Rouge Fuel Stop, Inc. d/b/a Citgo, DAB TB4348 (2019)

INITIAL DECISION

The Center for Tobacco Products (CTP) began this matter by serving an administrative complaint on Respondent, Rouge Fuel Stop, Inc. d/b/a Citgo, at 11345 West Jefferson Avenue, River Rouge, Michigan 48218, and by filing a copy of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  The complaint seeks an $11,182 civil money penalty from Respondent 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 six times within a 48-month period. 

The complaint alleges CTP previously initiated a civil money penalty action against Respondent Citgo.  The prior action concluded after Respondent Citgo admitted to four 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 May 27, 2016, and October 6, 2016, and opened packages of cigarettes intending to sell individual cigarettes on July 14,

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2017.1 Complaint ¶ 11; see CRD Docket Numbers T-17-2815, T-17-6048.  These violations are administratively final.

The complaint further alleges that Respondent Citgo subsequently committed two additional violations of the Act.  Specifically, that Respondent sold regulated tobacco products 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, thereby violating the Act.  Therefore, CTP seeks an $11,182 civil money penalty against Respondent Citgo for a total of six violations within a 48-month period.

I. Background

After CTP served its complaint upon Respondent, Respondent timely filed an Answer. On September 11, 2018, I issued an Acknowledgment 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, list of proposed witnesses and exhibits, and 14 exhibits (CTP Exs. 1-14), including the written direct testimony of one proposed witness, Inspector Hiram Harris (CTP Ex. 5).  Respondent timely filed its pre-hearing exchange, consisting of a pre-hearing brief, list of proposed witnesses and exhibits, and 10 exhibits (R. Exs. 1-10), including the written direct testimony of one proposed witness, Abe Hassan2 (R. Ex. 1).

I held a pre-hearing conference on April 23, 2019, during which both parties opted to cross-examine their opposition’s witness at a hearing. 

On June 26, 2019, I held a hearing in this case.  Transcript (Tr.).  During the hearing, I admitted CTP’s Exhibits 1 through 14, and Respondent’s Exhibits 1 through 10, absent objection.  Tr. 12-13.  Although Respondent’s witness, Mr. Hassan, was not available for

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cross-examination, CTP chose to forego cross-examination of Respondent’s witness and proceed with the hearing. Tr. 5-7. CTP’s witness, Inspector Harris, was present for the hearing. Respondent cross-examined Inspector Harris (Tr. 15-28), CTP conducted re-direct examination of its witness (Tr. 28-33), and Respondent re-crossed the witness (Tr. 33-37).

The parties timely filed post-hearing briefs (CTP Post-Hrg. Br.; R. Post-Hrg. Br.).

II. Issues

(1) Whether Respondent sold a regulated tobacco product to a minor and failed to verify the age of the purchaser on June 10, 2018, in violation of 21 C.F.R. § 1140.14(b)(1) and 1140.14(b)(2)(i); and if so,

(2) Whether the civil money penalty amount of $11,182 that CTP seeks 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 and its, 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. § 331 (f)(9).

The sale of regulated tobacco products to an individual who is under the age of 18 is a violation of 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 cigarette purchaser is younger than 18 years of age is also a violation of implementing regulations. 21 C.F.R. § 1140.14(b)(2)(i).

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 June 10, 2018, at approximately 5:05 PM, Respondent:

(1) sold a package of two Swisher Sweets cigars to a minor in violation of 21 C.F.R. § 1140.14(b)(1); and

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(2) 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)(2)(i).

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, it is more likely than not that, 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) and 1140.14(b)(2)(i).

CTP’s case against Respondent rests on the testimony of Inspector Harris, who conducted the inspection at issue, and supported by corroborating evidence including contemporaneous notes and photographs.  CTP Exs. 5-10. 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. 5 at 1-2.  Inspector Harris testified that he conducted such an inspection of Respondent’s establishment on June 10, 2018, at approximately 5:05 PM, during which he observed Respondent’s clerk sell an undercover minor a package of cigars and that the minor did not present any identification prior to the sale.  CTP Ex. 5 at 3.

Inspector Harris testified that, prior to the inspection at issue, he verified that the minor carried photographic identification that included the minor’s true age.  Inspector Harris also verified that the minor did not have any tobacco products in the minor’s possession.  CTP Ex. 5 at 2.  Inspector Harris parked his car near Respondent’s establishment, where he and the minor exited the vehicle.  The inspector watched the minor enter Respondent’s establishment and followed thereafter.  Id. at 3.  Inspector Harris testified that he took a position in the store from which he had a clear, unobstructed view of the sales counter and the minor.  Id.  From this location, Inspector Harris observed the minor obtain a package of cigars from a self-service display and purchase the package of cigars from an employee at the establishment.  CTP Ex. 5 at 3.  Additionally, Inspector Harris observed that the minor did not present any identification to the employee prior to the sale and that the employee did not provide the minor a sales receipt following the transaction.  Id.

Inspector Harris testified that after the purchase, both the minor and he exited the establishment and returned to the vehicle, where the minor immediately handed the inspector the package of cigars.  CTP Ex. 5 at 3.  Inspector Harris identified that package as containing Swisher Sweets cigars.  Inspector Harris relocated his vehicle to a safe space, labeled the cigars as evidence, photographed 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

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Management System (TIMS) and created a Narrative Report.  Id.  CTP corroborated Inspector Harris’ testimony by offering as evidence photographs that the inspector made of the cigars on the date in question.  CTP Exs. 9-10. CTP further corroborated Inspector Harris’ account by submitting a copy of his contemporaneously recorded TIMS report and Narrative Report.  CTP Exs. 7-8.

It is Respondent’s position that no transaction took place.  Instead, Respondent asserts that the minor “grabbed the 99¢ Swisher Sweet package from the counter,” “threw a $1 bill onto the counter,” and “fled the [establishment] before Respondent’s clerk could request identification and make a determination as to whether any transaction could be completed.”  R. Post-Hrg. Br. at 1.  Accordingly, Respondent maintains, “[t]here was no opportunity to request or receive the minor’s identification nor was there any reasonable opportunity to prevent the minor from taking the 99¢ Swisher Sweets from the counter.”  R. Post-Hrg. Br. at 3.

Respondent relies upon the written declaration of Respondent’s manager, Mr. Hassan, to support its account.  R. Ex. 1.  Mr. Hassan testified that “. . . after further inquiry of individuals present on the date and time in question, it has become apparent that no transaction or sale took place.  Rather, whoever was working with CTP in its undercover buy grabbed the Swisher Sweet tobacco product from the Respondent’s counter in the station, threw down some cash, and left the property.”  R. Ex. 1 at 2.  Respondent does not provide evidence in support of Mr. Hassan’s description but instead attacks the account provided by CTP’s witness, Inspector Harris.

Respondent asserts that the inspector did not recall whether he could overhear the conversation between the minor and the cashier; whether the minor placed the money on the counter or handed it directly to the clerk; whether the cashier charged the minor tax, provided the minor 1¢ change, or placed the cigars in a bag for the minor.  R. Post-Hrg. Br. at 2-3.  Therefore, Respondent concludes that CTP was unable to rebut Respondent’s account of the events based on its declaration.  R. Post-Hrg. Br. at 3.  I disagree.  I do not find the inspector’s honest responses to such intricacies undercut his very credible relevant testimony - that he witnessed Respondent’s clerk sell the cigars to the minor.

Respondent also disputes the validity of Inspector Harris’ written direct testimony. Respondent argues that given the volume of inspections he conducted and his memory of the events on cross-examination, the inspector could not remember the events detailed in his declaration signed nearly nine months after the inspection.  R. Post-Hrg. Br. at 2.  During the hearing, Inspector Harris explained that he conducts over a thousand inspections a year.  Inspector Harris explained that his answers on cross-examination were not based on what he recalled from this specific inspection, but on his narrative report, declaration, and his practice and procedures for conducting inspections “each and every time that they are completed.”  Tr. 22.  Inspector Harris completed a Narrative Report and TIMS report detailing the events at issue immediately following the

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inspection.  The inspector’s descriptions in these reports are entirely consistent with one another and with those detailed in his declaration.  Compare CTP. Ex. 5 at 3, with CTP Ex. 7 at 1, and CTP Ex. 8 at 1.  All of these accounts state that Inspector Harris directly observed Respondent sell a package of cigars to an undercover minor and fail to verify the minor’s age by means of photographic identification prior to the sale on June 10, 2018.  CTP Ex. 5 at 3; CTP Ex. 7 at 1; CTP Ex. 8 at 1.  I find no merit in Respondent’s argument.  To the contrary, I find the inspector’s testimony forthright, clear, and consistent.

On cross-examination, Inspector Harris testified that there is a comment section in the Narrative Report where inspectors have “the opportunity to note anything unusual or beyond the norm” if the normal process was not followed, or if anything unusual or unexpected took place.  Tr. 28.  Neither report documents or identifies an unusual event or occurrence.  CTP Ex. 7-8.  Had the events unfolded as Respondent asserts, surely Inspector Harris would have identified that such an incident occurred and documented matters accordingly.

Inspector Harris further testified that minors who participate in this program must complete required training.  CTP Ex. 5; Tr. 17.  The training includes understanding the tobacco act, what it represents, and why they are conducting the inspections.  Tr. 18.  Inspector Harris testified that the purpose of conducting the undercover buy inspections is “to keep the youth safe and to not allow tobacco products to be received by them in their younger years.”  Tr. 31.  He added, “We would not do any inspections to mislead in any way the business owners or to trick them in any way.”  Id.  Inspector Harris further clarified that the minors are paid by the hour and are not compensated based on the number of buys they receive.  Tr. 18-19, 31.

Respondent’s evidence to support its account lies entirely with the direct testimony of its witness, Mr. Hassan.  Mr. Hassan, however, was not present during the inspection.  His testimony is not based on his observations.  Rather, Mr. Hassan constructs it from the explanations of unnamed employees who were reportedly present during the events at issue.  It is noteworthy that none of those employees testified in this case.  Mr. Hassan and his unnamed staff have incentive to deny CTP’s accusations.  I do not find Mr. Hassan’s testimony to be compelling evidence.

On the other hand, I found Inspector Harris’ testimony to be honest and believable.  Inspector Harris testified credibly and comprehensively about his observations during the June 10, 2018, inspection at which he observed Respondent’s staff sell a package of cigars to a minor.  See CTP Ex. 5 at 3; Tr. 11-12.  His testimony was supported by contemporaneous records and supporting evidence.  CTP Exs. 5-10.

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

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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 June 10, 2018, in violation of 21 C.F.R. § 1140.14(b)(1) and 1140.14(b)(2)(i).  Respondent has failed to provide evidence sufficient to rebut CTP’s allegations.

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 six violations of the Act and its implementing regulations within a 48-month period.  In its Complaint, CTP sought the maximum penalty amount, $11,182, against Respondent.  Complaint ¶ 1.  Respondent asks that I lower the penalty to a nominal amount.  R. Br. 4.  Accordingly, I now turn to whether an $11,182 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.

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

I found that Respondent committed three violations for selling regulated tobacco products to minors, three violations for failing to verify, by means of photo identification containing a date of birth, that the purchaser was 18 years of age or older, and one violation for selling individual cigarettes.  Each violation was serious because it contravened federal laws enacted to protect minors from the adverse health effects associated with tobacco use. 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 $11,182 penalty sought “is in excess of Respondent’s net income for 2016 [redacted] and 2017 [redacted],” (R. Post-Hrg. Br. 3) and submits 2016 and 2017 income statements and federal tax returns in support of its position (R. Exs. 2-5.). Respondent has not, however, presented any evidence that it does not have the

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ability to pay the $11,182 civil money penalty.  In fact, Respondent concedes that its “ability to do business will not be affected.”  R. Br. 4. 

c. History of Prior Violations

The current action is the third civil money penalty action that CTP has brought against Respondent. Respondent sold regulated tobacco products to minors on May 27, 2016, October 6, 2016, and June 10, 2018. Respondent failed to verify that the purchaser was over 18 years of age on May 27, 2016, October 6, 2016, and June 10, 2018. Respondent opened packages of cigarettes to sell individual cigarettes on July 14, 2017. Respondent’s continued unwillingness or inability to comply with the federal tobacco regulations calls for a more severe penalty.

d. Degree of Culpability

I find Respondent fully culpable for all six violations of the Act and its implementing regulations.

e. Other Matters as Justice May Require

Respondent asserts that it posted signs; installed a cashier point-of-sale system requiring staff to input a purchaser’s birthdate; instituted a policy that staff verify the age of a purchaser and not sell to minors; and placed all tobacco products behind protective glass and “out of customer’s reach.”  R. Br. at 4; R. Post-Hrg. Br. at 4; see also R. Ex. 1 at 3.  Respondent submitted black-and-white photocopies of photographs of its sales counter, entry door, cashier point of sale screen, and employee policy.  R. Exs. 6-10.

The Respondent, however, does not state when it imposed these measures.  Respondent did not submit receipts for its new systems or protective glass.  Moreover, the evidence submitted is of poor quality and appears to contradict Respondent’s assertions.  For instance, Respondent asserts that it placed all tobacco products behind protective glass and “out of customer’s reach.”  R. Br. at 4.  However, the photos of Respondent’s sales counter are difficult to decipher, but appear to show a display of Swisher Sweets cigars very much within a customer’s reach, and no more difficult to access than the customer payment portal.  See R. Exs. 6, 7.  Respondent submitted no evidence that it took additional or subsequent action to ensure future compliance with federal law and its current measures were clearly not effective in preventing the sale of tobacco products to minors.  I simply do not find either Respondent’s assertions or its evidence in support thereof as persuasive.

Sales of tobacco products to minors are unlawful because younger individuals are more susceptible to making decisions that will endanger their lives down the road.  Retailers who choose to sell such a highly dangerous and addictive product bear a heavy burden to

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assure that they make their sales in compliance with law. Respondent does not appear to grasp either the importance of following these federal regulations or the gravity of repeatedly violating them.

I do not find that a reduced penalty is appropriate based on the record before me.

2. Penalty

Based on the foregoing reasoning, I find a penalty amount of $11,182 appropriate under 21 U.S.C. § 333(f)(5)(B) and (f)(9).

CONCLUSION

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $11,182 against Respondent, Rouge Fuel Stop, Inc. d/b/a Citgo, for six 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. In accordance with FDA guidance, CTP counted the violations identified during the initial inspection as a single violation, and all violations identified during subsequent inspections individually. See Orton Motor, Inc. d/b/a Orton’s Bagley v. U.S. Dep’t of Health & Human Serv., 884 F.3d 1205 (D.C. Cir. 2018).
• 2. In Respondent’s filings, my pre-hearing orders, and during the hearing, Respondent’s witness is identified as “Abe Hussein.” See Respondent’s List of Proposed Witnesses and Exhibits; Respondent Rouge Fuel Stop, Inc.’s Post-Hearing Brief; Order Scheduling Pre-Hearing Conference, April 11, 2019; Order Following Pre-Hearing Conference and Order Scheduling Hearing, April 23, 2019; Tr. 5-6, 11-12. However, in his declaration, Respondent’s witness identifies himself as “Abe Hassan.” R. Ex. 1 at 1. See also CTP Cover Letter, Aug. 6, 2018 (addressed to the attention of Abe Hassan); CTP Ex. 4 (Acknowledgement Form signed by Abe Hassan). For the sake of clarity, I identify Respondent’s witness in this decision as “Abe Hassan.”