5421, Inc. d/b/a Quik Pik, DAB TB4452 (2019)

INITIAL DECISION

The Center for Tobacco Products (CTP) began this matter by serving an administrative complaint on Respondent, 5421, Inc. d/b/a Quik Pik, at 5419 South 96th Street, Omaha, Nebraska 68127, and by filing a copy of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management. The complaint alleges that Quik Pik impermissibly sold regulated tobacco products to minors and failed to verify, by means of photo identification containing a date of birth, that a purchaser was 18 years of age or older, thereby 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. CTP seeks a $559 civil money penalty against Respondent Quik Pik for at least three1 violations within a within a 24-month period.

Page 2

I. Background

After CTP served Respondent with this complaint, Respondent timely filed an Answer. On February 26, 2019, I issued an Acknowledgment and Pre-Hearing Order (APHO) in which I set a schedule of pre-hearing exchanges and deadlines for submissions.

On March 28, 2019, April 27, 2019, and June 10, 20192, Respondent filed documents, consisting of a surveillance video (R. Exhibit 1), a Pre-Hearing brief, and tax returns. On May 20, 2019, CTP timely filed its Pre-Hearing exchange, consisting of a Pre-Hearing brief, list of witnesses and exhibits, and 23 exhibits (CTP Exs. 1-23), including the written direct testimony of three proposed witnesses, Senior Regulatory Counsel Laurie Sternberg (CTP Ex. 4), Inspector Benjamin Valder (CTP Ex. 5), and Inspector Sean Soderberg (CTP Ex. 6).

On June 20, 2019, I held a Pre-Hearing Conference, during which Respondent stated its desire to cross-examine Inspector Valder and Inspector Soderberg at a hearing.

On July 31, 2019, I held a hearing in this case. Transcript (Tr.). During the hearing, I admitted CTP’s Exhibits 1 through 23, and Respondent’s Exhibit 1, absent objection. CTP’s witnesses, Inspectors Valder and Soderberg, were present for the hearing. Respondent cross-examined Inspector Valder (Tr. at 16-18) and Inspector Soderberg (Tr. at 20-21). CTP conducted re-direct examination of Inspector Valder (Tr. at 18-19) and Inspector Soderberg (Tr. 21-22).

On September 19, 2019, Respondent timely filed its post-hearing brief (R. Post-Hrg. Br.). CTP elected not to file a post-hearing brief.

II. Issues

(1) Whether Respondent sold regulated tobacco products to a minor on May 30, 2018 and October 21, 2018, and failed to verify the age of the purchaser on October 21, 2018, in violation of 21 C.F.R. § 1140.14(a)(1) and 1140.14(a)(2)(i); and if so,
(2) Whether the civil money penalty amount of $559 that CTP seeks is appropriate.

Page 3

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(a)(1). The failure to verify, by means of photo identification containing the bearer's date of birth, that no regulated tobacco purchaser is younger than 18 years of age is also a violation of implementing regulations. 21 C.F.R. § 1140.14(a)(2)(i). 

I now turn to whether the 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). 

May 30, 2018 Allegation

Specifically, I must determine whether on May 30, 2018, at approximately 4:33 PM, Respondent:

• sold a package of Marlboro cigarettes to a minor in violation of 21 C.F.R. § 1140.14(a)(1).

CTP’s case against Respondent rests on the testimony of Inspector Valder, who conducted the May 30, 2018 inspection at issue, and supported by corroborating evidence including contemporaneous notes and photographs.  CTP Exs. 5, 8-11. Inspector Valder is an FDA-commissioned officer with the state of Nebraska, whose duties include determining a retailer’s compliance with the age and photo identification requirements relating to the sale of tobacco products through undercover buy inspections.  CTP Ex. 5 at 1-2.  Inspector Valder testified that he conducted such an inspection of Respondent’s establishment on May 30, 2018, at approximately 4:33 PM, during which he observed Respondent’s clerk sell an undercover minor a package of cigarettes.  CTP Ex. 5 at 3.

Inspector Valder testified that, prior to the inspection at issue, he verified that the minor carried photographic identification that included the minor’s true age.  Inspector Valder also verified that the minor did not have any tobacco products in the minor’s possession.  CTP Ex. 5 at 2.  Inspector Valder parked his car near the entrance of Respondent’s establishment, where he remained in the vehicle because he was concerned his presence

Page 4

would compromise the undercover nature of the inspection.  Id. at 3.  The inspector watched the minor enter Respondent’s establishment, where he had a clear, unobstructed view of the sales counter and the minor.  Id.  From this location, Inspector Valder observed the minor purchase a package of cigarettes from an employee at the establishment.  CTP Ex. 5 at 3. 

Inspector Valder testified that after the purchase, the minor exited the establishment and returned to the vehicle, where the minor immediately handed the inspector the package of cigarettes.  CTP Ex. 5 at 3.  Inspector Valder identified that package was Marlboro cigarettes.  Id.  Inspector Valder labeled the cigarettes as evidence, photographed the package, and processed the evidence in accordance with standard procedures.  Id.  Inspector Valder also contemporaneously recorded the inspection in the FDA’s Tobacco Inspection Management System (TIMS) and created a Narrative Report.  Id.  CTP corroborated Inspector Valder’s testimony by offering as evidence photographs that the inspector made of the cigarettes on the date in question.  CTP Exs. 10-11. CTP further corroborated Inspector Valder’s account by submitting a copy of his contemporaneously recorded TIMS report and Narrative Report.  CTP Exs. 8-9.

It is Respondent’s position that no transaction took place.  Respondent asserts that its employee was never notified of a violation and no proof was provided other than a simple picture of the front of the store.  R. Informal Br. at 4. 

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 in violation of 21 C.F.R. § 1140.14(a)(1).

I find Inspector Valder’s testimony to be honest and believable.  Inspector Valder testified credibly and comprehensively about his observations during the May 30, 2018 inspection at which he observed Respondent’s staff sell a package of cigarettes to a minor.  See CTP Ex. 5 at 3.  His testimony was supported by contemporaneous records and supporting evidence.  CTP Exs. 5, 8-11. 

I find that CTP has provided sufficient evidence to support its allegation that Respondent sold regulated tobacco products to a minor on May 30, 2018, at approximately 4:33 PM, in violation of 21 C.F.R. § 1140.14(a)(1).  While Respondent asserts as a defense that its employee was never notified that a violation occurred, Respondent neither provided evidence sufficient to rebut CTP’s allegations nor shown that such notice was legally required.

Page 5

October 21, 2018 Allegations

I now must determine whether on October 21, 2018, at approximately 9:32 AM, Respondent:

1. sold a package of Camel Crush Menthol Silver cigarettes to a minor in violation of 21 C.F.R. § 1140.14(a)(1); and
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(a)(2)(i).

CTP’s case against Respondent rests on the testimony of Inspector Soderberg, who conducted the inspection at issue, and supported by corroborating evidence including notes and photographs.  CTP Exs. 6, 15-18. Inspector Soderberg is an FDA-commissioned officer with the state of Nebraska, whose duties include determining a retailer’s compliance with the age and photo identification requirements relating to the sale of tobacco products through undercover buy inspections.  CTP Ex. 6 at 1-2.  Inspector Soderberg testified in his written declaration that he conducted such an inspection of Respondent’s establishment on October 21, 2018, at approximately 9:32 AM.  Id. at 2.  Inspector Soderberg further testified that upon arriving at Respondent’s establishment, he noticed that the establishment was not yet open for business.  Id. at 3.  The inspector and the minor remained in the area until the establishment opened for business.  Id.

Inspector Soderberg testified that, prior to the inspection at issue, he verified that the minor carried photographic identification that included the minor’s true age.  CTP Ex. 6 at 2.  Inspector Soderberg also verified that the minor did not have any tobacco products in the minor’s possession.  Id. at 3.  Inspector Soderberg remained in the car, “where [he] had a direct line of sight from [his] vehicle to the establishment front door.  Id. The inspector watched the minor enter Respondent’s establishment and minutes later “exit the store with something in his/her hand.”  Id.

Inspector Soderberg testified that after the minor exited the store, the minor returned to the vehicle, where the minor immediately handed the inspector the package of cigarettes.  CTP Ex. 6 at 3.  Inspector Soderberg identified that package was Camel Crush Menthol Silver cigarettes.  Id.  Inspector Soderberg testified that “[the minor] reported to [him] that during the inspection, [the minor] was able to purchase a package of cigarettes from an employee at the establishment.  [The minor] also reported to [him] that prior to the purchase, [the minor] did not present any identification to the employee ….”  Id.  Inspector Soderberg labeled the cigarettes as evidence, photographed the package, and processed the evidence in accordance with standard procedures.  Id.  Inspector Soderberg also contemporaneously recorded the inspection in the FDA’s Tobacco Inspection Management System (TIMS) and created a Narrative Report.  Id.  CTP offered photographs that the inspector took of the cigarettes on the date in question as

Page 6

corroborating evidence.  CTP Exs. 17-18.  CTP further submitted a copy of Inspector Soderberg’s contemporaneously recorded TIMS report and Narrative Report.  CTP Exs. 15-16.

It is Respondent’s position that no transaction took place at 9:32 AM on October 21, 2018.  Instead, Respondent asserts that its establishment was not open at 9:32 AM, as alleged in the complaint.  R. Informal Br. at 4.  Respondent also asserts that the photo CTP provided of the store shows that the store was closed.  Id.; see CTP Ex 19 (time-stamped October 21, 2018 – 09:55 AM).  Respondent relies upon a surveillance video from October 21, 2018, between the times of 9:30 AM to 10:04 AM, to support its account.  R. Ex. 1.   

On cross-examination, Inspector Soderberg testified that “9:32 is when my FDA phone timestamped the assignment due to the fact that’s when the assignment was open on my IPhone.”  Tr. at 20.  On redirect, Inspector Soderberg stated that he arrived at the establishment at approximately 9:32 AM CDT and observed that the establishment was not open.  Id. at 21.  He further stated that he and the minor sat in the car across the street until the establishment opened.  Id.  The following was stated upon questioning from the Court: 

The Court: Inspector Soderberg, you said that you waited in the car with the minor until the store opened.  Do you recall or did you make any notation as to the time you actually went into the store?

Inspector Soderberg: I observed the store opening at 10 o’clock a.m. central daylight time on the door, but as for the exact time, it would have been a few minutes after 10 a.m., but I cannot tell you an exact, to the minute time that the minor entered the store.

Tr. at 22. 

After considering all of the evidence and the relevant testimony, I do not find sufficient evidence to support CTP’s allegations that on October 21, 2018, at approximately 9:32 AM, Respondent sold regulated tobacco products to a minor and failed to verify the age of the purchaser by means of photographic identification containing the bearer’s date of birth.  CTP has the burden of proving Respondent’s liability by a preponderance of the evidence.  21 C.F.R. § 17.33.  As detailed below, I find that based on the evidence of record, it is not likely that, on the date and time in question, Respondent sold regulated tobacco products to a minor and 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(a)(1) and 21 C.F.R. § 1140.14(a)(2)(i). 

Page 7

In order to establish a violation, it is fundamental that CTP’s proof aligns with, and supports the allegations in the complaint.  It is the complaint’s allegations for which Respondent must mount its defense.  Here, where CTP’s complaint states the violations occurred at approximately 9:32 AM and the inspector’s sworn declaration states that the establishment was closed at 9:32 AM, CTP’s complaint does not align with, and is not supported by evidence.  I note that CTP did not avail itself of the opportunity to amend its complaint after acknowledging that the store was closed at 9:32 AM.  See 21 C.F.R. § 17.5(c) (CTP may, on motion, subsequently amend its complaint to conform with the evidence adduced during the administrative process, as justice may require.)

I find Inspector Soderberg’s testimony to be honest and believable and Respondent’s surveillance video directly supports his testimony.  Respondent’s surveillance video shows the store was closed and unoccupied until at least 10:04 AM.  Neither CTP nor the inspector have been able to provide a time that the minor entered the store.  Most importantly, CTP has been unable to pinpoint the time of the alleged violations.  CTP acknowledges that the store was closed at 9:32 AM, the alleged time in the complaint.  In its Informal Brief, CTP states “[t]he earliest time stamp for the tobacco product sold to [the minor] is 10:19 AM on October 21, 2018” and cites to Exhibit 17, which are photographs of the tobacco product time stamped 10:19 AM.  CTP’s Informal Brief supports Respondent’s position that the violations could not have happened at 9:32 AM, as alleged in the complaint.

Given that there is no dispute that the store was closed at the time that is alleged in the complaint, and neither the inspector nor CTP can provide a time that the alleged violations occurred, I find that CTP has not provided sufficient evidence to support its allegations that Respondent sold regulated tobacco products to a minor and failed to verify that the minor was of sufficient age through photographic identification on October 21, 2018, at approximately 9:32 AM, in violation of 21 C.F.R. § 1140.14(a)(1) and 21 C.F.R. § 1140.14(a)(2)(i).   

B. Penalty

I have found that Respondent committed at least one violation of the Act and its implementing regulations, on May 30, 2018, at approximately 4:33 PM, within a 12-month period.  The May 30, 2018 violation was the subject of a July 19, 2018 Warning Letter issued by CTP to Respondent.  It is CTP’s policy to issue a warning letter the first time a tobacco compliance check inspection reveals a violation of the federal tobacco laws and regulations.3 As the May 30, 2018 violation was the subject of the July 19, 2018 Warning Letter, I find that no additional penalty needs to be assessed at this time.

Page 8

Conclusion

Pursuant to 21 C.F.R. § 17.45, I enter judgment against Respondent, 5421, Inc. d/b/a Quik Pik, for one violation 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 12-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. CTP did not include violations that occurred outside the relevant timeframe for this complaint.
• 2. Respondent has indicated that the documents (Dkt Entry Nos. 9, 10, 11, and 12) filed on April 27, 2019 were filed in response to CTP’s Request for Production of Documents. As indicated during the Pre-Hearing Conference and Hearing, these documents were reviewed and considered as they are a part of the record. (Tr. at 8-9). Additionally, the surveillance video (R. Ex. 1) filed on March 28, 2019 and June 10, 2019 is the same video and will be considered as one exhibit.
• 3. This policy is set forth in detail at CTP Compliance & Enforcement, available at https://www.fda.gov/tobacco-products/compliance-enforcement-training/ctp-compliance-enforcement#c; See Orton Motor Co. d/b/a Orton’s Bagley v. HHS, 884 F.3d 1208-09 (D.C. Cir. 2018).