Glass N More Store Inc. d/b/a Glass N More Store, DAB TB5192 (2020)

INITIAL DECISION

The Center for Tobacco Products (CTP) of the Food and Drug Administration (FDA) seeks a civil money penalty (CMP) of $285, against Respondent, Glass N More Store Inc. d/b/a Glass N More Store, for at least two 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 12-month period. Specifically, the Administrative Complaint (Complaint) alleges that Glass N More Store impermissibly sold regulated tobacco products to minors. For the reasons discussed below, I find Respondent liable for the violations alleged, and conclude that a CMP of $145 is appropriate.

I.  Background

CTP began this matter by serving a Complaint on Respondent at its establishment located at 202 West Market Street, Sandusky, Ohio 44870, and by filing a copy of the Complaint with the FDA Division of Dockets Management. Respondent timely filed an Answer to

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CTP's Complaint. On September 18, 2019, I issued an Acknowledgment and Pre-Hearing Order in which I set a schedule of pre-hearing exchanges and deadlines for submissions.

On November 29, 2019, CTP filed a Motion to Compel Discovery, indicating that Respondent did not respond to its request for documents within the time limit.  See 21 C.F.R. § 17.23(a).  On the same date, CTP also filed a Motion to Extend Deadlines, requesting that its pre-hearing exchange deadline be extended for 30 days.  On November 29, 2019, Respondent filed eight documents in response to CTP's Motion to Compel Discovery.  On December 3, 2019, I issued an Order, which advised CTP that it had until December 17, 2019 to file a status report, indicating whether Respondent's November 29, 2019 filings satisfied its Request for Production of Documents or if it desired to renew its Motion to Compel Discovery. The December 3, 2019 Order also extended the parties' pre-hearing exchange deadlines.  On December 4, 2019, CTP filed a Status Report indicating that it was not renewing its Motion to Compel Discovery.  On December 5, 2019, I issued an Order rendering CTP's Motion to Compel Discovery moot.

On January 7, 2020, CTP timely filed its pre-hearing exchange, consisting of a pre-hearing brief, list of proposed witnesses and exhibits, and 19 exhibits (CTP Exs. 1-19), including the written direct testimony of two proposed witnesses, CTP's Senior Regulatory Counsel Laurie Sternberg (CTP Ex. 4) and Inspector Margaret Scala (CTP Ex. 5). Respondent did not file a pre-hearing exchange.  However, Respondent filed an Answer on September 14, 2019 and eight additional submissions on November 29, 2019 in response to CTP's Request for Production of Documents.

On February 19, 2020, I held a pre-hearing conference in this case.  I explained to the parties that the purpose of an administrative hearing under the applicable regulations is to afford the parties an opportunity for cross-examination and redirect examination of witnesses.  During the pre-hearing conference, Respondent noted its intent to cross-examine Margaret Scala, FDA-commissioned officer for the state of Ohio.

On March 13, 2020, I held a hearing in this case.  Transcript (Tr.).  During the hearing, I admitted CTP's Exhibits 1 through 19, and Respondent's submissions, absent objection. (Tr. at 11-14).  CTP's witness, Inspector Scala was present for the hearing.  Respondent cross-examined Inspector Scala (Tr. at 20-27). CTP did not conduct re-direct examination of Inspector Scala.  (Tr. at 27).

On April 14, 2020, I issued a Post-Hearing Briefing Order and Notice of Transcript Corrections informing the parties of the deadlines to file a post-hearing brief and the deadline to propose additional corrections to the transcript.  On April 24, 2020, CTP filed a Notice of Waiver of Post-Hearing Brief, indicating that it would not file a post-hearing brief.  On May 13, 2010, Respondent filed its post-hearing brief.  Neither party suggested additional corrections to the transcript.

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II.  Issues

A. Whether Respondent sold regulated tobacco products to minors on January 5, 2019 and May 13, 2019, in violation of 21 C.F.R. § 1140.14(b)(1); and
B. Whether the CMP amount of $285 sought by CTP is appropriate.

III.  Analysis, Findings of Fact and Conclusions of Law

A. Violations

CTP seeks a CMP 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 enforcement component, CTP, may seek CMPs 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 an implementing regulation.  21 C.F.R. § 1140.14(b)(1).

CTP alleges that Respondent committed at least two violations of the Act and its implementing regulations within a 12-month period.  Complaint ¶ 1.  Specifically, CTP alleges that, on January 5, 2019 and May 13, 2019, Respondent sold regulated tobacco products to minors in violation of regulations found at 21 C.F.R. pt. 1140.  Id. at ¶¶ 9-10.

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).

January 5, 2019 Allegation

Specifically, I must determine whether on January 5, 2019, at approximately 10:29 AM, Respondent:

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

CTP has the burden of proving Respondent's liability by a preponderance of the evidence.  21 C.F.R. § 17.33(b).  It is also Respondent's burden to prove any affirmative defenses 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(b)(1).

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CTP's case against Respondent rests on the testimony of Inspector Scala, who conducted the inspection at issue, and supported by corroborating evidence including contemporaneous notes and photographs.  CTP Exs. 5-7, 10, 13.  Inspector Scala is an FDA-commissioned officer with the state of Ohio, 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 Scala testified that she conducted such an inspection of Respondent's establishment on January 5, 2019, at approximately 10:29 AM, during which she observed a minor purchase a package of two cigars from Respondent.  Id. at 3.

Inspector Scala testified that, prior to the inspection at issue, she verified that the minor carried photographic identification that included the minor's true age.  Id. at 2.  Inspector Scala also verified that the minor did not have any tobacco products in the minor's possession.  Id.  Inspector Scala parked her car near Respondent's establishment, and the minor exited the vehicle.  Id. at 3.  Moments after the minor entered the establishment, the inspector entered the establishment, where she had a clear, unobstructed view of the sales counter and the minor.  Id.  The inspector testified that she observed the minor purchase a package of two cigars from an employee at the establishment.  Id.  Inspector Scala testified that she and the minor returned to the car, and the minor immediately handed her a package of cigars.  Id.  Inspector Scala identified the cigars as Swisher Sweets Boozy Watermelon cigars.  Id.  Inspector Scala labeled the cigars as evidence, photographed the package, and processed the evidence in accordance with standard procedures.  Id.  Inspector Scala also contemporaneously recorded the inspection in the FDA's Tobacco Inspection Management System (TIMS) and created a Narrative Report.  Id.  CTP corroborated Inspector Scala's testimony by offering as evidence photographs that the inspector made of the cigars on the date and time in question.  CTP Exs. 10, 13. CTP further corroborated Inspector Scala's account by submitting a copy of her contemporaneously completed TIMS report and Narrative Report.  CTP Exs. 6-7.

It is Respondent's position that the corporation is not responsible for the actions of the employee on January 5, 2019.  Docket (Dkt.) Entry No. 3a, Request.  Respondent did not provide any legal basis on which it relies.

After considering all of the evidence and the relevant testimony, I find sufficient evidence to support CTP's allegation that on January 5, 2019, at approximately 10:29 AM, Respondent sold a regulated tobacco product to a minor.  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 likely 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(b)(1).

Inspector Scala confirmed that she did view the actual sale to the undercover minor.  I found Inspector Scala's testimony to be honest and believable.  It is amply supported by

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contemporaneous records and other evidence.  CTP Exs. 5-7, 10, 13.  I further note that while Respondent submits that it is not responsible for the employee's actions on January 5, 2019, Respondent does not deny that the sale occurred as alleged by CTP.  Dkt. Entry No. 3(a).

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 allegation that Respondent sold a regulated tobacco product to a minor on January 5, 2019, in violation of 21 C.F.R. § 1140.14(b)(1).

The facts as outlined above, establish that Respondent's actions constitute a violation of law, and I conclude that Respondent is liable under the Act.  Accordingly, CTP is entitled to a CMP from Respondent.  21 U.S.C. § 333 (f)(9).

May 13, 2019 Allegation

Specifically, I must determine whether on May 13, 2019, at approximately 5:35 PM, Respondent:

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

CTP has the burden of proving Respondent's liability by a preponderance of the evidence.  21 C.F.R. § 17.33(b).  It is also Respondent's burden to prove any affirmative defenses 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(b)(1).

CTP's case against Respondent rests on the testimony of Inspector Scala, who conducted the inspection at issue, and supported by corroborating evidence including contemporaneous notes and photographs.  CTP Exs. 5, 8-9, 11, 16. Inspector Scala is an FDA-commissioned officer with the state of Ohio, 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 Scala testified that she conducted such an inspection of Respondent's establishment on May 13, 2019, at approximately 5:35 PM, during which she observed a minor purchase a package of two cigars from Respondent.  Id. at 3-4.

Inspector Scala testified that, prior to the inspection at issue, she verified that the minor carried photographic identification that included the minor's true age.  Id. at 3-4.  Inspector Scala also verified that the minor did not have any tobacco products in the minor's possession.  Id. at 4.  Inspector Scala parked her car near Respondent's

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establishment, and the minor exited the vehicle.  Id.  Moments after the minor entered the establishment, the inspector entered the establishment, where she had a clear, unobstructed view of the sales counter and the minor.  Id.  The inspector testified that she observed the minor purchase a package of two cigars from an employee at the establishment.  Id.  Inspector Scala testified that she and the minor returned to the car, and the minor immediately handed her a package of cigars.  Id.  Inspector Scala identified the cigars as Swisher Sweets Maui Pineapple cigars.  Id.  Inspector Scala labeled the cigars as evidence, photographed the package, and processed the evidence in accordance with standard procedures.  Id.  Inspector Scala also contemporaneously recorded the inspection in the FDA's Tobacco Inspection Management System (TIMS) and created a Narrative Report.  Id.  CTP corroborated Inspector Scala's testimony by offering as evidence photographs that the inspector made of the cigars on the date and time in question.  CTP Exs. 11, 16. CTP further corroborated Inspector Scala's account by submitting a copy of her contemporaneously completed TIMS report and Narrative Report.  CTP Exs. 8-9.

On cross-examination, Inspector Scala testified that she accompanied the minor into the establishment.  Tr. at 21.  The inspector also testified that she observed the transaction by the door.  Id.

After considering all of the evidence and the relevant testimony, I find sufficient evidence to support CTP's allegation that on May 13, 2019, at approximately 5:35 PM, Respondent sold a regulated tobacco product to a minor.  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 likely 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(b)(1).

Inspector Scala confirmed that she viewed the actual sale to the undercover minor.  I found Inspector Scala's testimony to be credible.  It is amply supported by contemporaneous records and other evidence.  CTP Exs. 5, 8-9, 11, 16.  Furthermore, Respondent has offered no evidence to dispute that the sale occurred as CTP alleges.  In its post-hearing brief, Respondent assets that "employee's violated company policy" and that Respondent is not responsible for the alleged instance.  Dkt. Entry No. 20.

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 allegation that Respondent sold a regulated tobacco product to a minor on May 13, 2019, in violation of 21 C.F.R. § 1140.14(b)(1).

The facts as outlined above, establish that Respondent's actions constitute a violation of law, and I conclude that Respondent is liable under the Act.  Accordingly, CTP is entitled to a CMP from Respondent.  21 U.S.C. § 333 (f)(9).

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B.  Civil Money Penalty

Pursuant to 21 U.S.C. § 333(f)(9), Respondent Glass N More Store is liable for a CMP not to exceed the amount listed in FDA's CMP regulations at 21 C.F.R. § 17.2.

In its Complaint, CTP seeks to impose the maximum penalty amount, $285, against Respondent for at least two violations of the Act and its implementing regulations within a 12-month period.  Complaint at ¶ 1.  In its Answer, Respondent does not deny the allegations, but states that the corporation is not responsible for the actions of the employees.  Docket (Dkt.) Entry No. 3a, Request.  In TOH, Inc. d/b/a Ridgeville Service Center, DAB No. 2668, at 16-18 (2015), the Departmental Appeals Board rejected the argument that the Respondent should not be held liable for its clerk's actions because the unlawful sales of tobacco products were outside the scope of their employment when the company had express written policies against tobacco sales to minors.  The Board found that the employees were plainly acting in the course of their employment in making the sales, and that "the mere fact that Respondent instructed its clerks not to sell to minors is . . . an inadequate defense because the corporation was obliged to ensure that its policies are enforced and effective."  DAB No. 2668, at 17-18.  Based on the Board's decision in TOH, I find Respondent's argument unpersuasive.

I find that Respondent committed two violations of the Act and its implementing regulations within a 12-month period.  When determining the amount of a CMP, 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).

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

I find that Respondent committed two violations of selling regulated tobacco products to minors on January 5, 2019 and May 13, 2019.  The repeated inability of Respondent to comply with federal tobacco regulations is serious in nature and the CMP amount should be set accordingly.

b. Respondent's Ability to Pay and Effect on Ability to Continue to do Business

Respondent has not provided any evidence to show it is unable to pay the $285 CMP sought by CTP.   There is also no evidence to determine what effect imposing the $285 CMP sought by CTP will have on Respondent's ability to continue to do business.  Therefore, based on the evidence in the administrative record, I find that Respondent has not presented any evidence that it does not have the ability to pay the $285 CMP sought by CTP.  Additionally, I find that Respondent has not presented any evidence to show the

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effect that imposing the $285 CMP sought by CTP will have on Respondent's ability to continue to do business.

c. History of Prior Violations

The current action is the first CMP action that CTP has brought against Respondent.

d. Degree of Culpability

Respondent asserts that it is not responsible for the violations because the corporation is not responsible for the actions of employees. I note that although Respondent asserts that the corporation is not responsible for the actions of its employees, Respondent has not denied that the violations occurred.  As stated above, the Departmental Appeals Board has rejected similar arguments made by other Respondents, as employees are plainly acting in the course of their employment in making tobacco sales.  It is Respondent's responsibility to ensure its employees comply with the law.  I find that Respondent committed the two violations as alleged in the Complaint, and I hold it fully culpable for two violations of the Act and its implementing regulations.

e. Additional Mitigating Factors and Other Matters as Justice May Require

To prevent future violations, Respondent asserts that it has taken disciplinary action against employees and updated policies.  Dkt. Entry No. 20, Closing Argument.  Respondent also asserts that it has updated equipment and software on its Point-of-Sale systems and now all restricted items require the cashier to scan identification for age verification to complete a sale of a restricted item.  Id.  Finally, Respondent argues that the upgrades in equipment and software have cost thousands of dollars in excess of the CMP sought by CTP.  Id.

In light of Respondent's actions to prevent future violations, I find evidence to reduce the $285 penalty.  Thus, I find that a CMP of $145 is appropriate.

IV.  Penalty

Based on the foregoing reasoning, I find a penalty amount of $145 to be appropriate under 21 U.S.C. §§ 333(f)(5)(B) and 333(f)(9).

V.  Conclusion

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $145, against Respondent, Glass N More Store Inc. d/b/a Glass N More Store, for at least two

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violations of the Federal Food, Drug, and Cosmetic 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.