Alkursi, Inc. d/b/a Exxon, DAB TB4540 (2019)

INITIAL DECISION

The Center for Tobacco Products (CTP) of the Food and Drug Administration (FDA) seeks a civil money penalty (CMP) of $11,410, against Respondent, Alkursi, Inc. d/b/a Exxon (Respondent), for at least 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. Specifically, the Administrative Complaint (Complaint) alleges that Respondent impermissibly sold a regulated tobacco product to a minor. The complaint alleges CTP previously initiated a civil money penalty action against Respondent and prior action concluded after Respondent admitted to at least five 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. For the reasons discussed below, I find Respondent liable for the violations alleged, and conclude that a CMP of $11,410 is appropriate.

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I. Background

CTP began this matter by serving a Complaint on Respondent at its establishment located at 16700 Northwest 17th Avenue, Miami Gardens, Florida 33056, and by filing a copy of the Complaint with the FDA Division of Dockets Management. Respondent timely filed an Answer to CTP's Complaint. On March 7, 2019, I issued an Acknowledgment and Pre-Hearing Order in which I set a schedule of pre-hearing exchanges and deadlines for submissions.

On March 18, 2019, Respondent timely filed its pre-hearing exchange (R. Informal Br., Docket Entry No. 8) along with a sworn witness statement. On March 19, 2019, Respondent filed 11 videos and three photographs (Docket Entry Nos. 10-10m, Videos of the incident) of the alleged violation on November 2, 2018, at approximately 7:29 PM. On April 3, 2019, CTP filed Complainant's Motion to Seal Respondent's Exhibits 10a, 10c, 10e, 10f, 10i, 10j, 10k, and 10l seeking to have those exhibits sealed as the purchaser in the video and photographs was CTP's undercover minor. In an April 15, 2019 letter issued by my direction, Respondent was advised that it had until April 30, 2019 to file a response to CTP's Motion to Seal. On April 19, 2019, Respondent filed its response, stating it had no objection to the exhibits being sealed. On April 22, 2019, I issued an Order Granting Motion to Seal Exhibits 10a, 10c, 10e, 10f, 10i, 10j, 10k, and 10l, withholding the exhibits from public disclosure.

On May 28, 2019, CTP timely filed its pre-hearing exchange, consisting of a pre-hearing brief, list of proposed witnesses and exhibits, and 16 exhibits (CTP Exs. 1-16), including the written direct testimony of two proposed witnesses, CTP's Senior Regulatory Counsel Laurie Sternberg (CTP Ex. 7) and Inspector Jessie Carry (CTP Ex. 8). On June 12, 2019, Respondent timely filed its pre-hearing exchange, consisting of a pre-hearing brief and the written direct testimony of one proposed witness, Mohammad Almohammad, which Respondent labeled as Exhibit 2.

On July 10, 2019, 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 Jessie Carry, FDA-commissioned officer for the state of Florida. CTP indicated that it would not be cross-examining Respondent's proposed witness, Mohammad Almohammad.

On August 15, 2019, I held a hearing in this case. Transcript (Tr.). During the hearing, I admitted CTP's Exhibits 1 through 16, and Respondent's Exhibits 1 and 2, absent objection. (Tr. at 5). CTP's witness, Inspector Carry was present for the hearing. Respondent cross-examined Inspector Carry (Tr. at 6-8). CTP conducted re-direct examination of Inspector Carry (Tr. at 9-10.).

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On September 24, 2019, CTP filed a Notice of Waiver of Post-Hearing Brief, indicating that it would not file a post-hearing brief. On October 1, 2019, Respondent filed its post-hearing brief.

II. Issues

A. Whether Respondent sold a regulated tobacco product to a minor on November 2, 2018, in violation of 21 C.F.R. § 1140.14(a)(1)1 ; and

B. Whether the CMP amount of $11,410 sought by CTP is reasonable.

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 enforcement component, 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 an implementing regulation. 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 product purchaser is younger than 18 years of age is also a violation of an implementing regulation. 21 C.F.R. § 1140.14(a)(2)(i).

CTP alleges that Respondent committed at least six violations of the Act and its implementing regulations within a 48-month period. Complaint at ¶ 1. Specifically, CTP alleges that, on November 2, 2018, Respondent sold cigarettes to a minor, and Respondent previously admitted to at least five violations of regulations found at 21 C.F.R. pt. 1140. Id. at ¶¶ 7, 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).

Specifically, I must determine whether on November 2, 2018, at approximately 7:29 PM, Respondent:

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

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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(a)(1).

CTP's case against Respondent rests on the testimony of Inspector Carry, who conducted the inspection at issue, and supported by corroborating evidence including contemporaneous notes and photographs. CTP Exs. 8-14. 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. 8 at 1-2. Inspector Carry testified that she conducted such an inspection of Respondent's establishment on November 2, 2018, at approximately 7:29 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 photographic identification that included the minor's true age. Id. at 2. Inspector Carry also verified that the minor did not have any tobacco products in the minor's possession. Id. Inspector Carry parked her car near Respondent's establishment, where she remained in the car, and the minor exited the vehicle. Id. The inspector watched the minor enter Respondent's establishment and exit minutes later with a tobacco product. Id. at 3. Inspector Carry testified that the minor returned to the car and immediately handed her a package of cigarettes. Id. Inspector Carry identified the cigarettes as Newport Box cigarettes. Id. Inspector Carry relocated her vehicle to a safe location, labeled the cigarettes as evidence, photographed the package, and processed the evidence in accordance with standard 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 cigarettes 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.

It is Respondent's position that its video recordings show that:

[t]he minor asked for a pack of Newport cigarettes but, being a minor, was denied the sale of cigarettes. This minor was accompanied by an adult who appeared to be 60 years old. This adult separately asked the counter clerk to purchase a pack of Newport cigarettes. The counter clerk Mohammad Almohammad sold a pack of Newport cigarettes to this adult customer. The sale of cigarettes to the adult customer was in the normal course of

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business and the counter clerk did not violate FDA regulations. The counter clerk saw both, the adult customer and the minor, leaving the store together.

R. Informal Br. at 2; see also R. Post-Hrg. Br. at 2-3. Respondent also asserts that the inspector could have entered the establishment after the violation to take pictures of the clerk, to question the clerk to obtain the truth, and review the security camera recordings. R. Informal Br. at 3.

Respondent relies upon 11 video clips and three photographs (R. Ex. 1, Dk. Entry Nos. 10-10m) and the written declaration of Mohammad Almohammad to support its account (R. Ex. 2). Mr. Almohammad testified that the cashier at the first counter refused to sell cigarettes to the minor after verifying her identification. R. Ex. 2. He further testified that an older woman purchased a pack of Newport cigarettes from him after the minor was refused and that the minor and the older woman exited the store together. Id.

On cross-examination, Inspector Carry testified that she did not accompany the minor into the establishment. Tr. at 8. The inspector also testified that the minor entered the establishment alone. Id. Finally, the inspector testified that she did not enter the establishment after the sale was concluded. Id. On re-direct examination, CTP asked the inspector to clarify whether she had viewed the sale and if she saw the tobacco product. Id. at 9. The inspector testified that she did not view the sale, but she did view the tobacco product when the minor handed it to her. See Tr. at 9.

After considering all of the evidence and the relevant testimony, I find sufficient evidence to support CTP's allegation that on November 2, 2018, at approximately 7:29 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 a regulated tobacco product to a minor in violation of 21 C.F.R. § 1140.14(a)(1).

Respondent's video evidence in support of its account does in fact show one of Respondent's employees refusing a purchase to a young woman. Dk. Entry No. 10, video D69; Dk. Entry No. 10d, Video 3652 . That young woman goes to another counter where she hands an older woman money. Id. The older woman requests cigarettes from the cashier and passes the cigarettes to the younger woman. Id. The two women leave the store together after the purchase. Id.

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However, the previously described interaction is not the subject of CTP's complaint. When CTP filed its Motion to Seal Respondent's Exhibits 10a, 10c, 10e, 10f, 10i, 10j, 10k, and 10l, CTP acknowledged that the purchaser in those exhibits was its undercover minor. The minor that CTP acknowledges as its undercover minor is not the same young woman that Respondent asserts was accompanied by an older woman who purchased cigarettes for her, and its video evidence (Dk. Entry No. 10, video D69) supports this fact. CTP's undercover minor is dressed in a white shirt with her hair pulled back into a ponytail and wears glasses while the young woman that Respondent refers to is wearing a green shirt with a green hair wrap and no glasses. Compare, Dk. Entry No. 10, video D69, with, Dk. Entry No. 10e, Video 34E. Docket entries 10j, Video 92A, and 10k, Video D1F, show CTP's undercover minor entering the store, approaching one of the counters, and leaving with a package of cigarettes.

Inspector Carry confirmed that she did not view the actual sale to the undercover minor. However, the applicable regulations do not require that an inspector directly witness the sale to an undercover buy minor. I found Inspector Carry's testimony to be honest and believable. It is amply supported by contemporaneous records and other evidence. CTP Exs. 8-14.

Further, the regulations also do not require an inspector to enter an establishment after a violation to confront the employee or to review video footage as Respondent has argued. Respondent's video evidence does show that a person was refused sale of a tobacco product on the date and about the approximate time of the violation at issue. The video evidence also supports CTP's allegation that an undercover buy minor purchased a regulated tobacco product from Respondent during the same time period. The record as a whole supports a reasonable conclusion that two different individuals, likely both minors, entered Respondent's establishment and attempted to purchase tobacco products on November 2, 2018.

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 November 2, 2018, in violation of 21 C.F.R. § 1140.14(a)(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 civil money penalty from Respondent. 21 U.S.C. § 333 (f)(9).

B. Civil Money Penalty

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

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In its Complaint, CTP seeks to impose the maximum penalty amount, $11,410, against Respondent for at least six violations of the Act and its implementing regulations within a 48-month period. Complaint at ¶ 1. In its Answer, Respondent requests that the penalty be waived or lowered. Answer at 2. In addition, Respondent contends, it is a small business and requests that ..."the exorbitant penalty amount of $11,410 be reduced to $550 because the number of incidents (including this alleged incident) are Three and not Six as alleged by CTP." R. Post-Hrg Br. at 3. Despite Respondent's argument that there should be three and not six violations, it admitted to five previous violations when it settled the prior CMP actions with CTP and acknowledged that those violations could be counted in determining the total number of violations for purposes of future enforcement actions. The prior cases are now closed and administratively final.

Moreover, Respondent's argument that there were only three violations in this case rather than six is inconsistent with the applicable FDA regulations. In fact, four inspections and a total of seven violations are documented.

The prior CMPs involved three inspections (2015, 2016, and 2017) with two violations documented each time. The two violations at the first inspection were counted as one, in accordance with customary practice, resulting in a charge of five violations. At the current inspection, one more violation was documented, for a total of six violations within a period of 48 months.

I find that Respondent committed six violations of the Act and its implementing regulations within a 48-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 four violations of selling regulated tobacco products to minors, and three violations for failing to verify, by means of photo identification containing a date of birth, that the purchasers were 18 years of age or older.3 The repeated inability of Respondent to comply with federal tobacco regulations is serious in nature and the CMP amount should be set accordingly.

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

As stated above, Respondent requests a lower fine and argues that it is a small business. R. Post-Hrg Br. at 3. However, Respondent did not provide tax returns or any financial documents to review. While it is understandable that Respondent is a small business, Respondent has not provided any evidence to show it is unable to pay the $11,410 CMP sought by CTP.  There is also no evidence to determine what effect imposing the $11,410 CMP sought by CTP will have on Respondent's ability to do business. It is not sufficient for Respondent to simply state that it cannot afford the penalty. 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 $11,410 CMP sought by CTP.

c. History of Prior Violations

The current action is the third CMP action that CTP has brought against Respondent.4 On December 15, 2017, CTP initiated the most recent CMP action, CRD Docket Number T-18-667, FDA Docket Number FDA-2017-H-6875, see also CRD Docket Number T-17-250, FDA Docket Number FDA-2016-H-3348, against Respondent for five violations of 21 C.F.R. pt. 1140. Complaint at ¶ 9. The action concluded when Respondent admitted the allegations contained in the Complaint issued by CTP, and paid the agreed upon penalty. Id. at ¶ 10. While Respondent has already paid civil money penalties for its previous violations, its continued inability to comply with the federal tobacco regulations calls for a more severe penalty.

d. Degree of Culpability

Respondent asserts that it is not responsible for the violation because the cigarettes were sold to an adult not a minor. As stated above, the situation that Respondent described is accurate, but that is not the subject of CTP's complaint. There is video evidence showing Respondent's employee selling cigarettes to CTP's undercover minor. It is Respondent's responsibility to ensure its employees comply with the law. I find that Respondent committed the six violations as alleged in the Complaint, and I hold it fully culpable for all six violations of the Act and its implementing regulations.

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e. Additional Mitigating Factors

To prevent future violations, Respondent asserts that during the last 12 months, all employees have been trained and appropriate safeguards have been put into place to prevent tobacco sales to minors. Answer at 8. Respondent also asserts that it has posted the required signs, stating that no tobacco products will be sold to minors and that photo identification is required from people appearing to be minors. Id.

Respondent's attempts to train employees and posting signs to deter tobacco sales to minors are commendable. However, this is Respondent's third CMP action, and Respondent has had ample opportunity to correct its violations and come into compliance. Thus, I find that a CMP of $11,410 is appropriate.

IV. Penalty

Based on the foregoing reasoning, I find a penalty amount of $11,410 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 $11,410, against Respondent, Alkursi, Inc. d/b/a Exxon, for at least six 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 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. 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. Respondent's videos were filed with file names that contain multiple letters and numbers. For purposes of this decision and clarity, this decision cites to those videos with the Departmental Appeals Board E-File Docket number and the last three characters of the file name.
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3. In accordance with customary practice, CTP counted the violations at the initial inspection as a single violation, and all subsequent violations as separate individual violations. 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).
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4. Respondent's prior violations include violations for sale to a minor on December 3, 2015, April 5, 2016, and November 27, 2017. On those same dates, Respondent also failed to verify identification.
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