STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND ) PROFESSIONAL REGULATION, DIVISION ) OF ALCOHOLIC BEVERAGES )

AND TOBACCO, )

)

Petitioner, )

)

vs. ) Case No. 97-2844

)

CAFÉ IGUANA, INC., )

d/b/a CAFÉ IGUANA, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on June 20, 1997, in Miami, Florida, before J. D. Parrish, a designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Miguel Oxamendi, Senior Attorney

Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco

1940 North Monroe Street Tallahassee, Florida 32399-1007

For Respondent: Louis J. Terminello

Chadroff, Terminello & Terminello 2700 Southwest 37th Avenue

Miami, Florida 33133-2728 STATEMENT OF THE ISSUES

Whether Respondent committed the violations alleged in the Emergency Order of Suspension and Notice to Show Cause and, if

so, what penalty should be imposed.

PRELIMINARY STATEMENT

On June 12, 1997, the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (Department) issued an Emergency Order of Suspension and Notice to Show Cause that charged the Respondent, Café Iguana, Inc., doing business as Café Iguana (Iguana), with multiple violations of Section 561.29, Florida Statutes. More specifically, the Department alleged Respondent had maintained a public nuisance as it had been visited by persons using, selling, or delivering illegal or controlled substances. Respondent contested the allegations, and the matter was scheduled for formal hearing.

At the hearing, Petitioner presented testimony from Detective Evelyn Fernandez, a Metro-Dade police officer; Detective James Robertson, also a Metro-Dade police officer; and Douglas Bartelt, the Department's Special Agent. Its exhibits numbered 1 through 5 were admitted into evidence.

The Respondent presented testimony from Special Agent Bartelt; Howard Newman, a chiropractic physician who patronized Respondent's club; Scott Miller, the manager for Café Iguana; John Capizzi, a forensic fraud examiner employed by Respondent; Steven Caputi, the director of administration for the Respondent's management company; Bradshaw Lotspeich, an attorney who patronized the Respondent's club; Gus Solano, a consulting engineer who designs lighting systems and tested the lighting at

the Respondent's club; Zaira Mesa, a patron of Respondent's club; Joe Delaney, an officer for, and shareholder in, the Respondent company; Mark E. Vasu, president and chairman of the company that manages the Respondent's club; and Shannon Miller, the director of operations for Respondent's management company who is also a shareholder. Respondent's exhibits numbered 2 through 12 were admitted into evidence.

A transcript of the proceeding has not been filed. The parties have filed Proposed Recommended Orders which have been considered in the preparation of this order.

FINDINGS OF FACT

1. The Petitioner is the state agency charged with the responsibility of regulating licensed alcoholic beverage establishments.

2. At all times material to the allegations in this case, the Respondent, Café Iguana, Inc., doing business as Café Iguana, held alcoholic beverage license number 23-01868 which is a series 4-COP license.

3. At all times material to the allegations in this case, Iguana was located at 8505 Mills Drive, D-75, in Miami, Dade County, Florida.

4. At all times material to the allegations in this case, the following persons were officers and/or shareholders of the Respondent corporation: Mark Vasu, Shannon Miller, David Lageschulte, and Gerald Joe Delaney.

5. Prior to the issuance of the Emergency Order of Suspension which is at issue in this proceeding, the Department conducted an investigation of alleged acts of recurring illegal narcotic activity on the licensed premises.

6. In furtherance of such investigation Special Agent Bartelt, Detective Fernandez, and Detective Robertson entered the licensed premises in an undercover capacity for the purpose of purchasing illegal substances. In this regard Special Agent Bartelt observed the two detectives as they attempted to acquire illegal substances from persons within the licensed premises.

7. The investigation at Iguana began on March 15, 1997, and was concluded on June 12, 1997. In total, the detectives made seven purchases of a substance which was later tested and determined to contain cocaine. Respondent did not object to, nor dispute the accuracy of, the lab reports received into evidence which confirmed the substances contained cocaine.

8. As to the purchase which occurred on March 15, 1997, Detective Fernandez approached a female bathroom attendant and represented that she wanted "to get hooked up." According to Detective Fernandez this type of language is commonly used to

   ask for illegal drugs. She sought cocaine, by implication in the language of such transactions. The attendant referred her to an individual known in this record as "Anthony" who was the men's restroom attendant.

9. Standing in the doorway to the men's restroom, Detective

   Fernandez exchanged $20.00 for approximately one-half gram of cocaine. The cocaine was in a clear plastic zip-lock style bag that was no larger than two inches by two inches. Upon receipt of the bag, Detective Fernandez placed it in her pocket and left the restroom area.

10. All of the transactions later described were completed in the same manner. Detective Fernandez made no effort to be noticed by the club's management. She was not conspicuous in the purchase of the illegal substance. Instead, she made every effort to mimic her perception of a drug transaction.

11. The next purchase occurred on April 4, 1997. On this date, Detective Fernandez went back to Anthony and again requested drugs. She was told to wait. Approximately forty-five minutes later she returned to the doorway area adjacent to the men's room. At that time other females were also waiting for Anthony. After transferring $25.00 to the attendant, Detective Fernandez received approximately one-half gram of cocaine.

    During this purchase, Detective Fernandez believes Respondent's employees may have walked past to use the restroom but could not verify that anyone observed her transaction. Additionally, Detective Fernandez did not observe a sale of a similar type to the other females in line at the restroom corridor.

12. On April 12, 1997, Detective Fernandez went to Anthony and asked him if she could "get a half." Noteworthy on this date was the fact that Detective Fernandez went inside the men's room to make the transaction. During her stay in the restroom she saw a bartender and a security person who were using the facility. Neither asked why she was inside the men's restroom. Neither interfered with her discussion with Anthony. Instead, Anthony introduced her to a white male who was using the telephone in the

    room who is identified in this record as "Juan." Anthony reported that Juan was "my man." In exchange for $40.00 Anthony delivered approximately one gram of cocaine to Detective Fernandez. There is no evidence that the bartender or the security person observed any of the transaction which took place.

13. On May 9, 1997, Detective Fernandez again went to Respondent's club and sought illegal drugs. This time she asked a bartender how to "hook up." He referred her to the restroom. Anthony was not at the men's room, so she went to the female attendant known in this record as "Rica." Inside the female's restroom Rica exchanged approximately one-half gram of cocaine for $25.00.

14. On May 15, 1997, Detective Fernandez purchased one-half gram of cocaine from Anthony for $30.00. Later, during the early morning hours of May 16, 1997, Detective Fernandez made a second purchase from Anthony. Although there were other patrons of the bar within the restroom, there is no evidence that any of them witnessed either of these transactions.

15. The final purchase by Detective Fernandez was on

    
    

    June 11, 1997. On this date she contacted Rica and again sought to purchase drugs. She handed Rica $30.00, and the attendant left the restroom and returned a short while later with approximately one-half gram of cocaine. Although there were numerous patrons entering and exiting the facility, there is no evidence that anyone observed Detective Fernandez receive the bag

    of cocaine.

    
    

16. At all times material to the allegations of this case, Iguana was a popular club which was well attended on the nights of this investigation. The audio system for the club, although especially dominating on the dance floor, distributed music throughout the licensed premises. In this regard it is uncertain if any of the conversations between the undercover officer and the parties selling drugs could be easily overheard.

17. As to the lighting system for the club, at all times material to this investigation, lighting would have been set at its lowest levels of illumination throughout the licensed premises. Consequently, only the restrooms would have been well- lit. As a result it is uncertain as to how visible transactions occurring outside the restrooms would have been.

18. At all times material to the allegations of this case, the restroom attendants were not employees of Iguana or its management company but were contract personnel through a third party valet service operated by David Cook. Iguana paid Cook to provide restroom attendants. This contract was terminated on June 13, 1997, when Respondent learned of the attendants' alleged involvement in the illegal transactions described above.

    Further, Iguana notified Cook of its intention to assist in the prosecution of such individuals.

19. Iguana is managed by a company known as Chameleon Concepts. In order to effectively identify and minimize

    potential losses for Iguana, Chameleon Concepts contracted with a company whose purpose was to audit operations to ensure the overall integrity of the business operation.

20. This auditor, a forensic fraud examiner, was to identify losses or potential losses due to fraud, embezzlement, policy or procedure violations, or other improprieties. Thus, effective October 1, 1996, Iguana was voluntarily being reviewed by an independent company, with an on-going, monthly retainer, to determine if there were any potential improprieties. The auditor for the company, John Capizzi, found no violations of policy, alcoholic beverage rules, or regulations.

21. Prior to the investigation of this case, Iguana employees were required to participate in responsible vendor programs.

22. Prior to the investigation of this case, Iguana managers were required to participate in responsible vendor programs.

23. Iguana management routinely conducts meetings wherein responsible vendor practices are discussed.

24. Iguana and Chameleon Concepts have developed written employee handbooks and policies which specifically admonish employees regarding illegal substances on the licensed premises.

25. Iguana employees and managers are instructed to advise the management of any suspected illegal substances on the licensed premises.

26. In the past, Iguana has participated in campaigns designed to retain false identification used by suspected underage drinkers to gain entrance to licensed premises.

27. The testimony of Mr. Vasu regarding efforts of the company to comply with all rules and regulations of the Department has been deemed credible and persuasive regarding Iguana's position on illegal drug transactions. Management would not condone or allow illegal drug sales if it were known to them.

28. None of the officers or shareholders of Iguana were aware of the illegal drug transactions occurring on the licensed premises. The only Iguana employee alleged to have been connected to a sale was one incident wherein a bartender referred Detective Fernandez to the restroom.

29. Cocaine is a controlled substance, the sale of which is prohibited by Florida law.

30. None of the purchases described herein were of such a nature or were so conspicuously transacted that a reasonable person would have known illegal sales were taking place.

31. None of the patrons of the club who testified for Respondent were aware that illegal drug sales took place within the licensed premises.

32. The detective making the purchases did not act in a flagrant or open manner. Moreover, the detective did not attempt to verify whether or not bartenders, security guards, or managers employed by Iguana were aware of the restroom attendants' illegal

    activities. At best, one bartender knew to refer the detective to the restroom.

33. In addition to selling illegal drugs, the restroom attendants handed out towels to club patrons and offered for sale personal toiletry items at tables maintained within the restroom. For a club patron to have money to purchase such items or tip the attendant would be a reasonable assumption.

    CONCLUSIONS OF LAW

    
    

34. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

35. Section 893.13, Florida Statutes, provides, in pertinent part:

    
    

    (1)(a) Except as authorized by this chapter and chapter 499, it is unlawful for any person to sell, manufacture, or deliver, or possess with intent to sell, manufacture, or deliver, a controlled substance.

    
    

    * * *

    
    

    (2)(a) Except as authorized by this chapter and chapter 499, it is unlawful for any person to purchase, or possess with intent to purchase, a controlled substance.

    
    

    * * *

    
    

    (7)(a) It is unlawful for any person:

    
    

    * * *

    
    

    5. To keep or maintain any store, shop, warehouse, 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.

36. Section 561.29, Florida Statutes, provides, in part:

    
    

    1. The division is given full power and authority to revoke or suspend the license of any person holding a license under the Beverage Law, when it is determined or found by the division upon sufficient cause appearing of:

       1. 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 regulation in regard to the hours of sale, service, or consumption of alcoholic beverages or license requirements of special licenses issued under s. 561.20, 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. A conviction of the licensee or his or its agents, officers, servants, or employees in any criminal court of any violation as set forth in this paragraph shall not be considered in proceedings before the division for suspension or revocation of a license except as permitted by chapter 92 or the rules of evidence.

       2. Violation by the licensee or, if a

          corporation, by any officers thereof, of any laws of this state or any state or territory of the United States.

       3. Maintaining a nuisance on the licensed premises.

       
       

37. Rule 61A-2.022, Florida Administrative Code, sets forth the penalty guidelines which are imposed upon alcoholic beverage licensees who are supervised by the Department. For violations of Section 561.29(1)(c), Florida Statutes, which is maintaining a nuisance, the first occurrence penalty recommended is revocation of the license. Similarly, for any violation of Chapter 893, Florida Statutes, the penalty recommended is revocation. The rule contemplates that the violations were occurring in an "open and notorious manner on the licensed premises."

38. In this case the Department bears the burden of proof to establish, by clear and convincing evidence, the allegations

    against this Respondent. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

39. It is concluded that the actions complained of, the sale of illegal substances such that the premises constitutes a public nuisance, have not been established by clear and convincing evidence. The actions were not committed in an open and notorious manner but were intended to be inconspicuous. Moreover, the restroom attendants, while technically agents of the licensee, were not trained nor controlled by Iguana management. No evidence supports a finding that any Iguana owner or manager knew or should have known of the activities conducted by the third party contract personnel.

40. As a responsible vendor this employer has made reasonable efforts to train its employees and to enforce a policy that would avoid this type of violation. To that end it has an outside auditor and regular management meetings to discuss potential losses to the company which result from this type of breach.

41. This Respondent cannot be an absolute insurer against violations and cannot control the conduct of all persons within its licensed premises. Management neither fostered nor condoned the acts which occurred on its premises during the investigation.

42. Finally, this Respondent was not negligent in its efforts to comply with beverage laws. Managers, who were trained and well-advised regarding company policy, were on the premises.

No manager observed or could have observed the transactions which took place. Without knowledge of the transactions, management had done everything reasonably expected of them to avoid this type of issue.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, enter a final order dismissing the Emergency Order of Suspension.

DONE AND ENTERED this 23rd day of July, 1997, in Tallahassee, Leon County, Florida.

J. D. PARRISH Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 23rd day of July 1997.

COPIES FURNISHED:

Miguel Oxamendi, Senior Attorney Department of Business and

Professional Regulation Division of Alcoholic Beverages

and Tobacco

1940 North Monroe Street Tallahassee, Florida 32399-1007

Louis J. Terminello, Esquire Chadroff, Terminello & Terminello 2700 Southwest 37th Avenue

Miami, Florida 33133-2728

Richard Boyd, Director

Division of Alcoholic Beverages and Tobacco

Department of Business and Professional Regulation

1940 North Monroe Street Tallahassee, Florida 32399-0792

Lynda L. Goodgame, General Counsel Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-0792

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: 97-002844

Orders for Case No: 97-002844