STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE No. 91-6985

)

RAYMOND & GWENDOLYN HOUSE )

d/b/a RAY'S LOUNGE AND )

PACKAGE, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Pensacola, Florida, before Robert T. Benton, II, Hearing Officer of the Division of Administrative Hearings, on November 6, 1991, and finished the following day. Petitioner filed its proposed recommended order on November 18, 1991, and respondents filed their proposed recommended order on November 20, 1991. The attached appendix addresses proposed findings of fact by number.

APPEARANCES

For Petitioner: Thomas A. Klein, Esquire

725 South Bronough Street Tallahassee, Florida 32399-1000

For Respondent: Leo A. Thomas, Esquire

Levin, Middlebrooks, Mabie, Thomas, Mayer & Mitchell

Post Office Box 12308 Pensacola, Florida 32501

STATEMENT OF THE ISSUE

Whether petitioner's suspension of respondents' license should be terminated or extended, or whether other disciplinary action should be taken against the license for the reasons alleged in the notice to show cause?

PRELIMINARY STATEMENT

By notice to show cause dated October 24, 1991, petitioner alleged that respondents' "employee, BUD McCANTS, personally sold and delivered a controlled substance, cocaine, to a third party, on . . . licensed premises in violation of Section 893.13(1)(a), within Section 561.29(1)(a), Florida Statutes" twice on August 24, 1991, again on August 30, 1991, twice on September 1, 1991, and again on September 3, 1991; that respondents' "manager, Raymond House, Jr., personally sold and delivered a controlled substance, hydromorphone hydrochloride, a/k/a

dilaudid, to a third party, on . . . licensed premises in violation of Section 893.13(1)(a), within Section 561.29(1)(a), Florida Statutes," on August 25, 1991, and on September 4, 1991; that Raymond House, Jr. sold cocaine on the premises on October 15, 1991; that "a patron, DAVE, acting on the referral of [respondents'] employee, SENORA ROBINSON, personally sold and delivered a controlled substance, cocaine, to a third party, on . . . [the] licensed premises in violation of Section 893.13(1)(a), within Section 561.29(1)(a), Florida Statutes" on September 7, 1991; and that Dave sold cocaine on the premises again on October 23, 1991; and, finally, that "[o]n or about August 24, 1991, and continuing to the date of the service of the Notice to Show Cause . .

. [respondents, their] agents, servants or employees did unlawfully keep or maintain a place . . . used for the illegal keeping, selling or delivering of .

. . cocaine, in violation of Sections 823.10 and 893.13(2)(a)5, within Section 561.29(1)(a), Florida Statutes."

FINDINGS OF FACT

1. Respondents Raymond and Gwendolyn House hold alcoholic beverage license No. 27-00177, Series 4-COP, for Ray's Lounge & Package at 501 East Baars Street in a crime-ridden section of Pensacola, Florida.

   
   

2. Until petitioner closed them down on October 27, 1991, as far as respondents and their managers knew, the licensed premises stood, in recent times, like an island in a veritable sea of open illegality. Mrs. House stationed security guards in front of the lounge, and assigned them the duty of keeping undesirables out.

   
   

3. Young people ignore "no loitering" signs in the area and congregate on street corners, spilling into the street, blocking traffic and keeping "older folks" from passing. In the neighborhood outside respondents' establishment, drug sales take place in plain view of passersby. Although the authorities have closed the lounge, these problems persist.

   
   

4. Except on Saturdays and Sundays when her husband opened the bar, Mrs. House arrived at ten in the morning and stayed until seven or eight at night, when she turned things over to the assistant manager, Ernestine Dunklin, or to her son Michael. Sometimes she came back after supper.

   
   

5. The parents of six grown children, one of whom was allegedly prosecuted for selling heroin in the lounge in July of 1982, Mr. and Mrs. House have owned Ray's Lounge & Package for 18 years. Mr. House, who has worked at the Naval Air Station for two decades, leaves most of the management to his wife.

   
   

6. Maggie Baldwin, who had worked at Ray's Package & Lounge for the last

   15 years, arrived at seven and stayed until closing. She usually sat just inside the entrance, where she checked younger patrons' IDs. Neither Ms. Baldwin, Ms. Dunklin nor Ms. House has ever seen drugs used or distributed inside the lounge, or anybody appearing to use or sell drugs there.

   
   

7. In the last few months, young women named Brenda and Senora worked at the lounge. Mario, another of the Houses' four sons and a full-time "installer" for Cox Cable, filled in for Ernestine Dunklin on August 24, 1991, when she was away at a cousin's wedding, but he has not worked at the lounge since. Like his brothers Raymond Jr., and Herman, he sometimes patronized the bar. On the night of September 1, 1991, however, Mario House was at home.

8. John Anderson "Bud" McCants, who looked to be in his fifties, spent a lot of time at the lounge, where he was permitted to "bus" tables for tips. Although never on respondents' payroll, he also acted as a waiter, bringing drinks to patrons' tables and taking their money to a barmaid who (unlike him) was authorized to operate a cash register. He ran errands for Ms. House and often drove her home from the lounge. For these services, she paid him in cash.

   
   

9. Many people who frequented Ray's Lounge & Package, in some cases three or four times weekly, among whom are Barbara Livingston, Helen Gaines, Randy Jean Peeples Broughton, and professional people including a doctor, an engineer, and Elmer Jenkins, a retired college professor who serves on the Escambia County School Board, have never seen or smelled drugs being used or sold there.

   
   

10. Willie James Crenshaw, who lives four or five houses from Ray's Package & Lounge, was a regular customer Sunday nights. At least then, the crowd was mostly 50-ish and older, the proprietors' generation. But young "jits" also patronized the lounge, and respondents felt constrained to take steps to keep the premises "clean." A metal sign on the front door reads:

    
    

    ANYONE CAUGHT FIGHTING OR USING ANY ILLEGAL DRUGS ON THESE PREMISES WILL BE BARRED FROM THIS CLUB FOR LIFE AND SUBJECT TO DUE PROCESS OF LAW

    
    

    THANK YOU

    THE MANAGEMENT

    
    

    Respondents' Exhibit No. 1. Inside, signs were posted "from one end to the other," including in the bathrooms, advising patrons that monitors were on the look out for illegal activities. Friends, a grandson and employees did help monitor, including occasionally checking both bathrooms.

    
    

11. When Ms. House thought she saw drugs being sold outside, she called the Escambia County Sheriff's Department, sometimes as often as five or six times a night. Between October 26, 1990, and October 31, 1991, sheriff's deputies made 289 trips to Ray's Package & Lounge. Perhaps partly because of her calls, law enforcement officials decided to "target" Ray's Lounge & Package.

    
    

    Undercover Agents Dispatched

    
    

12. Casey Roberts, a "professional contract operator" whose primary occupation since 1972 has been as a confidential informant for law enforcement, found himself idle after some 60 domestic and an additional, approximately 60 international exploits. When he asked a friend at a federal agency for work, his friend put him in touch with Ray Reed, a special assistant to Escambia County's Sheriff, Charlie W. Johnson.

    
    

13. The Escambia County Sheriff's Department also asked to "borrow" an undercover operative from Orange County. Orange County Deputy Sheriff Julia A. Chatman arrived in Pensacola in time to accompany Mr. Roberts to Ray's Package & Lounge on August 24, 1991. Both wore "wires," microphones and transmitters that Mr. Reed and Escambia County Deputy Sheriff Roosevelt Walker, Jr. (on every occasion but two) monitored from a vehicle nearby.

    
    

14. As it happened, August 24, 1991, was Mrs. House's 63rd birthday. Entering the bar, the agents found what Mr. Roberts described as a "happy type of environment." After a half-hour visit to the bar between four and six

    o'clock that afternoon, the undercover agents returned around supper time and stayed an hour and a half. The birthday celebrants had shrimp for dinner.

    
    

15. About ten o'clock that night, undercover agents Roberts and Chatman returned a third time and purchased a small plastic bag of cocaine from Bud McCants for $40 or $50. An occasional user of marijuana and cocaine, Mr. McCants, a "known liar and cheat," also has a problem with alcohol. (But somebody else had put the Crown Royal he was accused of stealing in his jacket pocket, he testified.) The uncontroverted testimony was that Mrs. House did not know that he "did drugs."

    
    

16. After the purchase, the undercover agents left the bar and gave the cocaine to their handlers, then returned a fourth time and bought two more plastic bags of cocaine from "Bud" McCants for $40 each. Although she was on the premises the whole time, Mrs. House was unaware of either transaction. Both occurred while the bar was crowded. Each packet was on the order of an inch square, contained approximately one gram and could be carried unobtrusively in the palm of the hand.

    
    

17. The next day Ms. Chatman and Mr. Roberts returned for an hour or two, and found only seven or eight other customers. Mrs. House was not at the bar then. (Her husband was not on the premises on any of the occasions on which the undercover agents visited.) Casey Roberts bought two pills containing hydromorphone hydrochloride or "Dilaudid" from Raymond House, Jr. First Roberts gave Raymond $100. A little while later Raymond left the premises. As he returned, Roberts met him at the door and received the pills in a "hand exchange."

    
    

18. On August 30, 1991, agent Roberts paid Mr. McCants $40 for cocaine, only 25 or 30 feet from where Mrs. House, unaware of the transaction, was cleaning collard greens. On September 1, 1991, Roberts bought cocaine from McCants for $50 on two separate occasions. On September 4, 1991, Roberts again bought cocaine from McCants for $50, and also bought a single pill of hydromorphone hydrochloride (delivered in a folded napkin) for $60 from Raymond House, Jr.

    
    

19. On September 7, 1991, the undercover agents returned to Ray's Lounge & Package Store. Ms. Chatman asked Senora where she could get some "blow," by which she meant cocaine (although Senora originally understood her inquiry to relate to marijuana.) Senora spoke to Michael Collins who approached Ms. Chatman. Eventually a third person, Dave, gave her cocaine in exchange for $50.

    
    

20. Altogether the undercover agents went inside Ray's Lounge & Package on eight separate days, as many as four times on a single day. On ten to fifteen of these trips, they failed to obtain drugs. Ms. Chatman testified that the first time she offered Raymond House, Jr. drugs, he said "No, I don't deal with that," and returned money she had thrust on him. Now facing criminal charges, he did not testify himself.

    
    

    Licensees Not Shown To Be Culpable

    
    

21. Ms. House testified convincingly that she did not know anything about any of the drug transactions proven at hearing, and that she was shocked and angry when she learned of them (on or after October 27, 1991.) The other evidence is completely consistent with her testimony in this regard. Nothing in the evidence suggested that Raymond House, Sr. had any knowledge of the transactions.

22. The respondents knew that their son, Raymond House, Jr., was accused of agreeing to sell a packet of heroin over the telephone while working in the lounge in 1982. In fact, they removed the telephone on that account. Events in 1982 resulted in administrative proceedings against their license. Petitioner's Exhibit No. 3. Petitioner also proved that, in a case of mistaken identity, Bud McCants was arrested in 1986 on the licensed premises; and that, as it turned out, he had a single marijuana cigarette on his person at that time. But the evidence did not show that respondents knew about the marijuana (which had not occasioned the arrest.)

    
    

23. Except for reports months and years earlier of drug use or dealing by patrons, the evidence did not clearly and convincingly show that respondents had reason to know (before October 27, 1991) of any illegal activity on the licensed premises since 1982, much less than they condoned, encouraged or fostered it. Mrs. House responded diligently and appropriately to any report of illegal activity that reached her, as far as the credible evidence showed.

    
    

    CONCLUSIONS OF LAW

    
    

24. Since the Department of Business Regulation referred respondent's hearing request to the Division of Administrative Hearings, in accordance with Section 120.57(1)(b)3., Florida Statutes (1990 Supp.), "the division has jurisdiction over the formal proceeding." Section 120.57(1)(b)3., Florida Statutes (1990 Supp.).

    
    

25. License revocation proceedings have been said to be "'penal' in nature." State ex rel. Vining vs. Florida Real Estate Commission, 281 So.2d 487, 491 (Fla. 1973); Kozerowitz vs. Florida Real Estate Commission, 289 So.2d

    391 (Fla. 1974); Bach vs. Florida State Board of Dentistry, 378 So.2d 34 (Fla. 1st DCA 1979) (reh. den. 1980). Strict procedural protections apply in disciplinary cases, and the prosecuting agency's burden is to prove its case clearly and convincingly. Ferris vs. Turlington, 510 So.2d 292 (Fla. 1987).

    See Addington vs. Texas, 441 U.S. 426 (1979); Ferris vs. Austin, 487 So.2d 1163 (Fla. 5th DCA 1986); Anheuser-Busch, Inc. vs. Department of Business Regulation,

    393 So.2d 1177 (Fla. 1st DCA 1981); Walker vs. State Board of Optometry, 322 So.2d 612 (Fla. 3rd DCA 1975); Reid vs. Florida Real Estate Commission, 188 So.2d 846, 851 (Fla. 2nd DCA 1966). A licensee's breach of duty justifies revocation only if the duty has a "substantial basis," Bowling vs. Department of Insurance, 394 So.2d 165, 173 (Fla. 1st DCA 1981) in the evidence, unless applicable statutes and rules create a clear duty, which the evidence shows has been breached.

    
    

26. Section 562.29(1), Florida Statutes (1989), authorizes petitioner Division of Alcoholic Beverages and Tobacco to revoke or suspend a beverage license upon a showing of:

    
    

    1. Violation by the licensee or his or its agents, officers, servants, or employees, on the licensed premises . . . of any of the laws of the state or of the United States

       . . . or permitting another on the licensed premises to violate any of the laws of this state or of the United States, . . .

    2. Violation by the licensee of any laws of this state or any state or territory of the United States.

       
       

       Section 893.13(2)(a)5, Florida Statutes (1989), makes it unlawful to keep or maintain any store, shop, warehouse, dwelling or building which is resorted to by persons using controlled substances in violation of Chapter 893, Florida Statutes.

       
       

27. Section 823.10, Florida Statutes (1989), provides that any store, shop or building which is visited by persons for the purpose of unlawfully using any substance controlled under Chapter 893, or which is used for the illegal keeping, selling or delivery of the same is deemed to be a public nuisance. Section 561.29(1)(c), Florida Statutes, subjects an alcoholic beverage license to suspension or revocation where there is maintained a nuisance on the licensed premises.

    
    

28. Cocaine and hydromorphone hydrochloride are controlled substances. Florida outlaws their sale, use, delivery, or possession, unless prescribed by a physician in the ordinary course of his practice. Section 893.13, Florida Statutes (1989). Selling an unprescribed controlled substance or helping arrange such a drug transaction is a violation of Florida law, and a person committing such acts has committed a crime. State v. Dent, 322 So.2d 543 (Fla. 1975); Stephenson v. State, 371 So.2d 554 (Fla. 2d DCA 1976); State v. Hubbard, 328 So.2d 465 (Fla. 2d DCA 1976).

    
    

29. But respondents are properly held accountable for their employees' misconduct only if they were culpably responsible by reason of their own negligence, intentional wrong doing or lack of diligence. Cohen v. Schott, 48 So.2d 154 (Fla. 1950); Heifetz v. Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, 475 So.2d 1277 (Fla. 1st DCA 1985); Trader Jon, Inc. v. State Beverage Department, 119 So.2d 735 (Fla. 1st DCA 1960). The present case differs from Pauline v. Lee, 147 So.2d 359 (2d DCA 1962) cert. den.

    156 So.2d 389 (Fla. 1963), where the court held:

    
    

    The persistence and practiced manner with which the solicitations [for prostitution] described by the state's witnesses were made is sufficient to permit a factual inference leading to the conclusion that such violations of law were either fostered, condoned or negligently overlooked by the licensee notwithstanding his absence from the premises on the dates in question.

    
    

    Id. at 364. But see Taylor v. State Beverage Department, 194 So.2d 321, 325 (2d DCA 1967) cert. den. 201 So.2d 464 (Fla. 1967). The evidence in Pauline v. Lee established five separate solicitations for prostitution by five different employees of the licensee. In other cases involving open lewdness by licensees' employees, courts have upheld administrative orders charging licensees with knowledge. Golden Dolphin No. 2, Inc. v. State Division of Alcoholic Beverages and Tobacco, 403 So.2d 1372 (Fla. 5th DCA 1981) (several performances of show justified imputing knowledge to licensee, but evidence of obscenity held insufficient); G & B of Jacksonville, Inc. v. State Department of Business Regulation, Division of Beverage, 371 So.2d 1381 (Fla. 1st DCA 1979) (three topless female dancers engaged in "open, gross, lewd and lascivious behavior" at 139); G & B of Jacksonville, Inc. v. State Department of Business Regulation,

    Division of Beverage, 317 So.2d 139 (Fla. 1st DCA 1979) ("Six . . . employees engaged in similar but separate open and gross lewd acts with different patrons" at 140).

    
    

30. At least one District Court of Appeal has applied the Pauline v. Lee line of cases to drug dealing on licensed premises. In Lash, Inc. v. State Department of Business Regulation, 411 So.2d 276 (Fla. 3d DCA 1983), the "license revocation stemmed from narcotics violations on appellant's premises. The evidence established that on five occasions over a period of a week, undercover beverage agents purchased controlled substances from two of appellant's employees." 411 So.2d at 277. The Lash court concluded that a licensee's "simple negligence" justified revocation of a beverage license:

    
    

    Under Section 561.29(1), where the unlawful activity is committed by the licensee's agent, simple negligence is sufficient for revocation. Admittedly, the courts have refused to uphold revocations when the evidence showed only that on one occasion the licensee's employees violated the laws, and that the licensee otherwise took measures to comply with them. Where, however, the laws are repeatedly and flagrantly violated by the employees, an inference arises leading to the conclusion that such violations are either fostered, condoned or negligently overlooked by the licensee, notwithstanding his absence from the premises when the violations occur. Consequently, if 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. . .

    
    

    Where the violations are, as here, committed in a persistent and recurring manner, consisting of more than one isolated incident, the courts have not hesitated to find that

    such violations were either fostered, condoned, or negligently overlooked by the licensee, even through he may have been absent at the time of the commission of such. . . In the present case, the recurring sales were made possible by appellant's failure to supervise the premises and his employees in a reasonably diligent manner, properly leading to the license revocation.

    
    

    At 278. (Citations omitted and emphasis supplied.) Although the Third District permitted the Division to infer that the licensee negligently overlooked the violations or failed to exercise ordinary care in the maintenance of the licensed premises or supervision of his employees, it did so on the premise that the drug transactions had been open and flagrant. "[T]he licensee is not an absolute insurer against violations of the law on his premises even when committed by or through his employees." Jones v. State Department of Business

    Regulation, Division of Alcoholic Beverages and Tobacco, 448 So.2d 1109, 1111 (Fla. 1st DCA 1984).

    
    

31. The present case closely resembles Heifetz v. Department of Business Regulation, Division of Alcoholic Beverages & Tobacco, 475 So.2d 1277 (Fla. 1st DCA 1985) where, on six different days, two of the licensee's employees sold cocaine on the licensed premises. As was true regarding the respondents here, "the evidence failed to show Heifetz was involved in or knowingly condoned the illegal drug activity." At 12.79. There, as here, "drug transactions were concealed or hidden from view and not readily observable." At 1280. There, as here, "the lounge managers were unaware of the illegal drug activities." At 1281. There, as here, the licensee had taken steps "to make employees aware of the employer's policy against the use or sale of drugs." Id. In the present case as in Heifetz the undercover agents' drug purchases were surreptitious, not open, flagrant, glaring or notorious. There, as here, petitioner did not prove the licensee's culpability, even under a preponderance of the evidence standard. Cf. Department of Business Regulation v. Alex Perry d/b/a Perry's Package Store, No. 85-2950 (Dept. of Bus. Reg.; Dec. 31, 1985.)

    
    

32. Petitioner also charges respondents with "[m]aintaining a nuisance on the licensed premises" in violation of Section 561.29(1)(c) and 823.10, Florida Statutes (1989), and violating Section 893.13(2)(a)(5), Florida Statutes (1989), which makes it unlawful for any person "[t]o keep or maintain any store . . . which is resorted to by persons using controlled substances in violation of this chapter for the purpose of using these substances, or which is used for keeping or selling them in violation of this chapter." A literal reading of these statutes, just as in the case of Section 561.29(1)(a), Florida Statutes (1989) "would indicate that a liquor licensee is under the onus of suspension or revocation . . . irrespective of his own personal fault in connection therewith." Pauline v. Lee, supra at 364. But, as in the case of Section 561.29(1)(a), the statutes must be read to require proof of culpable responsibility by the licensee as a result of his own negligence, intentional wrongdoing or lack of diligence in order to warrant discipline of his license. The holder of an alcoholic beverage license is not an absolute insurer of the propriety of all human activities upon his premises. Taylor v. State Beverage Department, 194 So.2d 321 (2d DCA) cert. den. 201 So.2d 464 (Fla. 1967).

    
    

33. Petitioner failed, moreover, to prove that a public nuisance existed. "A public nuisance violates public rights, subverts public order, decency or morals, or causes inconvenience or damage to the public generally." Orlando Sports Stadium, Inc. v. State, 262 So.2d 881, 884 (Fla. 1972). The evidence suggested that conditions were a good deal more orderly, decent and moral inside the lounge than outside. Evidence of complaints is insufficient as a matter of law.

Testimony was admitted, and cited in the director's findings, to the effect that numerous complaints had been made to an official that youths were being served on the premises. Aside from the fact that such evidence, standing alone, is not competent and in this case was evidently prejudicial, not a single person making such alleged complaints was presented to support the fact that he did so complain and give the reason therefor.

Trader Jon, Inc. v. State Beverage Department, 119 So.2d 735, 737 (Fla. 1st DCA 1960). Except for complaints Mrs. House made herself (including one when her purse was stolen), the proof did not show who made the complaints catalogued on the computer-generated list, or the nature of the complaints.

RECOMMENDATION

It is, accordingly recommended that petitioner terminate the suspension of respondents' license forthwith, and dismiss the notice to show cause filed against the license.

RECOMMENDED this 26th day of November, 1991, in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 26th day of November, 1991.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-6985

Petitioner's proposed findings of fact Nos. 1, 4, 5, 8, 9, 10 and 14 have been adopted, in substance, insofar as material.

With respect to petitioner's proposed findings of fact Nos. 2, 6, 11, 13, 17, and footnote 2, the evidence did not clearly establish that Raymond House, Jr. worked as a manager of the lounge or that respondents employed him in any other capacity. Credible testimony put him behind the bar helping himself to drinks, but Ms. Dunklin, who was responsible for work assignments, testified that he was not an employee, and was not ever scheduled to work; and her testimony has been credited.

With respect to petitioner's proposed finding of fact No. 3 and footnote No. 1, the evidence showed that the Houses and Mr. McCants had known each other since 1968 or 1969, but not that he had worked for them continuously since then. At all pertinent times, however, the evidence did establish that he was a de facto employee of the licensees, even though not on the payroll.

With respect to petitioner's proposed findings of fact Nos. 6 and 7 and footnotes Nos. 3, 4 and 5, Casey Roberts' testimony was wholly unreliable (and came to a sudden halt when he was asked to testify without referring to the administrative complaint.) His descriptions of accused sellers and others, which he rattled off with seemingly great assurance, bore no resemblance to reality. But for Ms. Chatman's testimony and that of the law enforcement officers who monitored conversations electronically, none of the transactions with Roberts would have been established.

With respect to petitioner's proposed findings of fact Nos. 15 and 18, there was no evidence of drug use or drug dealing that was not carefully hidden from respondents and their managers. Bud McCants did not testify otherwise, (even though Bud McCants was brought to the hearing from jail where he is awaiting trial on charges of selling cocaine, giving him a strong incentive to cooperate with the authorities.) The fact that patrons discarded a marijuana cigarette, "suspected cocaine," and pills when the raid occurred on October 27, 1991, does not mean these items were visible beforehand, or intended for use or sale on the premises.

With respect to petitioner's proposed finding of fact No. 16, the only evidence of conviction was hearsay.

Respondents' proposed findings of fact Nos. 1, 2, 3, 6, 8 and 9 have been adopted, in substance, insofar as material.

With respect to respondents' proposed finding of fact No. 5, respondents did not produce all the regular customers.

With respect to respondents' proposed finding of fact No. 7, the monitoring officers received uninterrupted transmissions from the undercover agents' microphones, and could hear (usually loud) music as they entered the lounge, even if they did not have visual contact then.

With respect to respondents' proposed finding of fact No. 10, although petitioner proved drug transactions occurred, petitioner did not prove that respondents knew this or were in any way responsible for it.

COPIES FURNISHED:

Thomas A. Klein, Esquire 725 South Bronough Street Tallahassee, FL 32399-1000

Leo A. Thomas, Esquire

Levin, Middlebrooks, Mabie, Thomas Mayer & Mitchell

P.O. Box 12308 Pensacola, FL 32501

Richard W. Scully, Director Division of Alcoholic Beverages

and Tobacco

725 South Bronough Street Tallahassee, FL 32399-1000

Donald D. Conn, General Counsel Department of Business

Regulation

725 South Bronough Street Tallahassee, FL 32399-1000

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:

ALL PARTIES HAVE THE RIGHT TO SUBMIT WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST 10 DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONTACT THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE CONCERNING AGENCY RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER. ANY EXCEPTIONS TO THIS RECOMMENDED ORDER SHOULD BE FILED WITH THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE.

Docket for Case No: 91-006985

Orders for Case No: 91-006985