Spirits of the Tabeguache LLC d/b/a Spirits of the Tabeguache, DAB TB7709 (2024)

INITIAL DECISION

The Center for Tobacco Products (“CTP”), of the United States Food and Drug Administration (FDA), seeks a civil money penalty against Respondent, Spirits of the Tabeguache LLC d/b/a Spirits of the Tabeguache, for 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.  CTP alleges that Respondent violated the Act by impermissibly selling regulated tobacco products to underage purchasers. Therefore, CTP seeks a $638 civil money penalty against Respondent for three violations of the Act within a 24-month period.  For the reasons discussed below, I find the Respondent liable for the three violations alleged in the Complaint and conclude that a reduced civil money penalty (CMP) of $500 against Respondent is appropriate in this case. 

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Background and Procedural History

CTP began this matter by serving an administrative complaint on Respondent at 440 Main Street, Nucla, Colorado 81424 by United Parcel Service (UPS), and by filing a copy of the complaint with the FDA’s Division of Dockets Management.  Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 1 (Complaint), 1b (Proof of Service).

Respondent registered for the Departmental Appeals Board (DAB) E-File system and filed a timely Answer on February 16, 2023.¹  CRD Dkt. Entry No. 3 (Answer).  In its Answer, Respondent acknowledged the prior allegations, explaining that Respondent paid the CMP because “I chose to pay the fine rather than argue with the FDA”, but denied the current allegations, requesting CTP to provide evidence that the violation occurred.  Answer¶ 1.  Respondent asserted,

“I would like to request evidence that the violation occurred. My employee’s [sic] have checked these IDs and are certain that these individuals are 21.  I would like concrete evidence submitted to the contrary. Any individual can take a photo of a building and a box of cigarettes in a plastic bag and browse my store to get my employees [sic] description….” 

Id. at ¶ 1.  Further, that “[i]n response to these potential allegations, I have created a policy that states all tobacco customers must be approved by me personally”.  Id. at ¶ 2.

On February 22, 2023, Administrative Law Judge Catherine Ravinski² issued an Acknowledgment and Pre-Hearing Order (APHO) acknowledging receipt of Respondent’s Answer and establishing procedural deadlines in this case.  CRD Dkt. Entry No. 4 (APHO).  

On February 27, 2023, CTP filed a Motion for Protective Order re Docket Entry 4, on the basis that “Responding to Respondent’s overbroad request would require CTP to produce documents that are irrelevant, exempt from disclosure under 21 C.F.R. Part 20, and/or otherwise privileged”.  CRD Dkt. Entry No. 6 (Motion) at 2.  On March 24, 2023, CTP

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filed a Memorandum In Support Of Complainant’s Motion For A Protective Order.³  CRD Dkt. Entry No. 9.  

On April 11, 2023, Respondent filed its pre-hearing brief which consisted of Respondent’s response to the specific sections of the brief outline that was sent to Respondent with the February 22, 2023 APHO, and an additional filing titled “Answer to Pre-Hearing Brief”.  CRD Dkt. Entry Nos. 11, 11a.

On April 12, 2023, CTP filed a Motion to Compel Discovery, asserting that Respondent had not responded to its discovery request.  CRD Dkt. Entry Nos. 12, 12a-b.  On April 12, 2023, CTP also requested an extension of the pre-hearing exchange deadlines.  CRD Dkt. Entry No. 13.

On April 14, 2023, I issued an Order which advised Respondent that it had until April 28, 2023, to file a response to CTP’s Motion to Compel Discovery.  CRD Dkt. Entry No. 14 at 1-2.  My Order also granted CTP’s Motion to Extend Deadlines, giving CTP until June 14, 2023, and Respondent until July 5, 2023, to file their pre-hearing exchanges.  Id. at 2.

On April 17, 2023, Respondent filed a document titled “Answer to Document Request”, which consisted of 11 listed responses to CTP’s Motion to Compel Discovery.  CRD Dkt. Entry No. 15.  Respondent also filed a point-of-sale receipt transaction for CTP’s current alleged violation on November 7, 2022.  CRD Dkt. Entry No. 15a.

On April 19, 2023, a letter issued by my direction, advised CTP that considering Respondent’s submission, CTP had until April 28, 2023, to confirm whether its Motion to Compel Discovery is moot.  The letter further instructed that if CTP fails to respond by this date, I will assume that CTP is withdrawing its motion.  CRD Dkt. Entry No. 16.

On April 20, 2023, I issued an Order granting CTP’s Motion for Protective Order, to exclude the production of documents and information that are privileged and exempt from disclosure under 21 C.F.R. Part 20, that would otherwise disclose the underage purchaser’s identity and CTP’s training program materials.  The protection would also exempt the information contained in the Privileged Document Log that falls within the attorney-client privilege and the attorney work-product doctrine.  CRD Dkt. Entry No. 17.

On April 25, 2023, CTP filed a response to my April 19, 2023 By Direction Letter, and a Withdrawal of Motion to Compel Discovery.  CRD Dkt. Entry No. 18.  CTP stated that Respondent failed to provide document requests 5, 6, 8, and 10, and that although it does

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not believe Respondent’s April 17th Answer is responsive to CTP’s Request for Production of Documents requests 5, 6, 8, and 10, CTP will accept Respondent’s April 17th Answer.  Id. at 2.  CTP requested that Respondent should be estopped from presenting new evidence at a hearing on this matter without a showing of extraordinary circumstances for not producing the said documents.  Id.

On April 27, 2023, I issued an order finding CTP’s Motion to Compel Discovery moot. CRD Dkt. Entry No. 19.

On June 13, 2023, CTP timely filed its pre-hearing exchange, consisting of a pre-hearing brief (CTP Br.), two proposed witnesses and 13 proposed exhibits (CTP Exhibits (Exs.) 1-13).  CRD Dkt. Entry Nos. 20, 20a-n.  Specifically, the exhibits included the written direct testimonies of the two proposed witnesses, CTP’s Senior Regulatory Counsel Loretta Chi (CTP Ex. 3), and Inspector Michael Heidel (CTP Ex. 4).  Respondent did not file its pre-hearing exchange, including any proposed exhibits by the July 5, 2023 deadline or thereafter.  See CRD Dkt. Entry No. 14.

By Order dated August 10, 2023, I scheduled a pre-hearing conference for August 30, 2023, at 11:00 AM Eastern Time.  CRD Dkt. Entry No. 21 (Order Scheduling Pre-Hearing Conference).  On August 30, 2023, I held a video prehearing conference call (PHC) via Microsoft Teams in this case.  During the PHC, I discussed the procedural history of the case, the record, and the parties’ pre-hearing submissions.  See CRD Dkt. Entry No. 22 (Order Scheduling Hearing).  Respondent, Aimee Tooker, identified herself as the owner.  Id.  I acknowledged the Respondent’s February 16, 2023 Answer and Respondent’s additional information and arguments filed on April 11, 2023, and April 17, 2023, respectively.  See CRD Dkt. Entry Nos. 3, 3a-b, 11, 11a, 15, 15a.  I also noted that Respondent has not submitted the direct testimony of any proposed witnesses.  Respondent clarified that the pre-hearing exchange titled “Answer to Pre-Hearing Brief” that was filed on April 11, 2023, includes her “testimony.”  I explained that because Respondent’s “testimony” was not in the form of an affidavit and not submitted under penalty of perjury, I will consider such submission as argument.  Order Scheduling Hearing at 1.

Furthermore, during the PHC, I apprised Respondent of CTP’s proposed witnesses, Loretta Chi, Senior Regulatory Counsel, Office of Compliance and Enforcement, and Inspector Michael Heidel, FDA-commissioned officer with the state of Colorado.  I specifically asked Respondent of its intent to cross-examine one or both witnesses.  Respondent requested a formal hearing for the sole purpose of cross-examining FDA inspector, Michael Heidel.  I informed both parties that they will have the opportunity to submit their final arguments through the filing of post hearing briefs.  Order Scheduling Hearing at 2.  I also directed that if Respondent has any objections to any of CTP’s exhibits, that an objection in writing should be submitted by September 11, 2023, and that Respondent must state the specific bases for any such objection. Id.  Lastly, a

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hearing in this case was scheduled for Thursday, September 21, 2023, at 11:00 AM Eastern Time.  Id.

On September 21, 2023, I conducted a hearing in this case via Microsoft Teams.  The sole purpose of the hearing was to allow Respondent to cross-examine Inspector Michael Heidel.  During the hearing, I admitted CTP’s Exhibits 1-13 into the record without objection.  CRD Dkt. Entry No. 23, Transcript (Tr.) at 8.

On November 16, 2023, the transcript of the hearing was uploaded to the record.  In a November 16, 2023 Order Establishing Deadlines for Transcript Corrections and Post-Hearing Briefs, I informed the parties that the transcript of the September 21, 2023 hearing had been received and I included a list of the specific inconsistencies reflected in the transcript, as well as the corresponding corrections for each. CRD Dkt. Entry No. 24.  I gave each party until December 1, 2023, to submit any further proposed corrections to the transcript.⁴  Id. at 2.  I also set the deadlines for the parties’ simultaneous post-hearing brief submissions as January 2, 2024.  Id. at 3.  On December 26, 2023, CTP filed Notice of Waiver of Post Hearing Brief. CRD Dkt. Entry No. 25. On January 1, 2024, Respondent filed its post hearing brief which consisted of its assertion of the same arguments contained in its original Answer.  CRD Dkt. Entry No. 26; see also CRD Dkt. Entry No. 3.

Issues

• Whether Respondent sold a regulated tobacco product to an underage purchaser on November 7, 2022, in violation of Section 906(d)(5) of the Act; and
• If so, whether the civil money penalty amount of $638 that CTP seeks is an appropriate penalty.

Analysis, Findings of Facts and Conclusions of Law

To prevail, CTP must prove Respondent’s liability by a preponderance of the evidence.  The U.S. Supreme Court has described the preponderance of the evidence standard as requiring that the trier-of-fact believe that the existence of a fact is more probable than not before finding in favor of the party that had the burden to persuade the judge of the fact’s existence.  In re Winship, 397 U.S. 358, 371-72 (1970); Concrete Pipe and Prods. of Cal., Inc. v. Constr. Laborers, 508 U.S. 602, 622 (1993).  CTP has the burden to prove Respondent’s liability and appropriateness of the penalty by a preponderance of the evidence.  21 C.F.R. § 17.33(b).  Respondent has the burden to prove any affirmative

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defenses and any mitigating factors likewise by a preponderance of the evidence.  21 C.F.R. § 17.33(c).

I.     Violations

CTP determined to impose 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).  A tobacco product is misbranded if distributed or offered for sale in any state in violation of regulations issued under Section 906(d) of the Act.  21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).  FDA and its agency, 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. § 333(f)(9). 

Under Section 906(d)(5) of the Act, no retailer may sell regulated tobacco products to any person younger than 21 years of age.⁵  Act § 906(d)(5); 21 U.S.C. § 387f(d)(5).

A. Prior Violations

This is the second civil money penalty action CTP has brought against Respondent.  Complaint ¶¶ 15-16; see also CRD Docket Number T-22-314 (FDA Docket Number FDA-2022-H-0830).  The prior complaint alleged that Respondent committed violations of selling regulated tobacco products to underage purchasers on September 16, 2021, and February 28, 2022.  Complaint ¶ 15; CTP Ex. 1.  The previous action concluded when Respondent admitted the allegations contained in the Complaint issued by CTP and paid the agreed upon CMP in settlement of that claim.  Complaint ¶ 16; CTP Ex. 2.

Respondent has not contested these prior violations, and they are administratively final.  21 C.F.R. § 17.15(b) (stating that a “settlement agreement shall be filed in the docket and shall constitute complete or partial resolution of the administrative case as so designated by the settlement agreement.”).  Accordingly, I conclude that Respondent has two prior violations of the Act and implementing regulations.

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B. Alleged Current Violation

In addition to the two prior violations, CTP alleges that Respondent committed one additional violation, as follows:   

At approximately 1:45 p.m. on November 7, 2022, at Respondent’s business establishment, 440 Main Street, Nucla, Colorado 81424, an FDA-commissioned inspector conducted an inspection.  During this inspection, a person younger than 21 years of age was able to purchase a package of Marlboro cigarettes.  
To support its claim, CTP submitted the written declarations of Senior Regulatory Counsel Loretta Chi and FDA-commissioned Inspector Michael Heidel. CTP Exs. 3, 4.  CTP also submitted corroborating evidence, which includes reports, photographs, and other documentation.  CTP Exs. 5-13. 

Loretta Chi is a Senior Regulatory Counsel with the Center for Tobacco Products.  CTP Ex. 3 ¶ 2.  Chi testified that, as Senior Regulatory Counsel, she has gained knowledge of the processes used by the FDA regarding the establishment registration and product listing requirements.  Id. ¶¶ 3-5.  Chi further testified that the package of Marlboro cigarettes purchased on November 7, 2022, at Respondent’s establishment was manufactured by Philip Morris USA’s facility in the state of Virginia.  Id. ¶¶ 6-7.  Chi confirmed that the package of Marlboro cigarettes was not manufactured in the state of Colorado.  Id. ¶ 8.  Respondent does not dispute Chi’s written testimony and does not dispute that it sold Marlboro cigarettes at its establishment on November 7, 2022. 

Inspector Michael Heidel is an FDA-commissioned officer whose duties include determining whether retailers follow the age and photo identification requirements relating to the sale of regulated tobacco products.  CTP Ex. 4 ¶¶ 2, 3.  Inspector Heidel’s inspections entail accompanying underage purchasers who attempt to purchase tobacco products from retail establishments such as the one operated by Respondent.  Id. ¶ 4 et seq.

In his written testimony, Inspector Heidel testified that before the inspection, he confirmed that the Underage Purchaser (UP) did not have any tobacco products in his/her possession and possessed an accurate photographic identification of his/her date of birth.  CTP Ex. 4 ¶ 7; see also CTP Ex. 7.  Inspector Heidel also testified that, during the inspection, he parked his car near Respondent’s establishment, and stayed in the vehicle because he felt his presence inside the establishment would compromise the undercover nature of the inspection; however, that from his location, he had a “direct line of sight” of Respondent’s front door and watched the UP enter Respondent’s establishment.  Id. ¶ 8.Inspector Heidel further testified that minutes later, the UP immediately returned to the vehicle, whereupon they proceeded to drive to a nearby secure location, at which time the UP handed him the Marlboro cigarettes in a package.  CTP Ex. 4 ¶ 9; see CTP Ex. 6

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¶¶ 14-15.Inspector Heidel then labeled the Marlboro cigarettes as evidence and “photographed all of the panels of the package.”  CTP Exs. 4 ¶ 9; see CTP Ex. 6 ¶¶ 16-17.  Inspector Heidel stated that he then processed the evidence in accordance with standard procedures at the time of the inspection, which entailed completing the Tobacco Inspection Management System (TIMS) Form and creating a Narrative Report.  CTP Ex. 4¶¶ 9-11; see CTP Exs. 6, 8-9.  The UP’s redacted identification and Inspector Heidel’s contemporaneous photographs and reports were admitted into evidence during the September 21, 2023 hearing and corroborates Inspector Heidel’s testimony.  CTP Exs. 7-11, 23; see also CTP Ex. 10 (Compliance Check Inspection Notice Inspection). 

In its Answer, Respondent denied the current violation alleged in the Complaint.  Specifically, Respondent argued that its store employee is well-trained to check IDs, that the employee “assures me that she checked all IDs on the day of question”, and that CTP has failed to submit “solid proof” that such a violation of tobacco sales to underage purchasers occurred.  Answer ¶ 1.  The point-of-sale receipt submitted by Respondent reflects that a package of Marlboro cigarettes (for $9.50 plus tax, for a total of $10.32) was sold at Respondent’s establishment on November 7, 2022, at 1:49 p.m., which is the date and approximate time (1:45 p.m.) that CTP alleges that the violation occurred.  CRD Dkt. Entry No. 15a (POS Receipt).

Accordingly, I find Inspector Heidel’s testimony persuasive because it is supported by corroborating evidence documenting the November 7, 2022 violation for selling a regulated tobacco product to an underage purchaser.  Although I accept Respondent’s efforts to train its employees and assertions against selling to underage purchasers, Respondent’s own submission of the POS receipt confirms that the sale to the UP occurred. 

C. Respondent’s Defenses

With regards to whether Respondent sold a package of Marlboro cigarettes to an underage purchaser on November 7, 2022, Respondent has raised defenses in its written submissions, including its post-hearing brief, and during the September 21, 2023 hearing, challenging FDA’s report of the alleged violation.  Specifically, Respondent’s primary arguments, are as follows:

• Anyone can take a photo of a building or a packet of cigarettes;
• Whether the photographs in the evidence bag were those of the particular packet of the Marlboro cigarettes from its store as the photographs showed that they were dented and discolored;
• If the packet of cigarettes came from its store, it would look brand new without any dents or discoloration;

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• The procedure the FDA uses to conduct these inspections is “a gross waste of time and money”, as the FDA is not prioritizing tax dollars, and retailor penalty fees to the best use.

See e.g., Tr. at 12-13; CRD Dkt. Entry No. 11a at 2.   

Other than Respondent’s arguments, Respondent offered no evidence to rebut the testimony of Inspector Heidel regarding the sale of the package of Marlboro cigarettes to an underage purchaser. Based on Respondent’s line of questioning at the hearing, Respondent sought to specifically attack the methodology by which the inspection was conducted.  For instance, Respondent inquired whether it was possible that those cigarettes did not come from its store, rather from another location, and the cigarettes that were sold to the underage purchaser were not the same that was submitted for processing, to which Inspector Heidel responded, “No.  No, that is not possible.  Those cigarettes came from inside that store.”  Tr. at 17.  Further pertinent question and answer responses during the September 21, 2023 hearing were as follows:

Q.       . . .  And in your narrative report, Number 14, said, "After exiting the store, the underage purchaser immediately gave the cigarettes in a package directly to me." 
Which of those correct, did you have to leave the scene in front of my store in order to have that kid hand you a pack of cigarettes or did he immediately hand you a pack of cigarettes?  Those, to me, are two different actions. 

A.       In the, in the database for processing the evidence, the question asked is, did the evidence -- was the evidence given to me immediately.  It doesn't ask if we had to go to a different location. The process that happens with that is to clear the area and to process the evidence.  That is standard procedure for processing after a sale of any kind of tobacco item.  So the narrative report does not ask that specific question, did you leave the area, it just asks were the cigarettes immediately given, and then in my sworn statement, we did move, which is, which is standard operating procedure, to a secure location before processing the evidence.

Tr. at 14. 

How CTP conducts its inspections is irrelevant to the issue of Respondent’s compliance.  CTP’s inspection methodology does not alter my finding that Respondent committed the violation that is at issue here.  Further, Respondent’s testimony that it believes its

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salesclerk’s assertion that no violation took place because Respondent has known this employee over 12 years and has worked with her for over 3 years, over CTP’s allegation and corroborated evidence, is not sufficient to rebut this allegation.

I must determine whether, based on a preponderance of the evidence, if the allegations in the complaint are true, and, if so, whether these actions constitute a violation of law.  See 21 C.F.R. §§ 17.33, 17.45. 

The evidence of record establishes to my satisfaction that the violation charged in this case in fact took place on the date in question.  The testimony of Inspector Heidel supported by corroborating evidence is sufficient to establish that it is more likely than not that Respondent unlawfully sold a package of Marlboro cigarettes to an underage purchaser in violation of 21 C.F.R. § 17.33(b); see CTP Exs. 3-13.  Act § 906(d)(5).  Further, Respondent failed to establish any affirmative defense by a preponderance of the evidence.  21 C.F.R. § 17.33(c). 

I have considered all of Respondent’s arguments but find them to be unpersuasive. 

As detailed above, and based on the evidence of record, I find that it is more likely than not that the underage purchaser purchased a package of Marlboro cigarettes at Respondent’s establishment on November 7, 2022.  21 C.F.R. § 17.33.  Accordingly, I find that the facts as outlined above establish Respondent’s liability under Section 906(d)(5) of the Act.

II.     Mitigating Factors

Respondent has created a policy that all tobacco customers must be approved by Respondent personally.  Respondent asserts “I have a list of customers that have submitted their IDs to me and have acknowledged that they are 21 years of age.”  CRD Dkt. Entry Nos. 3 ¶ 2, 11a at 3, 15 ¶ 6.  Further, Respondent submits “I have also employed an ID scanner for my clerks.”  Id.  In creating this list of approved customers, Respondent asserts that such a list can be provided to the FDA in the event of a compliance check violation.  Id.  I find the measures that Respondent implemented to be persuasive, and I conclude that a reduced penalty is appropriate in this case. 

III.     Civil Money Penalty

I find that Respondent committed three violations of the Act and its implementing regulations within a 24-month period.  In its Complaint, CTP sought to impose the maximum penalty amount, $638, against Respondent for three violations of the Act and its implementing regulations within a 24-month period.  Complaint ¶¶ 1, 19.  When

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determining the amount of a civil money penalty, I am required to consider “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).  I acknowledge that Respondent has taken a responsible measure in order to prevent future violations.  Based on the foregoing reasoning, I find a reduced penalty amount of $500 to be appropriate under 21 U.S.C. §§ 333(f)(5)(B) and 333(f)(9).

Conclusion

Pursuant to 21 C.F.R. § 17.45, I enter judgment in the amount of $500 against Respondent, Spirits of the Tabeguache LLC d/b/a Spirits of the Tabeguache, for three 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 24-month period.  Pursuant to 21 C.F.R. § 17.11(b), this order becomes final and binding upon both parties after 30 days of the date of its issuance.

Endnotes

¹  Respondent also filed copies of the CTP’s Complaint and Cover Letter.  CRD Dkt. Entry Nos. 3a-b.

²  Administrative Law Judge Catherine Ravinski was previously assigned to this case.  The case has since been transferred to me, as referenced in the letter dated March 27, 2023, sent to both parties.  CRD Dkt. Entry No. 10.

³  A letter by my direction (By Direction Letter-BDL) issued on March 14, 2023, giving CTP a deadline of March 24, 2023, to file its memorandum in support of its motion.  CRD Dkt. Entry No. 7.

⁴  The parties submitted no additional corrections.

⁵  On December 20, 2019, the Act was amended by the Further Consolidated Appropriations Act, 2020, Pub. L. No. 116–94, § 603(a)-(b), to raise the federal minimum age for sale of tobacco products to 21, and directed the Secretary of the U.S. Department of Health and Human Services (Secretary) to “update all references to persons younger than 18 years of age in subpart B of part 1140 of title 21, Code of Federal Regulations, and to update the relevant age verification requirements under such part 1140 to require age verification for individuals under the age of 30.”  21 U.S.C. § 387f (note).