Station Management Consultants Inc. d/b/a Sunoco, DAB TB4420 (2019)

INITIAL DECISION

I hereby impose a No-Tobacco-Sale Order ("NTSO") against Respondent, Station Management Consultants Inc. d/b/a Sunoco ("Respondent"), for a period of 30 calendar days, for five repeated violations of federal tobacco regulations over a period of 36 months.

I. Background

The Center for Tobacco Products ("CTP") seeks to impose an NTSO, for a period of 30 calendar days, against Respondent, located at 327 MacDade Boulevard, Darby, Pennsylvania 19023, for five repeated violations of the Federal Food, Drug, and Cosmetic Act (the Act), 21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140, within a 36-month period. Specifically, selling a tobacco product to an individual under the age of 18 on (1) September 4, 2015, (2) August 2, 2016, and

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(3) June 1, 2018, in violation of 21 C.F.R. § 1140.14(a)(1);1 and failing to verify the age of a person purchasing tobacco products by means of a photographic identification containing the bearer's date of birth on (4) August 2, 2016, and (5) June 1, 2018, in violation of 21 C.F.R. § 1140.14(a)(2)(i). See Complaint ¶¶ 1, 8, 9; see also Informal Brief (Br.) of Complainant (CTP) at 11. Therefore, CTP seeks the imposition of an NTSO against Respondent for a period of 30 consecutive calendar days.

II. Procedural History

CTP began this matter by serving an administrative complaint on Respondent, at 327 MacDade Boulevard, Darby, Pennsylvania 19023, and by filing a copy of the complaint with the Food and Drug Administration's (FDA) Division of Dockets Management.

On March 26, 2019, Respondent timely filed an Answer ("Answer"). On March 28, 2019, I issued an Acknowledgment and Pre-Hearing Order that set out the deadlines for the parties' submissions in this case, and issued informal briefs for the parties to complete and submit.

On June 17, 2019, CTP filed its pre-hearing exchange. CTP's pre-hearing exchange included an Informal Brief of Complainant, a list of proposed witnesses and exhibits, and 17 numbered exhibits. CTP's exhibits included the declaration of one witness, Inspector Theresa McClain. On July 3, 2019, Respondent filed its pre-hearing exchange. Respondent's exchange included an Informal Brief of Respondent, a list of proposed witnesses and exhibits, and 17 numbered exhibits. Respondent's exhibits included the written direct testimony of five witnesses, Victor J. Marchiano, Stephen Mason, Shawn Frazier, Michael Neidl, and Lauren Cavage.

On August 7, 2019, I held a pre-hearing conference in this case. During the pre-hearing conference, I explained that the sole purpose of a hearing under the applicable regulations was to allow for the cross-examination and re-direct of any witnesses who had provided sworn testimony in pre-hearing exchanges, and only if the opposing party elected to cross-examine the witness. The parties stipulated to the admittance of each party's exhibits and waived the hearing as both parties declined the opportunity to cross-examine the opposing parties' witnesses. The parties were permitted to submit supplemental briefing, and on September 6, 2019, CTP filed its supplemental brief. The administrative record is now complete and this case is ripe for decision.

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III. Issues

A. Whether Respondent Sunoco sold cigarettes to a minor on June 1, 2018, and failed to verify, by means of photo identification containing a date of birth, that the purchaser was 18 years of age or older, in violation of 21 C.F.R. § 1140.14(a)(1) and (a)(2)(i).

B. Whether an NTSO for a period of 30 calendar days is reasonable.

IV. Applicable Regulations and Guidelines

CTP determined to impose an NTSO against Respondent pursuant to the authority conferred by the 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). The FDA and its agency, 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). Under 21 C.F.R. § 1140.14(a)(1), no retailer may sell cigarettes to any person younger than 18 years of age. Under 21 C.F.R. § 1140.14(a)(2)(i), retailers must verify, by means of photographic identification containing a purchaser's date of birth, that no cigarette purchasers are younger than 18 years of age.

The Act provides for civil money penalties ("CMPs") and NTSOs. NTSOs are authorized at 21 U.S.C. § 333(f)(8). The section allows for the imposition of an NTSO against a person who has committed "repeated violations" of restrictions on the sale of tobacco products. The term "repeated violations" is defined to mean "at least 5 violations of particular requirements over a 36-month period at a particular retail outlet ...." See FDA Civil Money Penalties and No-Tobacco-Sale Orders For Tobacco Retailers: Guidance for Industry (revised December 2016) at 3, 5-6, available at: https://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM252955.pdf.

The Act establishes the factors that must be considered in deciding on the length of an NTSO, but it does not specify the NTSO duration:

In determining the ... period to be covered by a no-tobacco-sale order, the Secretary shall take into account the nature, circumstances, extent, and gravity of the ... violations and, with respect to the violator, ... 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 Kat Party Store, Inc. d/b/a Mr. Grocer Liquor Store, CRD No. T-16-1684, at 2 (2016). CTP developed policy guidelines that establish

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maximum NTSO durations. For a first NTSO, CTP recommends a maximum duration of 30 calendar days. See FDA Determination of the Period Covered by a No-Tobacco-Sale Order and Compliance with an Order: Guidance for Tobacco Retailers, at 4 (Aug. 2015),
http://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM460155.pdf.

I find that under 21 U.S.C. § 333(f)(8), I have the authority to impose an NTSO. While the CTP guidance notes are not regulations and thus, are not binding, as a matter of law, I consider them to be persuasive.

V. Analysis

A. Violations

CTP alleges that Respondent committed five repeated violations of the Act and its implementing regulations over a 36-month period. See Complaint ¶ 1. CTP identified Respondent's original violations and Respondent's repeated violations that occurred within a specified 36-month period after the original violations. Id. ¶ 1 n.1, (table).

CTP previously filed three civil money penalty cases against Respondent, which Respondent acknowledged and admitted to the allegations in its Answer; regardless, the cases are now administratively final.2 Complaint ¶ 8; Answer ¶ 8.

In its most recent Complaint, CTP alleged that at approximately 1:40 PM on June 1, 2018, at Respondent's business establishment, 327 MacDade Boulevard, Darby, Pennsylvania 19023, an FDA-commissioned inspector documented Respondent's staff selling a package of Newport Box 100s cigarettes to a person younger than 18 years of age. Complaint ¶ 6. Additionally, the inspector documented that Respondent's staff failed to verify, by means of photographic identification containing a date of birth, that the purchaser was 18 years of age or older. Id. CTP alleges that with Respondent's most recent violations, it committed a total of five repeated violations of the Act and its implementing regulations over a 36-month period. See Complaint ¶ 1. CTP states that it did not include any repeated violations that occurred outside of the 36-month period. Id. n.2.

CTP's case against Respondent relies on the testimony of Inspector McClain. According to Inspector McClain's declaration: On June 1, 2018, at approximately 1:40 PM, she conducted a follow-up undercover buy compliance check inspection at Sunoco, located at

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327 MacDade Boulevard, Darby, Pennsylvania 19023. During the inspection, she parked her car near the Sunoco. She and Minor A exited the vehicle, and they entered the establishment contemporaneously. From her location, Inspector McClain had a clear, unobstructed view of the sales counter and Minor A. During the inspection, she observed Minor A purchase a package of cigarettes from an employee at the establishment. Prior to the purchase, she observed that Minor A did not present any identification to the employee. The employee did not provide Minor A with a receipt after the purchase. CTP Exhibit (Ex.) 7 ¶¶ 7-8.

Inspector McClain observed that the package of cigarettes were Newport Box 100s cigarettes. Id. ¶ 9. She then labeled the cigarettes as evidence and photographed all of the panels of the package and processed the evidence in accordance with standard procedures at the time of the inspection. Id.; see CTP. Exs. 11, 12.

Respondent does not refute the allegations, in fact, Respondent admits that on June 1, 2018, it sold tobacco products to a minor, in violation of 21 C.F.R. § 1140.14(a)(1), and failed to verify the purchaser's age by means of photographic identification, in violation of 21 C.F.R. § 1140.14(a)(2)(i). Complaint ¶ 6; Answer ¶ 8; Informal Br. of Respondent (R.) ¶¶ 4-5.

The photographic evidence, corroborating testimony, and Respondent's concession establish that Respondent is liable under the Act for violating 21 C.F.R. § 1140.14(a)(1) and (a)(2)(i).

B. No-Tobacco-Sale-Order Penalty

I now turn to whether a 30-day NTSO is appropriate in this case. The undisputed facts of this case show that Respondent is a repeated violator of FDA's tobacco regulations. Respondent has been the subject of three administratively final prior CMP actions based on its violations. Complaint ¶ 8. Therefore, Respondent does not have the right to contest violations in subsequent actions.

Between August 17, 2013, and August 2, 2016, Respondent sold cigarettes or smokeless tobacco to minors on four occasions. On two of those occasions, Respondent failed to verify by means of photographic identification containing a purchaser's date of birth, that no cigarette or smokeless tobacco purchasers are younger than 18 years of age. Complaint ¶ 8. For the purposes of the instant NTSO action, CTP counted the repeated violations that occurred on September 4, 2015, August 2, 2016, and June 1, 2018. Respondent originally violated the prohibition against selling cigarettes or smokeless tobacco to minors on August 17, 2013, and repeated that violation on September 4, 2015, August 2, 2016, and June 1, 2018. Respondent originally violated the requirement to verify the ages of persons purchasing cigarettes or smokeless tobacco by means of

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photographic identification containing the bearer's date of birth on September 4, 2015, and repeated that violation on August 2, 2016, and June 1, 2018. Id. ¶¶ 1, 6, 9.

Respondent argues that the 30-day imposition of an NTSO is inappropriate and excessive. Informal Br. of R. at 1. Respondent maintains that it "subjects its employees to vigorous training regarding the law as to tobacco sales and has the requirement of requiring photo identification of all individuals regardless of age for the sale of tobacco products." Id. at 3. Respondent further argues that the June 1, 2018 violation was done by an errant employee acting outside of the course and scope of her employment. Id. at 8-10. Respondent terminated this errant employee due to this misconduct. Id. At 10.

When determining the period to be covered by 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).

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

I have found that Respondent committed a total of five repeated violations of FDA tobacco regulations within a 36-month period. The repeated inability of Respondent to comply with federal tobacco regulations is serious and an NTSO is necessary and appropriate to protect the public health. Thus, I find that an NTSO of 30 calendar days is a reasonable penalty.

2. Respondent's Ability to Pay

This factor does not apply to the circumstances here because the penalty sought is an exclusion (NTSO) and not a monetary penalty.

3. Effect on Ability to do Business

Respondent argues that it "cannot afford to not sell tobacco products for 30 days." Informal Br. of R. at 9. According to Victor J. Marchiano, Respondent's Senior Vice President, Respondent "has been operating at a loss for the years 2017 and 2018 … [a] 30-day no sale of tobacco order will unduly and extremely worsen the financial condition of the store and will jeopardize the economic feasibility of continued operation. R. Ex. 9 ¶ 6. To corroborate this statement, Respondent submitted its 2017 and 2018 Profit and Loss Statements, which identify a net loss [redacted]. R. Exs. 4-5. As it pertains to cigarettes, Respondent yielded an [redacted], during the respective years. Id. 

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While I acknowledge that cigarette sales produce an annual profit for Respondent, I do not find this argument persuasive to abate the 30-day NTSO. The statements provided by Respondent prove that it has the ability to continue other lawful retail operations during the NTSO period. Respondent yielded a [redacted] profit in gasoline sales in 2018. Additionally, Respondent continued to earn an annual profit for snack, general merchandise, and beverage sales in both 2017 and 2018. R. Exs. 4-5. This evidence supports Respondent's ability to continue to operate.

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, at 3-4 (2016).

4. History of Prior Violations

It is undisputed that Respondent is a repeated violator of FDA's tobacco regulations prohibiting the sale of tobacco products to minors and verifying identification of those minors. As noted previously, Respondent has been the subject of three prior CMP actions. The current action is the first NTSO action against Respondent for repeated violations of the Act and its implementing regulations. Respondent has three times repeated violations of selling cigarettes or smokeless tobacco to minors on September 4, 2015, August 2, 2016, and June 1, 2018, and two times repeated violations of failing to verify the ages of persons purchasing cigarettes or smokeless tobacco by means of photographic identification containing the bearer's date of birth on August 2, 2016, and June 1, 2018.

5. Degree of Culpability

Based on my finding and Respondent's concession that it committed the most recent violations as alleged in the current complaint, I hold it fully culpable for all five repeated violations of the Act and its implementing regulations.

6. Additional Mitigating Factors

Respondent argues that it has "done everything it could possibly do to prevent the sale of tobacco products to minors." Informal Br. of R. at 6. Respondent may indeed have training programs, tobacco sale policies, registers and scanners to request identification for tobacco sales, however, I am not persuaded that Respondent's efforts have been effective for its establishment as Respondent continues to violate the regulations. Id. at 3-4. Respondent's placement of blame on its staff does not absolve it of liability. Sales clerks are acting within the scope of their employment when selling regulated tobacco

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products, and Respondent is responsible for the actions of those it employs when they fail to adhere to Respondent's policies and procedures.

While Respondent argues that the imposition of an NTSO is not mandatory, I find it necessary to combat sales of regulated tobacco products to minors. Informal Br. of R. at 3. Because Respondent is a habitual violator of the FDA tobacco regulations, I find that a 30-day NTSO is appropriate.

VI. Conclusion

For these reasons, I impose a No-Tobacco-Sale Order against Respondent Station Management Consultants Inc. d/b/a Sunoco, for a period of 30 consecutive calendar days. During this period of time, Respondent shall stop selling cigarettes, cigarette tobacco, roll-your-own tobacco, smokeless tobacco, and covered tobacco products regulated under the Federal Food, Drug, and Cosmetic Act. 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. On August 8, 2016, the citations to certain tobacco violations changed. For more information see: https://federalregister.gov/a/2016-10685.
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2. See FDA Docket Number FDA-2014-H-2002, CRD Docket Number C-15-476 ("First CMP Action"); FDA Docket Number FDA-2016-H-0015 ("Second CMP Action"); FDA Docket Number FDA-2017-H-1881, CRD Docket Number T-17-3166 ("Third CMP Action").
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