STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DORA INDUSTRIES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 96-0264

) DEPARTMENT OF LABOR AND EMPLOYMENT ) SECURITY, DIVISION OF MINORITY ) BUSINESS ADVOCACY AND ASSISTANCE ) OFFICE DEVELOPMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Administrative Law Judge, Susan B. Kirkland, held a formal hearing in this case on July 17, 1996, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Lorenzo Ramunno, Esquire

1882 North University Drive Plantation, Florida 33322

For Respondent: Joseph L. Shields, Senior Attorney

Department of Labor and Employment Security Division of Minority Business

Advocacy and Assistance Office 2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189

STATEMENT OF THE ISSUES

Whether Petitioner should be granted certification as a Minority Business Enterprise.

PRELIMINARY STATEMENT

By letter dated December 11, 1995, Respondent, Commission on Minority Economic and Business Development denied Petitioner, Dora Industries, Inc.'s (Dora Industries), request for certification as a Minority Business Enterprise on the basis that the minority owner did not control the management and daily operations of the business. Dora Industries requested an administrative hearing. The case was forwarded to the Division of Administrative Hearings on January 10, 1996.

The final hearing was scheduled for March 13, 1996 and then rescheduled for March 29, 1996. Respondent filed a motion for continuance which was granted,

and the case was rescheduled for final hearing on April 29, 1996. On April 18, 1996, Petitioner filed a motion for continuance which was granted. The case was rescheduled for final hearing on July 17, 1996.

At the final hearing, Petitioner presented Sandra Roth Finkleberg, Eli Finkleberg, and Jerome Berman as its witnesses. Petitioner's Exhibit 1 was entered in evidence. Respondent called Hector DeLayo as its witness.

Respondent's Exhibits 1-5 were entered in evidence.

At the final hearing the parties stated that no transcript would be ordered and agreed to file proposed recommended orders on or before July 29, 1996. On July 26, 1996, Respondent filed a Motion for Extension of Time, stating that Respondent had ordered the transcript and the transcript was not expected to be delivered before July 29, 1996. An Order was entered on July 30, 1996, granting the motion for extension of time. Petitioner filed its Proposed Recommended Order on July 23, 1996. On August 5, 1996, Petitioner filed a Motion to Substitute Proposed Recommended Order, which motion was granted. On August 15, 1996, Respondent filed another Motion for Extension of Time. An Order extending the time to file proposed recommended orders to August 19, 1996, was entered on August 16, 1996. Respondent filed its proposed recommended order on August 19, 1996.

FINDINGS OF FACT

1. Petitioner, Dora Industries, Inc. (Dora Industries), was started in 1989 by Sandra Roth (Roth), an American woman. Roth owns all of the company. Initially, Dora Industries bought janitorial and maintenance products from other companies and sold the products as a distributor.

   
   

2. Roth graduated from Hunter College with a degree in graphic arts. From 1979 to 1985, she worked for Union Carbide in North Carolina doing research for the chemical division. She was later placed in charge of dealing with third world countries on ways to use chemicals in agriculture.

   
   

3. In 1986, Roth went to work for Gold Coast Chemical Corporation (Gold Coast Corporation), which was owned by Eli Finkleberg. Her role at Gold Coast Corporation included doing the paperwork necessary for registering the chemicals manufactured by Gold Coast Corporations with the appropriate regulatory agency.

   
   

4. In 1989, Roth formed Dora Industries and married Eli Finkleberg. Dora Industries purchased some of its products from Gold Coast Corporation.

   
   

5. Due to ill health, Eli Finkleberg put Gold Coast Corporation up for sale in 1993. The company was advertised for sale in trade magazines. Using funds which Roth had acquired from the dissolution of a previous marriage, she purchased the manufacturing operations of Gold Coast Corporation in 1993. The purchase price was $96,000, which consisted of $47,091 in cash and the remainder in the assumption and payment of certain leases and contracts. In addition, Roth agreed to renegotiate the lease of the real property on which Gold Coast Corporation was housed to include the costs of clean up for hazardous materials which were found in the ground underneath the Gold Coast Corporation warehouse. The landlord attributed the presence of the hazardous materials to Gold Coast Corporation. The estimated cost of the clean up was not to exceed $200,000.

   
   

6. The inventory of Gold Coast Corporation was not included in the sale. However, the inventory remained in the warehouse previously occupied by Gold Coast Corporation and was handled for Gold Coast Corporation by Dora Industries

   d/b/a Gold Coast Chemical Products (Gold Coast Products). After the inventory was sold Gold Coast Corporation no longer sold any products and has not actively sold chemicals for the last two years.

   
   

7. Currently Dora Industries is manufacturing chemical cleaning products, distributing its own products and the products of other companies, and exporting products.

   
   

8. Eli Finkleberg is the treasurer and a salaried employee of Dora Industries. His responsibilities include interviewing applicants for sales positions, running the sales division of the company, overseeing the sales manager, and supervising the office staff. His annual salary is approximately

   $35,000. Due to his poor health, he works between four and six hours a day.

   
   

9. Jerome Berman is the general manager in charge of operations for Dora Industries. Mr. Berman owned and ran a chemical company for 23 years prior to coming to work for Dora Industries. His responsibilities include ordering all materials and supplies used in the production of and resale of industrial supplies, hiring and firing of all warehouse and distribution personnel, complying with governmental regulations, bidding, and supervising the warehouse and productions. Mr. Berman's annual salary is $57,000.

   
   

10. Both Mr. Berman and Mr. Finkleberg have the authority to sign checks on the Dora Industries account. Mr. Berman's authority is limited to $5,000. Roth is responsible for making major purchases for the business such as a telephone system which she recently acquired.

    
    

11. Roth employs a chemist who is responsible for the formulas used in the manufacture of the chemical products. This is the third chemist which Roth has employed since she started Dora Industries. Some of the formulas are given to Dora Industries by the suppliers of the raw materials, and some formulas are developed by the chemist. Roth does not have the expertise to develop formulas but she does have the expertise to manufacture a batch of products using a formula.

    
    

12. Each day Roth discusses the sales and operations with Mr. Finkleberg and Mr. Berman, respectively. In the hiring of sales personnel, Roth meets the applicants which have been interviewed by Mr. Finkleberg and makes the final decision on who to hire. Roth has delegated the hiring of the hourly wage personnel in the warehouse to Mr. Berman. According to Berman, he advises Roth who he intends to hire in case she should have an objection. Mr. Berman has to report the reasons that he fires personnel to Roth.

    
    

13. Roth did the bidding for the company before Mr. Berman was hired. Mr. Berman follows a set formula of cost plus a percentage of profit in the bidding process and requests permission from Roth before making any significant deviations from the formula.

    
    

14. Eli Finkleberg owns Trout and Associates, which is a telemarketing firm selling cleaning chemicals to companies outside of Florida. Trout and Associates has one full-time employee and one part-time employee. The full-time employee is housed in an office in the building occupied by Dora Industries. Trout and Associates buys some of its products from Dora Industries for resale.

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties in this proceeding. Section 120.57(1), Florida Statutes.

    
    

16. Rule 60A-2.005(3), Florida Administrative Code, requires that the minority owner must possess the authority to control the management and daily operations of the business. Subsections (3)(c) and (d) provide:

    
    

    1. The minority owners must exercise sufficient management and technical responsibilities and capabilities to maintain control of the business. If the owners of the business who are not minority persons are disproportionately responsible for the operations of the business, then the

       business is not controlled by minority owners.

    2. The control exercised by the minority owners shall be real, substantial and continuing, and shall go beyond mere pro forma control. In instances where the applicant business is found to be a family- operated business, with duties, responsi- bilities and decision-making occuring either jointly and mutually among owners and principals, or severally along managerial and operational lines between minority owners and non-minority owners or principals, the minority owners shall not be considered as controlling the business. Where the minority owners substantiate that the assumption of duties is not based on their lack of know- ledge or capability to independently, make decisions regarding the business' management and day-to-day operations, the minority owners' control may not be affected. The minority owners shall establish that they have dominate responsibility for the manage- ment and daily operations of the business

       as follows:

       1. The minority owners shall control the purchase of goods, equipment, business inventory and services needed in the day-to- day operations of the business. The minority owners' control of purchasing shall be evidence of their knowledge of products,

          brands, manufacturers, types of equipment and products and their uses, etc. rather than merely reflective of the minority owners' ministerial execution of ordering/acquisition of goods.

       2. The minority owners shall control the hiring, firing, and supervision of all employees, and the setting of employment practices, wages, benefits and other employment conditions. In instances where

          minority owners have delegated the hiring and firing of employees, the minority owners shall demonstrate that their know- ledge and capability is sufficient to evaluate the employees' performance in the given industry.

       3. The minority owners shall have know- ledge and control of all financial affairs of the business. The ability of any non- minority owner or employee to sign checks and enter into financial transactions on behalf of the business shall be considered in determining financial control. The minority owners shall expressly control the investments, loans to/from stockholders, bonding, payment of general business loans,

          payroll, and establishment of lines of credit.

       4. The minority owners shall have managerial and technical capability, know- ledge, training, education and experience required to make decisions regarding that particular type of work. In determining the applicant business' eligibility, the Office will review the prior employment and the professional skills, training and/or licenses required for the given industry, the previous and existing managerial relationship between and among all owners, especially those who are familiarly related, and the timing and purpose of management changes. If the minority owners have delegated the management and technical responsibility to others, the minority owners must substantiate that they have caused the direction of the management of the business and each phase of the technical operations of the business through their demonstrable knowledge of and capability in the delegated areas.

       5. The minority owners shall display independence and initiative in seeking and negotiating contracts, accepting and rejecting bids and in conducting all major aspects of the business in regard to any and all bidding and contracting. In instances where the minority owners do not directly seek or negotiate contracts, prepare estimates, or coordinate with contracting officials, but claim to approve or reject bids and contractual agreements, the minority owners shall demonstrate that they have the knowledge and expertise to independently make contractual decisions.

       6. The minority owner shall substantiate personal direction and actual involvement with all major aspects of the applicant business. The major aspects shall be defined as those tasks essential to

       accomplish all objectives and operations for which the applicant business requests certification.

       
       

17. Roth is an American woman, and she owns one hundred percent of Dora Industries, Inc. d/b/a Gold Coast Chemical Products.

    
    

18. Roth has demonstrated that she controls the purchases of goods, services, equipment and services which are needed to run the day-to-day operations of the business. She has the knowledge of the products and equipment needed to run the business and sufficient expertise to purchase those goods.

    She has delegated authority to purchase goods to Mr. Berman up to $5,000. This delegation is to make the purchasing process more efficient and does not mean that Roth is not capable of making the purchases herself.

    
    

19. Roth has demonstrated that she controls the hiring and firing of the employees of the business. Mr. Finkleberg interviews prospective salespersons and narrows the selection for Roth's final approval. Mr. Berman hires the personnel for the warehouse and the mixing of the products. He will generally tell Roth who he plans to hire to see if she has any objection. He does not fire personnel without Roth's approval. Roth has the expertise to be able to evaluate the performance of her employees, and the delegation to Mr. Berman to hire the warehouse personnel, who are hourly laborers, does not diminish her ability to do the hiring herself.

    
    

20. Roth has demonstrated that she has the knowledge and control of all financial affairs of the business. Having invested her own money in the company, she intends to make sure that her investment is protected. Through her testimony, Roth established that she is very concerned about the bottom line of the business and that she takes great efforts to make sure that the performance of the salespersons and office staff result in a profitable bottom line. These efforts include keeping track of the actual cost of the raw materials used in manufacturing the products so that the pricing of the product will cover the actual costs and monitoring the sales staff to weed out any salespersons who may be cheating the company.

    
    

21. I have considered the ability of Mr. Finkleberg and Mr. Berman to sign checks in Roth's absence, and I find that the reason for authorizing them to sign checks is for efficiency and expediency in running the business rather than conveying control to them.

    
    

22. The only area in which Roth has failed to demonstrate technical capability is the domain of the chemist in developing formulas. Given that many of the formulas are supplied by the manufacturers of the raw materials rather than developed in house and Roth's capability in hiring and firing chemists, I cannot conclude that Roth's lack of ability to develop a product formula precludes the qualification of the business as a minority business enterprise.

    
    

23. Roth has done the bidding in the past. The delegation to Berman of the bidding does not diminish her control. Berman follows a set formula and deviations from that formula have to be approved by Roth. Roth has demonstrated that she has the knowledge and expertise to independently make contractual decisions

    
    

24. Roth, as the minority owner of the business, has demonstrated that she controls management and daily operations of the business.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered granting Petitioner certification

as a minority business enterprise.

DONE AND ENTERED this 10th day of October, 1996, in Tallahassee, Leon County, Florida.

SUSAN B. KIRKLAND

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 10th day of October, 1996.

COPIES FURNISHED:

Lorenzo Ramunno, Esquire 1882 North University Drive Plantation, Florida 33322

Joseph L. Shields, Senior Attorney Office of the General Counsel Department of Labor and Employment

Security, Division of Minority Business Advocacy and Assistance Office

2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189

Douglas L. Jamerson, Secretary Department of Labor and

Employment Security

2012 Capital Circle Southeast

303 Hartman Building Tallahassee, Florida 32399-2152

Edward A. Dion, General Counsel Department of Labor and

Employment Security

2012 Capital Circle Southeast

303 Hartman Building Tallahassee, Florida 32399-2152

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 96-000264

Orders for Case No: 96-000264