G. LEE FOODS, INC., )
vs. ) CASE NO. 92-0682
Respondent. )
vs. ) CASE NO. 92-0683
Respondent. )
This order is entered pursuant to subsection 287.133(3)(e), F.S., adopting the stipulation of the parties in the above-styled consolidated cases. As stipulated, no formal hearing was held.
For Petitioner: Eric A. Blanchard, Esquire
For Respondent: Susan B. Kirkland, Esquire
Dannie L. Hart, Esquire Department of General Services Suite 309, Knight Building 2737 Centerview Drive
The issue for determination is whether the Petitioners, T.G. Lee Foods, Inc. (Lee) and McArthur Dairy, Inc. (McArthur), should be placed on the convicted vendor list described and provided for in Section 287.133, F.S.
By letter dated January 6, 1992, Ronald W. Thomas, Executive Director of the Department of General Services, issued a Notice of Intent to place each
Petitioner on the convicted vendor list. By Petitions For Formal Administrative Hearing, filed with the Department on January 28, 1992, each Petitioner contested that ruling. On January 31, 1992, each petition was forwarded to the Division of Administrative Hearings for the appointment of a hearing officer.
Concurrent with the forwarding of the Petitions, the Petitioners and the Respondent entered into a Joint Stipulation. The Joint Stipulation was also forwarded to the Division of Administrative Hearings on January 31, 1992. A Joint Motion For Consolidation of the two cases was filed on January 31, 1992. In an order dated February 21, 1992, the hearing officer granted the Joint Motion For Consolidation and allowed twenty days for the filing of proposed final orders. These proposed final orders have been filed and reflect that the parties have reached an agreement on the disposition of the cases since each proposed final order suggests that Petitioners should not be placed on the convicted vendor list. For that reason, the stipulated facts, and the proposed conclusions of law submitted by the Department of General Services are substantially adopted herein, as provided in subsection 287.133(3)(e)2.f., F.S.
The facts stated in the Joint Stipulation of the parties to the extent set forth below are hereby adopted as findings of fact:
On December 21, 1990, Petitioners, each of which is a wholly-owned subsidiary of Dean Foods Company ("Dean"), were each convicted of a one-count felony charge brought under Section 1 of the Sherman Antitrust Act.
On January 7, 1992, Respondent filed and Petitioners received notices of intent to each Petitioner pursuant to Section 287.133(3)(e)1, F.S.
On January 28, 1992, Petitioners, pursuant to Section 287.133(3)(e)2, F.S., filed a petition, pursuant to Section 120.57(1), F.S., requesting an order determining that it is not in the public interest for Petitioners to be placed on the State of Florida Convicted Vendor List.
Petitioners' convictions arose out of an investigation initiated by the Florida Attorney General into possible bid-rigging of school milk requirements contracts in Florida by dairies and distributors. In 1988, the Attorney General filed a civil action against these dairies and distributors, including Petitioners.
Section 287.133(3)(e)3.c, F.S., establishes "[t]he degree of culpability of the person or affiliate proposed to be placed on the convicted vendor list" as a factor to be considered in the decision whether to place such person or affiliate on such list.
The State of Florida's complaint alleged that the bid-rigging and contract allocation scheme began at least as early as 1978. According to the State's attorneys, the illegal activities actually started as early as the 1960's in southeastern Florida (McArthur Dairy's principal market area) and the 1970's in central and southwestern Florida (T.G. Lee Foods' principal market area). Dean purchased Petitioners in 1980. According to the State's attorneys, Jack Wells and James Clark, former sales managers at McArthur Dairy and T.G. Lee Foods, respectively, participated in such conspiracies during the 1960's and 1970's and fraudulently concealed their efforts from the former owners of T.G. Lee Foods and McArthur Dairy, from Dean and from the school boards. Thus, Dean unknowingly bought into these on-going conspiracies. While the fact that Dean bought into these preexisting schemes was not a legal defense, it is relevant to
the issue of culpability. This fact and Dean's early settlement offer were given favorable consideration by the State of Florida during settlement discussions.
Section 287.133(3)(e)3.d, F.S., establishes "[p]rompt or voluntary payment of any damages or penalty as a result of the conviction" as a factor mitigating against placement on the convicted vendor list.
Dean promptly paid on behalf of Petitioners all civil damages owed the State arising out of such activities. In a press release dated August 1, 1988, the Attorney General confirmed Dean's payment in full settlement of the charges brought by the State of Florida against Petitioners.
A federal grand jury sitting in Tampa, Florida also investigated this matter. Dean and Petitioners cooperated fully with that investigation. Pursuant to plea and settlement agreements dated September 12, 1990, entered into by each of Petitioners with the United States Department of Justice, Dean and Petitioners agreed to a comprehensive settlement. Said settlement required that Petitioner plead guilty to a one-count criminal information and pay $1 million each in criminal penalties and $175,000 each in civil damages to the federal government.
Such civil liabilities and criminal penalties were paid to the federal government, as reflected in a letter from the federal prosecutor to officials of the United States Defense Logistics Agency dated February 21, 1991, which letter appears as Exhibit A to the Memorandum submitted by Dean to the Defense Logistics Agency.
Section 287.133(3)(e)3.e, F.S., establishes "[c]ooperation with state or federal investigation or prosecution of any public entity crime" as a mitigating factor.
Petitioners agreed to and did cooperate fully with the State of Florida in connection with its investigation.
Petitioners also cooperated fully with the federal grand jury investigation. This cooperation was confirmed in the letter from the federal prosecutor referred to above, which states:
We have found McArthur & T.G. Lee and their attorneys to have been most cooperative in this matter. We believe both the companies and their attorneys have shown a high degree of responsibility by agreeing to settle this matter in an expeditious manner. The negotiated settlement with these defendants resolves all matters relating to their operations in Florida. As a final point, we believe the early agreement by these companies and their counsel to settle this matter for a substantial sum gave the incentive for other corporate defendants to come forward and also offer substantial criminal and civil settlements. Several of those cases have now been favorably concluded.
Section 287.133(3)(e)3.f., F.S., establishes "[d]isassociation from any other person or affiliate convicted of the public entity crime" as a mitigating factor.
Jack Wells and James Clark, the only individuals at McArthur Dairy and
T.G. Lee Foods implicated in the wrongdoing that give rise to the convictions in question, were terminated. The investigations conducted by the State of Florida and the Department of Justice disclosed no involvement or knowledge on the part of any other employee of Petitioners, Dean or any of Dean's other subsidiaries, as reflected in a letter form attorneys representing the State of Florida to Dean's attorney dated June 29, 1988.
Section 287.133(3)(e)3.g, F.S., establishes "[p]rior or future self- policing by the person or affiliate to prevent public entity crimes' as a mitigating factor.
All of Dean's subsidiaries, including Petitioners, have an active antitrust compliance program.
Section 287.133(3)(e)3.k, F.S., establishes "demonstration of good citizenship" as a mitigating factor.
Petitioners have been involved in civic and philanthropic affairs throughout the years. For example, T.G. Lee Foods and McArthur Dairy have spearheaded fundraising events for Edgewood Children's Ranch, a non-sectarian foundation for the support of under-privileged and abused children. T.G. Lee Foods and McArthur Dairy have also donated milk to the Ranch for a number of years. McArthur Dairy has made substantial contributions to organizations such as the University of Miami, and Miami Dade Junior College.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Sections 120.57(1) and 287.133, F.S.
Section 287.133(3)(e)3, F.S. lists the following factors which the hearing officer is to consider in determining whether it is in the public interest to place a person on the convicted vendor list.
* * *
Whether the person or affiliate committed a public entity crime.
The nature and details of the public entity crime.
The degree of culpability of the person or affiliate proposed to be placed on the convicted vendor list.
Prompt or voluntary payment of any damages or penalty as a result of the conviction.
Cooperation with state or federal investigation or prosecution of any public entity crime, provided that a good faith exercise of any constitutional, statutory, or other right during any portion of the investigation or prosecution of any public entity crime shall not be considered a lack of
cooperation.
Disassociation from any other persons or affiliates convicted of the public entity crime.
Prior or future self-policing by the person or affiliate to prevent public entity crimes.
Reinstatement or clemency in any jurisdiction in relation to the public entity crime at issue in the proceeding.
Compliance by the person or affiliate with the notification provisions of paragraph (a) or paragraph (b).
The needs of public entities for additional competition in the procurement of goods and services in their respective markets.
Mitigation based upon any demonstration
of good citizenship by the person or affiliate.
Section 287.133(3)(e)4, F.S., provides in pertinent part:
In any proceeding under this section, the department shall be required to prove that it is in the public interest for the person to whom it has given notice under this section to be placed on the convicted vendor list.
Proof of a conviction of the person or that one is an affiliate of such person shall constitute a prima facie case that it is in
the public interest for the person or affiliate to whom the department has given notice to be put on the convicted vendor list. Prompt payment of damages or posting of a bond, cooperation with investigation, and
termination of the employment or other relationship with the employee or other natural person responsible for the public entity crime shall create a rebuttable presumption that it is not in the public interest to place a person or affiliate on the convicted vendor list. ... If the hearing officer determines that the person was not convicted or is not an affiliate of such person, that person or affiliate shall not be placed on the convicted vendor list.
The Department has made a prima facie showing that it is in the public interest for Petitioners to be placed on the convicted vendor list based on the Petitioner's felony convictions.
The facts contained in the Joint Stipulation of the parties show that Petitioners have promptly paid the fines imposed, have cooperated with the investigation of the public entity crimes, and have terminated the employment of the individuals involved in the commission of the public entity crimes. Thus, Petitioners have established a rebuttable presumption that it is not in the best interests of the public to place them on the convicted vendor list. See subsection 287.133(3)(e)4., F.S., above. No evidence was presented to overcome the presumption.
Additionally, the facts contained in the Joint Stipulation of the parties show that Petitioners have established an active antitrust compliance program as a means to prevent public crimes and the Petitioners have demonstrated good citizenship through its civic and philanthropic endeavors. Thus, Petitioners have proved by a preponderance of the evidence that it is not in the best interests of the public to place the Petitioners on the convicted vendor list.
