STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DIVISION OF ALCOHOLIC BEVERAGES ) AND TOBACCO, )

)

Petitioner, )

)

vs. ) CASE NO. 82-738

) SEMINAR 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 April 20 and May 18, 1982, in Lauderhill, Florida.

APPEARANCES

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

725 South Bronough Street Tallahassee, Florida 32301

For Respondent: Stephen M. Goodman, Esquire

2145 North State Road Seven Margate, Florida 33063

ISSUE PRESENTED

Whether respondent's alcoholic beverage license should be disciplined on charges of unlawful drug activity, solicitation of a beverage, assignation of prostitution, and maintaining a public nuisance on the licensed premises.

BACKGROUND

By notice to show cause dated December 28, 1981, petitioner Division of Alcoholic Beverages and Tobacco ("DABT") charged respondent 1400 Powerline Road Corporation, t/a Seminar Restaurant and Lounge ("respondent") , with violating various provisions of she Beverage Law, Chapter 561, Florida Statutes (1981) . More specifically, DABT alleged that between August and October, 1981, employees of respondent sold or delivered controlled substances to undercover beverage officers on the licensed premises; that one employee solicited an officer to purchase an alcoholic beverage for her and engage in prostitution or assignation; that the licensed premises was resorted to by persons keeping or selling controlled substances; and that the licensed premises, because of illicit drug activities, constituted a public nuisance. Respondent disputed the charges and requested a formal hearing.

On March 9, 1982, DABT forwarded this case to the Division of Administrative Hearings for assignment of a hearing officer. Thereafter,

hearing was convened on April 20, 1982, then adjourned and continued on May 18, 1982.

DABT called as witnesses Beverage Officers Michael Imperial and Louis Terminello; Christine Wilson, David Shomers, and John T. Pennie. Petitioner's Exhibit 1 Nos. 8-10 and 12-14 were received into evidence. At the close of its case, DART voluntarily dismissed Count 9 of its notice to show cause.

Respondent called as its witnesses Arthur Chaddock, Bruce M. Johns, Larry Coleman, Michael Murray, Joseph Pastori, Alexander Siegel, Elaine Medeiros, Diane M. Leger, Mark Margulies, and Floyd Matlick. Respondent's Exhibit 1 Nos.

1 and 2 were received into evidence.

On June 7, 1982, DABT filed proposed findings of fact and conclusions of law. Only the first day of hearing--April 20, 1982--has been transcribed.

Based on the evidence presented, the following evidentiary and ultimate facts are determined:

FINDINGS OF FACT I.

The Licensed Premises

1. At all times pertinent to this proceeding, respondent held beverage license No. 16-1393 SRX, Series 4-COP, in connection with its operation of the Seminar Restaurant and Lounge ("licensed premises" or "premises") at 1400 North Powerline Road, Pompano Beach, Florida. The Seminar Restaurant and Lounge serves food and alcoholic beverages to its customers and provides entertainment in the form of "topless" dancers. (Testimony of Chaddock, Coleman, Matlick.)

   
   

   II.

   
   

   Violations of Law Occurring on Premises

   
   

2. On August 21, 1981; undercover Beverage Officer Louis Terminello entered the licensed premises and met Charlene Nelson, a dancer employed by respondent. She asked him to buy her a drink; he agreed. He asked if she knew where he could obtain some Quaaludes. She replied that another dancer named Rene Cavendish might have some. In a subsequent conversation, Ms. Cavendish offered to engage in sexual intercourse with Officer Terminello for $50. Later, that evening, he met Ms. Cavendish and purchased three methaqualone tablets from her for $15. This transaction occurred while they were seated at a booth-- con the premises; Ms. Cavendish handed the tablets to Officer Terminello by reaching across the table. (Testimony of Shomers, Pennie, Terminello.)

   
   

3. While these events were taking place, Officer Terminello was serving as the backup officer for Officer Michael Imperial, another undercover beverage officer, who had entered the premises accompanied by Christine Wilson, a confidential informant working for DABT. After Officer Imperial and Ms. Wilson were seated at a table, dancer Cavendish approached them. Ms. Wilson asked her if any cocaine or Quaaludes were available. Ms. Cavendish replied that a nurse would be there later with some pharmaceutical Quaaludes for sale but that she would check with another dancer named "Stormy." Later, Ms. Cavendish returned to Officer Imperial's table and sold him two methaqualone tablets for the sum of

   $10. She also introduced Stormy, who said that she had sold out of cocaine but

   that she could bring him a gram on the next Monday. (Testimony of Imperial, Wilson, Shomers, Pennie.)

   
   

4. On September 10, 1981, Officer Imperial and Ms. Wilson reentered the premises. Ms. Wilson made and sold dance costumes and was familiar with several dancers employed on the premises. Dancer Donna Robley approached them and asked Ms. Wilson to accompany her to the ladies' bathroom. While in the bathroom, Ms. Robley handed her the remaining portion of a marijuana cigarette. (Testimony of Imperial, Wilson, Shomers, Pennie.)

   
   

5. On September 14, 1981, Officer Imperial and Ms. Wilson again entered the licensed premises to make a prearranged purchase of methaqualone from a dancer named "Wanda." Christine Taylor, another dancer, told them Wanda was off duty but that she would check to see if there were any "ludes" or "coke" available. Later, an unidentified dancer told Ms. Wilson that Christine Taylor wanted " to see her in the ladies' bathroom. When Ms. Wilson arrived at the ladies' bathroom, she found Ms. Taylor and another dancer smoking marijuana cigarettes. She gave the unused portion of the cigarettes to Ms. Wilson, who handed them to Officer Imperial while on the premises. (Testimony of Imperial, Wilson, Shomers, Pennie.)

   
   

6. On September 23, 1981, Officer Imperial and Ms. Wilson again returned to the licensed premises to consummate a previously arranged drug transaction from a dancer named Joy Jacklin. After seating themselves in a booth, Officer Imperial and Ms. Wilson were approached by Ms. Jacklin, who asked Ms. Wilson to meet her in the dressing room. Upon arriving there, Ms. Jacklin handed Ms. Wilson a bag of marijuana. After placing it in her suitcase with her dance costumes, Ms. Wilson brought it to Officer Imperial. After receiving $35 from Officer Imperial, site returned to the dressing room and paid Ms. Jacklin. (Testimony of Imperial, Wilson, Shomers, Pennie.)

   
   

7. On September 24, 1981, Officer Imperial and Ms. Wilson again visited the licensed premises. On this occasion, Ms. Wilson was given a marijuana cigarette by dancer Christine Taylor inside the dancers' dressing room. Ms. Wilson then delivered the cigarettes to Officer Imperial while on the premises. (Testimony of Imperial, Wilson, Shomers, Pennie.)

   
   

   III.

   
   

   Respondent Supervised Employees and Premises in a Reasonably Diligent Manner

8. Respondent's owner and managers announced rules of conduct for its employees before it opened for business in July, 1981. They handed out written rules and discussed them with their employees, consisting of 10-15 dancers, 2 bartenders, 2-4 waitresses, 1-2 floorwalkers, and night-and day-shift managers. These employee rules prohibited solicitation of any kind. Employees were also instructed that drugs were prohibited on the premises; that if they saw drug violations, they should inform the manager; that violation of the rules would mean immediate dismissal. Employees were told to notify management of any employees who violated the rules, that failure to inform management of a violation would, in itself, be cause for dismissal. Copies of the employee rules were posted in the dancers' dressing room, both bars, both bathrooms, and the office. (Testimony of Chaddock, Coleman, Pastori, Matlick, Murray; R-1.)

9. Respondent diligently enforced its rules. Managers emphasized the rules in meetings held periodically and frequently with employees. Managers and floorwalkers constantly "walked the floor" supervising employees and monitoring activities on the premises. When management discovered violations of the rules, employees were promptly dismissed. Ten to fifteen employees were fired during . The first eight months of business. Most were fired for appearing to be under the influence of a drug or alcohol, others were fired for solicitation. Management's diligence in supervising its employees is evidenced by the fact that it had independently dismissed the five dancers involved in violations (described in Section II above) before DABT filed charges disclosing their misconduct. (These dancers were fired for various infractions occurring in the three-month period between the undercover investigation and the filing of charges.) If patrons were discovered offering and possessing drugs--as happened once or twice--they were promptly escorted from the premises. When Officer Imperial (in an undercover capacity) attempted to purchase drugs on the premises, an employee reported that fact to the day manager, Arthur Chaddock. Mr. Chaddock firmly took Officer Imperial into custody, detained him, angrily interrogated him about dealing in drugs with his employees, and called the sheriff's office. The next day, Mr., Chaddock fired the female employee involved because she admitted having been involved in a prior drug sale. (Testimony of Chaddock, Coleman, Pastori, Matlick, Murray.)

   
   

10. Respondent used reasonable care in selecting dancer applicants. Former employers of the applicants were contacted. Applicants with prior infractions were not hired. (While polygraph examinations were not given and background investigations were not conducted on dancers, such steps were not justified for employees with such a high turnover. DABT failed to establish

    that any other similar business utilized such devices.) (Testimony of Chaddock.)

    
    

11. The violations described in Section II above were not flagrant and readily detectable. Neither were they so widespread, persistent, and recurring that it can be reasonably concluded that respondent was negligent in not discovering them. (DABT has not shown or contended that respondent's owner or managers were aware of or condoned the violations.) Even DABT's investigating undercover' officer admitted that it would have been "tough" for respondent to detect these violations. Two violations occurred in the ladies' bathroom and two in the dancers' dressing room. (Testimony of Imperial, Wilson, Johns.)

    
    

12. Respondent was not negligent in supervising its employees and the licensed premises. It exercised reasonable end ordinary care in announcing rules of conduct and enforcing them. A similar "topless" lounge in the vicinity has operated under similar standards for 7 1/2 years without an infraction or charges filed by DABT. (Testimony of Chaddock, Coleman, Pastori, Matlick, Murray, Johns.)

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

14. Section 561.29(1)(a), Florida Statutes (1981), empowers DABT to suspend or revoke an alcoholic beverage license upon a finding that the licensee, agents, or employees--while on the licensed premises and in the scope of their employment-- violated any of the laws of Florida.

15. Soliciting the purchase of an alcoholic beverage is proscribed by Section 562.131(1); offering to engage in sexual intercourse for hire is proscribed by Sections 796.07(1) and (3); and possessing, selling, and delivering marijuana and methaqualone are proscribed by Section 893.13(1)(a)(2)

    , Florida Statutes (1981). The incidents described in Section II above constitute violations of these statutory prescriptions.

    
    

16. The courts have, however, held that a licensee is not an absolute insurer of the acts of its employees, Taylor v. State Beverage Department, 194 So.2d 321, 328 (Fla. 2d DCA 1967); that before penalizing a licensee, it must be shown that it was "culpably responsible for the violation through or as a result of . [its] own negligence, intentional wrongdoing or lack of diligence." Pauline v. Lee, 147 So.2d 359, 364 (Fla. 2d DCA 1962)

    
    

17. To establish negligence, it must be found that the licensee failed to exercise ordinary care in the maintenance of the premises or the supervision of its employees. See, Bach v. Florida State Board of Dentistry, 378 So.2d 34, 36 (Fla. 1st DCA 1979); Lash, Inc. v. State, 411 So.2d 276 (Fla. 3d DCA 1982). Since DABT has not announced prospectively, by rule, a standard of care for supervising employees, it must establish that standard-- and the licensee's breach--by presenting proof in Section 120.57 adjudicatory proceedings. See, Bowling v. Department of Insurance, 394 So.2d 165 (Fla. 1st DCA 1981); Anheuser- Busch, Inc. v. Department of Business Regulation, 393 So.2d 1177 (Fla. 1st DCA 1981).

    
    

18. License revocation proceedings are penal in nature. In such proceedings, the term "substantial competent evidence" takes on vigorous implications. Bowling, supra at 171. Matters in issue must be proven by evidence "which is indubitably as 'substantial' as the consequences [for the licensee] ." Id. at 172.

    
    

19. Measured by these standards, it is concluded that the evidence is insufficient to establish that respondent is culpably responsible for the violations which occurred on its premises. It has not been proven that the violations resulted from its own negligence, intentional wrongdoing, or lack of diligence. The notice to show cause and charges contained therein must, therefore, be dismissed.

    
    

20. To the extent DABT's proposed findings of fact are incorporated in this recommended order, they are adopted. In addition, proposed findings of fact Nos. 9 and 10 are expressly adopted. Proposed findings which have not been adopted are rejected as unsupported by the necessary quantum of evidence or unnecessary to resolution of the issues presented.

RECOMMENDATION

Based on the foregoing, it is RECOMMENDED:

That the notice to show cause and all charges against respondent be dismissed.

DONE AND RECOMMENDED this 8th day of July, 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 8th day of July, 1982.

ENDNOTES

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

," respectively.

2/ Officer Terminello, who was keeping Officer Imperial under general surveillance, did not see Ms. Cavendish hand the two methaqualone tablets to Officer Imperial.

COPIES FURNISHED:

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

Regulation

725 South Bronough Street Tallahassee, Florida 32301

Stephen M. Goodman, Esquire 2145 North State Road Seven Margate, Florida 33063

Richard A. Boyd Division of Beverage Post Office Box 8276

Lauderhill, Florida 33310

Charles A. Nuzum, Director Division of Alcoholic Beverages

and Tobacco

725 South Bronough Street Tallahassee, Florida 32301

Docket for Case No: 82-000738

Orders for Case No: 82-000738