DEPARTMENT OF BUSINESS REGULATION ) DIVISION OF ALCOHOLIC BEVERAGES ) AND TOBACCO, )
vs. ) CASE NO. 84-3775
R. HUGHES, INC., d/b/a THE ODDYSEY )
Respondent. )
A final hearing in this case was held in Jacksonville on November 6, 1984. The issue is whether petitioner Department of Business Regulation, Division of Alcoholic Beverages and Tobacco (Division), should discipline alcoholic beverage license number 26-920, series 4-COP, held by respondent R. Hughes, Inc., d/b/a The Odyssey (licensee) on charges of alleged multiple illegal drug transactions on the licensed premises. The charges set out in paragraphs 1 through 19 of the Division's Notice To Show Cause (the charging document) were admitted and appear as paragraphs 2 through 20 of the following Findings Of Fact. In addition, the Division charged the licensee with maintaining the licensed premises as a place used illegally for keeping or sell- ing controlled substances in violation of Section 893.13(2)(a)5, Florida Statutes (1983), and maintaining a public nuisance in violation of Sections 823.01 and 823.10, Florida Statutes (1983).
The Division does not contend that the licensee had actual or constructive knowledge of the admitted drug violations. The parties stipulated that the specific issue has become whether the licensee was negligent in supervising the operation of the licensed premises.
For Petitioner: William A. Hatch, Esquire
For Respondent: David M. Robbins, Esquire
R. Hughes, Inc. (licensee) held alcoholic beverage license number 26- 920, series 4-COP, at all times material through the date of the final hearing. The licensee was doing business as The Odyssey and was operating a lounge known as the Red Garter at 527 Main Street, Jacksonville. The licensee also operated two other lounges in Jacksonville under two additional licenses, the Silver Dollar and the Out Of Sight. Ruthene Hughes is owner of the licensee corporation.
On or about September 7, 1984, the licensee's employee, Jan, violated Florida Statutes (1983) Section 561.29(1)(a) by aiding and abetting the sale or delivery of marijuana to Beverage Officer Sams on the licensed premises, in violation of Florida Statutes (1983) Section 777.011 and 893.13.
On or about September 12, 1984, the licensee's employee, Shirley Ann Scott, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of marijuana to Beverage Officer Wilder on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about September 14, 1984, the licensee's employed manager, Cary Butler, violated Florida Statutes (1983) Section 561.29(1)(a) by possessing and delivering marijuana on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about September 14, 1984, the licensee's employee, Cary Butler, violated Florida Statutes (1983) Section 561.29(1)(a) by permitting the sale or delivery of marijuana to Beverage Officer Sams on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about September 14, 1984, the licensee's employee, Shirley Scott, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of marijuana to Beverage Officer Wilder on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about September 19, 1984, the licensee's employees, Gwendolyn Williams and Cary Butler, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of marijuana on the license premises, in violation of Florida Statutes (1983) Section 893.13.
On or about September 26, 1984, the licensee's employee, Shirley Scott, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of marijuana to Beverage Officers Wilder and Davis on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about September 26 and 27, 1984, the licensee's employee, Gloria Rivera, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of cocaine to Beverage Officer Davis on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about September 27, 1984, the licensee's employee, Gwendolyn Williams, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of cocaine to Beverage Officer Sams on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about September 28, 1984, the licensee's employee, Simonne Grant, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of marijuana to Beverage Officer Sams on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about September 29, 1984, the licensee's employee, Shirley Scott, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of marijuana to beverage Officer Sams on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about October 1, 1984, the licensee's employee, Gwendolyn Williams, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of cocaine to Beverage Officer Sams on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about October 1, 1984, the licensee's employee, Shirley Scott, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of marijuana to Beverage Officer Wilder on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about October 1 and 2, 1984, the licensee's employee, Gloria Rivera, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of cocaine to Beverage Officer Davis on the licensed premises, in violation of Florida Statutes 893.13.
On or about October 3, 1984, the licensee's employee, Shirley Scott, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of marijuana to Beverage Officer Sams on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about October 9, 1984, the licensee's employee, Shirley Scott, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of marijuana to Beverage Officer Sams on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about October 9, 1984, the licensee's employee Suzanne, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of marijuana to Beverage Officer Sams on the licensed premises, in violation of Florida Statutes (1983) Section 777.011 and 893.13.
On or about October 10, 1984, the licensee's employee, Shirley Scott, violated Florida Statutes (1983) Section 561.299(1)(a) by the sale or delivery of marijuana to Beverage Officer Sans on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
On or about October 18, 1984, the licensee's employee, Shirley Scott, violated Florida Statutes (1983) Section 561.29(1)(a) by the sale or delivery of marijuana to Beverage officer Sans on the licensed premises, in violation of Florida Statutes (1983) Section 893.13.
Ruthene Hughes (Hughes) had no actual or constructive knowledge of the illegal drug transactions referred to in paragraphs 2 through 20 above.
Hughes did not employ a security guard at the Red Garter. She relied on the police for security. She employed a manager, bartender (two on weekends), 9-10 dancers for any given night and one package store clerk. The manager's job was to supervise and manage the operation of the Red Garter in Hughes' absence and to make sure it complied with the law.
Like all the licensee's employees, manager Cary Butler applied for an "adult entertainment" employee work permit with the City of Jacksonville and, after passing a background investigation conducted by the sheriff's office, was issued a permit. Hughes reasonably relied on the background investigation and conducted no independent background check of her employees.
Hughes reviews her policy against any illegal drug usage, possession or sale with all employees she hires. She instructs her general manager (who,
when the position is filled, oversees the management of all three of her lounges) and managers to do this in her absence. Hughes, her general manager and managers have use of a written notice setting out these policies which the employees can sign to acknowledge receipt of the notice. The written notice used to be in more general use but recently has not been regularly in use at the Red Garter.
Hughes has caught eight different employees of the Red Garter violating her policy against illegal drug use in 1984, and she has fired all of them. One who was fired was one of several who were subjected to polygraph examinations. The polygraph of the one who was fired suggested to Hughes that the employee used illegal drugs frequently. None of the employees referred to in paragraphs 2 through 20 above were subjected to polygraph examinations.
Hughes also regularly consults with and cooperates with the Jacksonville Sheriff's Office to control illegal drug use, possession and sale in all of her lounges, including the Red Garter. Hughes has a close relationship with law enforcement agencies and has on numerous occasions provided information to said agencies regarding employees and patrons using controlled substances on the premises.
Hughes and her employees contacted Detective Keith Touchton of the Jacksonville Sheriff's Office on numerous occasions with information about the illegal activities of the "Outlaws" motorcycle gang in and around the licensed premises. This information related to use and sale of controlled substances and prostitution. Hughes ran a risk of bodily harm to herself and a risk of property damage to her premises for giving this information to him because of the potential retribution by the "Outlaws."
Officer George Pope, a fourteen and one-half year veteran of the Jacksonville Sheriff's Office who has known the licensee since 1978, on many occasions has been given intelligence information by Hughes and her employees to be passed on to the vice squad about the use and sale of drugs in and around the licensed premises and on other occasions has been given direct violations. Officer Pope also has given Hughes information concerning employees of hers who were using drugs and on every occasion the employee was dismissed.
In May or June 1984, Hughes completely shut down the licensed premises and fired all employees because of suspected illicit drug activity on the premises and other reasons.
Hughes continually supervises personnel and visits her three lounges approximately once a day. Additionally, she is available at all times should any questions arise concerning the employees.
There was insufficient evidence, taken together, to prove that the licensee was negligent in supervising the operation of the Red Garter. It was not proved that Hughes used less than ordinary reasonable care or was less than reasonably diligent in supervising the Red Garter in respect to the use, possession or sale of illegal drugs on the premises.
CONCLUSIONS OF LAW
Section 561.29, Florida Statues (1983), contains the following relevant provisions:
The division is given full power and authority to revoke or suspend the license of any person holding a license under the Bever- age Law, when it is determined or found by the division upon sufficient cause appearing of:
Violation by the licensee or his or its agents, officers, servants, or employees, on the licensed premises, or elsewhere while in the scope of employment, of any of the laws of this state or of the United States, or violation of any municipal or county regula- tion in regard to the hours of sale, service, or consumption of alcoholic beverages, or engaging in or permitting disorderly conduct on the licensed premises, or permitting another on the licensed premises to violate any of the laws of this state or of the United States....
(b)....
(c) Maintaining a nuisance on the licensed premises.
* * *
The division may impose a civil penalty against licensee for any violation mentioned in the Beverage Law, or any rule issued pursuant thereto, not to exceed $1,000 for violations arising out of a single transac- tion. If the licensee fails to pay the civil penalty, his license shall be suspended for such period of time as the division may specify.
Section 823.10, Florida Statutes (1983), declares a place or building where controlled substances are illegally kept, sold, or used, to be a nuisance.
Section 893.13(2)(a)(5), Florida Statutes (1983), makes it unlawful for any person:
To keep or maintain any store, shop, ware- house, dwelling, building, vehicle, boat, aircraft, or other structure or place which is resorted to by persons using controlled substances in violation of this chapter for the purpose of using these substances, or which is used for keeping or selling them in violation of this chapter.
Marijuana and cocaine are controlled substances. It is a violation of state law to sell, use, deliver, or possess marijuana or cocaine. Section 893.13, Florida Statutes (1983).
The negotiation of a sale of a controlled substance or the act of serving as a go-between in arranging such a drug transaction is a violation of
Florida law, and a person committing any such acts is subject to conviction under the criminal laws of Florida. Nadjawski v. State, 371 So.2d 554 (Fla. 2nd DCA 1976); State v. Hubbard, 328 So.2d 465 (Fla. 2nd DCA 1976); State v. Dent,
322 So.2d 543 (Fla. 1975). Section 777.011, Florida Statutes (1983).
In Lash, Inc. v. State, Department of Business Regulation, 411 So.2d
276 (Fla. 3rd DCA 1983), the operative facts before the court were:
The license revocation stemmed from narcotics violations on appellant's premises. The evidence established that on five occasions over a period of a week, undercover beverage agents purchased controlled substances from two of appellant's employees.
Id. at 277.
At page 278 of its decision, the court in Lash expounds at length on the proper standard for revocation or suspension of a beverage license:
Under Section 561.29(1), where the unlawful activity is committed by the Licensee's agent, simple negligence is sufficient for revocation. Admittedly, the courts have refused to uphold revocations when the evi- dence showed only that on one occasion the licensee's employees violated the laws, and that the licensee other wise took measures to comply with them.(Citations omitted.) Where, however, the laws are repeatedly and fla- grantly violated by the employees, an infer- ence arises leading to the conclusion that such violations are either fostered, condoned or negligently overlooked by the licensee, notwithstanding his absence from the premises when the violations occur. (Citations omitted.) Consequently, if the evidence supports the conclusion that the licensee failed to exercise ordinary care in the maintenance of the licensed premises or the supervision of his employees, he can be found negligent and his license revoked. (Citation omitted.)
Where the violations are, as here, committed in a persistent and recurring manner consist- ing of more than one isolated incident, the courts have not hesitated to find that such violations were either fostered, condoned, or negligently overlooked by the licensee, even though he may have been absent at the time of the commission of such. (Citations omitted.) In the present case, the recurring sales were made possible by appellant's failure to supervise the premises and his employees in a reasonably diligent manner, properly leading to the license revocation.
In this case there were more violations by more employees over a longer period of time than in the Lash case. Accordingly, the violations established in this case are sufficient to give rise to the inference discussed in Lash that the licensee negligently overlooked the violations or failed to exercise ordinary care in the maintenance of the licensed premises or the supervision of his employees. But the inference which flows from the violations can be rebutted, as it has been by the evidence in this case. There is less basis for an inference of negilgent oversight in a case involving discreet drug transactions than in the cases involving open solicitation for prostitution and lewd and lascivious behavior, which are the cases which appear to have given rise to the inference applied in Lash. 2/ A discreet drug transaction is more difficult to detect.
The evidence in this case did not prove that the licensee either condoned or fostered illegal drug activities on the licensed premises. Nor was the licensee inattentive to the business or ignorant or indifferent to what happened on the licensed premises.
Nor did the evidence prove that the licensee negligently overlooked the violations that occurred on the licensed premises. It was not proved that the violations in this case were not all committed surreptiously.
A licensee has a duty to exercise reasonable diligence in the selection of employees and in the training and instruction of employees. The Jacksonville Sheriff's Office conducts a background investigation on all new employees. The licensee reasonably relies on this background investigation. In this case, the licensee adequately trained its supervisory personnel in regard to suspected drug use. (With some employees like Cary Butler, no amount of training will turn out to be enough.)
A licensee also has a duty to supervise its employees and exercise reasonable diligence to detect and arrest wrongdoing on their part. Hughes had spot polygraph examinations done on some of her employees. Her personal supervision of the premises was reasonably diligent under the circumstances. (Having licensed three locations to Hughes, the Division cannot be heard to complain that she personally did not work in all of them full-time or close to it.) She made it a policy to, and was reasonably diligent in taking steps to be sure that all employees knew her policies against illegal drugs on the premises. She cooperated with law enforcement in regard to illegal drugs and acted upon information provided to her by law enforcement by firing employees involved with illegal drugs. In summary, although the licensee in this case could (and, to avoid another citation, probably will) take even more precautionary measures against illegal drugs on the premises of the Red Garter, the evidence in this case did not prove that the measures she already has taken fall short of the legal standard of care in a license discipline case.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that:
The Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, enter a final order dismissing the charges against respondent, R. Hughes, Inc. d/b/a The Odyssey, contained in the Notice To Show Cause in this case.
RECOMMENDED this 6th day of December, 1984, in Tallahassee, Florida.
J. LAWRENCE JOHNSTON Hearing Officer
Filed with the Clerk of the Division of Administrative Hearings this 6th day of December, 1984.
1/ Both parties submitted proposed findings of fact. The proposed findings of fact were reviewed, and the following findings of fact attempt to rule, either directly or indirectly, on each proposed finding of fact. Proposed findings of fact which were approved and adopted are reflected in the following Findings of Fact. Where proposed findings of fact are not reflected in the following Findings of Fact and no direct ruling rejecting the proposed findings of fact is apparent in the following Findings of Fact, the proposed findings of fact have been rejected as either being not proved but competent substantial evidence, being cumulative, being subordinate, or being irrelevant.
2/ The first application of the inference appears to be Pauline v. Lee, 147 So.2d 359 (Fla. 2nd DCA 162). It has since been applied in a number of what may euphemistically be described as "exotic" dancer cases. See the G & B of Jacksonville cases beginning at 371 So.2d 137, and Golden Dolphin No. 2, Inc. v. State Division of Alcoholic Beverages and Tobacco, 403 So.2d 1372 (Fla. 5th DCA 1982).
William A. Hatch, Esquire Louisa E. Hargrett, Esquire Department of Business Regulation
David M. Robbins, Esquire 1107 Blackstone Building
Gary R. Rutledge, Secretary Department of Business Regulation
Howard M. Rasmussen, Director Department of Business Regulation Division of Alcoholic Beverages and Tobacco
