convinced that he fully understood the administrative process prior to the time that an interpreter was made available to him.

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Finally, Respondent states that he takes these violations very seriously.  He notes that he and his wife train the employees “under standard procedure[s] in accordance with the state law.”  Answer ¶ 2.  Respondent notes that he expends significant effort to “comply with the law through training and supervision[,]” and displays all required signs in his store.”  Id.  Furthermore, in her declaration, Rodna Jacques noted that she once forgot to check a customer’s identification prior to a tobacco sale.  (Docket Entries 16, 27, and 27a).  After that incident, Respondent had a meeting with her, gave her an immediate warning, and explained the consequences of failing to check a customer’s identification.  Ms. Jacques further stated that Respondent holds bi-weekly team meetings, and refreshes the tobacco sales protocol at those meetings.  Id.

Throughout the course of this administrative proceeding, I have been impressed with Mr. Collado’s effort to comply with judicial directives and follow rules and procedures that are unfamiliar to him.  Thus, on the basis of the entire record, it is apparent that a reduced civil money penalty is appropriate.

V. Penalty

Based on the foregoing reasoning, I find a mitigated civil money penalty amount of $4,000 to be appropriate under 21 U.S.C. § 333(f)(5)(B) and 21 U.S.C. § 333(f)(9).

VI. Conclusion

For these reasons, and pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $4,000 against Respondent, State Road Service Station Inc. d/b/a Valero, for seven violations of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140, within a 48-month period.  Pursuant to 21 C.F.R. § 17.45(d), this order becomes final and binding upon both parties after 30 days of the date of its issuance.

1. In accordance with FDA guidance, CTP counted the violations observed at the initial inspection as a single violation, and the violations observed at subsequent inspections as separate individual violations. See Orton Motor, Inc. d/b/a Orton’s Bagley v. U.S. Dep’t of Health & Human Servs., No. 16-1299 (D.C. Cir. Mar. 20, 2018).
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