STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
STATE OF FLORIDA, DEPARTMENT OF ) BUSINESS REGULATION, DIVISION OF ) ALCOHOLIC BEVERAGES AND TOBACCO, )
)
Petitioner, )
)
vs. ) CASE NO. 78-1808
)
ANHEUSER-BUSCH, INC., )
)
Respondent. )
)
RECOMMENDED ORDER
THIS CASE came on for consideration after a Notice to Show Cause had been filed by the Petitioner, State of Florida, Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, against the Respondent, Anheuser- Busch, Inc., under the Petitioner's case No. 29056-A. The Respondent requested a hearing pursuant to the provisions of Section 120.57, Florida Statutes, and a hearing was held before the undersigned Hearing Officer with the Division of Administrative Hearings, at Room 103, Collins Building, Tallahassee, Florida, at 9:30 a.m. on May 22, 1979.
APPEARANCES
For Petitioner: Dennis LaRosa, Esquire
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
For Respondent: T. Paine Kelley, Jr., Esquire
Macfarlane, Ferguson, Allison & Kelly Post Office Box 1531
Tampa, Florida 33601
and
T. Michael Carpenter, Esquire Associate General Counsel Anheuser-Busch, Inc.
725 Testalozzi Street
St. Louis, Missouri 63118
ISSUES
The issues in this case are as set forth in the attached copy of the Notice to Show Cause and by its attachment this copy becomes a part of the Recommended Order. This Notice to Show Cause in its various counts raises the question of whether the action of the Respondent which took place on March 21, 1978, through its "bar spending" practice (i.e., the practice of a representative of manufacturer or a wholesaler purchasing drinks for consumers at the premises of
a retail licensee) has violated the provisions of Subsection 561.42(1), Florida Statutes.
FINDINGS OF FACT
By agreement and stipulation the parties, in the person of their counsel, have offered a Statement of Facts. This Statement of Facts is accepted by the Hearing Officer to be the evidential fact determination from which the outcome of the matters here in dispute will be concluded. To that end the Statement of Facts is attached to this Recommended Order and made a part of the Recommended Order. This stipulation of the Statement of Facts appears as it was offered at the time of the formal hearing conducted on May 22, 1979.
The Respondent, as a brewer of malt beverages licensed under the laws of Florida, has been charged with the giving of financial aid and assistance to a number of vendors licensed by the State of Florida. There are sixteen licensed vendors named in the allegation in eighteen separate counts. This activity on the part of the Respondent has purportedly violated the conditions of Section 561.42, Florida Statutes (1977), which contains the following language:
Section 561.42 Tied house evil; financial aid and assistance to vendor by manufacturer or distributor prohibited; procedure for enforcement; exception.--
No licensed manufacturer or distributor of any of the beverages herein referred to shall have any financial interest, directly or indirectly, in the establishment or business of any vendor licensed under the Beverage Law, nor shall such licensed manufacturer or distributor assist any vendor by any gifts or loans of money or property of any description or by the giving of any rebates of any kind whatsoever. No licensed vendor shall accept, directly or indirectly, any gift or loan of money or property of any description or any rebates from any such licensed manufacturer or distributor; provided, however, that this shall not apply to any bottles, barrels, or other containers necessary for the legitimate transportation of such beverages, or advertising materials, and shall not apply to the extension of credit, for liquors sold, made strictly in compliance with the provisions of this section.
This particular provision of law has application to the malt beverage business through the finding of the Florida Supreme Court in Castlewood International Corp. vs. Wynne, 294 So.2d 321 (Fla. 1974).
The specific portions of Subsection 561.42(1), Florida Statutes (1977), which are at issue in this cause, are those provisions dealing with the meaning of the words "gifts" and "rebates" found in the subject Subsection. (The parties, in the course of their argument, conceded that the portion of that Subsection dealing with loans of money or property is not to be regarded.)
In determining the meaning of the words "rebates" and "gifts", as set forth in Subsection 561.42(1), Florida Statutes (1977), the Petitioner has promulgated rules in the Florida Administrative Code which define those terms. The recitation of those roles is as follows:
7A-1.09 Rebate. The term 'rebate' (often referred to as accumulative promotion or retroactive discount) shall include any refund or discount made or allowed other than such discounts as are permitted under Section 561.42, Florida Statutes; and as such they are prohibited.
7A-1.10 'Gift'. The term `gift' shall apply to the giving of free goods or things of value as a discount not otherwise permitted by law or reward for purchasing any given quantity of alcoholic beverages whether at one time or over a period of time; and as such they are prohibited.
A close reading of the role definition of "rebate", establishes that rebates as considered in cases interpreting the meaning of the beverage laws in the State of Florida; rebates which constitute accumulative promotion or retroactive discounts; and refunds or discounts made or allowed other than such discounts permitted under Section 561.42, Florida Statutes, are prohibited by Subsection 561.42(1), Florida Statutes, as implemented by the definitional statement found in Rule 7A-1.09, Florida Administrative Code. This definition found in the rule establishes the parameters for prosecuting claims against this Respondent.
Likewise, the definition found in Rule 7A-1.10, Florida Administrative Code, dealing with the term "gifts" sets the limits beyond which Petitioner may not venture in its efforts to penalize the Respondent for alleged violations of Subsection 561.42(1), Florida Statutes (1977) premised on the theory that the licensee has given a vendor a gift. "Gift" within the meaning of the rule is constituted as the giving of free goods; the giving of things of value as a discount not otherwise permitted by law; or the giving of a reward for purchasing any given quantity of alcoholic beverages either at one time or over a period of time.
In examining the numerous possibilities for establishing a "rebate" or "gift", the most reasonable beginning is to establish those discounts which are allowed. The reference in the rule defining "rebate" describes this form of discount as a discount permitted by Section 561.42, Florida Statutes. In particular, Subsection 561.42(6), Florida Statutes (1977), provides:
(6) Nothing herein shall be taken to forbid the giving of trade discounts in the usual course of business upon wine and liquor sales.
Therefore, any discount given in the usual course of business is allowed. Moreover, in view of the construction of the grammar in Rule 7A-1.09, Florida Administrative Code, dealing with "rebates", any refund given in the ordinary course of business will be allowed. Turning to that element of the definition of "gifts" found in Rule 7A-1.10, Florida Administrative Code, which establishes that discounts net otherwise permitted by law are prohibited, when that language is considered in view of the statement of Subsection 561.42(6), Florida Statutes
(1977), it demonstrates that trade discounts in the usual course of business are not gifts.
A discount in the usual course of business is defined in Subsection 561.01(10), Florida Statutes (1977), which states:
'Discount in the usual course of business means a cash discount given simultaneously at the time of sale. The same discounts shall be offered to all vendors buying similar quantities. Any discount which is in violation of this section shall be considered an arrangement for financial assistance by gift.
The next point in the inquiry is whether the activities in the case sub judice, constitute the giving of a discount in the usual course of business from the manufacturer to vendors. Obviously, the answer is no. Whatever final characterization should be given the activities, they were not cash discounts given simultaneously at the time of a sale between the manufacturer and vendors in the sixteen establishments. Consequently, the conflict must be resolved by the systematic analysis of the remaining terms and phrases found in the definitions set out in Rules 7A-1.09 and 7A-1.10, Florida Administrative Code.
The first of these terms and phrases to be examined is the term "rebate". This terminology involves a consideration of the meaning of the term "rebate" in its common meaning and the term "rebate" as specifically defined in the subject rule, as being an accumulative promotion or retroactive discount.
The Petitioner in its Proposed Recommended Order advances the economic theory that a vendor may not assume that his products will be sold within a given period or at a given price. Under this theory, the Respondent's purchase of the beer at retail prices reduced the vendor's cost of acquisition giving him a so-called automatic and predictable profit, thereby effecting a "rebate" of the vendor's purchase price by increasing cash flow and giving a guaranteed profit to the vendor. This theory in the mind of the Petitioner is supported by the fact that when free beer was given to customers of a vendor, the reasonable implication is that the vendor would give away more products during the free beer party time sequences then he would normally sell during the free beer party time sequence. That hypothetical may be true; however, the facts stipulated to in the course of this hearing do not establish that more beer was consumed on the premises because it was given away than would have been the case if the patrons had to pay the retail price, and no official notice or recognition can be taken of that proposal. To establish the desired facts, the Petitioner would need to have proved these facts or gained a stipulation from the Respondents to that effect. Having failed to establish the increased volume theory, the Petitioner is unable to demonstrate increased profits due to increased volume, ergo there is no "rebate" or retroactive discount that has been shown by the Petitioner in its proof. Moreover, the ordinary meaning of the word "rebate" does net lend itself to the establishment of a "rebate" by the evidential facts adduced in this hearing. (See Black's Law Dictionary, Revised Fourth Edition's definition of the term "rebate".)
Again, looking at the definition of "rebate" in the subject role dealing with the terms "refund" or "discount", there is no showing that the Respondent was repaying, making restoration or returning money to the vendors as a form of restitution or repayment when it purchased the alcoholic beverages for
the benefit of the patrons of the vendor, (see Black's Law Dictionary, Revised Fourth Edition's definition of the term "refund", and it has already been concluded that the payment from the manufacturer to the vendor was not a retroactive discount. There is no showing that the vendors paid any less than usual when they purchased the products which were subsequently given away to the general public and paid for by the Respondent at the usual prices.
The Petitioner has also failed to prove that the "bar spending" constituted a "gift" within the meaning of Rule 7A-1.10, Florida Administrative Code. The free goods that were given were goods given to the general public and, absent a showing that the volume of sales would have been increased due to Respondent's purchase of the alcoholic beverages, it cannot be shown that the vendors were extended free goods. (The discount theory offered under the definition of "gift" has been discussed in examining the meaning of the word "rebate", and no further reference is necessary.) Additionally, it has not been shown that any form of reward was extended to the vendors for purchasing given quantities of alcoholic beverages either upon a single event or over a period of time, because the proof is insufficient to demonstrate that any greater volume of alcoholic beverage was sold under the "bar spending" arrangement, than would have bean sold ordinarily and having failed to make that showing, it cannot be successfully argued that the vendors reaped the rewards of extra profits from the activities which transpired in their licensed premises, either as direct profits on sales or tips for its employees. Finally, the Petitioner's assertion that the mere act of having the promotional staff of the Respondent put on the bar party constituted a "gift" or reward is not convincing for reason that the proof does not indicate that particular benefit.
In summary, Petitioner has failed to prove that the activities constituted "rebates" or "gifts" within the meaning of Subsection 561.42, Florida Statutes (1977), and although the Petitioner may be philosophically opposed to the arrangement which this Respondent had with the several vendors to promote "bar spending" in the licensed premises of the vendors, to reach that result it would be necessary to strain the construction of Subsection 561.42(1), Florida Statutes (1977), and its attendant Rules 7A-1.09 and 7A-1.10, Florida Administrative Code, beyond allowable bounds.
The parties have availed themselves of the opportunity to submit Proposed Findings of Fact, Conclusions of Law and Recommendations and to the extent that these proposals are consistent with this Recommended Order they have been considered and utilized; to the extent that they are inconsistent with this Recommended Order, they are, after consideration, specifically rejected.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this cause.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 21, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 2, in the amount of $361.00, to Suder Goodrich, Inc., d/b/a Mac's Bar.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 21, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of
Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 4, in the amount of $210.00, to Gregory L. Caldwell, d/b/a The Pub.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 21, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 1, in the amount of $440.00, to 427 N. Atlantic Ave., Inc., d/b/a Big Mothers.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 21, 1978, the Respondent, Anheuser-Busch, Inc., by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 2, in the amount of $150.00, to 427 N. Atlantic Ave., Inc., d/b/a Big Mothers.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 21, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 3, in the amount of $310.00, to Ann L. Metz, d/b/a Enter-Metz-O
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 21, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 3, in the amount of $750.00, to Jeane B. Hall, d/b/a Pit Stop Arcade.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 22, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 7, in the amount of $280.00, to F.B. & L., Inc., d/b/a Shark Lounge & Package.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 22, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 5, in the amount of $356.00, to Boot Hill, Inc., d/b/a Boot Hill Saloon.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 22, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 8, in the amount of $385.00, to Oliver A. Bell, d/b/a Carnival Motor Inn.
Based upon a full consideration of the facts herein, it is concluded as a matter of law than the Petitioner has failed to prove that on or about March 23, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of
money or property or by giving a rebate, to-wit; a check, Check No. 13, in the amount of $276.00, to Douglas Silver, dab/a Blackbeard's Tavern.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 23, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 6, in the amount of $200.00, to Grady Scott Hensley, d/b/a The Elbow Room.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 23, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 5, in the amount of $900.00, to Consolidated Inns of Daytona Beach, Inc., d/b/a Holiday Inn Surfside.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has foiled to prove that on or about March 23, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check--three checks totaling $640.00, to Sam L. Barry, d/b/a Broadway Sam's.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 24, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 9, in the amount of $240.00 to P.J.'S of Daytona, Inc., d/b/a P.J.'S.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 24, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 14, in the amount of $270.00, to Pink Pussy Cat, Inc., d/b/a Red Garter Club.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 24, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 5, in the amount of $850.00, to McMillian and Wright, Inc., d/b/a The Ocean Pier.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 24, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of money or property or by giving of a rebate, to-wit; a check, Check No. 6, in the amount of $150.00, to McMillian and Wright, Inc., d/b/a The Ocean Pier.
Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Petitioner has failed to prove that on or about March 24, 1978, the Respondent, Anheuser-Busch, Inc., violated the provisions of Subsection 561.42(1), Florida Statutes (1977), by the giving of a gift, loan of
money or property or by giving of a rebate, to-wit; a check, Check No. 8, in the amount of $420.00, to Daytona Safari Motel, Inc., d/b/a The Wreck.
It is recommended that the allegations in this cause be DISMISSED. DONE AND ORDERED this 15th day of June, 1979, in Tallahassee, Florida.
CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301
(904) 488-9675
COPIES FURNISHED:
Dennis LaRosa, Esquire
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
T. Michael Carpenter, Esquire Associate General Counsel and
Donald S. McDonald, Esquire, General Counsel Anheuser-Busch, Inc.
721 Testalozzi Street St. Louis, MO 63118
Paine Kelly, Jr., Esquire Macfarlane, Ferguson, Allison & Kelly Post Office Hex 1531
Tampa, Florida 33601
Attachment 1 STATE OF FLORIDA
DEPARTMENT OF BUSINESS REGULATION DIVISION OF BEVERAGE TALLAHASSEE, FLORIDA
NOTICE TO SHOW CAUSE - NOTICE OF INFORMAL CONFERENCE
NOTICE TO SHOW CAUSE WHY YOUR DIVISION OF BEVERAGE LICENSE/CIGARETTE PERMIT SHOULD NOT HAVE A CIVIL PENALTY ASSESSED AGAINST IT OR BE SUSPENDED OR REVOKED.
LICENSE OR PERMIT NUMBER 26-1312 YOU ANHEUSER-BUSCH, INC.
TRADING AS ANHEUSER-BUSCH, INC.
LOCATED 111 Busch Drive, Jacksonville Florida
are hereby notified by the Director of the Division of Beverage, Department of Business Regulation, State of Florida, that he has been presented certain evidence which, if true, is good and sufficient cause for him, pursuant to Section 561.29/210.16, Florida Statutes, to assess a civil penalty against or to suspend or revoke your Division of Beverage license/permit, license/permit number 26-1312 issued to you by the State of Florida under the laws of Florida for the current license year, or any renewal thereof, over which the Division of Beverage has jurisdiction said cause being for any one of the following:
On or about the 21st day of March, 1978, you ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; JACK FORST, did financially assist a retail vendor, to wit; SUDER-GOODRICH, INC., DBA MAC'S BAR, Licence number 74-452, located at 2000 S. Atlantic Avenue, Daytona Beach Shores, Volusia County, FL, by the giving of a gift, loan of money or property or by the giving of a rebate, to wit; check, check number 2, in the amount of
$361.00, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT, and
endorsed by SUDER GOODRICH, INC. MAC'S BAR,
contrary to F.S. 561.42 (1).
On or about the 21st day of March, 1978, you ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employe, to wit; JACK FORST, did assist financially, a retail vendor, to wit; GREGORY L. CALDWELL, DBA THE PUB, License number 74-837, located at 3304 S. Atlantic Avenue, Daytona Beach Shores, Volusia County, FL, by the giving of a gift, loan of money or property or by the giving of a rebate, to wit; a check, check number 4, in the amount of
$210.00, dated March 21, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT
and endorsed by THE PUB, contrary to F.S. 561.42(1).
On or about the 21st day of March, 1978, you ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; MIKE FEHLING, did assist financially, a retail vendor, to wit;
427 N. ATLANTIC AVE., INC., DBA BIG MOTHERS, License number 74-210, located at 525 N. Atlantic Avenue, Daytona Beach, Volusia County,
Florida, by the giving of a gift, loan of
money or property or by the giving of a rebate, to wit; a check, check number 1, in amount of
$440.00, dated March 21, 1978, drawn on the
account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT
and endorsed by BIG MOTHERS DISCO, 427 N. ATLANTIC., INC., contrary to F.S. 561.42(1).
On or about the 21st day of March, 1978, you ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; MIKE FEHLING, did assist financially, a retail vendor, to wit;
427 N. ATLANTIC AVE., INC., DBA BIG MOTHERS, License number 74-210, located at 525 N. Atlantic Avenue, Daytona Beach, Volusia County,
Florida, by the giving of a gift, loan of
money or property or by the giving of a rebate, to wit; a check, check number 2, in the amount of $150.00, dated March 21, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT
and endorsed by BIG MOTHERS DISCO, 427 N. ATLANTIC, INC., contrary to F.S. 561.42 (1).
On or about the 21st day of March, 1978, you, ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; JACK FORST, did assist financially, a retail vendor, to wit; ANN L. METZ, DBA. ENTER METZO #1, License number 74-205, located at 3278 S. Atlantic Avenue, Daytona Beach Shores, Florida, Volusia County, by the giving of a rebate, to wit; a check, check number 3, in the amount of
$310.00, dated March 21, 1978, drawn on the account of ANHEUSER BUSCH DISBURSEMENT ACCOUNT
and endorsed by ENTER-METZ-O, contrary to F.S. 561.42(1).
On or about the 22nd day of March, 1978, you ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; MIKE FEHLING did financially assist a retail vendor, to wit; JEANE B. HALL, DBA, PIT STOP ARCADE, License number 74-722, located a 1114 Main Street, Daytona Beach, Volusia County, Florida, by the giving of a rebate, to wit; a check, check number 3, in the amount of $750.00, dated March 22, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT and endorsed by PIT STOP ARCADE, J. HALL, contrary to F.S. 561.42 (1).
On or about the 22nd day of March, 1978, you, ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; JACK FORST, did financially assist a retail vendor, to wit;
F.B. & L., INC., DBA, SHARK LOUNGE, License number 74-372, located at 730 Broadway Avenue,
Daytona Beach, Volusia County, Florida, by the giving of a rebate, to wit; a check, check number 7, in the amount of $280.00, dated March 22, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT and
endorsed by SHARK LOUNGE & PACKAGE, contrary to F.S. 561.42(1).
On or about the 22nd day of March, 1978, you, ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; MIKE FEHLING, did financially assist a retail vendor, to wit; BOOT HILL, INC., DBA BOOT HILL SALOON, License number 74-5, located at 310 Main Street, Daytona Beach, Volusia County, Florida, by the giving of a rebate, to wit; a check, check number 5, in the amount of $356.00, dated March 22, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT, and endorsed by BOOT HILL, INC., contrary to F.S. 561.42(1).
On or about the 22nd day of March, 1978, you, ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; JACK FORST, did financially assist a retail vendor, to wit; OLIVER A. BELL, DBA CARNIVAL MOTOR INN, by the giving of gifts, loans or money or property or by the giving of a rebate, to wit; a check, check number 5, dated March 22, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT and endorsed by CARNIVAL MOTOR INN BAR, MANAGERS ACCOUNT, FRIDAY'S NIGHT CLUB
contrary to F.S. 561.42(1).
On or about the 23rd day of March, 1978, you ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; JACK FORST, did financially assist a retail vendor, to wit; DOUGLAS SILVER, DBA BLACKBEARD'S TAVERN, by the giving of gifts, loans of money or property or by the giving of a rebate, to wit; a check, check number 13, in the amount of
$276.00, dated March 23, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT
and endorsed by BLACK BEARD'S TAVERN, SILVER, contrary to F.S. 561.42(1).
On or about the 23rd day of March, 1978, you ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; MIKE FEHLING, did financially assist a retail vendor, to wit; GRADY SCOTT HENSLEY, DBA, THE ELBOW ROOM, by
the giving of gifts, loans of money or property or by the giving of a rebate, to wit; a check, check number 6, in the amount of
$200.00, dated March 23, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT
and signed by SCOTT HENSLEY, contrary to F.S. 561.42(1).
On or about the 23rd day of March, 1978, you, ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; MIKE FEHLING, did financially assist a retail vendor, to wit; CONSOLIDATED INN OF DAYTONA BEACH, INC., DBA HOLIDAY INN SURFSIDE, by the giving of gifts, loans of money or property or by the giving of a rebate, to wit; a check, check number 5, in the amount of $900.00, dated March 23, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT and endorsed by CONSOLIDATED INNS OF DAYTONA BEACH, INC., DBA
HOLIDAY INN SURFSIDE, contrary to F.S. 561.42(1).
On or about the 23rd day of March, 1978, you, ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; JACK FORST, did financially assist a retail vendor, to wit; SAM L. BERRY, DBA BROADWAY SAM'S, by the giving of gifts, loans of money or property or by the giving of a rebate, to wit; a check -
three checks totaling $640.00, contrary to F.S. 561.42(1).
On or about the 24th day of March, 1978, you, ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; MIKE FEHLING, did financially assist a retail vendor, to wit; P.J.'S OF DAYTONA, INC., DBA, P.J.'S, License number 74-473, located at 400 Broadway Avenue Daytona Beach, Volusia County, Florida, by the giving of gifts, loans of money or property or by the giving of rebate, to wit; a check, check number 9, in the amount of $240.00
dated March 24 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT, contrary to F.S. 561.42(1).
On or about the 24th day of March, 1978, you, ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; JACK FORST, did financially assist a retail vendor, to wit; PINK PUSSY CAT, INC., DBA, RED GARTER CLUB, License number 74-356, located at 1001 Main Street, Daytona Beach, Volusia County, Florida,
by the giving of gifts, loans of money or property or by the giving of a rebate, to wit; a check, check number 14, in the amount of
$270.00, dated March 24, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT
and endorsed by RED GARTER, PINK PUSSY CAT, INC., contrary to F.S. 561.42(1).
On or about the 24th day of March, 1978, you, ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; JACK FORST, did assist a retail vendor financially, to wit; McMILLIAN AND WRIGHT, INC., DBA, THE OCEAN PIER, License number 74-771, located at Main Street Over the Ocean, Daytona Beach, Volusia County, Florida, by the giving of gifts, loans of money or property or by the giving of rebates, to wit; a check, check number 5, in the amount of $850.00, dated March 21, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT and endorsed by McMILLIAN & WRIGHT, INC., OPERATING OCEAN PIER CASINO, contrary to F.S. 561.42(1).
On or about the 24th day of March, 1978, you, ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; JACK FORST, did assist financially a retail vendor, to wit; McMILLIAN and WRIGHT, INC., DBA, THE OCEAN PIER, License number 74-771, located at Main Street Over The Ocean, Daytona Beach, Volusia County, Florida, by the giving of gifts, loans of money or property or by the giving of rebates, to wit; a check, check number 6, in the amount of $150.00, dated March 21, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT and endorsed by McMILLIAN & WRIGHT, INC., OPERATING OCEAN PIER CASINO, contrary to F.S. 561.42(1).
On or about the 24th day of March, 1978, you, ANHEUSER-BUSCH, INC., a licensed manufacturer or distributor and/or your agent, servant or employee, to wit; MIKE FEHLING, did financially assist a retail vendor, to wit; DAYTONA SAFARI MOTEL, INC., DBA, THE WRECK, License number 74-546, located at 7 S. Wild Olive, Daytona Beach, Volusia County, Florida, by the giving of gifts, loans of money or property of by the giving of rebates, to wit; a check, check number 8, in the amount of
$420.00, dated March 24, 1978, drawn on the account of ANHEUSER-BUSCH DISBURSEMENT ACCOUNT
and endorsed by WRECK BAR, RINGO, contrary to F.S. 561.42(1).
Attachment 2
STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DIVISION OF ALCOHOLIC BEVERAGES AND TOBACCO,
Petitioner,
vs. CASE NO. 78-1808
ANHEUSER-BUSCH, INC.,
Respondent.
/
STATEMENT OF FACTS
Respondent is a brewer of various beers which it sells under the following brands: Budweiser, Michelob, Michelob Light, Busch, Busch Bavarian, Anheuser-Busch Natural Light and Anheuser-Busch Classic Dark. Respondent holds alcoholic beverage license 26-1164, Type C-M3, and has its Florida business address at 111 Busch Drive, Jacksonville, Florida.
A promotion was organized and approved by Respondent's marketing management and a special checking account was established at the Halifax National Bank of Port Orange, Florida, from which Respondent paid retail licensees as set out below. The promotion was directed by Respondent's district manager for the Daytona Beach area, who was assisted by two teams of five persons each, composed of out-of-state employees of Respondent's Field Sales Task Force.
Prior to March 20, 1978, representatives of Respondent contacted retail alcoholic beverage licensees in Daytona Beach with regard to sponsoring on- premises consumer promotions of its product. Respondent made advance arrangements to sponsor free beer parties at sixteen selected retail establishments during the Easter spring break week (March 20-24, 1978).
During said spring break week, Respondent sponsored free beer parties at the sixteen retail alcoholic beverage licensed establishments. During a specified period of time, usually one or two hours, the licensees served Respondent's products to consumers in the licensee's place of business. Payment was made to the licensee by Respondent for the products actually purveyed, either before or after they were served to the the consumers. Representatives of Respondents mingled with the consumers to explain the merits of Respondent's products. In each instance the licensee was paid his retail price per can, bottle or glass for the beer actually served to consumers. That is, if the retailer's normal price was $1.00 per can, Respondent paid the licensee $1.00 for each can served to consumers.
The parties were sponsored at the retail premises identified below on the dates set out. The licensees were paid the sums stated for the amount and brand of beer denoted. (The charge for draft beer was calculated on the basis of 200 servings per 15 1/2-gallon kegs. Where tips were given by Respondent to employees of a licensee, they did not exceed a customary amount.)
LOCATION PARTY DATE ITEM MONEY RECD.
A. P.J.'S, 4-COP, #74-473 3-24-78 2 kegs BUDWEISER
P.J.'S, of Daytona, Inc. $240 Draft
400 Broadway Avenue Daytona Beach, FL
SHARK LOUNGE, 4-COP, #74-372 3-22-78 15 cases BUSCH F.B.&L, INC. $280 BAVARIAN beer and 730 Broadway Avenue tips
Daytona Beach, FL
THE ELBOW ROOM, 2-COP, #47- 3-23-78 2 kegs BUSCH 761 $200 BAVARIAN Draft. Grady Scott Hensley
820 Main Street Daytona Beach, FL
BLACKBEARD'S TAVERN, 2-COP 3-23-78 2 kegs BUSCH DOUGLAS SILVER, #74-221 BAVARIAN Draft.
516 Main Street Daytona Beach, FL
MAC'S BAR, 4-COP, #74-452 3-21-78 20 cases BUDWEISER Suder-Goodrich, Inc. $361 beer and tips. 2000 S. Atlantic Avenue
Daytona Beach Shores, FL
RED GARTER CLUB, 4-COP 3-24-78 10 cases BUDWEISER Pink Pussy Cat, Inc., #74-356 $270 beer and tips
1001 Main Street Daytona Beach, FL
THE PUB, 2-COP, #74-837 3-21-73 2 kegs BUDWEISER Gregory Lee Caldwell $210 Draft and tips. 3304 S. Atlantic Avenue
Daytona Beach Shores, FL
THE OCEAN PIER, 4-COP, #74- 3-24-78 6 kegs BUDWEISER 771 $1,000 Draft and tips.
McMillian and Wright, Inc. Main Street Over the Ocean Daytona Beach, FL
PIT STOP ARCADE, 1-COP 3-22-78 5 kegs MICHELOB Jeane B. Hall, #74-722 $750 Draft and tips. 1114 Maim Street
Daytona Beach, FL
HOLIDAY INN SURFSIDE, 4-COP 3-23-78 30 cases MICHELOB Consolidated Inn of Daytona $900 and BUSCH LIGHT. Beach, Inc. #74-7505
2700 N. Atlantic Avenue Daytona Beach, FL
BOOT HILL SALOON, 2-COP 3-22-78 20 cases BUDWEISER Boot Hills, #74-5 $356 and tips
310 Main Street Daytona Beach, FL
THE WRECK, 4-COP, #74-546 3-24-78 3 kegs BUSCH BEER Daytona Safari Motel, Inc. $420
7 S. Wild Olive Daytona Beach, FL
BIG MOTHERS, 4-COP, #74-210 3-21-78 4 kegs ANHEUSER-
427 N. Atlantic Ave., Inc. $590 BUSCH LIGHT
525 N. Atlantic Avenue Daytona Beach, FL
CARNIVAL MOTOR INN, 4-COP 3-22-78 15 cases MICHELOB
Oliver Bell $385 beer and tip. 930 N. Atlantic Avenue
Daytona Beach, FL
ENTER METZ-O #1, 4-COP 3-21-78 3 kegs ANHEUSER- Ann L. Metz, #74-295 $310 BUSCH LIGHT and 3278 S. Atlantic Avenue tips.
Daytona Beach Shores, FL
BROADWAY SAM'S 4-COP 3-23-78 25 cases BUDWEISER Sam L. Berry, #74-496 $640 beer and tips.
725 Broadway Avenue Daytona Beach, Florida
Bar spending (i.e., the practice of a representative of a manufacturer or of a wholesaler of purchasing drinks for consumers at the premises of a retail licensee) has long been an industry marketing practice in Florida, albeit on a more limited scale than set forth above. The Florida Division of Alcoholic Beverages and Tobacco has known of the practice, but has never before brought any action against a licensee for such bar spending activities, or otherwise advised the brewing industry of its opposition to spending on any scale. The brewing industry has never sought such an opinion from the Petitioner as to the legality of bar spending from the Division. This is the first activity known to the Division incorporating all of the features described in the foregoing statement.
DENNIS E. LAROSA
Staff Attorney
Department of Business Regulation 725 S. Bronough Street Tallahassee, Florida 32304
For Petitioner
T. PAINE KELLY, JR., ESQUIRE Macfarlane, Ferguson, Allison &
Kelly
P.O. Box 1531
Tampa, Florida 33601 For Respondent
Of counsel for Respondent:
T. Michael Carpenter, Esquire Associate General Counsel Anheuser-Busch, Inc.
721 Testalozzi Street
St. Louis, Missouri 63118
================================================================= AGENCY FINAL ORDER
=================================================================
DEPARTMENT OF BUSINESS REGULATION STATE OF FLORIDA
JOHNS BUILDING
725 SOUTH BRONOUGH STREET TALLAHASSEE, FLORIDA 32301
DIVISION OF ALCOHOLIC BEVERAGES AND TOBACCO,
Petitioner,
vs. DOAH CASE NO. 78-1808
DABT NO. 29056-A
ANHEUSER-BUSCH, INC.,
Respondent.
/
FINAL ORDER INTRODUCTION
The Director has read the Recommended Order, the Exceptions to the Recommended Order and the complete record in this matter.
FINDINGS OF FACT
The Findings of Fact are those set forth in the Statement of Facts heretofore submitted by the parties by stipulation on May 22, 1979, which is attached hereto and incorporated herein as Exhibit "A".
CONCLUSIONS OF LAW
Respondent, as a brewer of malt beverages licensed under the laws of Florida, has been charged with giving financial assistance to 16 licensed Florida vendors in 18 separate counts, enumerated in the Notice to Show Cause, attached hereto and incorporated as Exhibit "B". Financial assistance flowing from a brewery or manufacturer of alcoholic beverages to a vendor in the form of gifts or rebates is prohibited by Section 561.42, Florida Statutes (1977), and as is relevant hereto that provision of law reads as follows:
Section 561.42 Tied House Evil; Financial aid and assistance to vendor by manufacturer or
distributor prohibited; procedure for enforcement; exception. --
No licensed manufacturer or distributor of any beverages herein referred to shall have any financial interest, directly or indirectly, in the establishment or business of any vendor licensed under the Beverage Law, nor shall such licensed manufacturer or distributor assist any vendor
by any gifts or loans of money or property of any description or by the giving of any rebates of any kind whatsoever. No licensed vendor shall accept, directly or indirectly, any gift or loan of money or property of any description or any rebates from any such licensed manufacturer or distributor; provided, however, that this shall not apply to any bottles, barrels, or other containers necessary for the legitimate trans- portation of such beverages, or advertising materials, and shall not apply to the extension of credit, for liquors sold, made strictly in compliance with the provisions of this section.
The Tied House Evil Law, as the previous section is commonly known, is made applicable to malt beverages, pursuant to the opinion of the Florida Supreme Court in Castlewood International Corp. v. Wynn, 294 So.2d 321 (Fla. 1974).
The Division alleges that the purchase at retail by the Respondent of its own products from a vendor under the facts of this case is a prohibited gift or rebate within the meaning of subsection 561.42(1), Florida Statutes (1977).
The Petitioner has promulgated rules defining "gift" and "rebate" as follows:
7A-1.09 Rebate. The term "rebate" (often referred to as accumulative promotion or retroactive discount) shall include any refund or discount made or allowed other than such discounts as are permitted under Section 561.42, Florida Statutes; and as such they are prohibited.
7A-1.10 Gift. The term "gift" shall apply to the giving of free goods or things of value as a discount not otherwise permitted by law or reward for purchasing any given quantity of alcoholic beverages either at one time or over a period of time; and as such they are prohibited.
"Gift or rebate" having been interpreted by the Division to have specific meaning may be utilized in determining whether the Statement of Facts constitute violations of the Tied House Evil Law. These definitions do not indicate that they are exclusive of any other commonly-used meaning of the words, nor should an agency interpretation of a statute by rule be used to frustrate the clear and unambiguous intent of the law. Such determinations are sufficient and may be used as a guide in determining whether violations have occurred.
It is admitted that Respondent repurchased its product from 16 vendors at the vendors' customary retail price, based upon the amount of Respondent's product supplied to the vendors. The effect of such repurchase is disclosed by the following example. Assume that the brewery sold its products to the distributor at $10.00 per unit and the distributor sold its product to the vendors at $11.00 per unit and with retail markup, including some profit added by the vendors, the retail price of the product becomes $15.00 per unit. The brewery has through the repurchase returned to the vendors not only the $11.00 purchase price but also the $4.00 profit-overhead markup.
In Section 561.42(6), Florida Statutes, it is provided:
Nothing herein shall be taken to forbid the giving of trade discounts in the usual course of business upon wine and liquor sales.
Such statute has been made applicable to malt
beverages, pursuant to the opinion of the Florida Supreme Court in Castle-wood International Corporation v. Wynn, supra.
Discounts, as referred to in Section 561.42(6), Florida Statutes, are defined by Section 561.01(10), Florida Statutes, as follows:
Discount in the usual course of business means cash discount given simultaneously at the time of sale. The same discount shall be offered to all vendors buying similar quantities. Any discount which is in violation of this section shall be considered an arrangement for financial assistance or gift.
It is evident by reading the definition of discounts in the usual course of business that the transactions in the instant matter are not within the purview of such statutory provision.
Instead, the transactions at issue in the instant matter had the effect of giving a rebate to the vendors of all of their purchase price. Such action is tantamount to the giving of financial aid or assistance by gift or rebate in violation of Section 561.42(1), Florida Statutes. Inasmuch as the vendor has been paid $15.00 per unit by the brewery, this figure includes the vendor's
initial acquisition cost of $11.00 per unit and thereby returns the entire purchase price. Additionally, Respondent's actions in repurchasing its products supplied to the vendors and utilized for the promotional parties also had the effect of rebating the vendor's purchase price and increasing the vendors' cash flow by giving them the profit-overhead markup.
The Respondent's counsel asserted at hearing that the vendor received no gift or rebate because the "sale" is without additional consideration beyond retail. This argument ignores the basic policy consideration underlying the Tied House Evil Law which is:
. . . to divorce manufacturing-distributing activities of the liquor business from that of retailers, . . . Mayhue's Super Liquor, Store, Inc. v. Mickeljohn, 426 F.2d 142 (5th Cir. 1970)
Such argument of Respondent also ignores the very basic contention that the entire party from beginning to end was a gift to the vendor. The instant matter does not involve the situation in which a member of the Respondent's promotional staff went in to the vendor's place of business unknown to the vendor and bought a round of the respondent's products for the patrons. Instead, it involves a promotional scheme in which the Respondent contacted the vendors in question and obtained their concurrence in giving a promotional party in which Respondent's products would be given away at a subsequent time in a manner which was not only free to the vendor's but also in substance free to the vendors themselves, since Respondent agreed ahead of time to repurchase all of its products supplied to the vendors and utilized for the promotional part at the retain price plus customary tips.
Finally, the effect of the promotional party clear gave substantial intrinsic if not precise worth to the vendor in the party's effort on the vendor's profit, overhead, cash flow, promotional value, competitive edge, advertising and goodwill.
The fact that Respondent purchased the products of the vendors at retail price and enabled the vendor to vie or host a free beer party is clearly a gift and rebate within the meaning and the cited rules and Florida Statutes 561.42(1) which clearly and expressly forbids the giving of gifts or rebates either "directly or indirectly". As noted above, the beer was not only free to the customers of the vendors but in economic terms was clearly free to the vendor whose employees readily gave it away for the asking. Additionally, the employees of several of the vendors were given (where applicable) customary tips by the Respondent, a separate transaction which simply and obviously constitutes a financial aid or assistance.
It is beyond reason to suggest that the vendors did not receive a financial benefit from the transaction outlined in the facts of this case. If the promotional activities of the Respondent in this case are not prohibited, then nothing would prevent manufacturers similarly situated from having 1, 5, 50 or
100 parties per year as preferred or key vendors locations. Such would be an inducement for other vendors to carry the products and the promoting manufacturer, thus creating a Tied House effect heretofore condemned in this State.
Therefore, the Respondent is found to have violated Florida Statutes 561.42(1) in each of the enumerated 18 charges in the Notice to Show Cause, attached hereto and incorporated herein as Exhibit "A".
CONCLUSIONS
Respondent is ordered to pay a civil penalty in an amount equal to the actual consideration paid the 16 vendors and 18 counts on the Notice to Show Cause, attached hereto and incorporated herein as Exhibit "B". Where tips were paid, 15 percent of the actual consideration paid to the particular vendor is assessed as a penalty.
DONE and ORDERED this * day of September, 1979, in Tallahassee.
CHARLES A. NUZUM, DIRECTOR
Division of Alcoholic Beverage and Tobacco
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
(904) 488-7891
* NOTE: The Final Order filed with DOAH has an unreadable issue date; the 30th has been used for the ACCESS Index.
| Issue Date | Proceedings |
|---|---|
| May 23, 1980 | Final Order filed. |
| Jun. 15, 1979 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Sep. 30, 1979 | Agency Final Order | |
| Jun. 15, 1979 | Recommended Order | Petitioner failed to prove Respondent gave gifts or loans to businesses it sold that were not in the course of business. Dismiss. |
