Mirae Corporation d/b/a Cigar Land, DAB TB5804 (2023)

INITIAL DECISION

The Center for Tobacco Products (“CTP”), of the United States Food and Drug Administration (FDA), seeks a civil money penalty against Respondent, Mirae Corporation d/b/a Cigar Land, for violations of the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. §301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140.  CTP alleges that Respondent violated the Act by impermissibly selling regulated tobacco products to underage purchasers and failing to verify that a purchaser was 21 years of age or older.  Therefore, CTP seeks a $601 civil money penalty against Respondent for three violations of the Act within a 24-month period.¹   For the reasons discussed below, I find Respondent liable for the three violations alleged in the Complaint and conclude that a reduced CMP of $400 against Respondent is appropriate.

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Background and Procedural History

CTP began this matter by serving an administrative complaint on Respondent at 3930 A Street Southeast, #302, Auburn, Washington 98002 by United Parcel Service (UPS), and by filing a copy of the complaint with the FDA’s Division of Dockets Management.  CRD Dkt. Entry Nos. 1 (Complaint), 1b (Proof of Service).

Respondent timely filed its Answer, along with a video clip, which the Civil Remedies Division of the Departmental Appeals Board (DAB) received on July 17, 2022.  CRD Dkt. Entry Nos. 4 (Video), 5 (Answer).  In the Answer, Respondent denied the allegations, raised several defenses, disputed the appropriateness of the CMP, and attached supplemental documentation.  CRD Dkt. Entry No. 5.  On July 20, 2022, I issued an Acknowledgment and Pre-Hearing Order (APHO) acknowledging receipt of Respondent’s Answer and establishing procedural deadlines in this case.  CRD Dkt. Entry No. 6.

On September 7, 2022, CTP filed a Motion to Compel Discovery asserting that Respondent had not responded to its discovery request. CRD Dkt. Entry Nos. 9, 9a, 9b.  On September 7, 2022, CTP also requested an extension of the pre-hearing exchange deadlines.  CRD Dkt. Entry No. 10.  On September 14, 2022, I issued an Order, which advised Respondent that it had until September 28, 2022, to file a response to CTP’s Motion to Compel Discovery.  CRD Dkt. Entry No. 11 at 1-2.  My Order also granted CTP’s Motion to Extend Deadlines.  Id. at 2.  On September 16, 2022, Respondent filed its pre-hearing brief, which may have been in response to CTP’s discovery request and CTP’s Motion to Compel Discovery.  CRD Dkt. Entry No. 12.  While Respondent’s submission responded to the specific sections of the brief outline that was sent to Respondent with my July 20, 2022 APHO, Respondent did not include any mention or specific response to CTP’s discovery request, CTP’s Motion to Compel, or my Order of September 14, 2022.  On September 29, 2022, a letter issued by my direction noted the uncertainty as to whether Respondent complied with CTP’s discovery request or Request for Production of Documents (RFP).  The September 29, 2022 letter advised CTP that it had until October 7, 2022 to advise of the status of the RFP.  CRD Dkt. Entry No. 13.  On October 3, 2022, CTP filed its Complainant’s Response to By Direction Letter, stating that:

. . . [t]o date, Respondent has neither provided documents in response to CTP’s Request for Production of Documents, nor indicated in writing that responsive documents do not exist . . .

CRD Dkt. Entry No. 14.  On October 3, 2022, Respondent filed a copy of CTP’s July 29, 2022 Request for Production of Documents with responsive answers included.  CRD Dkt. Entry No. 15.  On October 7, 2022, I issued an Order relating to CTP’s Motion to Compel Discovery, advising the parties that, in light of Respondent’s October 3, 2022

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submission, I denied CTP’s Motion to Compel Discovery as moot.  CRD Dkt. Entry No. 16.

On November 10, 2022, CTP timely filed its pre-hearing exchange, consisting of a pre-hearing brief (CTP Br.), list of proposed witnesses and exhibits, and 23 proposed exhibits (CTP Exhibits (Exs.) 1-23).  CTP’s pre-hearing exchange included the written direct testimony of three proposed witnesses, CTP’s Senior Regulatory Counsel Loretta Chi (CTP Ex. 4), Inspector Ilya Kluchnikov (CTP Ex. 5), and Inspector Damon Roberson (CTP Ex. 6).  CRD Dkt. Entry Nos. 17, 17a 17x.  I note that Respondent submitted its pre-hearing brief out-of-turn on September 16, 2022, prior to the deadline established in the APHO and before CTP’s submission of its pre-hearing exchange.  See CRD Dkt. Entry No. 12.  By Order dated December 6, 2022, I scheduled a pre-hearing conference for January 10, 2023 at 2:30 PM Eastern Time.  CRD Dkt. Entry No. 18 (Order Scheduling Pre-Hearing Conference).

On January 5, 2023, Respondent filed an updated pre-hearing brief.  CRD Dkt. Entry No. 19.  Respondent did not submit any proposed exhibits, marked in accordance with my July 20, 2022 APHO.  See CRD Dkt. Entry No. 6 ¶¶ 6.c, 8.  Nor did Respondent propose any witnesses or present any witness testimony in the pre-hearing exchange.  The pre-hearing submission was filed after the November 30, 2022 deadline established in my September 14, 2022 Order which, among other things, extended the filing deadline for Respondent’s pre-hearing exchange.  Respondent did not provide an explanation, or otherwise demonstrate that extraordinary circumstances prevented it from filing an exchange in a timely manner.  CRD Dkt. Entry No. 19.  In a letter issued by my direction, CTP was given until January 9, 2023 to file an objection to Respondent’s untimely pre-hearing exchange submission.  CRD Dkt. Entry No. 21.  On January 6, 2023, by email transmission, CTP advised of its intent not to object to Respondent’s January 5, 2023 submission.  CRD Dkt. Entry No. 23.

On January 10, 2023, I held a prehearing conference call (PHC) in this case.²  See CRD Dkt. Entry No. 25 (Summary of January 10, 2023 Pre-Hearing Conference and Order Following Pre-Hearing Conference) (January 12, 2023)).  During the PHC, we discussed both parties’ proposed exhibits and witnesses.  Id. at 1.

During the PHC, I apprised Respondent of CTP’s proposed witnesses:  Senior Regulatory Counsel Chi; Inspector Kluchnikov; and Inspector Roberson.  Id.  I asked Respondent of its intent to cross-examine CTP’s witnesses, and Respondent requested an opportunity to review all of the witness written direct testimony.  Id. At 2.  I gave Respondent until January 13, 2023 to review the testimony and advise of his intent to proceed to hearing

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for the purpose of cross-examination of any or all of the witnesses.³  Id.  During the PHC, I also directed the parties to advise this office in writing of objections, if any, to the admission of the proposed exhibits submitted by the other party.  CRD Dkt. Entry No. 25 at 3.  Lastly, a hearing in this case was scheduled for Thursday, February 16, 2023 at 1:30 PM Eastern Time.⁴

In addition to summarizing the PHC, my January 12, 2023 Order, confirmed that both parties agreed to proceed to a decision based on the written record.  The Order also established a schedule for the parties to file simultaneous final briefs.  See id.

My January 12, 2023 Order also reiterated my discussion with Respondent concerning untimely submissions of evidence beyond the deadlines that I had established.  The Order confirmed my prior reminder to Respondent of the requirement for meeting all deadlines established in the case, and I directed Respondent that until further orders were issued, the time for submitting additional documentation/evidence had passed.  Id. At 2. 

On January 13, 2023 and January 26, 2023, Respondent filed its Objection to CTP’s Ex. 6 (Declaration of Inspector Roberson) and Final Brief (R. Final Br.), respectively.  CRD Dkt. Entry Nos. 26, 27.  On February 21, 2023, CTP filed its final brief (CTP Final Br.).  CRD Dkt. Entry No. 28.

As previously discussed, the parties waived the right to a hearing in this case and agreed that the matter could be decided based on the written record.  Accordingly, the record is now closed, and I am issuing a decision on the record in this case.

Issues

• Whether Respondent sold regulated tobacco products to underage purchasers on June 10, 2021 and April 5, 2022, and failed to verify, by photo identification, that a regulated tobacco product purchaser was of sufficient age, on April 5, 2022, in violation of Section 906(d)(5) of the Act; and
• If so, whether the civil money penalty amount of $601 that CTP seeks is an appropriate penalty.

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Preliminary Matters

The Parties’ Objections

As discussed above, on January 12, 2023, I issued an order which summarized the pre-hearing conference held on January 10, 2023, and which established, among other things, a deadline for the parties to submit in writing any objections to the admission of the proposed exhibits of the other party.  The parties were given until January 20, 2023 to file their respective objections.  CRD Dkt. Entry No. 25 at 3.  On January 13, 2023, Respondent filed an objection to the submission of the Declaration of Inspector Roberson (CTP Ex. 6).  CRD Dkt. Entry No. 26 (R’s Objection).  Specifically, Respondent points to that portion of Inspector Roberson’s November 9, 2022 Declaration which acknowledged the mistaken entry in his narrative report and TIMS, in which Inspector Roberson included the address number of the Respondent’s business establishment as “3902” instead of “3930.”  Id. At 1-2.  In the objection, Respondent asserts that the inspector’s error when transcribing the address number in the narrative report and TIMS is a basis for questioning the written Declaration in its entirety.  Id. at 3.  In support of this argument, Respondent contends:

. . . the suite immediately adjacent to our business is Dollar PLUS which sells some of the same products as our business.  The correct suite number and address are very critical and important factors for correct final conclusion and it is very possible that the inspector may have observed the alleged violations in Dollar PLUS, rather than at Cigar Land.

. . . in preparing the testimony, [t]he Inspector (Damon Roberson) changes the store address and also the document . . . from FDA does not have any suite number and correct store address so CTP_Ex._6_Declaration_of_Damon_Roberson (Case: April 5, 2022) must not be considered as evidence in reaching the final conclusion.

Id. at 3. 

In response, CTP rebuts Respondent’s objection and contends that Inspector Roberson’s inaccurate transcription of the establishment number as “3902” was a simple mistake of merging the first two numbers of the address with the last two numbers of the suite number.  CTP points to the Inspector’s acknowledgment and correction of the address error in his Declaration.  CTP notes that “Respondent offers no admissible evidence or persuasive argument that would call into question this obvious explanation or [Inspector Roberson’s] credibility generally.  CRD Dkt. Entry No. 28 at 1-2.

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CTP further contends:

Nor does the [address number] mistake support Respondent’s theory that the inspector went to the wrong establishment.  That Inspector Roberson in fact inspected Respondent’s establishment is supported not only by his testimony but also by the photograph he took of Cigar Land’s entrance on the date of inspection, which clearly shows the name of the store above an open door marked “302.”

Id. at 2.

In addition, CTP objects to Respondent’s submission of the driver’s license identification of the employee purportedly on duty during the April 5, 2022 inspection.  Id. at 3 fn.2.  CTP argues that the driver’s license, while responsive to CTP’s Request for Production of Documents:  1) it was not provided in response to that request; 2) it was not included in Respondent’s pre-hearing exchange; and 3) it was filed after the deadlines established in the APHO and my October 7, 2022 Order which, among other things, extended the pre-hearing exchange deadlines.  Id.

I find CTP’s argument has merit and acknowledge Respondent’s untimely submissions in this case.  It is not until Respondent’s final brief that the employee’s driver’s license is submitted for consideration.  See CRD Dkt. Entry No. 27 at 2.  While the argument regarding the employee’s description was raised by Respondent in prior written submissions (see CRD Dkt. Entry No .5 at 6), Respondent did not provide this evidence at any previous point in the proceedings.  However, I do not find that CTP is prejudiced by this submission as it had an opportunity to review the submission and formulate an argument against it.  Considering the entire record, I find the ends of justice will be served if Respondent is given an opportunity to defend itself against CTP’s allegations.

I also note CTP’s objection to Respondent’s argument and submitted photographs, for the first time in its final brief, that the suite number for Dollar PLUS is “303.”  CRD Dkt. Entry No. 28 at 2 fn.1.  CTP argues that the evidence was filed well after the pre-hearing exchange deadlines previously established and the assertion does “not provide any support beyond its bare assertion.”  Id.  CTP goes further to assert that “[e]ven if the evidence were admitted, there is no nexus between “303” and Inspector Roberson’s transcription error such that it suggests he mistakenly inspected Dollar PLUS rather than Cigar Land.”  Id. 

While I agree with CTP that the specific issue of the suite number for Dollar PLUS was not raised until Respondent’s final brief, Respondent questioned whether Inspector Roberson may have inspected Dollar PLUS, the business directly adjacent to Respondent’s establishment in Respondent’s Answer filed on July 17, 2022.  See CRD Dkt. Entry No. 5 at 7-8.

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Further, CTP objects to the admission of the CCTV video footage (CRD Dkt. Entry No. 4), submitted by Respondent on July 17, 2022 with its Answer.  CRD Dkt. Entry No. 17 at 17; CRD Dkt. Entry No. 28 at 3.  CTP challenged the submission of the video, asserting:

. . . the video is not reliable.  First, the time-stamp on the video, which is dated April 5, 2022, does not match the period of the alleged violation.  Second, upon watching the video at 50% speed in order to better observe the characteristics of the clerk, CTP noted that the time clock on the video skips seconds at a time and that the video shows at least five transactions, which does not comport with the three transactions represented to have taken place during that time period by Respondent

CRD Dkt. Entry 17 at 17 (citing CRD Dkt. Entry No. 15 at 8); see also CRD Dkt. Entry No. 28 at 3.

In multiple written submissions, Respondent relies heavily on the content of the video footage to rebut Inspector Roberson’s testimony, and to support its assertion that no violation occurred on April 5, 2022, as alleged in CTP’s complaint.  CRD Dkt. Entry Nos. 5 at 5; 19 at 3, 7; 27 at 1-5.

The regulations grant me the authority to “receive, rule on, exclude, or limit evidence.”  21 C.F.R. § 17.19(b)(11).  I also have the authority to “[w]aive, suspend, or modify any rule in this part if the presiding officer determines that no party will be prejudiced, the ends of justice will be served, and the action is in accordance with law . . . .”  21 C.F.R. 17.19(b)(17).

Based on the foregoing, I find it appropriate to accept and consider the submissions of both CTP and Respondent in their entirety.  I admit into the administrative record CTP Exs. 1-23.  Further, Respondent’s submissions filed on July 17, 2022 (Answer and video footage), September 16, 2022 (Respondent’s Brief), October 3, 2022 (Respondent’s Response to CTP’s Request for Production of Documents), January 5, 2023 (Respondent’s Updated Pre-Hearing Brief), January 13, 2023 (Respondent’s Objection to CTP’s Ex. 6), and January 26, 2023 (Respondent’s Final Brief) (CRD Dkt. Entry Nos. 4, 5, 12, 15, 19, 26, 27) are included in the record and will be considered in deciding this case. 

Analysis, Findings of Facts and Conclusions of Law

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

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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).

CTP has the burden to prove Respondent’s liability and appropriateness of the penalty by a preponderance of the evidence.  21 C.F.R. § 17.33(b).  Respondent has the burden to prove any affirmative defenses and any mitigating factors likewise by a preponderance of the evidence.  21 C.F.R. § 17.33(c).

I.     Violations

CTP determined to impose 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).  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).  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 21 and failure to verify, by means of photo identification containing the bearer's date of birth, that a regulated tobacco product purchaser is of sufficient age are violations of implementing regulations.  Act, Section 906(d)(5);⁵  21 U.S.C. § 387f(d)(5).

A.  June 10, 2021 Violation

In its Complaint, CTP alleges that Respondent committed three violations of the Act and its implementing regulations within a 24-month period.  CRD Dkt. Entry No. 1 ¶ 1.  On September 16, 2021, Respondent filed an informal brief.  CRD Dkt. Entry No. 12.  In the brief, Respondent conceded the violation alleged to have taken place on June 10, 2021.  Id. at 2.  Therefore, I find that Respondent sold regulated tobacco products to an underage purchaser on June 10, 2021, in violation of section 906(d)(5) of the Act.

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B.  April 5, 2022 Violations

CTP argues the testimonies of Senior Regulatory Counsel Loretta Chi (Chi) and Inspector Damon Roberson, plus the corroborating evidence which includes photographs of the e-liquid product that was obtained from Underage Purchaser (UP) B on April 5, 2022 are proof that Respondent unlawfully sold regulated tobacco products to an underage purchaser and failed to verify, by photo identification, that the purchaser was of sufficient age, in violation of the Act.  CRD Dkt. Entry No. 17 at 6, 9-13.

In this instance, CTP’s case against Respondent rests on the testimony of Loretta Chi and Inspector Damon Roberson, plus corroborating evidence.  CTP Exs. 4, 6, 17k-m, 17s-u.  Based on the discussion below, I find the respective witness testimony to be credible and persuasive.

Loretta Chi is a Senior Regulatory Counsel with the Center for Tobacco Products.  CTP Ex. 4 ¶ 1.  Chi testified that, as Senior Regulatory Counsel, there is knowledge of the processes used by the FDA regarding the establishment registration and product listing requirements.  Id. ¶¶ 2,3.  Chi further testified that the JUUL Menthol e-liquid product purchased on April 5, 2022 at Respondent’s establishment was manufactured by JUUL Labs in the State of Wisconsin.  Id. ¶¶ 6,7.  Chi confirmed that the e-liquid product was not manufactured in Washington.  Id. ¶ 8.

Respondent does not dispute Chi’s testimony and does not dispute that it sold ENDS/e-liquid products for sale at its establishment on April 5, 2022.  Accordingly, I find that Respondent’s establishment received JUUL e-liquid products in interstate commerce and held them for sale on April 5, 2022, after shipment in interstate commerce.

Inspector Roberson is an FDA-commissioned officer whose duties include determining whether retailers are in compliance with the age and photo identification requirements relating to the sale of regulated tobacco products.  CTP Ex. 6 ¶¶ 1-2.  Inspector Roberson’s inspections entail accompanying underage purchasers who attempt to purchase tobacco products from retail establishments such as the one operated by Respondent.  Id. 

Inspector Roberson testified that, before the inspection, he confirmed that UP B did not have any tobacco products in his/her possession and possessed an accurate photographic identification of his/her date of birth (i.e., military photographic identification).  CTP Ex. 6 ¶ 7; see also CTP Ex. 18.  Inspector Roberson testified that, during the inspection, he parked his car near Cigar Land (Respondent’s Establishment), and Inspector Roberson and UP B exited the vehicle.  CTP Ex. 6 ¶ 8.  Inspector Roberson testified that he watched UP B enter Cigar Land, then entered the establishment himself shortly after.  Id.  Inspector Roberson testified that, from his location, he had a clear, unobstructed view of the sales counter and UP B.  Id.  During the inspection, he observed

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UP B purchase an ENDS/e-liquid product from an employee at Respondent’s establishment.  Id.  Inspector Roberson testified that prior to the purchase, he observed that UP B did not present any identification to the employee, and the employee did not provide UP B a receipt after the purchase.  Id.

Inspector Roberson testified that, after UP B completed his/her purchase, UP B and Inspector Roberson returned to the vehicle, where UP B immediately handed Inspector Roberson the ENDS/e-liquid product.  CTP Ex. 6 ¶ 9.  Inspector Roberson testified that he observed that the product was a JUUL Menthol e-liquid product.  Id.  Inspector Roberson labeled the JUUL Menthol e-liquid product as evidence and photographed all of the panels of the package.  Id.  Inspector Roberson then processed the evidence in accordance with standard procedures at the time of the inspection, which entailed completing the TIMS Form and creating a Narrative Report.  Id.  ¶¶ 9-11.  UP B’s redacted identification and Inspector Roberson’s contemporaneous photographs and reports were admitted into evidence and corroborate Inspector Roberson’s testimony.  CTP Exs. 10-12, 18, 20; see also CTP Ex. 21 (Notice of Compliance Check Inspection).  Immediately following the PHC, by email transmission, Respondent waived its right to cross-examine Inspector Roberson.  See CRD Dkt. Entry No. 24 at 1.

I also find that Respondent has failed to prove any affirmative defenses or to rebut CTP’s evidence regarding the April 5, 2022 violations for selling a regulated tobacco product to an underage purchaser and failing to verify the purchaser’s age with photographic identification.  See generally CRD Dkt. Entry Nos. 5, 12, 15, 19, 27.  Respondent did not cross-examine Inspector Roberson concerning the inspection on April 5, 2022.

As to the April 5, 2022 violation, Respondent raises several defenses in its multiple written submissions.  Specifically, Respondent argues:

• the inspector’s description of Respondent’s sales clerk in the TIMS and Narrative Statement does not match the description of the sales clerk on duty at the time of the April 5, 2022 inspection;
• the Point of Sale (POS) documentation and video footage submitted does not support the allegation that the e-liquid product sold to UP B was in fact sold; and
• the inspector’s incorrect documentation in the TIMS and Narrative Statement and subsequent correction in his Declaration raises an issue as to the credibility of the inspector’s testimony. 

See CRD Dkt. Entry Nos. 5 at 5-6; 15 at 4, 8, 19; 19 at 3, 4, 6-7, 9; 27 at 1-3, 5-7.

I have considered Respondent’s arguments but find them to be unpersuasive.  Respondent has consistently asserted that the sale of regulated tobacco products to an underage purchaser on April 5, 2022, did not occur.  First and foremost, as mentioned above, Respondent declined to cross-examine CTP’s witnesses and has not presented any other

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evidence to rebut or otherwise impeach the testimony of CTP’s witnesses.  Moreover, Respondent has not provided any evidence in support of this assertion, other than the unsubstantiated contention that Inspector Roberson’s entire testimony should be discounted because of documentation of an incorrect address number in his narrative statement and TIMS, and because the inconsistency between the inspector’s description of Respondent’s employee and Respondent’s description.

1.  Employee’s Description

Respondent argues that the employee on duty at the time of the April 5th inspection was the store manager, Tycota Anderson.  CRD Dkt. Entry No. 27 at 1-2.  Respondent describes Mr. Anderson as having blonde hair and not wearing glasses.  Id.  CTP counters by noting that Respondent’s description does not match the sales clerk who appears in the video footage.  CRD Dkt. Entry No. 28 at 3.

Inspector Roberson testified under oath that he observed Respondent sell regulated tobacco products to an underage purchaser on April 5, 2022.

In his April 5, 2022 Narrative Report, Inspector Roberson provided the following description of the employee who sold tobacco products to UP B:

Name: 
As observed on   Not observed 
Gender: Male 
Age: Adult 
Hair: Black/Dark Brown 
Characteristics:  Glasses

CTP Ex. 10 at 1. 

I have reviewed the 15-minute video submitted by Respondent, purported to be footage during the April 5, 2022 inspection.  CRD Dkt. Entry No 4.  I have also examined the photograph of the driver’s license of Tycota Anderson, the sales clerk purportedly on duty during the inspection.  CRD Dkt. Entry No. 27.  The driver’s license shows a picture of Mr. Anderson with what could be considered “dark blonde” or “light brown” hair.  Id.  Also, under “Restrictions,” the driver’s license documents “none,” which typically refers to whether the driver wears glasses.  Id.  A close examination of the video shows what appears to be an adult individual working behind the sales counter, wearing what looks to be a dark head covering (possibly a hat), a black/dark face mask such as those worn during the height of the COVID-19 pandemic, and what appears to be eye glasses resting on the nose bridge of the face mask.  See, e.g., CRD Dkt. Entry No. 4 at 12:12:27.  From this short clip, it is difficult to see what the employee looks like.  But what is obviously absent from the clip is the presence of blonde hair, contrary to Respondent’s assertion

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that “. . . as shown in the CCTV recording and ID below, our store manager (Tycota Anderson) who worked on April 5, 2022, at approximately 1:05PM has blond hair and does not wear glasses.”⁶ CRD Dkt. Entry No. 27 at 1.

2.  Point fo Sale Documentation

Respondent also contends:

. . . the inspector observed a person purchasing ENDS/E-liquid around 1:05 pm, but the CCTV recording shows that we sold different products – namely, pall mall blue, Crown Red & Dunhill at that time.  For double confirmation of sales around 1:05PM, the points of sales transaction logs from POS is (sic) provided as below.  Based on sales transaction logs from 4/5/22 at 01:00 PM to 4/5 01:12 PM, there are three transactions as below and POS transaction logs confirm again that [t]here is no JUUL sales during that time.

CRD Dkt. Entry No. 27 at 3; see also id. at 4, 5.

At the outset, CTP maintains that the April 5, 2022 inspection began at approximately 1:05 PM and concluded at 1:35 PM Pacific Daylight Time (PDT).  CRD Dkt. Entry No 28 at 2-3 (citing CRD Dkt. Entry Nos. 17g  at ¶ 7, 17k at ¶ 20).  CTP goes on to:  1) note the discrepancy between the time on the video clock (12:00:17 – 12:15:10) and the time of the inspection (approximately 1:05 PM through 1:34 PM PDT)⁷ ; and 2) argue that, while Respondent provided sales receipts covering sales from 1:03:47 PM to 1:12:09 PM on April 5, 2022, receipts covering the entirety of the inspection period were not included.  CRD Dkt. Entry No 28 at 2-3.  I find CTP’s second contention to have merit.

As a part of its pre-hearing and final briefs (CRD Dkt. Entry Nos. 19, 27), Respondent included screen shots of transaction logs for sales on April 5, 2022 between 12:52 PM and 1:34 PM.  CRD Dkt. Entry No.  19 at 7.  The transaction log shows sales between the approximate start of the inspection (1:05 PM PDT) and the end of the inspection (1:34 PM PDT).  See CTP Ex. 17k at 1, 2.  However, Respondent only provided three sales receipts which identify the tobacco product purchases during the relevant time period.

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CRD Dkt. Entry No. 19 at 8, 9.  Based on the three receipts, Respondent concludes that the receipts show that no e-liquid product was sold during the April 5, 2022 inspection.

Respondent’s conclusion is a bit premature.  According to the transaction log, the sale at 1:03PM is theoretically outside the window of the inspection, which is documented to have started at approximately 1:05PM.  But that being said, there are five other sales which occurred during the inspection, and for which Respondent did not provide receipts to show the exact product sold at that time.  CRD Dkt. Entry No. 19 at 7; compare with id. at 8, 9.  Had Respondent fully complied with CTP’s July 29, 2022 Request for Production of Documents⁸ , there would be a complete picture of the tobacco products sold between 1:05PM and 1:34PM on April 5, 2022.  As it stands, we do not know what products were sold in the five transactions reflected in the transaction log to have occurred at 1:13PM, 1:16PM, 1:22PM, 1:23PM, and 1:34PM.  CRD Dkt. Entry No. 27 at 3.

Further, if I am to infer that the CCTV video represents a clip of the establishment’s activities during the inspection, the video is inconsistent with Respondent’s representation that only three sales occurred during the relevant time period.  I have reviewed the video clip closely.  To begin with, I note that the time stamp spans from 12:00:17 to 12:15:10.  CRD Dkt. Entry No. 4.  It does not cover the 30-minute inspection period in its entirety.  Further, during the approximately 15 minutes available video footage, there were five sales transactions:

• Customer 1 sale – 12:03:00
• Customer 2 sale – 12:08:52
• Customer 3 sale – 12;12:10
• Customer 4 sale -  12:13:04
• Customer 5 sale – 12:14:47

Id.  Based on the video clip, at least five sales occurred during the first 15 minutes of the inspection.  This evidence contradicts Respondent’s repeated claim that only three transactions occurred and that none of the three sales involved the sale of an ENDS/e-liquid product.  And if I accept Respondent’s contention as true, that brings into question whether the CCTV video in the record is accurate footage and pertains to the inspection and transactions at issue.  Respondent has not provided an explanation or otherwise presented any evidence to explain the discrepancy and to support a finding that it is more likely than not that that the alleged violation did not, in fact, occur.

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3.  Inspector Roberson’s Narrative and TIMS Mistatement

Respondent’s final defense rests on a transcription error in Inspector Roberson’s April 5, 2022 narrative report and TIMS entry.  CRD Dkt. Entry No. 27 at 6, 7.  Respondent chose to waive cross-examination of Inspector Roberson and focused on the inaccuracy and subsequent acknowledgment by Inspector Roberson of the establishment’s address transcription error, as opposed to questioning Inspector Roberson and attacking his credibility at a hearing.  While Respondent makes the transcription error the focal point of its argument, Respondent has provided no evidence as to how a two-digit transcription error in a narrative statement results in discrediting Inspector Roberson’s entire sworn Declaration.  Respondent’s attention to the confusion with the address number in the April 5, 2022 narrative report appears to be more of a distraction than a significant source of evidence, and it does not lead me to disregard Inspector Roberson’s testimony.  A writer’s error made by Inspector Roberson while recording the last two digits of Respondent’s business address is largely irrelevant and fails to undermine the inspector’s credibility.

Additionally, in its final brief, Respondent raises an argument not presented in prior submissions.  Specifically, Respondent claims:

. . . the suite immediately adjacent to our business is Dollar PLUS (STE 303) which sells some of the same products as our business (STE 302) . . .

. . . The correct store address and Suite number are very important and critical for correct final conclusion but the document below from FDA has wrong store address and even do not have suite number as below . . .

. . . In preparing the testimony, the inspector Damon Roberson (case for April 5, 2022) changes the store address as below and changing the store address can lower testimony credibility because Cigar Land (STE 302) and Dollar Plus (STE 303) are VERY adjacent and selling same products.

CRD Dkt. Entry No. 27 at 6, 7.

In response, CTP argues that there is no evidence in the record to show a “nexus between ‘303’ and Inspector Roberson’ transcription error such that it suggested he mistakenly inspected Dollar Plus rather than Cigar Land.”  CRD Dkt. Entry No. 28 at 2 fn.1.  CTP contends that the inspector’s transcription error aside, the record strongly supports the fact that Inspector Roberson inspected the intended establishment, meaning Cigar Land.  Id. at 2.

I am persuaded by CTP’s rationale.  Notwithstanding the conceded transcription error, other evidence in the record supports a conclusion that on April 5, 2022, Inspector

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Roberson inspected Respondent’s establishment.  Included in the record are photographs taken by Inspector Roberson on April 5, 2022 of the entrance of Respondent’s establishment (CTP Ex. 12), as well as his sworn Declaration regarding the inspection (CTP Ex. 6).

I find Inspector Roberson’s testimony, supported by corroborating evidence, to be credible and unbiased.  Inspector Roberson testified convincingly and comprehensively about his observations during the April 5, 2022 inspection.  He testified that he observed UP B enter Respondent’s establishment, purchase an ENDS/e-liquid product, and exit the establishment with a JUUL Menthol e-liquid product, which UP B affirmed was sold to him/her by Respondent’s employee.  See CTP Ex. 6 ¶ 9.  Inspector Roberson’s testimony was supported by contemporaneous records and supporting evidence.  Id. ¶¶ 10, 11.

CTP has the burden of proving Respondent’s liability by a preponderance of the evidence.  21 C.F.R. § 17.33.  I find that CTP has provided sufficient evidence to support its allegations that Respondent sold regulated tobacco products to an underage purchaser and failed to verify, by means of photo identification, that the underage purchaser was of sufficient age on April 5, 2022, in violation of Section 906(d)(5) of the Act.  I do not find Respondent’s evidence sufficient to merit an affirmative defense to negate liability.  21 C.F.R. § 17.33(c).

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).

II.     Civil Money Penalty

I have found that Respondent committed three violations of the Act and its implementing regulations within a 24-month period.  The FDA, and 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 sought to impose the maximum penalty amount of $601 against Respondent.  Complaint ¶ 1.    When determining an appropriate penalty, the presiding officer must evaluate any circumstances that mitigate or aggravate the violation. 21 C.F.R. § 17.34(a).  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); see also 21 C.F.R. § 17.34.

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

I found that Respondent committed three violations of selling regulated tobacco products to underage purchasers and failing to verify, by photographic identification, that a purchaser was of sufficient age.  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 Ability to Do Business

Respondent has not argued that it does not have the ability to pay the $601 CMP.  Respondent has not presented any evidence that the penalty will effect its ability to continue to do business.  In its Answer, Respondent only states that the CMP is too high.  See CRD Dkt. Entry No. 5 at 2.

C.  History of Prior Violations

The current action is the first CMP action brought against Respondent for violations of the Act and its implementing regulations.

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.  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 has detailed some of the steps it takes to prevent violations of the Act.  CRD Dkt. Entry Nos. 15 at 10-16; 19 at 2.  After the June 10, 2021 violation, Respondent implemented internal training for sales of tobacco products.  Respondent also installed and utilizes a new POS system to complete transactions involving age restrictive tobacco products.  Id.

Respondent does not deny that it sold regulated tobacco products to an underage purchaser on June 10, 2021 in violation of section 906(d)(5) of the Act.  His admission to the June 10, 2021 violation lends credibility to Respondent’s assertions that he implemented safeguards to prevent future violations after this initial violation.  While it is apparent that these safeguards did not prevent the unlawful sale of a tobacco product to

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an underage purchaser on April 5, 2022, I nevertheless accept Respondent’s assertions that he attempted to put these safeguards in place.  In light of Respondent’s actions to try to prevent future violations, I find evidence to reduce the $601 CMP.  I find that a CMP of $400 is appropriate.

F.  Penalty

Based on the foregoing, I find a reduced penalty amount of $400 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 impose a reduced civil money penalty of $400 against Respondent, Mirae Corporation d/b/a Cigar Land, for three violations of the Act, 21 U.S.C. § 301 et. seq., within a 24-month period.  Pursuant to 21 C.F.R. § 17.45(d), this decision becomes final and binding upon both parties after 30 days of the date of its issuance.

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Endnotes

¹  In the Complaint, CTP stated that any violations that occurred outside the relevant timeframe were not included.  See Civil Remedies Division (CRD) Docket (Dkt.) Entry No. 1, ¶ 1 fn.1 (Complaint).

²  Pursuant to Respondent’s request, a translator was assigned to assist Respondent during the PHC.

³  On January 10, 2023, prior to issuance of the PHC Summary and Order, Respondent by email transmission advised of his intent not to proceed to a hearing and to have the case decided based on the submitted record.  CRD Dkt. Entry No. 24; see also CRD Dkt. Entry No. 25 at 2.

⁴  As a result of Respondent’s waiver of the right to a hearing, the hearing previously scheduled for February 16, 2023 was cancelled.  See CRD Dkt. Entry No. 25 at 2.

⁵  On December 20, 2019, the Act was amended by the Further Consolidated Appropriations Act, 2020, Pub. L. No. 116–94, § 603(a)-(b), to raise the federal minimum age for sale of tobacco products to 21, and directed the Secretary of the U.S. Department of Health and Human Services (Secretary) to “update all references to persons younger than 18 years of age in subpart B of part 1140 of title 21, Code of Federal Regulations, and to update the relevant age verification requirements under such part 1140 to require age verification for individuals under the age of 30.”  21 U.S.C. § 387f (note).

⁶  At the PHC held on January 10, 2023, Respondent’s employee, Tycota Anderson, sat in on the conference for, according to Respondent, the conference participants to “see what [he] . . . looks like . . . .”  See CRD Dkt. Entry No. 24.

⁷  CTP acknowledges Respondent’s explanation for the video time clock discrepancy, i.e., the CCTV was not updated to reflect the change to daylight savings time so therefore the video time clock is one hour behind.  CRD Dkt. Entry No. 28 at 3; citing CRD Dkt. Entry No. 5 at 5.

⁸  In part, CTP’s RFP sought “[a]ll documents relating to the sales of tobacco products at the Establishment on . . . April 5, 2022, including, but not limited to, point of sale transaction logs, . . . register tapes and data and video surveillance tapes and data.  CTP acknowledges that Respondent filed a video clip with the Answer filed on July 17, 2022.”  CRD Dkt. Entry No. 9a ¶ 4.