Duffy and Associates, Inc. d/b/a Discount Tobacco, DAB TB6169 (2023)

Initial DECISION

I sustain the determination of the Center for Tobacco Products (“CTP”) of the United States Food and Drug Administration (“FDA”) to impose a civil money penalty of $638 against Respondent, Duffy and Associates, Inc. d/b/a Discount Tobacco.

I. Background

Respondent requested a hearing in order to challenge CTP’s determination to impose a civil money penalty.  After the parties completed pre-hearing exchanges of briefs and exhibits, on March 15, 2023, I held a telephone pre-hearing conference in this case.  During the pre-hearing conference call, the parties agreed that a hearing was not required and consented to a decision based on the administrative record.  As neither party objected to the submission of the other party’s proposed exhibits, I admitted into evidence CTP’s Exhibits (Exs.) 1-24 and Respondent’s Exs. 1-14.  Following the pre-hearing conference, I afforded the parties an opportunity to file final briefs.  On April 14, 2023, CTP filed a

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final submission.  On April 20, 2023, Respondent filed its response to CTP’s final submission.

Accordingly, the record is now closed, and I am issuing a decision on the record in this case.

II. Issues, Findings of Fact and Conclusions of Law

1. Issues

   1. Respondent sold regulated tobacco products to underage purchasers and failed to verify, by means of photographic identification, that regulated tobacco product purchasers were of sufficient age, on January 7, 2022, and August 7, 2022, in violation of section 905(d)(5) of the Act and 21 C.F.R. § 1140.14(b)(2)(i); and
   2. A civil money penalty of $638 is a reasonable remedy. 

2. Findings of Fact and Conclusions of Law

CTP determined to impose a civil money penalty against Respondent pursuant to the authority conferred by the Federal Food, Drug, and Cosmetic Act (Act) and implementing regulations at 21 C.F.R. pt. 1140.  The Act prohibits misbranding of a tobacco product.  21 U.S.C. § 331(k).  A tobacco product is misbranded if distributed or offered for sale in any state in violation of regulations issued under section 906(d) of the Act.  21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).  The Secretary of the U.S. Department of Health and Human Services issued the regulations at 21 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); see also 21 U.S.C. § 387f (note) (directing the Secretary to change references to persons younger than 18 to younger than 21, and to change the age verification requirements from individuals under the age of 26 to under the age of 30, in 21 C.F.R. subpart B of part 1140).¹  Under section 906(d)(5) of the Act, no retailer may sell regulated tobacco products to any person younger than 21 years of age and retailers must verify, by means of photographic identification containing a purchaser’s date of

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birth, that no regulated tobacco product purchasers are younger than 21 years of age.²

CTP premises its case on inspections conducted on Respondent’s establishment on January 7, 2022, and August 7, 2022.  On January 7, 2022, an FDA-commissioned inspector, Katherine Nizick, went to Respondent’s establishment in the company of underage purchaser (UP) A to conduct an undercover buy (UB) compliance check inspection.  CTP Ex. 5 ¶ 7.  UP A entered the facility after Inspector Nizick verified that UP A possessed photo identification showing their actual date of birth, that UP A was under the age of 21 at the time of the inspection, and that UP A did not have any tobacco products in their possession.  Id.  Inspector Nizick watched UP A enter the establishment and went in shortly after UP A.  Id. ¶ 8.  From a vantage point that was a clear and unobstructed view of the sales counter and UP A, Inspector Nizick observed UP A purchase a package of Swisher Sweets Classic Grape cigars.  Id. ¶ 9.  Inspector Nizick also observed that UP A did not present identification to Respondent’s sales clerk.  Id. 
¶ 8.

On August 7, 2022, CTP conducted a follow-up UB compliance check inspection of Respondent’s establishment.  Inspector Nizick returned to the establishment, accompanied by UP B.  CTP Ex. 5 ¶ 12.  Before entering the establishment, Inspector Nizick confirmed that UP B was in possession of a photo identification showing their actual date of birth, that UP B was under the age of 21 at the time of the inspection, and that UP B did not possess any tobacco products.  Id.  Inspector Nizick watched UP B enter the establishment, and subsequently entered shortly thereafter.  Id. ¶ 13.  From a clear, unobstructed view of the sales counter, Inspector Nizick observed UP B purchase a package of cigars from an establishment employee.  Id.  Prior to the purchase, Inspector Nizick observed that UP B did not present photo identification to the establishment employee.  Id.

CTP offered corroborating evidence consisting of photographs of the tobacco products purchased on January 7, 2022, and August 7, 2022 (CTP Exs. 11, 12, 16, 17), redacted photographic identifications for UP A and UP B (CTP Exs. 10, 15), Inspector Nizick’s sworn declaration (CTP Ex. 5), and the January 7, 2022, and August 7, 2022 Narrative and TIMS Reports (CTP Exs. 6, 7, 8, 9).   

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1. Respondent sold regulated tobacco products to underage purchasers in violation of federal law.

In its Complaint, CTP alleges that Respondent committed at least three violations of the Act and its implementing regulations within a 24-month period.³  Respondent admitted, in part, the allegations in the Complaint, but offered defenses and contested the amount of the civil money penalty.  CRD Docket (Dkt.) Entry Nos. 3 (“Answer”) at 1-2; 3a (“Attachment A) at 1-2; 11 (“Respondent’s Pre-Hearing Brief (Br.)”) at 1; 17 (“Respondent’s Final Br.”) at 2-4.  

Specifically, Respondent admits that it sold regulated tobacco products to an underage purchaser on January 7, 2022, at approximately 6:31 PM and again on August 7, 2022, at approximately 4:31 PM.  Id.     

Because Respondent has admitted to the sales allegations as outlined in the Complaint, I therefore find these facts establish Respondent’s liability under the Act.  The Act and its implementing regulations prohibit the sale of regulated tobacco products to any person younger than 21 years of age.  Act, § 906(d)(5). 

2. Respondent failed to verify the underage purchasers’ age prior to sale of the regulated tobacco products.

Although Respondent admits it sold regulated tobacco products to underage purchasers on January 7, 2022, and August 7, 2022, as alleged in the Complaint, it denies the violations alleging that it failed to verify the underage purchasers’ age prior to sale of the respective tobacco products at issue on those same dates.  Respondent asks that I drop the identification violations from this matter.  

In support of its position, Respondent raises two defenses: 1) that it was not required to verify the purchasers age through photographic identification in that its sales clerk’s perception of the underage purchasers was that each purchaser was at least 27 years of age; and 2) it is precluded from being charged with a violation of the identification requirement under 21 C.F.R. § 1140.14(b)(2)(i)  based on a settlement agreement entered into in 2015 in a case involving another of Respondent’s establishments located in Illinois.  Answer at 2; Respondent’s Final Br. at 2-3.

Based on these arguments, Respondent seeks dismissal of the identification violations alleged on January 7, 2022, and August 7, 2022, reducing the violations to two instead of

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four, and therefore reducing the civil money penalty presently sought by CTP.  Respondent’s Final Br. at 4.

1. Identification Requirement

With regard to the identification violation, Respondent argues:

We are requesting the complaint’s labeled 13b & 15b be dropped because our employee believed the person to be purchasing the age restricted products was at least 27 years of age.  Based on the employee’s perception of age and the past precedent of the FDA to consider an individual’s perception of age, see Respondent Ex, 13, we are 13b & 15b . . . be dropped from the case.  

Respondent’s Pre-Hearing Br.

Respondent further contests CTP’s assertion in its final brief that “[t]he age-verification requirement is based on an objective, not subjective, standard.”  Respondent’s Final Br. at 1; referencing CTP’s Final Br. at 2-4.  In particular, Respondent relies on the Merriam-Webster Dictionary definition of “objective” versus “subjective” in support of its position, and concludes:

[t]he process a retail clerk uses to come to a conclusion for age verification is a combination of objective and subjective decisions which the retail clerk needs to make quickly . . .   

*  *  *  *  *  *

. . . There is no clear-cut objective way to determine a person’s age without requiring the person to present a photo ID to the retail clerk.  Furthermore, the retail clerk is not required by law to ask anyone for a photo ID . . . .

Respondent’s Final Br. at 2, 3.

Respondent’s argument is without merit.  Under 21 C.F.R. § 1140.14(b)(2)(i), and as modified by section 906(d)(5) of the Act, “[e]ach retailer must verify by means of photographic identification containing the bearer’s date of birth that no person purchasing the product is younger than 21 years of age.”  Both section 906(d)(5) of the Act and 21 C.F.R. § 1140.14(b)(2)(i) are purely objective – they do not consider a retailer’s subjective inquiry about the appearance of a tobacco product purchaser.  Auto Valet Inc. d/b/a Finest Car Wash, DAB No. 2915 at 8 (2018)(“there is no subjective appearance exception to the requirement that retailers check the photo identification of tobacco purchasers who appear to be older than age 26 but are actually 26.”); Deli-Icious

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Catering Inc. d/b/a Convenient Food Mart, DAB No. 2812 at 11 (2017)(“the regulations do not incorporate any ‘appearance’ or ‘judgment’ standard and instead require that retailers check photo IDs of all persons aged 26 and younger who seek to purchase [regulated tobacco products].”)  Indeed, “requiring age verification if a person ‘looked’ like he or she was a particular age would be difficult to administer and to enforce.”  
Deli-Icious at 11.

Therefore, contrary to Respondent’s assertion, retail clerks and employees are required by law to check the identification of every purchaser age 30 or younger notwithstanding any perceptions regarding the purchaser’s appearance.  See 21 C.F.R. § 1140.14(b)(2)(i) as modified by section 906(d)(5) of the Act.  

The record clearly shows that each underage purchaser was in possession of valid photo identification at the time of the January 7, 2022, and August 7, 2022 inspections.   CTP Ex. 5 ¶¶ 7, 12 (stating, in part, that Inspector Nizick confirmed that each undercover buyer had in their possession photo identification showing each purchaser’s actual date of birth before entering Respondent’s establishment; see also CTP Exs. 10, 15 (underage purchasers’ redacted photo identification card).  

Respondent offered no evidence to rebut that which CTP presented.  To the point, Respondent did not offer any proof that Respondent’s employees checked the underage purchasers’ identification and verified from that identification that the underage purchasers were of sufficient age.  I do not find that Respondent rebutted Inspector Nizick’s testimony in the absence of any proof supporting Respondent’s assertion.  Therefore, I find Inspector Nizick’s testimony and CTP’s corroborating evidence to be credible proof that Respondent unlawfully sold regulated tobacco products to underage purchasers and unlawfully failed to verify the underage purchasers’ age prior to the sales on January 7, 2022, and August 7, 2022.

2. 2015 Settlement Agreement

Respondent also asserts that it is precluded from being charged with a violation of the identification requirement under 21 C.F.R. § 1140.14(b)(2)(i) (as modified by section 906(d)(5) of the Act), based on a settlement agreement entered in 2015.  The settlement agreement related to a case involving another of Respondent’s establishments also located in Illinois.  Answer at 2; Respondent’s Final Br. at 2-3; see also CRD Dkt. Entry No. 9l (“Respondent’s Ex. 13”); CRD Docket No. C-15-1487 Complaint ¶ 3.

In part, Respondent contends:

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[CTP counsel] agreed not to charge us with the violation in the future if we agreed to withdraw our appeal.  Part of this agreement with [CTP counsel] was that he sends us a letter which states the CTP will not use 21 C.F.R. 
§ 1140.14(b)(2)(i) in any future enforcement action against Duffy & Associates, Inc.

. . . He didn’t say the agreement was only for the 2015 case . . . It was made very clear to me by [CTP counsel], that the aforementioned violation would not be used in any future enforcement actions against Duffy & Associates, Inc. now and in the future.

Respondent’s Final Br. at 2, 3.

CTP disputes Respondent’s interpretation of the 2015 settlement agreement and argues that “Respondent’s interpretation of the 2015 CMP settlement would allow it to violate the law with impunity, for eternity.  Such a result is illogical . . . .”  CTP’s Pre-Hearing Br. at 21.  

As part of its pre-hearing submission, among other things, Respondent submitted a letter from CTP dated November 10, 2015.  Respondent’s Ex. 13.  The letter pertains to a prior case before this tribunal (CRD Docket No. C-15-1487) in which a settlement agreement was reached between the parties regarding the complaint filed in that specific case.  In the November 10, 2015, letter, counsel for CTP stated, in part:

. . . in exchange for your agreement to withdraw your appeal of this case and payment of a fine in the amount of $125.00, CTP agrees that the violation cited in paragraph 1(b) of the complaint, failing to verify the age of a person purchasing tobacco products by means of photographic identification containing the bearer’s date of birth, as required by 21 C.F.R. § 1140.14(b)(1), will not be used in any future enforcement action.

Respondent’s Ex. 13 (emphasis added).

I am persuaded by CTP’s interpretation of the language contained in the November 10th letter.  Respondent’s position is unfounded.  It appears that Respondent seeks to expand the settlement in the 2015 case to be applicable to any case in which a violation of the identification requirement is alleged and preclude any future civil money penalty action based on this violation.  Such an interpretation of the settlement agreement is indeed illogical, tenuous at best, and well beyond what is stated in CTP’s November 10, 2015, settlement confirmation letter.  The November 10th letter is quite clear that the settlement provisions pertain to “the violation cited in paragraph 1(b) of the complaint, . . . .”  Review of the complaint docketed under CRD Docket No. C-15-1487 expressly states:

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. . . FDA-commissioned inspectors documented the following violations:

*  *  *  *  *  *  *

b. Failing to verify the age of a person purchasing tobacco products by means of photographic identification containing the bearer’s date of birth, as required by 21 C.F.R. § 1140.14.(b)(1).  Specifically, the [underage purchaser’s] identification was not verified before he sale, as detailed above, on October 17, 2014, at approximately 2:41 PM.

CRD Docket No. C-15-1487 Complaint at 2.  

In this instance, I find Respondent’s asserted defense to be unconvincing.  It is clear from the language of the 2015 settlement confirmation letter that the terms of the settlement were applicable only to the violations in that particular complaint, specifically the identification violation alleged at paragraph 1(b).  It is also apparent that the preclusion from any future allegations pertained exclusively to use of the October 17, 2014, identification violation in any future complaints for this specific establishment, and not ALL establishments owned under the banner of “Duffy & Associates, Inc.”

The unrebutted evidence on the record compels me to find by a preponderance of the evidence that the identification violations on January 7, 2022, and August 7, 2022, occurred as alleged in the Complaint.

3. A civil money penalty of $638 is reasonable.

Pursuant to 21 U.S.C. § 333(f)(9), Respondent is liable for a civil money penalty not to exceed the amounts listed in FDA’s civil money penalty regulations at 21 C.F.R. § 17.2.  In its Complaint, CTP sought to impose the maximum penalty amount of $638 against Respondent for three violations of the Act and its implementing regulations within a 24-month period.  Complaint ¶¶ 1, 19.  In its Informal Brief, CTP asserts that a $638 civil money penalty, the maximum allowable, is appropriate.  CTP’s Pre-Hearing Br. at 16-18.

When determining the amount of a civil money penalty, I am required to consider “the nature, circumstances, extent and gravity of the violations and, with respect to the violator, ability to pay, effect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other matters as justice may require.”  21 U.S.C. § 333(f)(5)(B).

In addition to its request that I dismiss the two identification violations alleged, Respondent asks that I reduce its civil money penalty based on two violations and not

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four.⁴  Answer at 2.  It asserts that, at one point, it attempted to change its policy and “required everyone to present a photo ID prior to the purchase of tobacco products.”  Respondent’s Final Br. at 3.  Respondent states that, as a result of the attempted policy change, its clerks were subjected to general abuse from the customers and lost 20% of its tobacco sales.  Therefore, “we had to revert to our old policy . . . .”  Id.   

Respondent’s defense does not contradict the fact that Respondent continued to make unlawful tobacco sales.  As Respondent concedes, when attempts to require identification verification, as required by law, for the purchase of tobacco products became inconvenient or cumbersome, Respondent returned to its old practice of requiring “a photo ID of any person who appears to be under the age of 35.”  See id. at 3 (emphasis added).  

Based on Respondent’s contentions, I do not find any mitigating factors which would justify reducing the penalty that CTP determined to impose.  

The unrebutted evidence proves that on January 7, 2022, and August 7, 2022, Respondent made unlawful sales of a tobacco product to underage purchasers and failed to verify each purchaser’s age by photo identification prior to each sale.  That is egregious conduct.  Regulations authorize a penalty of up to $638 for the violations committed by Respondent.  45 C.F.R. § 102.3; 21 U.S.C. § 333(f)(9) 

Underscoring the egregiousness of Respondent’s conduct is the fact that Respondent made its second unlawful sale after having received a warning from CTP in the wake of the first unlawful sale.  CTP Ex. 1.  

I take notice that tobacco products are highly addictive and dangerous to the health of those who consume them.  They may have lethal long-term effects on consumers.  Younger purchasers are highly susceptible to becoming addicted.  A penalty of $638 is plainly reasonable given the dangers of tobacco products and Respondent’s repeated unlawful sales of these products to underage purchasers.  

CTP has requested a civil money penalty of $638, which is a permissible penalty under the regulation.  21 C.F.R. § 17.2.  Therefore, I find that a civil money penalty of $638 is warranted and so order one imposed.

Endnotes

¹  As of December 20, 2019, the Act was amended to raise the federal minimum age for the sale of tobacco products to 21 years of age or older.  See Act, § 906(d)(5).

²  I note that CTP cites 21 C.F.R. § 1140.14(b)(2)(i), which has not been updated to reflect the age change, for the identification violations alleged on January 7, 2022, and August 7, 2022.  See Complaint ¶¶ 13.b, 15.b; see also supra fn.1. 

³  Two violations were committed on January 7, 2022, and two on August 7, 2022.  In accordance with customary practice, CTP counted the violations identified during the initial inspection as a single violation, and violations identified during subsequent inspections individually. 

⁴  As previously discussed, the current Complaint alleges “at least three violations within a twenty-four month period” as opposed to four as cited by Respondent.  Complaint ¶ 1.