STATE OF FLORIDA Division of Administrative Hearings FILED DEPARTMENT OF BUSINESS AND PROFESSIONA GULATION 7 -| 5 CH DIVISION OF ALCOHOLIC BEVERAGES AN DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, DIVISION OF ALCOHOLIC BEVERAGES AND TOBACCO, Petitioner, vs. J. J. TAYLOR COMPANIES, INC. d/b/a J. J. TAYLOR DISTRIBUTING MIAMI ~ Respondent. FINAL ORDER Final Order No. BPR-97-07932 Date |0-3)-97 FILED Dept. of Business and Professional Regulation AGENCY CLERK Sarah Wachman, By: or a Ane aig CASE NO. IA 23 962668 LICENSE NO. 23-07951 SERIES JDBW Oy -444| Wo) eee The Director, Division of Alcoholic Beverages and Tobacco, Department of Business and Professional Regulation (Division), after consideration of all records and other evidence regarding this case on file with the Division, hereby enters this Final Order. PRELIMINARY STATEMENT 1. On February 28, 1997, the Division issued an Administrative Action which alleged that Respondent, J. J. Taylor Companies, Inc. d/b/a J. J. Taylor Distributing Miami, through its agents, servants, or employees, sold alcoholic beverages to a vendor on the “no sale list,” in violation of s. 562.42(5), Fla. Stat. The Administrative Action advised the Respondent of its right to request a hearing pursuant to Chapter 120, Florida Statutes. 2. On March 14, 1997, Respondent answered the Administrative Action by letter and requested a formal hearing, which was scheduled for June 17, 1997. 3. On June 17, 1997, the Division of Administrative Hearings (DOAH) conducted a hearing in Miami, Florida, by video teleconference, with Administrative Law Judge Susan B. Kirkland presiding. The hearing was conducted in accordance with ss. 120.569 and 420.57(1), Florida Statutes, (Supp. 1996). On July 10, 1997, the Administrative Law Judge filed her Recommended Order in this cause. The Division’s counsel filed exceptions to the Recommended Order on July 25, 1997. NG ONE PTIONS FILED BY DIVISION The Division's counsel has filed exceptions to paragraphs 15 and 16 of the Conclusions of Law, and to the recommended penalty. 4. In the exception to paragraph 15, the Division’s counsel challenges the conclusion of taw that the Division did not prove that Respondent “failed to exercise due diligence in supervising the salespersons who made the prohibited sales to Miami Supermarket," and that “[t]he evidence does not establish that the actions of the salespersons were flagrant.” The Division’s counsel argues that the recommended order, particularly paragraph 15, incorrectly limited its analysis of Respondent's due diligence with respect top salespersons and of the “flagrancy” of the violations to the actions of Respondent's salespersons and ignored any discussion of the Respondent's action or inaction in relation to its computer data entry personnel. The recommended order does 2 appear to focus almost exclusively on the activities of the salespersons and addressed the issue of “flagrancy” only from the perspective of the salespersons rather than that of Respondent. Although it was in fact the salespersons who actually made the sales to Miami Supermarket, the focus should be on the conduct of the Respondent in relation to its entire business. 5. It appears that the Administrative Law Judge has misapplied the cases regarding “flagrant” violations of law. Although courts have found that licensees can be held liable for “flagrant” violations committed by agents of the licensee, this does not translate into a rule of law that a licensee cannot be held liable for violations committed by its agents unless the violations can be accurately described by the Oxford English . Dictionary definition of “flagrant.” The use of the term “flagrant” is meant only to convey that licensees should not be held responsible for surreptitious or concealed activities which they would not discover even with diligent oversight of the licensed business. The Administrative Law Judge concludes that the actions of the salespersons were not “flagrant,” but does not explain how to apply this “flagrant” standard to a transaction which occurs away from the licensed premises. The cases cited by the Administrative Law Judge in the recommended order and by Respondent in its proposed recommended order al! involve activities occurring on the licensed premises. Here, the issue of “flagrancy” must focus on facts beyond the off-premises transaction between the salesperson and the vendor, and must take into account all factors within Respondent's control which may have led to the violation. Particularly, the analysis should include how Respondent's action or inaction led to its failure to heed the Division’s twenty-two notices regarding Miami 3 Supermarket Because the recommended order fails to properly apply this legal standard, the exception to paragraph 15 is accepted, and will be incorporated into this Order below. 6. In its exception to paragraph 16, the Division’s counsel challenges the conclusion of law that the prohibited sales occurred as a result of “one inaccurate data entry.” Division’s counsel notes that in the. Findings of Fact, paragraph 4, the Administrative Law Judge found that following the placement of Miami Supermarket on the no sale list, the Division mailed weekly notices to Respondent of Miami Supermarket’s status for four months. Furthermore, in paragraph 6 of the Findings of Fact, the Administrative Law Judge found that “[a]lthough [Respondent] received additional notices that Miami Supermarket was on the no sale list, the data entry employee continued to fail to change the cash only entry to a no sale entry.” It is clear from the Findings of Fact that more than one error occurred which resulted in the prohibited sales. Accordingly, the exception to paragraph 16 is accepted, and will be incorporated into this Order below. 7. Division's counsel also disputes the relevance of paragraphs 7, 8, and 9 of the Administrative Law Judge’s findings of fact. It is not clear whether Division’s counsel actually seeks exceptions to these paragraphs. Division's counsel's objections to the relevance of these findings may be well taken, but the findings are supported by competent and substantial evidence. Accordingly, any exception that Division’s counsel may have to these findings is rejected. FINDINGS OF FACT 8. The Division hereby adopts and incorporates by reference the Findings of Fact numbered 4 through 9, as set forth in the Recommended Order. CONCLUSIONS OF LAW 9. The Division hereby adopts and incorporates by reference paragraphs 10 through 14 of the Conclusions of Law as set forth in the Recommended Order. 10. | Paragraph 15 of the Recommended Order is substituted with the following: Unlike the above-cited cases, the violations here occurred off the licensed premises, in a location where Respondent and its managers could not be expected to observe the transactions. The actual violations in this case may have been committed by the salespersons, but whether the salespersons acted in good faith or acted flagrantly is for the most part irrelevant. It may be true that the salespersons did not make the erroneous computer entry regarding Miami Supermarket's status. It may be true that the salespersons acted in accordance with the information available on the computer. It may be true that the vendor did not tell the salespersons that it was on the no sale list, although the vendor is certainly under no obligation to inform distributors of this fact. See s. 561.42(5), Fla. Stat. The violations were not necessarily the result of any wrongdoing on the part of the salespersons, but were the direct result of Respondent's failure to heed the Division's twenty-two notices that Miami Supermarket was on the no sale list. Respondent places the blame on “computer error,” because its data entry personnel failed to place Miami Supermarket on the no sale list in its computer system when Respondent first received notice, and the subsequent notices were ignored. However, it is in fact Respondent's procedures that resulted in the failure to place Miami Supermarket on the no sale list in its computer system. Respondent's procedures, which allow it to ignore 5 repeated notices from Division, must be attributed to Respondent, particularly in view of the unrebutted testimony that Mr. Cueto personally received the twenty-two notices from the Division. Respondent's failure to heed twenty-two separate notices from the Division certainly should be characterized as “flagrant” and demonstrates failure to exercise diligence in the management of the licensed business. 11. | Paragraph 16 of the Recommended Order is substituted with the following: The primary purpose of s. 561.42(5) is to prevent an unlawful extension of credit by distributors to vendors who do not pay their bills. An effect of this statute, however, is that it prevents vendors who use poor business practices with distributors from receiving alcoholic beverages. The statutes deters vendors from failing to pay its suppliers, but the system works only if every distributor honors the no sale list. If just one distributor fails to honor the no sale list, the deterrent effect is utterly defeated. By selling to a vendor on the no sale list, Respondent reaps the benefit of being the sole source of alcoholic beverages to the wayward vendor. The vendor receives no motivation to improve its business practices, because there is a distributor sells them alcoholic beverages regardless. By contrast, other distributors who honor the no sale list, including the distributor who the vendor failed to pay in the first place, suffer decreased business and are left with no recourse other than to have the Division file an action against the distributor who made the sale. The Division treats the no sale list seriously enough to send out weekly notices to the distributors. Respondent should be expected to ensure that every reasonable step is taken to prevent sale from occurring in violation of the no sale list. Respondent's procedures, which allow it to ignore twenty-two notices from the Division 6 based on its failure to heed the first notice, are the direct cause of the violations in this case. 12. The Division has established by clear and convincing evidence that Respondent has violated s. 561.42(5), Florida Statutes. The Division's penalty guidelines, Rule 61A-2.022, F.A.C., call for a $1,000 civil penalty for this violation, but no suspension of the license. Although no license suspension is warranted in this action, the mitigation presented by Respondent is insufficient to justify a departure from the guideline penalty of $1,000. 13. This increase in penalty from the recommended order was based on a review of the complete record. ORDER Based upon the foregoing Findings of Fact and Conclusions of Law, it is ordered that Respondent shall pay a $1,000 civil penalty, due 15 days from the date of this Order. octane DONE AND ORDERED this _“AY_ day of September, 1997. BNSC AY, ICHARD A. BOYD, Director Division of Alcoholic Beverages and Tobacco 1940 North Monroe Street Tallahassee, Florida 32399-1020 (904) 488-3227 RIGHT TO APPEAL RIGHT TO APPEAL This Final Order may be appealed pursuant to Section 120.68, Florida Statutes, and Rule 9.110, Florida Rules of Appellate Procedure, by filing a Notice of Appeal conforming to the requirements of Rule 9.110(d), Florida Rules of Appellate Procedure, both with the appropriate District Court of Appeal and with this agency within 30 days of rendition of this Order, accompanied by the appropriate filing fee. THIS ORDER SERVED ON BY DATE Copies furnished: Louis J. Terminello, Esq. Chadroff, Terminello & Terminello 2700 S.W. 37th Avenue Miami, Florida 33133-2728 Susan B. Kirkland, Administrative Law Judge Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, Florida 32399 Chief T.P. Wheeler Bureau of Law Enforcement Major Jorge Herrera Miami District Supervisor Miguel Oxamendi Office of General Counsel Thomas D. Winokur Office of General Counsel

Docket for Case No: 96-004112