Bobi Jeans of Church Point, Inc. d/b/a Shamrock / Kwik Stop, DAB TB5259 (2020)

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 $11,410 against Respondent, Bobi Jeans of Church Point, Inc. d/b/a Shamrock / Kwik Stop.

I. Background

Respondent requested a hearing in order to challenge CTP's determination to impose a civil money penalty against it.  I held a hearing by telephone on July 28, 2020.  At the hearing, I received into evidence exhibits offered by CTP that it identified as CTP Exhibit (Ex.) 1 - CTP Ex. 16.  Hearing Transcript (Tr.) at 2.  I also received into evidence exhibits offered by Respondent that it identified as Respondent (R.) Ex. A - R. Ex. M.  Id. Neither CTP nor Respondent indicated a desire to conduct cross-examination.  I allowed Respondent to make a statement

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on the record.  Tr. at 5-8.  On August 27, 2020, I informed the parties of receipt of the hearing transcript and set a September 26, 2020 filing deadline for the parties' post-hearing briefs and to file any corrections to the transcript.  CRD Docket (Dkt.) Entry 39.  On September 23, 2020, Respondent submitted its "final statement."  CRD Dkt. Entry 40.  On September 26, 2020, CTP submitted its Notice of Waiver of Post-Hearing Brief.  CRD Dkt. Entry 41.

II. Issues, Findings of Fact and Conclusions of Law

A. Issues

The issues presently before me are: (1) whether Respondent violated regulations governing the sale of tobacco products to minors; and (2) whether a civil money penalty of $ 11,410 is reasonable.

B.  Findings of Fact and Conclusions of Law

There is no dispute in this case that Respondent is a business that sells tobacco products to the general public.

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 Part 21 of the Code of Federal Regulations (C.F.R.).  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).  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 covered tobacco products to an individual who is under the age of 18 and the failure to verify the photographic identification of an individual who is not over the age of 26 are violations of implementing regulations.  21 C.F.R. § 1140.14(b)(1), (b)(2)(i).

The alleged violations that are at issue here are not the first instance in which Respondent was charged with violating law and regulations concerning the sale of tobacco products.  CTP filed a previous administrative complaint against Respondent on May 16, 2019, alleging that Respondent:  On April 3, 2018, September 22, 2018, and February 16, 2019 unlawfully sold covered tobacco products to a minor and failed to verify the minor purchaser's age by means of photographic identification.  CTP Exs. 1, 3.  These previous allegations of noncompliance are administratively final and are not subject to challenge by Respondent.  On June 5, 2019, Respondent's representative signed an acknowledgment in which Respondent admitted to the allegations in the May 2019 complaint and waived the right to challenge these allegations.  CTP Ex. 4.

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At issue in the case presently before me are claims by CTP of two additional violations by Respondent that allegedly occurred on August 1, 2019.  CTP alleges that, on that date, Respondent unlawfully sold cigars to a minor and failed to verify the minor's age through photographic identification, in violation of 21 C.F.R. § 1140.14(b)(1) and (b)(2)(i).

CTP offered uncontroverted proof that Respondent violated the law as is alleged.  The proof consists of the sworn testimony of Kathy Blakes, an FDA-commissioned inspector charged with inspecting retail establishments for possible unlawful sales of tobacco products.  CTP Ex. 6.  Inspector Blakes testified that on August 1, 2019, at approximately 4:28 PM, she accompanied Minor A to Respondent's establishment to conduct an undercover buy (UB) compliance check inspection.  CTP Ex. 6 at ¶ 7.  Inspector Blakes testified that she verified that the minor possessed identification establishing his/her age to be less than 18 years and that he/she was not in possession of tobacco products prior to entering the establishment.  Id. Inspector Blakes testified that she watched Minor A enter Respondent's establishment.  The inspector entered moments after the minor.  Id. at ¶ 8.  Inspector Blakes stated that she had a "clear and unobstructed view of the sales counter."  Id. She testified that she witnessed an employee of the business sell Minor A cigars without checking the minor's identification.  Id. After exiting the establishment, Inspector Blakes and Minor A returned to the vehicle where the inspector took possession of the package of cigars, labeled them, and photographed both sides of the package.  Id. at ¶ 9.  As corroboration for Inspector Blakes' testimony, CTP offered photographs of the package of two Swisher Sweets Classic Grape cigars that Minor A allegedly purchased.  CTP Exs. 10, 11.

I find Inspector Blakes' testimony to be credible and, buttressed by the photographic evidence offered by CTP, her testimony establishes that Respondent violated tobacco sales regulations on August 1, 2019.  The unlawful sale on that date, coupled with the failure by Respondent's employee to verify the purchaser's age, constitute two more violations in addition to the five previous and administratively final violations.

The evidence establishes that Respondent committed at least seven violations of tobacco sales regulations during the period beginning April 3, 2018, through August 1, 2019.  The proposed civil money penalty of $11,410 sought by CTP is the maximum allowed by law.  21 C.F.R. § 17.2.

Respondent concedes that its employee sold cigars to Minor A and failed to verify the minor's age.  Tr. at 5, 7.  Instead, Respondent argues the unfairness of the CMP sought in that ". . . the EMPLOYEE who sold the tobacco took the class, ignored the DOB blocker on our register and NOTHING was done to her – she

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was responsible for NOTHING !!!!"  CRD Dkt. Entry 36; see also CRD Dkt. Entries 20, 40.  Respondent states:

I am not only requesting a reduced fine, I am requesting the charges by[sic] dropped and the FDA revise their policies and hold the employee responsible if they did not follow store policies . . . .

CRD Dkt Entry 40.

Respondent also contends that it cannot afford the $11,410 CMP sought by CTP.  CRD Dkt. Entry 20 at 3; Tr. at 8.  Specifically, Respondent argues:

In December 2017, we closed our Boutique called Nina's due to slow sales . . . We turned the building into a venue to rent out called The Rustic Room . . . We have not yet acquired enough business to pay all of its bills so that has been an additional burden on Kwik Stop . . .

CRD Dkt. Entry 20 at 3.Respondent also notes its purported substantial indebtedness in the form of outstanding loans and a line of credit against both its Kwik Stop establishment and the Rustic Room venue.  CRD Dkt. Entry 40.  Respondent contends that "[t]his fine would put an additional financial strain on the business."  Id.

I find Respondent's assertions to be unpersuasive.

To demonstrate its inability to pay, Respondent submitted a copy of a personal money market account bank statement for the period June 1-28, 2019 (R. Ex. J); a copy of its 2018 "S" Corporation federal income tax form (R. Ex. K); and several business account bank statements for the Rustic Room venue, not at issue in this case (R. Ex. M at 3-17).

Review of the tax return discloses its ordinary business income for tax year 2018 in excess of [redacted].  See R. Ex. K at 2.  In addition, the bank statements submitted, covering periods from January 2019 to November 2019 and March 2020 to April 2020, show positive balances at the end of each statement period.  R. Exs. J, M at 3-17.  Most notably, Respondent's personal money market account statement for the period June 1-28, 2019, reflects a closing balance of almost [redacted].  R. Ex. J.  Even assuming as true Respondent's representation of its business liabilities in the form of outstanding loans and line of credit (see  CRD Dkt. Entry 40), the financial documentation furnished by Respondent supports a conclusion that Respondent has the ability to pay the $11,410 CMP sought by CTP.

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Beyond the tax document and bank statements, Respondent has not presented any evidence to show that imposition of an $11,410 CMP would diminish its ability to conduct business.  CTP asserts that "Respondent may continue to sell tobacco products and other products at its establishment."  CRD Dkt. Entry 14 at 14.  I agree with CTP's assessment on this point.  Respondent may continue to sell tobacco products so long as it complies with the Act's prohibition of selling tobacco products to minors.

I find no mitigating factors that would allow me to reduce the penalty requested by CTP, which I find proportional and appropriate in this case.  Respondent asserted that policies were in place to ensure compliance with the tobacco sale requirements including: taking a Responsible Vendor training class1; having its employees sign an acknowledgment of termination for violation of tobacco sale requirements; placement of "WE CARD" signage on the premises; and "put a DOB blocker on cash registers," to show DOB requirements to purchase tobacco and alcohol.  CRD Dkt. Entry 20; see also CRD Dkt. Entry 40.  However, this in itself is not a mitigating factor, since Respondent through its employee failed to actually prevent the sale.  Moreover, Respondent made no effort to take responsibility for the violations, instead blaming its employee and urging me to fine that individual directly.  Tr. at 7, 8.

The evidence amply justifies the penalty sought by CTP.  Respondent is not only a repeat offender but it has on multiple occasions sold a dangerously addictive product to minors, individuals who are among the most vulnerable in our society.  It has done so in the face of repeated warnings by CTP of the adverse consequences of unlawful sales of tobacco products and in the face of findings of prior violations of law.

Therefore, pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $11,410 against Respondent Bobi Jeans of Church Point, Inc. d/b/a Shamrock / Kwik Stop for seven violations of the 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. § 17.11(b), this decision becomes final and binding upon both parties 30 days from the date of its issuance.

• 1. I note Respondent's testimony that the classes were approved by the State of Louisiana, and not by FDA or CTP.  Tr. at 6-7.