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Approving adverse action against the Tobacco Shop License held by Peters Market Inc., d/b/a Peters Market (License ID #20200001649), for the premises located at 530 Saint Peter Street. (Licensee will be represented by legal counsel for the hearing before the City Council) (Laid over from February 5, 2025).
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WHEREAS, Peters Market Inc., d/b/a Peters Market (“Licensee”) holds a Tobacco Shop License, License ID #20200001649 (“License”), for the premises located at 530 Saint Peter Street, Saint Paul, Minnesota (“Licensed Premises”) (See License at Exhibit 1); and
WHEREAS, under the terms and conditions of the License, Licensee is prohited from selling, offering for sale or otherwise distributing flavored tobacco products pursuant to Saint Paul Legislative Code § 324.07(j), unless exempted under section 324.07(l); none of the exemptions under section 324.07(l) exist in this case; and
WHEREAS, Saint Paul Legislative Code § 324.03(5) defines flavored tobacco product as “any tobacco product … that contains a taste or smell, other than the taste or smell of tobacco that is distinguishable by an ordinary consumer either prior to or during the consumption of the tobacco product … including, but not limited to, any taste or smell relating to menthol, mint, wintergreen, chocolate, cocoa, vanilla, honey, fruit or any candy, dessert, alcoholic beverage, herb or spice.” (“Flavored Tobacco Products”); and
WHEREAS, on or about May 12, 2022, the Department of Safety and Inspections (“DSI”) conducted an investigation of the Licensed Premises after it received a complaint that Flavored Tobacco Products were being sold on the License Premises (the “May 2022 Inspection”) (See Joint Statement of Stipulations, Paragraphs 5 & 6 at Exhibit 2); and
WHEREAS, during the May 2022 Inspection, a DSI Inspector observed in plain sight, multiple Flavored Tobacco Products on display shelves organized for sale with pricing information, behind the counter/cash register, and in a glass display case, as well as hidden behind bags and boxes under the counter/cash register behind lottery tickets (See Joint Statement of Stipulations, Paragraphs 7 & 8 at Exhibit 2); and
WHEREAS, on July 8, 2022, the City issued a Notice of Violation to Licensee which detailed the violation of Saint Paul Legislative Code § 324.07(j), which prohibits the sale of Flavored Tobacco Products; the Notice of Violation included a copy of the DSI Inspector’s Report detailing the DSI Inspector’s observations during the May 2022 Inspection and provided options for the resolution of the violation (See Notice of Violation & DSI Inspector’s Report at Exhibit 3); and
WHEREAS, after Peters Market failed to respond to the July 8, 2022, Notice of Violation, the violation was deemed admitted and on August 24, 2022, the City Council passed Resolution 22-1286, imposing the presumptive ten (10) day suspension of the License for a violation of Saint Paul Legislative Code § 324.07(j), for the Flavored Tobacco Products found on the Licensed Premises during the May 2022 Inspection (See Notice of City Council Action & Resolution 22-1286 at Exhibit 4); and
WHEREAS, Licensee did not challenge the basis of the violation or request a hearing to appeal the ten (10) day suspension of the License as approved in Resolution 22-1286; and
WHEREAS, on January 26, 2023, DSI received a complaint that the Minnesota Department of Revenue found Menthol cigarettes, a Flavored Tobacco Product, in a drawer by the cash register on the License Premises (See Joint Statement of Stipulations, Paragraph 13 at Exhibit 2); and
WHEREAS, on January 27, 2023, DSI performed an investigation of the Licensed Premises and located numerous Flavored Tobacco Products in a metal filing cabinet behind the counter in the area of the cash register (See Joint Statement of Stipulations, Paragraphs 14 - 18 at Exhibit 2); and
WHEREAS, on or about February 27, 2023, the City issued a Notice of Violation to Licensee which alleged that Licensee violated Saint Paul Legislative Code § 324.07(j), which prohibits the sale of Flavored Tobacco Products; the Notice of Violation included a copy of the DSI Inspector’s Report detailing the DSI Inspector’s observations during the January 27, 2023, inspection of the Licensed Premises and provided options for the resolution of the violation (See Notice of Violation & DSI Inspector’s Report at Exhibit 5); and
WHEREAS, on March 10, 2023, Licensee timely requested a hearing before an Administrative Law Judge to challenge the alleged February 27, 2023, violation of the License; and
WHEREAS, on June 15, 2023, the City served additional discovery requests on Licensee that requested, among other things:
1. The production of all non-privileged correspondence or documentation related to the acquisition, inventory or sale of tobacco products identified in any DSI Inspector’s Report;
2. The identification of the source from which Licensee acquired each of the tobacco products identified in any DSI Inspector’s Report;
3. To identify all invoices, receipts or other documentation that relates to the Licensee’s acquisition, inventory or sale of Flavored Tobacco Products from May 13, 2022, through January 27, 2023; and
(See Joint Statement of Stipulations, Paragraph 27 at Exhibit 2).
WHEREAS, on July 28, 2023, Licensee responded to City’s additional discovery request and provided invoices from Core-Mark and Golden Valley Wholesale, neither of which included the purchase of Menthol or any other Flavored Tobacco Products, and did not include any information or identify where Licensee acquired Menthol tobacco products (See Joint Statement of Stipulations, Paragraph 28 at Exhibit 2); and
WHEREAS, the City subsequently learned through a State investigation that Licensee may have purchased Flavored Tobacco Products from Costco Wholesale Corporation (“Costco”), which Licensee failed to disclose as part of its initial discovery responses or as a part of the additional discovery request made by the City on June 15, 2023; and
WHEREAS, on June 7, 2024, the City obtained a subpoena issued to Costco for all receipts, invoices, or documents regarding the sale of tobacco products to Licensee from May 13, 2022, through June 5, 2024; on June 25, 2024, Costco provided the City with documents in response to the subpoena which established that Licensee purchased four hundred twenty-one (421) units of Flavored Tobacco Products from May 13, 2022, through June 5, 2024, totaling $45,275.15 (“Costco Flavored Tobacco”) (See Joint Statement of Stipulations, Paragraphs 29 & 30 at Exhibit 2); and
WHEREAS, before Costco produced evidence of the Licensee’s purchase of the Costco Flavored Tobacco, Licensee never produced any documents or information that it purchased any tobacco or Flavored Tobacco Products from Costco, despite specific requests for such information (See Joint Statement of Stipulation, Paragraphs 31 & 32 at Exhibit 2); and
WHEREAS, after the Costco Flavored Tobacco products were disclosed by Costco, Licensee specifically stipulated that it sold, offered for sale, or otherwise distributed Flavored Tobacco Products, specifically menthol cigarettes, within the City, in violation of St. Paul Legislative Code 324.07(j) (See Joint Statement of Stipulations, Paragraph 33 at Exhibit 2); and
WHEREAS, in consideration of factual stipulations, Licensee agreed to withdraw, and in fact has withdrawn, its request for a hearing before the Office of Administrative Hearings; pursuant to that request, the Office of Administrative Hearings dismissed the proceeding on August 21, 2024 (See Joint Statement of Stipulations, Paragraph 34 at Exhibit 2); and
WHEREAS, Licensee’s egregious failure to provide the requested information about the Costco Flavored Tobacco caused the City to expend significant resources between July 2023 and June 2024 for additional discovery and depositions, motion practices, and preparation for a contested hearing of the License revocation; and
WHEREAS, the timely production of the information related to the Costco Flavored Tobacco, as requested by the City, would not have forced the City to expend such significant resources in the Licensee’s appeal of the License revocation; and
WHEREAS, pursuant to Saint Paul Legislative Code § 310.03(k), the City Council may impose upon any licensee some or all of the costs of a contested hearing before an independent hearing examiner if the position, claim or defense of the Licensee was frivolous, arbitrary or capricious, made in bad faith, or made for the purpose of delay or harassment; and
WHEREAS, the City paid outside attorney’s fees and costs to litigate this matter in the amount of $74,631.36 (See Detail Transaction File List at Exhibit 6); and
WHEREAS, on February 5, 2025, the City Council held a hearing on this matter and considered the evidence presented.
NOW, THEREFORE, BE IT RESOLVED that based on the hearing and the information and evidence presented, the Saint Paul City Council adopts the aforementioned Findings of Fact contained in the joint stipulation of fact (See Joint Statement of Stipulation at Exhibit 2) and finds that Licensee sold, offered for sale, or otherwise distributed Flavored Tobacco Products within the City in violation of Saint Paul Legislative Code § 324.07(j) and knowingly withheld information specifically requested by the City, which forced the City to expend significant resources between July 2023 and June 2024 for additional discovery and depositions, motion practices, and preparation for a contested hearing of the License revocation in violation of Saint Paul Legislative Code § 310.03(k).
NOW, THEREFORE, BE IT ORDERED by the Saint Paul City Council as follows:
1. Tobacco Shop License, License ID #20200001649, held by Peters Market Inc., d/b/a Peters Market, for the premises located at 530 Saint Peter Street, Saint Paul, Minnesota, is hereby REVOKED pursuant to Saint Paul Legislative Code § 310.03(m)(3).
2. Peters Market Inc., d/b/a Peters Market, acted in bad faith, when it intentionally withheld discovery requested by the City, which unnecessarily forced the City to expend significant resources between July 2023 and June 2024. Accordingly, pursuant to Saint Paul Legislative Code § 310.03(k), the City Council hereby orders Peters Market Inc. d/b/a Peters Market to cover the City’s costs of outside attorneys’ fees in the amount of $74,631.36.