Amana Mart Inc. d/b/a Quik Mart / Citgo, DAB TB5200 (2020)

INITIAL DECISION

The Food and Drug Administration’s Center for Tobacco Products (CTP) seeks an $11,410 civil money penalty against Respondent, Amana Mart Inc. d/b/a Quik Mart / Citgo, 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 eight times within a 48-month period.  Specifically, CTP alleges that Respondent violated the Act when 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.  For the reasons discussed below, I find Respondent liable for the violations alleged in the complaint, but conclude that reducing the civil money penalty from $11,410 to $4,500, is appropriate. 

I.    Background

CTP began this case by serving an administrative complaint on Respondent at its establishment located at 15500 West Chicago Street, Detroit, Michigan 48228, and by

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filing a copy of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  Respondent timely filed an Answer to CTP’s complaint.  On December 3, 2019, I issued an Acknowledgement and Pre-Hearing Order (APHO) in which I set a schedule of pre-hearing exchanges and deadlines for submissions.

CTP timely filed its pre-hearing exchange, consisting of a pre-hearing brief; a list of proposed witnesses and exhibits; 16 proposed exhibits (CTP Exs. 1-16); and the written direct testimony of two proposed witnesses, CTP’s Senior Regulatory Counsel Laurie Sternberg (CTP Ex. 5) and FDA-commissioned Inspector Hiram Harris (CTP Ex. 6).  Respondent did not submit any written direct testimony but submitted 22 proposed exhibits (R. Exs. 1-22).  CRD Docket (Dkt.) Nos. 5-7; 9-10; 12-13; 15-21; 23-28; 33-34.

On May 4, 2020, I conducted a pre-hearing conference.  During the pre-hearing conference, I admitted CTP Exhibits 1-16 and Respondent’s Exhibits 1-22 into evidence.1    Respondent declined to cross-examine either of CTP’s proposed witnesses.  The parties waived their right to a hearing and consented to a decision on the written record. 

II.    Issues

(1)    Whether Respondent sold a regulated tobacco product to a minor and failed to verify the age of the purchaser on July 31, 2019, in violation of 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i); and if so,
(2)    Whether the civil money penalty amount of $11,410 is appropriate.

III.    Analysis, Findings of Fact, and Conclusions of Law

A.  Violations

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

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

1.  Prior Violations

This is the third civil money penalty action brought against Respondent for violating the Act’s requirements.  CTP Exs. 1, 3; Complaint ¶ 11; see CRD Docket Numbers T-17-3485 and T-18-3074.  Respondent was found to have committed six prior violations.  Specifically, Respondent sold a regulated tobacco product to a minor on June 17, 2016, November 13, 2016, September 16, 2017, and May 6, 2018, in violation of 21 C.F.R. § 1140.14(a)(1), (b)(1); and on the same dates, also failed to verify photographic identification of the regulated tobacco product purchaser in violation of 21 C.F.R. § 1140.14(a)(2)(i), (b)(2)(i). 

Respondent’s first CMP action concluded with a default judgment finding Respondent liable for all of the violations alleged.  CTP Ex. 2.  Respondent’s second CMP action resulted in settlement and concluded after Respondent admitted to at least six violations2 of the regulations and paid an agreed upon penalty.  CTP Exs. 2, 4.  In settlement, Respondent expressly waived its right to contest these violations in subsequent actions.  Id.  These six violations are now administratively final.

2.  Current Violations

I now turn to whether the remaining allegations in the complaint are true, and, if so, whether Respondent’s actions constitute a violation of law.  21 C.F.R. § 17.45(b).  Specifically, I must determine whether on July 31, 2019, at approximately 6:15 PM, Respondent sold a package of two Swisher Sweets Classic cigars to a minor, and failed to verify the age of the purchaser by means of photographic identification containing the bearer’s date of birth. 

CTP has the burden of proving Respondent’s liability by a preponderance of the evidence.  21 C.F.R. § 17.33(b).  It is Respondent’s burden to prove any affirmative defenses also by a preponderance of the evidence.  21 C.F.R. § 17.33(c).  As detailed below, I find that based on the evidence of record, on the date and time in question, Respondent sold regulated tobacco products to a minor and failed to verify the minor’s identification before the sale in violation of 21 C.F.R. § 1140.14(b)(1), (b)(2)(i).

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CTP’s case against Respondent rests on the testimony of Inspector Hiram Harris, who conducted the inspection at issue, and supported by corroborating evidence including contemporaneous notes and photographs.  CTP Exs. 6-11.  Inspector Harris is an FDA-commissioned officer with the state of Michigan, whose duties include determining whether retail outlets unlawfully sell regulated tobacco products to minors through undercover buy inspections.  CTP Ex. 6 at 1-2.  Inspector Harris testified that he conducted a follow-up undercover buy (UB) compliance check inspection of Respondent’s establishment on July 31, 2019, at approximately 6:15 PM, during which he observed Minor A purchase a package of cigars from an employee at Respondent’s establishment.  Id. at 2-3.  He observed Minor A did not present any identification prior to the sale.  Id. at 3.

Inspector Harris testified that, prior to the inspection at issue, he verified that Minor A possessed a true and accurate photographic identification showing the minor’s actual date of birth.  Id. at 2.  Inspector Harris also verified that Minor A was under the age of 18, and that the minor did not have any tobacco products in the minor’s possession prior to entering the store.  Id.

Inspector Harris parked his car near Respondent’s establishment, where he and Minor A exited the vehicle.  Id. at 3.  The inspector observed Minor A enter Respondent’s establishment and he followed thereafter.  Id.  Inspector Harris testified he had a clear, unobstructed view of the sales counter and Minor A.  Id.  From this location, Inspector Harris observed Minor A purchase a package of cigars from an employee at the establishment.  Id.  Additionally, Inspector Harris observed that Minor A did not present any identification to the employee prior to the sale and that the employee did not provide Minor A with a sales receipt following the transaction.  Id.

Inspector Harris testified that after the purchase, he and Minor A returned to the vehicle, where Minor A immediately handed the inspector the package of cigars.  Id.  Inspector Harris identified that package as Swisher Sweets Classic cigars.  After moving to a nearby safe location, Inspector Harris testified that he labeled the cigars as evidence, photographed all the panels of the package, and processed the evidence in accordance with standard procedures.  Id.  Inspector Harris also contemporaneously recorded the inspection in the FDA’s Tobacco Inspection Management System (TIMS) and created a Narrative Report.  Id.  CTP corroborated Inspector Harris’s testimony by offering as evidence photographs that the inspector made of the cigars on the date in question.  CTP Exs. 10-11.  CTP further corroborated Inspector Harris’s account by submitting a copy of his contemporaneously recorded TIMS report and Narrative Report.  CTP Exs. 8-9.

I find Inspector Harris’s testimony to be credible.  Inspector Harris testified comprehensively about his observations during the July 31, 2019 inspection where he observed Respondent’s staff sell a package of Swisher Sweets Classic cigars to a minor and that prior to the purchase, the minor did not present identification.  CTP Ex. 6 at 2-3.

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Respondent does not deny the allegations, and admits that a disgruntled employee committed the violations as alleged in CTP’s complaint.  Answer at 1 (Dkt. No. 3).  It is Respondent’s position that it should not be held responsible for the actions of its staff.  Respondent argues that a cashier intentionally committed the violations to “get back at us for not giving him a raise.”  Id. at 1-2.  Therefore, the violations “should be issued to the employee that was trained not to sell to a minor.”  R. Ex. 6 (Dkt. No. 12).

Respondent’s arguments are irrelevant to the issue of whether Respondent is responsible violating the Act.  The mere fact that Respondent trained its staff not to sell to minors is an inadequate defense.  An employee of Respondent, performing the duties of their employment, made an improper sale and did not ask for identification prior to making the sale.  Respondent is responsible for such actions of its employee.  When a retailer chooses to sell an inherently dangerous regulated tobacco product, that retailer must abide by those regulations. 

I find that CTP has provided sufficient evidence to support its allegation that Respondent sold regulated tobacco products to a minor and failed to verify that the minor was of sufficient age through photographic identification on July 31, 2019, in violation of 21 C.F.R. § 1140.14(b)(1) and 1140.14(b)(2)(i).  The facts, as outlined above, establish that Respondent’s actions constitute violations of law, and I conclude that Respondent is liable under the Act.  Accordingly, CTP is entitled to a civil money penalty from Respondent.  21 U.S.C. § 333(f)(9).

B.  Civil Money Penalty

I have found that Respondent committed at least eight violations of the Act and its implementing regulations within a 48-month period.  In its complaint, CTP sought the maximum penalty amount, $11,410, against Respondent.  Complaint ¶ 1.  Respondent argues such an amount will cause an undue hardship on its business, and asks that I lower the penalty.  Answer at 2 (Dkt. No. 4).  Accordingly, I now turn to whether an $11,410 civil money penalty is appropriate.

1.  Determining Amount of Civil Money Penalty 

When determining the amount of a civil money penalty, I am required to 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); see also 21 C.F.R. § 17.34.

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

Respondent committed at least eight violations of the Act.  It sold regulated tobacco products to minors on five separate occasions:  June 17, 2016, November 13, 2016, September 16, 2017, May 6, 2018, and July 31, 2019.  On those same dates, Respondent also failed 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 civil money penalty amount should be set accordingly. 

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

Respondent asserts that the $11,410 penalty sought will “put us out of business.”  R. Ex. 6 (Dkt. No. 12).  Respondent has submitted bank statements to demonstrate its inability to pay such an amount.  R. Exs. 15-20 (Dkt. Nos. 23-28).

c.  History of Prior Violations

The current action is the third civil money penalty action that CTP has brought against Respondent.  Respondent was previously found to have sold a regulated tobacco product to a minor on June 17, 2016, November 13, 2016, September 16, 2017, and May 6, 2018, in violation of 21 C.F.R. § 1140.14(a)(1), (b)(1); and on the same dates, failed to verify photographic identification of the regulated tobacco product purchaser in violation of 21 C.F.R. § 1140.14(a)(2)(i), (b)(2)(i). 

d.  Degree of Culpability

It is Respondent’s responsibility to ensure its staff complies with the regulations.  Therefore, I find Respondent fully culpable for all violations of the Act and its implementing regulations.

e.  Other Matters as Justice May Require

Respondent has taken steps to help ensure compliance with the Act.  Respondent indicated that the disgruntled employee that made the unlawful sale is no longer employed with the business.  R. Ex. 6 (Dkt. No. 12).  Respondent utilizes a Point of Sale (POS) system to reduce the likelihood of a sale of tobacco products to minors in the future.  R. Exs. 4-5 (Dkt. Nos. 9-10).  Respondent has also retrained its employees on age verification for tobacco sales.  R. Exs. 1, 3 (Dkt. Nos. 5, 7), 11-14 (Dkt. Nos. 18-21). 

Respondent has also submitted documentation that, due to the hardship caused by the COVID-19 pandemic, it was recently approved for a Small Business Administration loan

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of $10,702 through the Paycheck Protection Program.  R. Exs. 21-22 (Dkt. Nos. 33-34).  COVID-19 has had a devastating impact on small businesses that has resulted in unprecedented hardship and economic disruption.  Given the circumstances, I find it appropriate to reduce the civil money penalty.

2.  Penalty

Based on the foregoing reasoning, I find a penalty amount of $4,500 appropriate under 21 U.S.C. § 333(f)(5)(B) and (f)(9).

IV.    Conclusion

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $4,500 against Respondent, Amana Mart Inc. d/b/a Quik Mart / Citgo, for at least eight violations of the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140, within a 48-month period.  Pursuant to 21 C.F.R. § 17.45(d), this order becomes final and binding upon both parties after 30 days of the date of its issuance.

1. Respondent’s proposed Exhibits 21 and 22 were untimely filed.  However, CTP did not object to the untimely submissions; therefore Exhibits 21 and 22 were also admitted into evidence.
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2. In accordance with FDA guidance, CTP counted the violations identified during the initial inspection as a single violation, and subsequent violations individually.  See Orton Motor, Inc. d/b/a Orton’s Bagley v. U.S. Dep’t of Health & Human Servs., 884 F.3d 1205 (D.C. Cir. 2018).
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