STATE OF FLORIDA DEPARTMENT OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND ) PROFESSIONAL REGULATION, )

DIVISION OF ALCOHOLIC )

BEVERAGES AND TOBACCO, )

)

Petitioner, )

vs. ) Case No. 00-3892

) DAWSON, FABRIZZI & FLETCHER, ) INC., d/b/a C.J. OSCARS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by Administrative Law Judge, Fred L. Buckine, held a formal hearing in the above-styled case on December 20, 2000, at video sites in Tallahassee and Fort Myers, Florida.

APPEARANCES

For Petitioner: Michael Martinez, Esquire

Department of Business and Professional Regulation

1940 North Monroe Street Tallahassee, Florida 32399-1007

For Respondent: John Charles Coleman, Esquire

Coleman & Coleman

2300 McGregor Boulevard Post Office Box 2089

Fort Myers, Florida 33902-2089

STATEMENT OF THE ISSUES

The first issue presented is whether Respondent failed to derive at least 51 percent of its gross revenue from sales of food and non-alcoholic beverages during the period of September 1, 1999 through October 31, 1999, contrary to Section 561.20(2)(a)4, Florida Statutes, and Rule 61A-3.0141, Florida Administrative Code.

The second issue presented is whether during the period of November 1, 1999, through October 31, 1999, Respondent failed to maintain and/or produce separate records of all purchases and gross retail sales of food and non-alcoholic beverages and all purchases of gross retail sales of alcoholic beverages, to wit: numerous register summaries, Z tapes, contrary to

Section 561.20(2)(a)4, Florida Statutes, and Rule 61A-3.0141, Florida Administrative Code.

The third issue presented is whether during the period of April 1, 1999, through May 31, 1999, the Respondent failed to maintain and/or produce separate records of all purchases and gross retail sales of food and non-alcoholic beverages and all purchases of gross retail sales of alcoholic beverages, to wit: records provided failed to include cash bar sales, contrary to Section 561.20(2)(a)4, Florida Statutes, and Rule 61-3.0141(3) (a)2, Florida Administrative Code.

PRELIMINARY STATEMENT

By an Administrative Action dated December 9, 1999, and filed with the Division of Administrative Hearings on

September 19, 2000, the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (DABT) is attempting to revoke, suspend, or otherwise discipline Respondent's special Alcoholic Beverage License SRX4COP

Number 46-04601.

In support thereof, DABT filed a motion to amend its initial administrative complaint to add Count III. Respondent filed objections. After a telephonic conference, DABT's motion to amend was granted. Respondent filed a Motion to Dismiss the Amended Complaint, alleging vagueness of Section 561.20(2)(a)4, Florida Statutes, and Rule 61A-3.0141, Florida Administrative Code, and a violation of due process of law. Respondent's Motion to Dismiss the Amended complaint was taken under advisement and denied at the final hearing.

Count I alleges that during the period of April 1, 1999, through May 31, 1999, Respondent failed to derive at least 51 percent of its gross revenue from the sales of food and non- alcoholic beverages in violation of Section 561.20(2)(a), Florida Statutes, and Rule 61A-3.0141, Florida Administrative Code.

Count II alleges that during the period of April 1, 1999, through May 31, 1999, Respondent failed to maintain and/or produce separate records of all purchases and gross retail sales of food and non-alcoholic beverages and all purchases of gross retail sales of alcohol beverages, to wit: records failed to include cash bar sales, catering tickets and/or catering contracts in violation of Section 561.20(2)(a)(4), Florida Statutes, and Rule 61-3.0141(3)(a)2, Florida Administrative Code.

Count III alleges that during the period of September 1, 1999, through October 31, 1999, Respondent failed to maintain and/or produce separate records of all purchases and gross retail sales of food and non-alcoholic beverages and all purchases of gross retail sales of alcoholic beverages to wit: records failed to include sales from numerous register summaries (or Z tapes), in violation of Section 561.20(2)(a)4, Florida Statutes, and Rule 61-3.0141(3)(a) and/or Rule 61.0141(3)(a)(2), Florida Administrative Code.

Respondent denied all allegations contained in each count of the Amended Administrative Complaint and requested a formal hearing under Section 120.57(1), Florida Statutes. By letter dated September 19, 2000, DABT referred the matter to the Division for the assignment of an Administrative Law Judge and for the conduct of a formal hearing.

At the final hearing, DABT presented the testimony of David Curry, Michael Batson, Jack Allen, Special Agent Vincent Lanza, and Agents Steven Tompkins and Debra Martin. DABT's Exhibits 1-

9 were received as evidence. Respondent testified on his own behalf. Respondent's Exhibits 1-12 were received as evidence.

A transcript of this proceeding was ordered by Counsel for DBAT at the conclusion of the hearing. The Court Reporter did not provided the transcript within fifteen days following the final hearing. No transcript has been provided as of the date of this Recommended Order. As a result of the extended delay without a transcript, an Order was entered requiring the parties to file their Proposed Recommended Orders without benefit of the transcript.

On March 30, 2001, Counsel for Respondent filed a Motion to Withdraw as Counsel for Respondent due to his inability to communicate with his client; his client's prolonged illness, and the fact that C.J. Oscars Restaurant had closed it doors and discontinued doing business. Counsel for the Agency had no objection to Counsel's withdrawal, and the Motion to Withdraw was granted. The Proposed Recommended Order from the Agency was filed on March 30, 2001, and given consideration.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made:

1. Petitioner, the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, is the agency charged with the responsibility of administering and enforcing the beverage law of the State. Chapters 561-568, Florida Statutes.

2. At all times material to this proceeding, Respondent, Dawson, Fabrizzi, & Fletcher, Inc., d/b/a C.J. Oscars, operated a licensed restaurant business located at 1502 Miramar Street, Cape Coral, Florida, 33904. The corporate officers are Charles Dawson, president; Albert N. Fabrizzi, Vice-President; and Jack Allen, manager of C. J. Oscars.

3. At all times material to this proceeding, Respondent applied for and was holding a series SRX4COP Alcoholic Beverage License Number 46-04601, which authorized the sale of beer, wine, and liquor for consumption on the licensed premises of the restaurant business.

4. The designation "SRX" identifies a beverage license issued to a business operating [primarily] as a restaurant. Respondent's SRX license authorized the sale of alcoholic beverages on the premises, so long as at lease 51 percent of the

   gross revenue is derived from the sale of non-alcoholic beverages and food.

5. Respondent was made aware of the 51 to 49 percent gross revenue requirement when Charles Dawson applied for the SRX license. Indeed, the application for the SRX license,1 signed by Charles Dawson, specifically noted these requirements and the necessity to maintain a record of compliance. Accordingly, Charles Dawson knew, or should have known, that he would need purchase and sale records to show, upon demand, the SRX-imposed percentage requirements were met by the licensee.

6. Required statutory and rule compliance are made known to each SRX license holder and are strictly imposed upon each licensee.2 Section 561.20(2)(a)4, Florida Statutes, and Rule 61A-3.0141, Florida Administrative Code, clearly and unequivocally states that records of all purchases and gross retail sales are required to be kept, in legible English language, by each licensee and are made available upon demand by the DABT.

7. To enforce the above requirements, DABT performs periodic audits of all restaurants holding a special SRX license. As a part of that audit process, Special Agents from DABT conduct undercover visits and announced visits, as is its normal custom and practice.

8. Between May and October 1999, Steven Tompkins, District Supervisor, Fort Myers office, DBAT, testified to making undercover visits to C.J. Oscars Restaurant on five to fifteen different occasions. During one or more of those visits, he observed Monday night drink specials where patrons who spent

   $5.00 on any combination of food/drink were given a plastic cup along with their initial order. Thereafter, and for the remainder of the evening, drinks were sold to cup holders for

   $0.25 per drink. On several other occasions, he observed money paid at the bar for cash sales of alcoholic drinks go directly into the pocket of the bartender, Mr. Allen. On other occasions, he observed Mr. Allen ring-up money on the bar cash register for both food and alcoholic drinks. On occasions while he sat at the bar, he observed cash sale money rung up on the cash register and the actual receipt of the sale thrown into an ice bucket under the bar. Mr. Tompkins, based upon his 25 years of experience, his observations, personal purchases and knowledge of the business operation, believed that Respondent was selling more alcoholic beverages than food.

9. Ms. Debra Martin initially visited Respondent's restaurant on or about May 19, 1999, and after identifying herself as an agency employee requested access of food purchase records for April and May 1999 and was informed that the requested records were kept off premises.3 Ms. Martin testified

   that during September 1999 she requested bank statements and guest checks. Respondent could not provide guest check, and informed Ms. Martin that some guest checks were no longer kept. Ms. Martin's request for "Z" tapes went unanswered at that time.

10. The Agency introduced in evidence Respondent's income statement4 for the four-month period, January 1, 1999, through May 31, 1999, which indicated that Respondent sold 51.20 percent alcohol and 48.80 percent food during that four-month period of time. David Cary (Respondent's bookkeeper) testified that C.J. Oscars had opened the business the third week of March 1999, and Respondent's income statement related to the nine-week period from the third week of March 1999 to May 31, 1999. Mr. Cary testified that C.J. Oscars had met its required sale percentages for the eight-week period of April 1, 1999, through May 31, 1999.

11. Jack Allen, III, manager of C.J. Oscars, and Michael Batson, register expert, both testified that register Z tapes record each register transaction in sequential numbering, with the initials G.T., meaning grand total. Both witnesses testified that the register records a running total of the purchases entered and this information is recorded on the Z tapes of each register. Mr. Allen, regarding missing Z tapes, testified that during a new employee training, the trainee would practice register operation by running a Z tape, and he limited

    a new employee's training sessions to use of only two Z tapes. Mr. Allen concluded his testimony by stating that cash bar receipts were often thrown into a bucket on the bar, and as bar manager he would check the cash receipts against other records each morning, tally totals by pencil, and throw the cash receipts away.

12. Special Agent, Jim Lanza testified that of the Z tapes provided by Respondent, in response to the Agency demands, he organized into charts.5 The charts showed which Z tapes were missing, to wit: September 2, 1999, beginning with Z tape number 134 which was provided; the following sequentially number tapes were missing, 136, 137, 139, 140, 141. For October 1, 1999, beginning with Z tape number 228 which was provided, the following are examples of missing tapes, 229, 230, 232, 233.

    Mr. Lanza's charts, using the grand total of the beginning lower-numbered Z tape as the base, subtracted the beginning grand total from the next sequential grand total provided, with

    the resulting difference reflecting unreported sales. From this charting sequence, Mr. Lanza concluded that Respondent's unreported sales from missing Z tapes was $65,133.08 for the months of September 2, 1999, through October 31, 1999.

13. Charles Dawson testified in agreement with the testimony of his bar manager, Mr. Allen, regarding the use of Z tapes, the training of new employees, and cash receipts having

    been placed in a water bucket on the bar and later being thrown away. Mr. Dawson's additional reasons for the missing Z tapes, while questionable, demonstrated a persistent and recurring pattern of a lack of diligence or a practiced disregard for consequences. According to Mr. Dawson, he read and signed the SRX license affidavit, but now claims he did not understand, nor did anyone explain to him what "specific type of records" he was required to keep.6 As to cash bar sales receipts, Mr. Dawson testified that they were added together with other sales, stapled to the guest checks for a running total, compared with the Z tapes totals and cash in register totals, and then thrown away. Regarding the missing Z tapes, Mr. Dawson testified that one of his registers had broken down, and was repaired and when back in operation, the Z tape numbering system was sequentially misaligned and returned to zero; thus, the missing Z tapes. On another occasion, lighting struck a register causing it to jam and render two or more Z tapes unreadable; they were thrown away. During the few days the registers were down, either he or Mr. Allen would go to each register drawer, at the end of the business evening, take the cash totals, and give that information to Mr. David Cary, bookkeeper.

14. Charles Dawson, owner, knew of the mandatory requirement to maintain records of all gross sales of food and non-alcoholic beverages, separate records of all gross purchases

    of alcoholic purchases, and separate records of all gross retail sales of alcoholic beverages. Charles Dawson, by his actual participation in the wrongful destruction of records, permitted, approved, and condoned the continuous destruction by Ray Allen of cash sale receipts of alcoholic beverages and the destruction of register Z tapes resulting from the sale of food and alcoholic beverages by C. J. Oscars.

    CONCLUSIONS OF LAW

    
    

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

16. Section 561.20(2)(a)4., Florida Statutes, provide in pertinent part as follows:

(2)(a) No such limitation of the number of license as herein provided shall henceforth prohibit the issuance of a special license to:

* * *

4. Any restaurant . . . deriving at least 51 percent of its gross revenue from the sale of food and nonalcoholic beverages; however, no restaurant granted a special license on or after January 1, 1958, pursuant to general or special law shall operate as a package store. . . .

17. Rule 61A-3.0141(1),(2)(d),(3)(a)4, Florida

Administrative Code, provides in pertinent part as follows:

(1) Special restaurant licenses in excess of the quota limitation set forth in subsection 561.20(1), Florida Statutes, shall be issued to otherwise qualified applicants for establishments that are bona fide restaurants engaged primarily in the service of food and non-alcoholic beverages, if they qualify as special restaurant licenses as set forth in subsection (2) of this rule. Special licensees must continually comply with each and every requirement of both subsections (2) and

(3) of this rule as a condition of holding a license. Qualifying restaurants must meet the requirements of this rule in addition to any other requirements of the beverage law. The suffix "SRX" shall be made a part of the license numbers of all such licenses issued after January 1, 1958.

1. Special restaurant licenses shall be issued only to applicants for licenses in restaurants meeting the criteria set forth herein.

   
   

   * * *

   
   

   (d) An applicant for an SRX license must either hold, or have applied for, the appropriate restaurant license issued by the Division of Hotels and Restaurants prior to issuance of the temporary SRX license. The restaurant must hold the appropriate restaurant license before it will be eligible for a permanent SRX license.

   
   

   * * *

   
   

2. Qualifying restaurants receiving a special restaurant license after

   April 18, 1972, must, in addition to continuing to comply with the requirements set forth for initial licensure, also maintain the required percentage, as set forth in paragraph

   (a) or (b) below, in a bi-monthly basis. Additionally, qualifying restaurants must meet at al times the following operating requirements:

   (a) At least 51 percent of total gross revenues must come from retail sale on the licensed premises of food and non- alcoholic beverages. . . .

   1. Qualifying restaurants must maintain separate records of all purchases and gross retail sales of food and non-alcoholic beverages and all purchases and gross retail sales of alcoholic beverages.

   2. The records required in subparagraph (3)(a)1. of this rule must be maintained on the premises for

      a period of 3 years. . . .

   3. Since the burden is on the holder of the special restaurant license to demonstrate compliance with the requirements for the license, the records required to be kept shall be legible, clear, and in the English language.

3. The required percentage shall be computed by adding all gross sales of food, non-alcoholic beverages, and alcoholic beverages and thereafter dividing that sum into the total of gross sales of food plus non-alcoholic beverages.

1. DABT is statutorily empowered to suspend or revoke an alcoholic beverage license, such as the one held by Respondent, based upon any of the grounds enumerated in Section 561.29(1)(a) and (g), Florida Statutes, which in pertinent part provides:

   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 . . . .

         
         

         * * *

         
         

         (g) A determination that any person required to be qualified by the division as condition for the issuance of the license is not qualified.

         
         

2. A literal reading of Section 561.29(1), Florida Statutes, could suggest an interpretation that a licensee may have its license suspended or revoked based on a violation of state law committed by its agents, officers, servants, or employees on the licensed premises, regardless of the licensee's own personal fault or misconduct in connection with the unlawful activity.

3. Under well established case law, Florida courts have consistently held that a licensee's license may be suspended or revoked pursuant to Section 561.29(1)(a), Florida Statutes, only if it is determined that the licensee is culpably responsible for the violation as a result of his own negligence, his intentional wrongdoing, or his lack of diligence. See Pic N' Save v. Department of Business Regulation, 601 So. 2d 245 (Fla.

   1st DCA 1992) and the cases cited therein. In Pic N' Save, employees of the licensee sold alcoholic beverages to underage patrons on several different occasions, notwithstanding owner's

   training and repeated reminders to check I.D.'s. In that situation the Court found the licensee engaged in conduct, which was, in retrospect, reasonable under the circumstances.

4. In this case, however, the evidence has shown, in retrospect, that the licensee's entire conduct demonstrated a want of care that raises the presumption of indifference to the possible consequences. Respondent's various excuses for the missing Z tapes, "lightening struck his cash register,"; "after the night manager's pencil tally of the bar register, those [Z]tapes were no longer needed"; and "the manager's pencil tally

   [s] from the bar registers and a separate tally from the dining room register[s] recorded sales are all the records "[we have], evidence Respondent's "want of care" to comply with those responsibilities imposed by the rule and under the statute. Respondent's claim of not fully understanding what type of "records" where required to be kept, further evidence "a clear example of Respondent's indifference to the consequences [suspension or revocation]."

5. In a disciplinary proceeding, the burden is upon the agency to establish facts upon which its allegations of misconduct are based, Balino v. Department of Health and

   Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977).

   
   

   Not only must the proof at the hearing be that conduct charged in the accusatorial document, but also that conduct must legally

   fall within the statute or rule the Agency claimed to have been violated. It is a basic tenet of common law pleading that "the allegta and probata must correspond and agree." See Rose v.

   State, 507 So. 2d 630, 632 (Fla. 5th DCA 1987).

   
   

6. It is now settled in Florida that a business license is subject to suspension or revocation only upon proof by clear and convincing evidence of the alleged violations. DABT must prove the material allegations found in its Administrative Compliant by clear and convincing evidence. Department of

   Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern and Company et al., 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987); Evans Packing Co. v. Department of Agriculture, 550 So. 2d 112

   (Fla. 1st DCA 1989)

   
   

7. As to Count I of the Administrative Complaint, DABT has shown by clear and convincing evidence that Respondent was culpably responsible for the failure of the business, C.J. Oscars Restaurant, to maintain food and non-alcoholic beverages sales at 51 percent of the total revenues derived from food and non-alcoholic beverages during the period of April 1, 1999, through May 31, 1999.

8. With regard to Count II of the Administrative Complaint, DABT has shown by clear and convincing evidence that Respondent's negligence and careless disregard was the primary

   cause for the failure of the business to maintain and produce separate records of all purchases and gross retail sales of food and non-alcoholic beverages and all purchases and gross retail sales of alcoholic beverages during the period of April 1, 1999, through May 31, 1999.

9. As to Count III of the administrative complaint, DABT has shown by clear and convincing evidence that Respondent has failed to maintain and to produce separate records of all purchases and gross retail sales of food and non-alcoholic beverages. Respondent has failed to maintain and to produce separate records of all purchases of gross retail purchases and gross retail sales of alcoholic beverages during the period of September 1, 1999, through October 31, 1999, was due to the careless disregard of the consequences by Respondent.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, and a review of the penalty guidelines in Rule 61A-2.022, Florida Administrative Code, it is recommended that the Department of Business and Professional Regulation enter a final order revoking Respondent's Alcohol Beverage License

SRX4COP Number 46-04601.

DONE AND ENTERED this 13th day of April 2001, in Tallahassee, Leon County, Florida.

FRED L. BUCKINE

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 13th day of April, 2001.

ENDNOTES

1. Petitioner Exhibit number 3, Special Restaurant Affidavit, page 1, (7)(a), (b), (c), (d) and (e), signed by Charles Dawson on March 21, 1999, details the required records to be kept by the licensee.

   
   

2. The licensee in this case is an incorporated business entity, Dawson, Fabrizzi and Fletcher, Incorporated, with one of the owners, Charles Dawson, managing the operation of C.J. Oscars Restaurant. Allegations by DBAT are made against the licensee. Statutory compliance as a condition of licensee's ownership is the legal responsibility of the incorporated entity licensee. In this case the corporate entity licensee, Dawson, Fabrizzi, and Fletcher, is responsible and accountable for the conduct of Charles Dawson, its president. Section 561.01(14), Florida Statutes.

   
   

3. Under Rule 61A-3.0141(3)(b)& (c), Florida Administrative Code, it is permissible for an SRX licensee to maintain the required records of total gross purchases and gross revenues from retail sale on the licensed premises off premises in the office of an accountant or other specified persons with prior written approval by DABT. This permissive option does not change, alter nor negate to obligation to keep nor the type of records to be kept by the licensee.

4. C.J. Oscar's Income Statement(s), (Exhibit 5, 5 page composite) consisting of total sales of beer, wines, etc. and total sales of food, are not the records required by statute to be kept. An Income Statement reflects totals of the accountant's compilation derived from other source documents of individual purchases and individual sales of alcoholic beverages and individual purchases and individual sales of non-alcoholic beverages and foods. The latter, records of individual purchases and of individual sales, are required by the cited statute to be kept and provided by a SRX licensee upon demand.

   
   

5. Charts, Petitioner's Exhibit number 7.

   
   

6. Rule 61A-4.063(8), Florida Administrative Code, clearly defines the keeper of records and the records to be kept. Subsection (8) states clearly that "Each vendor licensed ... shall maintain complete and accurate records ... Records include purchase invoices, inventory records, receiving records, cash register tapes (Z tapes) computer records ... and any other records used in determining sales."

COPIES FURNISHED:

John Charles Coleman, Esquire Coleman & Coleman

2300 McGregor Boulevard Post Office Box 2089

Fort Myers, Florida 33902-2089

Mr. Charles Dawson, Vice President Dawson, Fabrizzi & Fletcher, Inc. C/O C. J. Oscars

1502 Miramar Street

Cape Coral, Florida 33904

Michael Martinez, Esquire Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-1007

Richard Turner, Director Division of Alcoholic Beverages

and Tobacco

Department of Business and Professional Regulation

1940 North Monroe Street Tallahassee, Florida 32399-0792

Hardy L. Roberts, III, General Counsel Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-1007

Captain Al Nienhuis

Division of Alcoholic Beverages and Tobacco 4100 Center Point Drive, Suite 104

Fort Myers, Florida 33916

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 must be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 00-003892

Orders for Case No: 00-003892