Kwik Stop 7th. Ave Inc. d/b/a Kwik Stop Food Store, DAB TB5245 (2020)

INITIAL DECISION

The Food and Drug Administration's Center for Tobacco Products (CTP) seeks to impose against Respondent, Kwik Stop 7th. Ave Inc. d/b/a Kwik Stop Food Store, a No-Tobacco-Sale Order for a period of 30 consecutive days for five repeated 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. part 1140, within a 36-month period.  Specifically, CTP alleges that Respondent violated the Act when 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 and then repeated those violations at least five times within a 36-month period .  For the reasons discussed below, I find Respondent liable for the violations alleged in the complaint, but conclude that reducing the No-Tobacco-Sale Order (NTSO) against Respondent from a period of 30 consecutive days to 15 consecutive days, is appropriate.

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I.  Background

CTP began this case by serving an administrative complaint on Respondent at its establishment located at 13695 Northwest 7th Avenue, Miami, Florida 33168, and by filing a copy of the complaint with the Food and Drug Administration's (FDA) Division of Dockets Management.  Respondent timely filed an Answer to CTP's complaint.  On October 3, 2019, 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, containing of a pre-hearing brief (CTP Br.) and 15 proposed exhibits (CTP Exs. 1-15), including the written direct testimony of FDA-commissioned Inspector Jessie Carry (CTP Ex. 7).  Respondent timely filed its pre-hearing exchange, containing of a pre-hearing brief (R. Br.)1 and 12 proposed exhibits (R. Exs. 1-12), including the written direct testimony of Muhammad Khaled (R. Ex. 12).

On June 3, 2020, I conducted a pre-hearing conference.  During the pre-hearing conference, the parties agreed to a decision based on the documentary evidence and written argument.  I permitted the parties to file final briefs.  I also provided Respondent an opportunity to submit newly acquired evidence related to the impact of recent events on its business and CTP to file a responsive pleading or objections thereto.

Respondent filed a final brief (R. Final Br.) and two new exhibits (R. Exs. A-B).  CTP waived its opportunity to file a final brief or responsive pleading and did not object to my consideration of Respondent's newly submitted evidence.

Absent objection, I admit CTP Exhibits 1-15, Respondent's Exhibits 1-12, and Respondent's Exhibits A-B into evidence.

II.  Issues

Whether Respondent repeatedly violated 21 U.S.C. § 331, specifically 21 C.F.R. § 1140.14(a)(1), 1140.14(a)(2)(i), 1140.14(b)(1), and 1140.14(b)(2)(i), five or more times within a 36-month period; and if so, whether an NTSO of 30 consecutive days' duration is an appropriate remedy.

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III. Analysis, Findings of Fact, and Conclusions of Law

CTP seeks to impose an NTSO against Respondent pursuant to the authority conferred by the Act, as amended by the Family Smoking Prevention and Tobacco Control Act (TCA), and implementing regulations.  See TCA, Pub. L. No. 111-31 (June 22, 2009).  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).  A tobacco product is misbranded if distributed or offered for sale in any state in violation of regulations issued under section 387f(d) of the Act.  21 U.S.C. § 387c(a)(7)(B).

The FDA, and its CTP, may seek the imposition of remedies against any person who violates the Act's requirements as they relate to the sale of tobacco products.  21 U.S.C. § 331(f)(9).  CTP may seek to impose an NTSO when it finds "that a person has committed repeated violations of restrictions promulgated under section 387f(d) . . . at a particular retail outlet."  21 U.S.C. § 333(f)(8).  "Repeated violations" is defined as "at least 5 violations of particular requirements over a 36-month period at a particular retail outlet that constitute a repeated violation."  TCA § 103(q)(1)(a).

A. Violations

The regulations provide that no retailer may sell regulated tobacco products to any person younger than 18 years of age.  21 C.F.R. § 1140.14(a)(1),2 1140.14(b)(1).  The regulations also require that retailers verify, by means of photographic identification containing a purchaser's date of birth, that no regulated tobacco product purchasers are younger than 18 years of age.  21 C.F.R. § 1140.14(a)(2)(i), 1140.14(b)(2)(i).

1. Prior Violations

This case constitutes the fourth action CTP has brought against Respondent for violating the Act's requirements.  CTP Exs. 1, 3, 5; Complaint ¶ 8-11; see CRD Docket Numbers T-17-4135, T-18-507; T-18-2024.  The prior actions alleged Respondent sold cigarettes or smokeless tobacco to a minor on February 20, 2016, February 5, 2017, and November 11, 2017, in violation of 21 C.F.R. § 1140.14(a)(1), and a covered tobacco product to a minor on April 14, 2018, in violation of 21 C.F.R. § 1140.14(b)(1).  The prior actions further alleged that, on the same dates, Respondent also failed to verify photographic identification of the cigarette or smokeless tobacco purchasers in violation of 21 C.F.R. § 1140.14(a)(2)(i), and covered tobacco product purchaser in violation of 21 C.F.R. § 1140.14(b)(2)(i).

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Each prior action resulted in settlement and concluded after Respondent admitted to violating the regulations as alleged and paid an agreed upon penalty.  CTP Exs. 2, 4, 6.  In settlement, Respondent expressly waived its right to contest these violations in subsequent actions.  Id.  These violations are now administratively final.

2. Current Violations

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 November 4, 2018, at approximately 9:30 PM, Respondent sold a blu Classic Tobacco electronic nicotine delivery system (ENDS) product to a person younger than 18 years of age 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 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 a regulated tobacco product 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 Jessie Carry, who conducted the inspection at issue, and supported by corroborating evidence including contemporaneous notes and photographs.  CTP Exs. 7-12. Inspector Carry is an FDA-commissioned officer with the state of Florida, whose duties include determining whether retail outlets unlawfully sell regulated tobacco products to minors through undercover buy inspections.  CTP Ex. 7 at 1-2.  Inspector Carry testified that she conducted such an inspection of Respondent's establishment on November 4, 2018, at approximately 9:30 PM, during which she observed a minor enter the establishment, without tobacco products, and return with a tobacco product in hand.  Id. at 3.

Inspector Carry testified that, prior to the inspection at issue, she verified that the minor carried true and accurate photographic identification that included the minor's true date of birth.  Id. at 2.  Inspector Carry also verified that the minor did not have any tobacco products in the minor's possession.  Id. at 2-3.  Inspector Carry testified that she parked her car near Respondent's establishment, where she remained in the car, and the minor exited the vehicle.  Id. at 3.  The inspector testified that she had a clear, unobstructed view where she watched the minor enter Respondent's establishment and later exit Respondent's establishment with something in the minor's hand.  Id.  Inspector Carry testified that the minor immediately returned to the car and handed her an ENDS product.  Id.  Inspector Carry identified the ENDS product as a blu ENDS product.  Id.  Inspector Carry relocated her vehicle to a safe location, labeled the ENDS product as evidence, photographed the package, and processed the evidence in accordance with standard

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procedures.  Id.  Inspector Carry also contemporaneously recorded the inspection in the FDA's Tobacco Inspection Management System (TIMS) and created a Narrative Report. Id.  CTP corroborated Inspector Carry's testimony by offering as evidence photographs that the inspector made of the blu ENDS product on the date and time in question.  CTP Exs. 11-12. CTP further corroborated Inspector Carry's account by submitting a copy of her contemporaneously recorded TIMS report and Narrative Report.  CTP Exs. 9-10.

I found Inspector Carry's testimony to be credible and believable and supported by contemporaneous records and photographic evidence.  CTP Exs. 7-12.

Respondent asserts that it did it did not have an employee working as a cashier who met the description detailed in the inspector's narrative report.  Answer at 1-2; Informal Br. of R. at 2; see CTP Ex. 9 at 1.  Respondent submits the testimony of its principal owner, Mohammed Khaled, to support its assertion.  R. Ex. 12.  Mr. Khaled testified that although he was not working during the inspection at issue, he did not have an employee with a "gray/white receding hair line" as described in the inspector's narrative report.  R. Ex. 12 at 2; see CTP Ex. 9 at 1.  However, Respondent provided no further evidence to support its claim.  Mr. Khaled's testimony is self-serving and unsupported by the record and I do not find it compelling on this issue.  Moreover, even if Respondent did not employ a cashier that met such a description, I would not find it determinative as to whether Respondent sold a regulated tobacco product to a minor on the date in question.

Respondent's owner also testified that CTP's inspections occurred near times of opening or closing the establishment "when cashiers are naturally distracted."  R. Ex. 12 at 1.  Further, Respondent submits that the minors have requested uncommon tobacco products such as cigars and ENDS products, "which are not commonly understood by the cashiers to be covered by [Respondent's] tobacco sales policy or by law or by regulation."  Id.  In selling dangerous and addictive tobacco products, Respondent, and its staff, are required to comply with all applicable laws and regulations, no matter when the sale occurs.

Respondent also implies that a sale did not take place.  Specifically, Respondent takes issue with the language of the inspector's narrative report, stating that the minor "attempted" the undercover buy and did not explicitly state that money changed hands.  R. Br. at 3-4.  In her narrative report, Inspector Carry documented that she confirmed that the minor did not have tobacco products prior to the start of the inspection by securing the minor's belongings in the vehicle prior to the start of the inspection, asking the minor to turn out the minor's pockets, and asking the minor directly.  CTP Ex. 9 at 1.  The inspector watched the minor enter Respondent's establishment and exit Respondent's establishment with something in the minor's hand.  CTP Ex. 7 at 3.  The minor immediately returned to the vehicle and handed the inspector an ENDS product.  Id.  It is reasonable to conclude that the minor was successful in his/her attempt and did indeed purchase the tobacco product, rather than purloin it, from Respondent's establishment.  I find that the minor did just that.

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Respondent also complains that because of the nearly nine-month delay between the inspection and complaint, it was unable to secure video and other evidence in its defense.  R. Br. at 3.  Respondent's argument is unavailing.  On November 7, 2018, CTP issued a Notice of Compliance Check Inspection, which informed Respondent of the violation documented during the November 4, 2018 inspection.  CTP Ex. 13.  The record reflects that the notice was delivered to Respondent's establishment at 13695 Northwest 7th Avenue, Miami, Florida 33168, on November 9, 2018, at 1:22 PM, and signed for by an individual identified as "saude."  CTP Ex. 4.  Although Mr. Khaled testified that he did not receive the November 7, 2018 notice (R. Ex. 12 at 2), whether Respondent's staff provided the notice to Mr. Khaled is not at issue before me.  Neither statute nor regulation requires CTP to send a Notice of Compliance Check Inspection to Respondent nor serve it on Respondent in accordance with 21 C.F.R. § 17.7.  See Sinjil, Inc. v. HHS, Case No. 19-3213, at 9 (6th Cir. Mar. 4, 2020).

CTP has the burden of proving Respondent's liability by a preponderance of the evidence.  21 C.F.R. § 17.33.  After considering the evidence of record, I find that CTP has provided sufficient evidence, which Respondent has failed to successfully rebut, that Respondent sold a regulated tobacco product to a minor on November 4, 2018, at approximately 9:30 PM, 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.

B. Penalty

CTP may seek an NTSO when it finds five or more repeated violations of the applicable regulations over a 36-month period.  21 U.S.C. § 333(f)(8); TCA § 103(q)(1)(a); see Food & Drug Admin., Civil Money Penalties & No-Tobacco-Sale Orders For Tobacco Retailers: Guidance for Industry, 5-6 (Dec. 2016), (December 2016 Guidance), available at http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/ UCM252955.pdf (last visited Sept. 23, 2020).

For the purposes of the instant NTSO action, CTP counted repeated violations that occurred within the 36-month period that included February 5, 2017, through November 4, 2018.  Respondent originally violated 21 C.F.R. § 1140.14(a)(1), the prohibition against selling cigarettes or smokeless tobacco to a minor, on February 20, 2016.  Respondent then repeated that violation on February 5, 2017, and November 11, 2017.  Respondent originally violated 21 C.F.R. § 1140.14(a)(2)(i), the requirement to verify through photographic identification that no cigarette or smokeless tobacco product purchaser is under the age of 18, on February 20, 2016.  Respondent then repeated that violation on February 5, 2017, and November 11, 2017.  Respondent originally violated 21 C.F.R. § 1140.14(b)(1), the prohibition against selling covered tobacco products to a

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minor, on April 14, 2018.  Respondent then repeated that violation on November 4, 2018, as I have detailed in this decision.  Accordingly, Respondent has repeatedly violated the relevant regulatory requirements at least five times within a 36-month period.

I now turn to whether a 30-day NTSO is appropriate in this case.

1. Determining Appropriate Length of NTSO

When determining the appropriate duration of an NTSO, I am required to take into account "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).  Further, when determining whether to "compromise, modify, or terminate" an NTSO, I must "consider whether the retailer has taken effective steps to prevent violations of the minimum age requirements for the sale of tobacco products." TCA § 103(q)(1)(G), (F)(i)-(iv).  These steps include:

(i) adopting and enforcing a written policy against sales to minors;
(ii) informing its employees of all applicable laws;
(iii) establishing disciplinary sanctions for employee noncompliance; and
(iv) requiring its employees to verify age by way of photographic identification or electronic scanning device[.]

TCA § 103(q)(1)(G), (F)(i)-(iv); see also December 2016 Guidance at 11; Food & Drug Admin., Determination of the Period Covered by a No-Tobacco-Sale Order and Compliance With an Order, 3- 4 (Aug. 2015), (FDA Guidance), available at https://www.fda.gov/ regulatory-information/search-fda-guidance-documents/ determination-period-covered-no-tobacco-sale-order-and-compliance-order (last visited Sept. 23, 2020); Kuma H. Mamie d/b/a 7-Eleven Store 22921A, DAB No. 2877, at 7 (2018); Station Management Consultants Inc. d/b/a Sunoco, DAB No. 2996, at 2-3, 6-7 (2020).

CTP policy guidelines establish 30 calendar days as the maximum NTSO duration CTP will seek for a retailer's first NTSO.  See FDA Guidance at 4.

In this case, CTP seeks the maximum NTSO duration of 30 calendar days.

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

I have found that Respondent committed at least five repeated violations of FDA tobacco regulations within a 36-month period. 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

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regulations is serious and an NTSO is necessary and appropriate to protect the public health.

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

Respondent asserts that 65% of its business revenue is from tobacco sales and "an NTSO of any length would effectively necessitate a closure" of its establishment.  R. Pre-Hrg. Br. at 3; see R. Ex. 12 at 2.  Respondent submits its 2018 tax return (R. Ex. 8), as well as sample receipts and invoices from 2019 (R. Exs. 9-11), in support of its position.  The tax return shows that Respondent operates at a net gain.  However, these documents do not break down its profit and loss by category, namely tobacco products.  The sample receipts and invoices from 2019 may offer a snapshot into Respondent's sales, but do not demonstrate that an NTSO "of any length" would close Respondent's business, which, in addition to tobacco products, sells snacks, drinks, and various sundries.  Respondent simply did not show how a potential net loss emanating from the imposition of an NTSO would undermine its ability to continue to operate.

I recognize the severe impact that an NTSO may have on Respondent's business, however, Respondent has not demonstrated how any anticipated loss outweighs the need to protect minors from its business practices.  Moreover, "the need to protect the [minors] outweighs the adverse effects that an NTSO may have on an individual retailer's business, especially in light of the fact that imposition of this remedy is reserved only for those retailers who demonstrate indifference to the requirements of law."  Kat Party Store, Inc. d/b/a Mr. Grocer Liquor Store, CRD No. T-16-1684, DAB No. TB509, at 3-4 (2016); see Three Star Market, Inc. v. HHS, Case No. 18-4257, 4-5 (6th Cir. Feb. 4, 2020).

c. History of Prior Violations

As noted previously, Respondent has been the subject of three prior civil money penalty actions.  The current action is the first NTSO action against Respondent for repeated violations of the Act and its implementing regulations.  Respondent has repeatedly violated the law despite the imposition of escalating civil money penalties against it.  Between February 20, 2016, and November 4, 2018, Respondent sold a regulated tobacco product to a minor on five occasions.  On four of those occasions, Respondent also failed to verify by means of photographic identification containing a purchaser's date of birth, that no regulated tobacco product purchasers were younger than 18 years of age.  Although CTP only counted five repeated violations during the relevant period, Respondent has demonstrated that it is either unable or unwilling to comply with the federal tobacco regulations, which calls for a more severe penalty.

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d. Degree of Culpability

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

e. Other Matters as Justice May Require

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 assure that they make their sales in compliance with law.

Following the first three civil money penalty actions, Respondent installed an "identification swipe device" and informed its employees verbally and in writing of its tobacco sales policy.  R. Ex. 12 at 2; R. Ex. 4.  Although these measures appear to have reduced the number of violations cited during the subsequent inspection, they were not sufficient to ensure Respondent's full compliance with the law.  Following the most recent violation, Respondent issued the employee on duty a written warning and re-issued its tobacco sales policy to all staff.  Id.; see R. Ex. 6 (warning letter); R. Ex. 7 (policy).  It is important that Respondent take steps that are effective in preventing violations of the minimum age requirements for the sale of tobacco products.  See TCA § 103(q)(1)(G), (F)(i)-(iv).

Respondent also asserts that the restrictions instituted as a result of the Covid-19 global health pandemic and civil rights protests have severely challenged business operations and finances.  R.'s Status Report & Motion to Dismiss at 2, May 4, 2020; R. Final Br. at 3.  Respondent's counsel argues, "The virus and the George Floyd protests had just about shuttered them previously with the stay-at-home restrictions and curfews.  They were already on reduced hours and now, the mayor of Miami-Dade County has reinstituted a 10 p.m. to 6 a.m. curfew due to the explosion in cases of the virus in Florida."  R. Final Br. at 3.  Respondent also submits a letter from Respondent's owner, Mr. Khaled.  R. Ex. A.  In it, Mr. Khaled states,

As a small business owner, I have to overcome so many challenging situations to survive.  This pandemic made it worse for small business like me.  As of today, I lost 810 working hours which is equivalent to more than 60 days of store closing due to pandemic.  We also had to deal with curfew situations in our area.  We are dealing with another round of curfew right now until further notice.  [Y]ou can easily imagine my dire situation in this moment.  In addition, this store is the only source of income for my family with two young kids aged 11 and 6 years.  Everyday sale of the store is crucial for my survival with my family.  Last year (2019) I made only [redacted].

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I don't know what will happen this year.  In this dire situation, I humbly urge you to consider my situation with the above facts that I just mentioned . . . .

Id.  Respondent submitted the 2019 personal tax return transcript of its sole owner, Mr. Khaled.  R. Ex. B.  The return shows an adjusted gross income of [redacted], and two child dependents.  R. Ex. B. at 2, 4.  Although Mr.  Khaled's letter is an unsworn statement, I find it credible and supported by supplementary evidence, and with some limited value.   Nonetheless, the Covid-19 pandemic has had sweeping effects, both health and financial, and touched nearly every American in some capacity.  No doubt, it has had significant effects on Respondent as well.

Accordingly, I conclude that a reduction in the NTSO period is appropriate.

2. Appropriate Penalty

Based on the foregoing, I conclude that an NTSO for a period of 15 consecutive days is appropriate to deter Respondent from continuing to violate federal law, but enable Respondent an opportunity to conduct its business in compliance with the law.  21 U.S.C. § 333(f)(5)(B); TCA § 103(q)(1)(G); 21 C.F.R. § 17.34; FDA Guidance at 3-4.

IV.  Conclusion

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the form of a No-Tobacco-Sale Order for a period of 15 consecutive days against Respondent, Kwik Stop 7th. Ave Inc. d/b/a Kwik Stop Food Store, for at least five repeated 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. part 1140, within a 36-month period.  Pursuant to 21 C.F.R. § 17.45(d), this order becomes final and binding upon the parties 30 days after the date of its issuance.

• 1. Counsel for Respondent filed its informal brief on October 7, 2019, a pre-hearing brief on February 21, 2020, and another pre-hearing brief on February 25, 2020.  In this decision, I refer to Respondent's February 25, 2020 submission as its pre-hearing brief and cite to that submission accordingly.
• 2. On August 8, 2016, the citations to certain tobacco violations changed.  For more information see:  https://federalregister.gov/a/2016-10685.