STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DIVISION OF ALCOHOLIC BEVERAGES ) AND TOBACCO, )

)

Petitioner, )

)

vs. ) CASE NO. 80-451

) OSCAR'S LOUNGE, INC., d/b/a ) OSCAR'S RESTAURANT AND LOUNGE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, R. L. Caleen, Jr., held a formal hearing in this case on March 30, 1982, in Miami, Florida.

APPEARANCES

For Petitioner: James N. Watson, Jr., Esquire

725 South Bronough Street Tallahassee, Florida 32301

For Respondent: Peter Kneski, Esquire

822 Biscayne Building

19 West Flagler Street Miami, Florida 33130

ISSUE

Whether respondent's alcoholic beverage license should be disciplined on charges that it operated its restaurant in violation of beverage rules.

BACKGROUND

In March, 1980, petitioner Division of Alcoholic Beverages and Tobacco ("DABT") filed a notice to show cause charging respondent Oscar's Lounge, Inc., d/b/a Oscar's Restaurant and Lounge ("respondent"), with violating the Beverage Law, Chapters 561 and 562, Florida Statutes (1981) , and DABT rules.

Specifically, DABT alleged that on six occasions, respondent violated Rule 7A- 3.15, Florida Administrative Code, and Section 562.12(1), Florida Statutes, by continuing to sell alcoholic beverages after the service of full-course meals had been discontinued; that, on November 8, 1979, respondent violated Rule 7A-

3.14 by failing to maintain on its premises records of purchases and sales of alcoholic beverages or food and non-alcoholic beverages; and that, in March, 1979, respondent violated Rule 7A-2.07 (2) by failing to adequately and timely notify DABT of a change in its corporate officers. 1/

Respondent denied the charges and requested a hearing. Thereafter, DABT forwarded this case to the Division of Administrative Hearings for assignment of a hearing officer. Hearing was initially set for June 17, 1980. During the next one-and-one-half years, hearing was repeatedly continued and reset on motion of one party or the other.

At hearing, DABT offered Petitioner's Exhibit 2/ Nos. 1-15 into evidence, each of which was received. Respondent offered Respondent's Exhibit 2/ Nos.

1. into evidence, each of which was received. Respondent also moved to dismiss based on a prior final order invalidating a portion of the rules in question; ruling was reserved pending submittal of evidence and posthearing memoranda.

   
   

   The parties filed posthearing proposed findings of fact and conclusions of law by July 2, 1982. A transcript of the hearing was filed by April 21, 1982.

   
   

   Based on the evidence presented at hearing, the following facts are determined:

   
   

   FINDINGS OF FACT

   
   

   1. At all times relevant to this proceeding, respondent conducted business as Oscar's Restaurant and Lounge (the "licensed premises" or "premises") at 901 Southwest Eighth Street, Miami, Florida, under a special restaurant alcoholic beverage license, No. 23-2059-SRX (Series 4-COP-SRX), issued prior to April 18, 1972.

      
      

      I.

      
      

   2. At 2:30 p.m. on November 8, 1979, when beverage officer Louis J. Terminello inspected the licensed premises, the kitchen area was not in use.

      The kitchen lights were off, no kitchen employees were present, and no food was being prepared. Although alcoholic beverages were being served to approximately three patrons in the bar section of the premises, no food had been served. (Testimony of Terminello.)

      
      

   3. Officer Terminello then asked Oscar Sarmiento, the on-site representative of respondent, to produce business records reflecting the purchases and sales of alcoholic beverages, food, and nonalcoholic beverages. Mr. Sarmiento replied that the requested records were not on the premises, that they were at the office of respondent's accountant, Mark Thaw. (Testimony of Terminello.)

      
      

   4. Respondent contends, without corroboration, that DABT, through Officer Terminello, had given oral permission to keep these business records off premises, at its accountant's office. Officer Terminello denied having given such permission. Taking into account the interest and bias of the witnesses, Officer Terminello's denial is accepted as the more credible and is persuasive. The fact that, before or during the time in question, DABT agents inspected respondent's records at its accountant's office does not, by itself, establish that respondent had permission from DABT to keep business records offsite. (Testimony of Terminello, Sarmiento.)

      
      

   5. Before leaving the premises that day, Officer Terminello explained to Mr. Sarmiento the requirements of special restaurant alcoholic beverage licenses and provided a written notice of deficiencies. (Testimony of Terminello.)

   6. At 2:30 PM. on December 5, 1979, Officer Terminello returned to the licensed premises to conduct a follow up inspection. The kitchen area was, again, not in use. A small amount of food was found in the refrigerator. The stove was cold. No food was being prepared or served. Silverware was insufficient to accommodate 200 customers. Several patrons in the bar area were being served alcoholic beverages by Guano Salas, the employee in charge of the premises. (Testimony of Terminello.)

      
      

   7. At 2:00 P.M.. on the next day, December 6, 1979, Officer Terminello returned to the premises and found a similar situation: the kitchen was not in use, no food was being prepared or served, and patrons were being served alcoholic beverages in the bar area. He then arranged to have another beverage officer, Leonard Del Monte, attempt to purchase an alcoholic beverage and a meal. At 3:00 P.M.., Officer Del Monte entered, ordered an alcoholic beverage, and asked for "something to eat." Juana Salas, the employee in charge, told him that he could go "down the street," that there were plenty of restaurants in the area. He asked for a menu but was net given one. Although there were patrons drinking in the bar area, none were eating or being served meals. (Testimony of Terminello, Del Monte.)

      
      

   8. At 5:30 P.M.. on December 7, 1979, Officers Terminello and Del Monte returned to the premises. Officer Del Monte, in an undercover capacity, ordered and was served an alcoholic beverage. He requested a menu but Ms. Salas told him that no food was being served. Other Patrons were being served drinks but none were consuming meals. (Testimony of Terminello, Del Monte.)

      
      

   9. At 4:40 P.M.. on December 11, 1979, Officers Terminello and Del Monte again entered the premises. Patrons were at the bar drinking but no food was being prepared or served. When Officer Del Monte ordered a meal, he was told that food was not being served because the kitchen was being disinfected. He ordered and was served an alcoholic beverage. (Testimony of Terminello, Del Monte.)

      
      

   10. During each of the foregoing inspections of the licensed premises, Officers Terminello and Del Monte remained on the premises for approximately 20-

       30 minutes. (Testimony of Del Monte, Terminello.)

       
       

   11. Oscar Sarmiento, former owner of the licensed premises, testified that, to his knowledge (although he was not always on the premises) meals could almost always be purchased on the premises, that lunch could normally be purchased in the early and mid-afternoons. (Testimony of Sarmiento.)

       
       

       II.

       
       

   12. Prior to February 28, 1979, Oscar Sarmiento was the owner and president of respondent. On February 28, 1979, Elma Sarmiento, his wife, became sole owner and was elected president, treasurer, and secretary of respondent corporation. (Testimony of Sarmiento; R-3, R-4.)

       
       

   13. On February 28, 1979, Rene Valdes, a beverage license broker acting on behalf of respondent, filed with DABT forms indicating that Elma Sarmiento owned all stock of the respondent corporation and that she was elected president, treasurer, and secretary at the corporate director's meeting held on February 28, 1979. 3/ (In anticipation of the change in ownership, Mrs. Sarmiento had been fingerprinted by DABT on November 13, 1978.)(Testimony of Valdes; R-2, R-3, R-4.)

       III.

       
       

   14. By final order dated December 12, 1979, that portion of Rule 7A-3.15, Florida Administrative Code, which requires special restaurant licensees to "discontinue the sale of alcoholic beverages whenever the service of full course meals is discontinued" was declared an invalid exercise of delegated legislative authority by a Division of Administrative Hearings hearing officer. Gainesville Golf and Country Club, Inc. v. Division of Alcoholic Beverages and Tobacco, Department of Business Regulation, DOAH Case No. 79-1851R, affirmed, 402 So.2d 616 (Fla. 1st DCA 1981). DABT concedes that this portion of Rule 7A-3.15 is ineffective 4/ and any evidence concerning violation of it "cannot be used as an indication that the licensee was operating in a manner not consistent with its alcoholic beverage license." (Challenge to the validity of Rule 7A-3.15 filed by DABT on April 27, 1982.)

       
       

       CONCLUSIONS OF LAW

       
       

   15. The Division of Administrative Hearings has jurisdiction ever the parties and subject matter of this proceeding. 120.57(1), Fla. Stat. (1981).

       
       

   16. DABT is statutorily empowered to revoke or suspend an alcoholic beverage license, or impose a civil penalty, upon a finding that the licensee, inter alia, violated a DABT rule or Florida statute. 561.29(1)(a), (b), and (e), Fla. Stat. (1981).

       
       

   17. Special restaurant alcoholic beverage licenses such as that held by respondent are issued pursuant to Section 561.20(2) and are available only to bona fide restaurant operations primarily engaged in the service of food and non-alcoholic beverages. Department of Business Regulation, Division of Beverage v. Huddle, Inc., 342 So.2d 140, 142 (Fla. 1st DCA 1977). DABT has

       promulgated Rule 7A-3.15(3) which sets forth the test for a bona fide restaurant operation:

       
       

       1. The following criteria will be used in determining whether or not the

          holder of a specified restaurant license is a bona fide restaurant:

          * * *

          1. The restaurant must derive at

             least 51 percent of its gross revenue from the sale of food and non-alcoholic beverages, except those restaurants issued special restaurant licenses prior to April 18,

             1972 which shall be required to derive at least 30 percent of its gross revenue from the sale of food and non-alcoholic beverages.

             The 51 percent or 30 percent shall be determined by taking the average monthly gross revenue of the sale of food and

             non-alcoholic beverages over a period of any calendar year.

          2. The principal business of the restaurant must cater to and serve full course bona fide meals to the general public.

          3. The business is advertised and

             held out to the public to be a place where

             meals are prepared and served, space being provided with adequate kitchen and dining room equipment and having employed such number and kinds of employees for preparing, cooking and serving meals for guests;

             the primary operation of such restaurant shall be for the preparation, cooking and serving of meals and not for the sale of alcoholic beverages.

          4. The restaurant shall be equipped with the necessary china and tableware and

seating to handle the minimum seating special act. [sic]

1. Rule 7A-3.14 restricts the issuance of special restaurant licenses to restaurants capable of seating at least 150 patrons and serving full-course meals. It also requires the holder of a special restaurant license to maintain on its premises, or other place approved by the Division, a separate and complete record of all purchases and sales of food and non-alcoholic beverages.

   
   

2. Rule 7A-2.07(2) requires a licensee which changes corporate officers to file within ten days of such change a certified copy of the minutes of the stockholders' meeting at which the change was effected. Newly elected officers who have not previously been fingerprinted by DABT must have their fingerprints taken within ten days after being elected.

   
   

3. Finally, Section 562.12(1), Florida Statutes (1981), prohibits a licensee from selling alcoholic beverages except as permitted by its license.

   
   

4. DABT has the burden of proving its charges against respondent. License revocation proceedings are penal in nature. Matters at issue must be proven by evidence "which is indubitably as substantial' as the consequences

   [for the licensee." Bowling v. Department of Insurance, 394 So.2d 165, 172 (Fla. 1st DCA 1981).

   
   

5. Measured by these standards, it is concluded that the evidence does not establish that respondent, by failing to discontinue the sale of alcoholic beverages after the service of full-course meals had been discontinued, violated Rule 7A-3.15, Florida Administrative Code, and Section 562.12(1), Florida Statutes (1981). 5/ DABT established only that on six occasions for periods of approximately 30 minutes or less in mid or late afternoon--respondent served alcoholic beverages without serving feed or full-course meals. Such conduct does not constitute a violation of Rule 7A-3.15, Florida Administrative Code, or Section 562.12(1), Florida Statutes (1981). Furthermore, the fact that during such limited periods alcoholic beverages were served and food was not, does not justify or reasonably support an inference that the licensed premises is not a bona fide restaurant, that its principal business is not to serve full course meals to the public, or that its primary operation is not the cooking and serving of meals. Further, the fact that, on one occasion, silverware was inadequate to serve 200 persons does not establish that the licensee was not equipped to serve the minimum 150 patrons required by rule.

   
   

6. DABT has, however, established that respondent violated Rule 7A- 2.07(2), Florida Administrative Code, and thereby Section 561.29(1)(e), Florida Statutes. Although respondent timely notified DABT of the election of Elma Sarmiento as president, treasurer, and secretary, it did not timely submit a certified copy of the minutes of the February 28, 1979, corporate meeting.

7. Moreover, it has been established that respondent violated Rule 7A- 3.14, Florida Administrative Code, and Section 561.29(1)(e), Florida Statutes, by failing to maintain on its premises records of purchases and sales of food and non-alcoholic beverages.

   
   

8. Respondent's motion to dismiss is denied.

   
   

9. Penalty. License revocation and suspension, an extreme and drastic penalty, is warranted only by the most flagrant cases. Taylor v. State Beverage Department, 194 So.2d 321, 329 (Fla. 2d DCA 1967). Such action would be unjustified on the facts of this case. Respondent's violations were technical, not substantive. Under the circumstances, a civil penalty of $1,000 would be appropriate.

   
   

10. To the extent the parties' proposed findings of fact are incorporated in this recommended order, they are adopted; otherwise, they are rejected as unsupported by the evidence or unnecessary to the resolution of the issues presented.

RECOMMENDATION

Based on the foregoing, it is RECOMMENDED:

That DABT impose a civil penalty of $1,000 against respondent for the rule and statutory violations as described above.

DONE AND RECOMMENDED this 5th day of August, 1982, in Tallahassee, Florida.

R. L. CALEEN, JR. Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 5th day of August, 1982.

ENDNOTES

1/ Three additional charges in the notice to show cause were substantially voluntarily dismissed by DABT.

2/ Petitioner's and Respondent's Exhibits will be referred to as "P- ," and "R-

," respectively.

1. / Minutes of the meeting were not filed with DABT. There is no indication that DABT ever requested that they be filed. They are now in evidence as P-10.

2. / Although the rule's invalidity was determined in May, 1951, it was, inexplicably, published in the new 1982 Florida Administrative Code.

   
   

3. / The thrust of the charge was respondent's alleged failure to discontinue serving alcoholic beverages. DABT also alleged that respondent failed to comply with repeated notifications and failed to demonstrate that the primary operation of its business was for the service of meals. But, even assuming these allegations to be true, they de net constitute violations of Rule 7A-3.15, Florida Administrative Code, and Section 562.12(1), Florida Statutes.

COPIES FURNISHED:

James N. Watson, Jr., Esquire Department of Business

Regulation

725 South Bronough Street Tallahassee, Florida 32301

Peter Kneski, Esquire 822 Biscayne Building

19 West Flagler Street Miami, Florida 33130

Captain John Harris Division of Beverage

1350 Northwest 12th Avenue Miami, Florida 33136

Charles A. Nuzum, Director Division of Alcoholic Beverages

and Tobacco

725 South Bronough Street Tallahassee, Florida 32301

Docket for Case No: 80-000451

Orders for Case No: 80-000451