vs. ) CASE NO. 84-0721
) JAMESTOWN IN THE GROVE APARTMENTS ) CLUB, INC., d/b/a SUZANNE'S IN ) THE GROVE, )
Respondent. )
Pursuant to notice a formal hearing was conducted in this case in Miami, Florida, on March 27, 1985, before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings. Appearances for the parties were as follows:
For Petitioner: Harold F. X. Purnell, Esquire
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
A transcript of the hearing was filed with the Division of Administrative Hearings on June 6, 1985. Thereafter, both parties filed memorandums of law containing proposed findings of fact and proposed conclusions of law. Careful consideration has been given to both of the memorandums of law in the preparation of this Recommended Order.
This is a case in which the Petitioner seeks to take disciplinary action against the Respondent's alcoholic beverage license on the basis of alleged violations of Section 565.02(4), Florida Statutes, and Rule 7A-3.19(1), Florida Administrative Code. The specific charges against the Respondent are that on each of four specific dates the Respondent, through its officers, directors, employees, agents , or servants, sold alcoholic beverages to two specified persons who were not club members or guests of club members.
Based on the stipulations of the parties, on the exhibits received in evidence and on the testimony of the witnesses at the hearing, I make the following findings of fact:
The Respondent, Jamestown In The Grove Apartments Club, Inc., d/b/a Suzanne's In The Grove, (hereinafter referred to as "Suzanne's") holds alcoholic beverage license number 23-1193, license series 11-C. Respondent has held the subject license since December of 1971.
For a number of years the Respondent operated at its present location in much smaller premises. Several years ago the buildings where Respondent was located were demolished and a highrise condominium building was erected on the site. Respondent obtained space in the new building and embarked upon a plan to create a larger and fancier facility then it had previously operated. The new improved facility began operations in May of 1983 under the present name of Suzanne's In The Grove. The new improved facility is, in the words of one of the witnesses, "... a high fashion, beautiful people-type disco nightclub in Coconut Grove." The property and furnishings for the new improved facility required an investment in excess of two million dollars.
During the planning stages for the new improved facility which opened in May of 1983, Suzanne's retained the services of a consultant who was an expert in the planning and operation of limited membership clubs. The consultant worked with the management of Suzanne's in designing the layout of the premises and in instituting operational procedures designed to maximize the ability of management to control access into the premises. The concepts employed by the consultant were modeled on the procedures used at limited access private clubs on military bases. The premises were specifically designed to facilitate the limitation of access to members and their guests. To that end, the premises had a small doorway, had a desk for checking membership just inside the doorway, and had a narrow stairway that led from the reception desk to the main area of the club. Suzanne's also issued plastic membership cards embossed with the member's name in raised letters. The operations procedures included provisions for a doorman, at least one receptionist at the desk, and at least one employee at the top of the stairs. Often they had more than one employee at the desk and at the top of the stairs. Due to unexpected extremely large crowds of patrons when Suzanne's first opened, they also contracted for additional security personnel to assist their regular employees with access control.
As part of the preparation for the opening of Suzanne's the management of the club formulated a set of written policies for employees. Included in these written policies were specific prohibitions against any conduct which would constitute a violation of the alcoholic beverage laws. Each employee was given a copy of these written policies and was required to read the policies and then sign a statement agreeing to comply with the policies and acknowledging that he or she would be fired for any violation of the policies. These policies included a specific prohibition against admitting anyone who was not a member or a bona fide guest of a member. Between the opening of Suzanne's and the dates of the violations charged in this case, Suzanne's had fired employees for admitting people who were not members.
Prior to opening in May of 1983, Suzanne's also instituted a policy of requiring periodic polygraph examinations of all employees. The consultant helped them formulate the questions to be asked during the polygraph examinations. The polygraph examinations specifically covered questions as to
whether the employee was aware of the members-only regulations, whether the employee had ever distributed a membership card without collecting a membership fee and turning the fee over to the club, and whether the employee had ever let anyone into the club who was not a member or a bona fide guest of a member. If the results of the polygraph examination indicated that an employee was being deceptive about whether he or she had admitted non-members to the club, the employee was terminated. The consultant also assisted the management of Suzanne's in the selection of key employees and participated in the interviews of those employees.
From the date of opening through August 28, 1983, Suzanne's sold 3,025 memberships at $50.00 each. Since August 28, 1983, Suzanne's has taken in an additional $198,000.00 in membership fees. Because of the large amount of revenue generated by the sale of memberships, Suzanne's has always been very interested in strict enforcement of the members-only policy. It is in Suzanne's best economic interests to maintain strict enforcement because without such enforcement there would be no reason for anyone to buy a membership and Suzanne's would in all likelihood lose substantial membership revenues. Suzanne's entire marketing concept would have been ruined if people could get in easily without having a membership card.
When Suzanne's first opened in May of 1983, all employees were required to attend a meeting at which an attorney specializing in alcoholic beverage law told them about the requirements of the liquor laws in general and about the special provisions of the liquor laws relating to 11-C licenses. All of the employees were specifically told that the sale of alcoholic beverages was restricted to members and their guests.
The consultant employed by Suzanne's recommended an emphasis on access control at the door rather than a system of point of sale control because Suzanne's did not have an in-house credit or charge system, which is the best system to use for a point of sale control system. An in-house credit system was prohibitively expensive where membership dues were only $50.00 per person. A typical Dade County club with an in-house credit system has an annual membership fee of $460.00 in addition to an initial fee of $1,000.00 to join.
Since the dates of the violations charged in this case Suzanne's has maintained its access control procedure at the door and has added a point of sale control system as well. The point of sale control includes imprinting the membership card on all sales slips.
On August 28, 1983, two investigators of the Division of Alcoholic Beverages and Tobacco went to Suzanne's at about 2:20 a.m. They told the doorman ("Robert") that they were not members but that they wanted to go in and look around. The doorman let them in, but told them that if anyone asked they should say they came in with a member. Once inside the premises, each of the DABT investigators ordered and were served an alcoholic beverage. None of the bartenders or barmaids asked if they were members.
On September 7, 1983, the same two investigators returned to Suzanne's at approximately 11:40 p.m. They walked past the doorman and other employees and entered the premises. No one tried to determine if they were members. Both investigators ordered and were served an alcoholic beverage.
On September 10, 1983, two DABT investigators (one who had been on both prior occasions and one who had not been there before) went to Suzanne's. A line of approximately 300 people were waiting outside to enter Suzanne's. To
avoid waiting in the line, the two investigators went near the front of the line and waited until the one who had been there before could get the attention of Robert, the doorman. When he got Robert's attention, he asked Robert if Robert could do them a favor about the line and gave Robert $5.00. Robert took the money and admitted the two investigators without asking whether they were members. One of the investigators was able to order and be served an alcoholic beverage. It was so crowded inside that the other investigator was not able to place an order for an alcoholic beverage.
On September 21, 1983, the two DABT investigators who had visited Suzanne's on the first occasions described above returned to the premises. Again they were able to enter without being asked about their membership status and both ordered and were served an alcoholic beverage.
None of the DABT investigators who went to Suzanne's on the four occasions described above were members of the Suzanne's, nor were they bona fide guests of anyone who was a member. On each occasion when they were served alcoholic beverages, they paid the regular price for the beverages, approximately $3.50 each.
On all four of the occasions described above when the DABT investigators entered Suzanne's and purchased alcoholic beverages, the club was very crowded. The extent of the crowds on those nights is reflected by the gross receipts for those four nights which were, respectively, $10,099.35,
$5,125.60, $9,973.25, and $5,034.15. On all four of the occasions described above when DABT investigators entered Suzanne's, there were several employees of Suzanne's both in the area of the reception desk at the bottom of the stairs as well as at the top of the stairs attempting to control access to the premises and maintain control over the crowds.
During 1983 Suzanne's was obtaining security services from Dade Federal Security. The security company would provide plainclothes guards to assist Suzanne's employees check membership, to help maintain order, and to help control the line outside when it was especially crowded. Sometime during 1983 the management at Suzanne's complained to Dade Federal Security that they suspected that some of the guards provided by Dade Federal Security had been taking money to admit non-members into the premises. Dade Federal Security confronted its employees with this complaint and one of the employees confessed to having taken money to admit non-members to Suzanne's. The employee was fired.
The foregoing findings of fact contain the substance of the vast majority of the findings proposed by both parties. Proposed findings which are not incorporated in the foregoing findings are specifically rejected as irrelevant, as contrary to the greater weight of the evidence, or as unsupported by persuasive competent substantial evidence.
CONCLUSIONS OF LAW
On the basis of the foregoing findings of fact and on the applicable judicial decisions, statutes, and rules, I make the following conclusions of law:
The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 120.57, Fla. Stat.
Section 565.02(4), Florida Statutes, reads as follows in pertinent part:
The payment of such club license tax shall authorize the service and distribution to members and nonresident guests of the club only, and such service and distribution to the members and nonresident guests shall not be deemed sales within the meaning of the law in this state; but any service or dis- tribution to anyone other than a member or
nonresident guest of such licensed club shall be deemed a sale, and any officer, member, or employee of any such licensed club who sells or distributes or serves any such beverages to any person other than a member or non resident guest of such club for money or other value shall be deemed guilty of selling such beverages without a license and shall be punished as provided by law.
Rule 7A-3.19(1), Florida Administrative Code Contains the following language regarding holders of 11-C beverage licenses:
Alcoholic beverages may be served only to bona fide club members or to their guests. The payment for such service and
distribution must be made only by bona fide club members.
Section 561.29, Florida Statutes, authorizes the Division of Alcoholic Beverages and Tobacco to suspend or revoke a beverage license whenever any licensee or its agents, officers, servants, or employees violate any law of this state on the licensed premises and also authorizes the DABT to impose a civil penalty of up to $1,000.00 per violation for any such violation of law or for violation of any rule issued by the DABT.
Each of the seven sales of alcoholic beverages which took place on the four date described above in the findings of fact was a violation of the statutory and rule provisions quoted above. While the literal language of the statute would seem to indicate that any such violation constitutes a sufficient basis for suspension, revocation, or civil penalty, a long series of court decisions require that the evidence also show that the violations are attributable to some fault on the part of the licensee. The current state of the law in this regard is described as follows in Lee v. Department of Business Regulation, 465 So.2d 579 (Fla. 1st DCA 1985):
Although a literal reading of section 561.29(1)(a) would seem to indicate that a license could be revoked or suspended whenever an employee violated the law on the licensed premises, irrespective of the personal fault of the licensee, it is well established that the licensee must be found to be culpable, as a result of either his own negligence, intentional wrongdoing, or lack of diligence in supervising and maintaining
surveillance over the premises. (Citation omitted) The licensee is not, however, required to be an absolute insurer against violations of law on the premises by his employees. Therefore, where the evidence shows only a single, isolated violation of the law, the courts have refused to uphold revocations. (Citations omitted) But where the laws are repeatedly and flagrantly violated or occur in a persistent or practiced manner, the courts have inferred that the violations were either condoned or negligently overlooked by the licensee, notwithstanding his absence from the premises at the time of the violation. (Citations omitted)
Here there is absolutely no evidence of any intentional wrongdoing by the licensee. The evidence also establishes the licensee did not condone or foster the violations, but, to the contrary, was very interested in preventing entrance to the premises by anyone other than bona fide members and their guests. Accordingly, the only question which remains is whether the licensee negligently overlooked the violations. As we learn from Lash, Inc. v. State, Department of Business Regulation, 411 So.2d 276 (Fla. 3d DCA 1983):
[I]f the evidence supports the conclusion that the licensee failed to exercise ordinary care in the maintenance of the licensed premises or the supervision of his employees, he can be found negligent and his license revoked.
Upon consideration of the totality of the evidence in this case and weighing the nature and circumstances of the violations against the many efforts taken by the licensee to prevent any violations on the licensed premises, I am compelled to a conclusion that the evidence is insufficient to support a conclusion that the licensee was negligent. The licensee took at least ordinary, and in some cases what appear to be extraordinary, efforts to prevent the very type of violations that occurred here. The fact that those efforts were not completely successful does not warrant a conclusion that the licensee was negligent. As noted in Lee, supra, and the cases cited therein, the licensee is not required to be "an absolute insurer against violations of law."
In reaching the conclusion that the evidence is insufficient to warrant a conclusion that the licensee was negligent, I have not overlooked the fact that in this case there were several violations on several days rather than the "single incident" which in many cases has been found to be an insufficient basis for a finding of negligence. Yet even though there were several violations in this case, it would be inappropriate to indulge in the inference that the licensee was negligent in light of the evidence of the extensive efforts to which the licensee went to anticipate and prevent this very type of violation. The licensee's responsible attitude in this regard is also reflected by the fact that as soon as it became aware that its carefully planned procedures were not being completely successful, it took additional steps to increase the efficacy of its control over access and sales.
I have also not overlooked the evidence of similar past violations by this licensee, but I have not made any findings of fact based on that evidence because the evidence lacks relevance and probative value. The only evidence of the prior violations consisted of a witness reading selected information from the DABT's files and copies of four stipulated resolutions of prior charges against the licensee. The stipulated resolutions contain no admission of guilt, so they are not competent substantial evidence that the facts alleged in the prior charges are in fact true. Further, all of the prior charges arose from events alleged to have taken place prior to the opening of the present facility at a time when the licensee's premises were much smaller and arranged differently.
On the basis of all of the foregoing, I recommend that the Director of the Division of Alcoholic Beverages and Tobacco enter a Final Order in this case dismissing all charges against the licensee.
DONE AND ORDERED this 3rd day of July, 1985, at Tallahassee, Florida.
MICHAEL M. PARRISH
Filed with the Clerk of the Division of Administrative Hearings this 3rd day of July, 1985.
Harold F. X. Purnell, Esquire General Counsel
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
