STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in these cases on August 8, 2011, in Ft. Myers, Florida, before Thomas P. Crapps, a designated Administrative Law Judge of the Division of Administrative Hearings (DOAH).

APPEARANCES

For Petitioner: Jaakan A. Williams, Esquire

Department of Business and Professional Regulation

1940 North Monroe Street, Suite 40

Tallahassee, Florida 32399

For Respondent: Bridgette Stokes, pro se

Club Manhattan Bar and Grill 1349 31st Street

Sarasota, Florida 34234

STATEMENT OF THE ISSUES

The issues in these cases are whether Respondent, Club Manhattan Bar and Grill, LLC, d/b/a Club Manhattan Bar and Grill (Respondent), committed the acts alleged in the administrative complaints dated September 13, 2010, and December 1, 2010, and, if so, what disciplinary action, if any, should be taken against Respondent.

PRELIMINARY STATEMENT

This matter involves two administrative complaints filed by Petitioner, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (Department), against Respondent.

The first Administrative Complaint, dated September 13, 2010, DBPR Case No. 2010-037348, contained two allegations. The Department first alleged that, on or about September 8, 2010, Respondent failed to provide the required service area, seating, and equipment to serve 150 persons full-course meals at tables at one time as required by section 561.20(2)(a)4., Florida Statutes (2010),1/ within section 561.29(1)(a). The Department's second allegation was that on September 8, 2010, Respondent failed to maintain separate records of all purchases of gross retail sales of food and non-alcoholic beverages and all purchases and gross retail sales of alcoholic beverages on the licensed premises for a three-year period or failed to produce

such records to the Department within 14 days of it requesting the records in violation of Florida Administrative Code

Rule 61A-3.0141(3)(a)1., within section 561.29(1)(a). On November 5, 2010, Respondent disputed the Administrative Complaint and requested a formal hearing. On June 13, 2011, the first administrative action was transferred to DOAH for a formal hearing and assigned Case No. 11-2957.

The Department's second Administrative Complaint, DBPR Case No. 2010-053163, was brought on December 1, 2010. The Department alleged that for an audit period of April 1, 2010, through July 31, 2010, Respondent failed to maintain separate records of all purchases of gross retail sales of food and non- alcoholic beverages and all purchases and gross retail sales of alcoholic beverages on the licensed premises for a three-year period or failed to produce such records to the Department within 14 days of it requesting such records in violation of rule 61A-3.0141(3)(a)1., within section 561.29(1)(a). Further, the Department alleged that, for the time period of April 1, 2010, through July 31, 2010, Respondent failed to derive at least 51 percent of its gross revenue from the sales of food and non-alcoholic beverages as required to qualify for its license as required by section 561.20(2)(a)4., within section 561.29(1)(a). On March 22, 2011, Respondent disputed the issues of fact and requested a formal hearing. On June 3, 2011, the

Department transferred this second administrative action to DOAH for a formal hearing, and this second administrative action was assigned Case No. 11-2805. On June 17, 2011, the undersigned consolidated the two administrative actions for a final hearing on August 8, 2011.

At the August 8, 2011, hearing, the Department presented the testimony of Mark Flynn (Special Agent Flynn), Denise Austin (Lt. Austin), Marlene Nadeau (Ms. Nadeau), and J. Cesar Torres (Mr. Torres) and offered two exhibits into evidence without objection. Respondent offered the testimony of two witnesses,

Martha Brookings (Ms. Brookings) and Bridgette Stokes (Ms. Stokes), and did not present any exhibits.

A Transcript of the proceedings was filed with DOAH on August 25, 2011. The Department filed a Proposed Recommended Order on September 6, 2011; however, Respondent did not file one.

FINDINGS OF FACT

1. The Department is the state agency charged with the responsibility of regulating persons holding alcoholic beverage licenses. § 561.02, Fla. Stat.

2. Respondent is licensed under the Florida beverage law by the Department. Respondent holds a 4COP/SRX special restaurant license issued by the Department with Alcoholic Beverage License No. 68-04347. Ms. Stokes is the licensee of

   
   

   record for Respondent. Consequently, Respondent is subject to the Department's regulatory jurisdiction.

3. Respondent's series 4COP/SRX is a special restaurant license that permits it to sell beer, wine, and liquor for consumption on the licensed premises. Additionally, the licensee must satisfy seating and record-keeping requirements and must comply with 51 percent of its gross sales being food and non- alcoholic beverages. See § 561.20(2)(a)4., Fla. Stat. Respondent's restaurant is located in Sarasota County, Florida, and, pursuant to the 4COP/SRX license, must have seating and capability to serve 150 customers at any one time.

4. On August 5, 2010, Special Agent Flynn conducted an inspection of Respondent's business premises. He conducted the inspection based on complaints made to the Department that Respondent was operating as an after-hours bar, rather than a restaurant.

5. At this initial inspection, which occurred at 2:30 p.m. on August 5, 2010, Special Agent Flynn found the restaurant did not have any customers or menus. Further, he noticed that the premises had seating for only 92 people and a large dance floor. Further, he observed that the walls had signs advertising drink specials and late-night parties.

6. Special Agent Flynn met Ms. Stokes, Respondent's manager and holder of the license, and informed her that the beverage

   
   

   license required that Respondent be able to serve 150 customers at one time. Also, Special Agent Flynn requested the required business records concerning the purchase of alcoholic beverage invoices from the distributors for a 60-day proceeding period. Ms. Stokes did not have the requested records on the premises.

7. On August 19, 2010, Special Agent Flynn sent Ms. Stokes a written request, requesting alcoholic purchase invoices for a 60-day period before August 19, 2010. The request allowed

   Ms. Stokes 14 days to compile the records and to provide the records to the Department. The record here showed by clear and convincing evidence that Respondent did not produce records for the audit period.

8. On September 8, 2010, at approximately 3:00 p.m., Special Agent Flynn returned to Respondent's premises. Again, he found that Respondent did not have the required seating number and ability to serve 150 customers at one time. Special Agent Flynn offered credible testimony that, during the September 8, 2010, inspection, he found Respondent had only 106 available seats. Further, consistent with his inspection on August 5, 2010, Special Agent Flynn observed facts showing that Respondent was a late-night bar, as opposed to a restaurant. The evidence showed that on September 8, 2010, Special Agent Flynn observed that Respondent did not have any customers, menus, and very little food in its small kitchen. Special Agent Flynn, however,

   
   

   did observe that Respondent continued to have its large dance floor, disc jockey booth, advertised drink specials, and posters advertising late-night parties. Clearly, Respondent was being operated as a bar, rather than a restaurant as required by its license.

9. At the September 8, 2010, inspection, Special Agent Flynn again requested Respondent's business records that he had previously requested for the 60-day time period before August 19, 2010. Ms. Stokes provided a few invoices for purchases of food and non-alcoholic beverages. These invoices were dated after the August 19, 2010, date that Special Agent Flynn had requested and did not cover the requested 60 days prior to the August 19, 2010, request. These records included food and beverage purchases by Respondent from retailers, but did not contain any records concerning the points of sale at the restaurant.

10. Ms. Nadeau, an auditor for the Department, offered credible testimony concerning the Department's request for business records from Respondent for the audit period of April 1, 2010, through July 31, 2010. On August 27, 2010, Ms. Nadeau set up an audit request for the period of April 1, 2010, through

    July 31, 2010, based on information provided by Special Agent Flynn. The Department provided Ms. Stokes with an audit engagement letter that requested business records. Ms. Nadeau testified that on September 10, 2010, she was contacted by

    
    

    Ms. Stokes. Ms. Stokes informed Ms. Nadeau that Ms. Stokes had become the owner of the restaurant in June 2010 and that she did not have the required records. Ms. Nadeau informed Ms. Stokes to provide all the records requested in the audit engagement letter that Ms. Stokes had and to try to obtain the prior records from the previous managing member of Respondent.

11. On September 22, 2010, Ms. Stokes mailed to the Department records she claimed met the audit period. The records consisted of guest checks for July and August 2010, which only showed food purchases and no alcoholic beverage purchases. Further, Ms. Nadeau found that the records were not reliable, because the records contained numerous personal items not related to the restaurant, such as baby wipes, cotton swabs, and boxer shorts. Consequently, the record clearly and convincingly shows that Respondent failed to provide the required business records for the audit period of April 1, 2010, through July 31, 2010.

12. Next, based on Respondent's failure to provide any reliable records, the Department was unable to conduct an audit of the business. Records provided by Respondent indicated that the only sales that occurred on the premises were for food. However, the testimony showed that Respondent's business included the sale of alcohol and marketed the sale of alcoholic beverages for late-night parties.

    
    

13. Mr. Torres, the senior auditor for the Department, credibly testified that he conducted an independent review of Ms. Nadeau's initial audit findings. Mr. Torres, who has been employed with the Department for 27 years, reviewed the records provided by Respondent. He credibly testified that Respondent's guest checks were very questionable because they showed all food sales, but no alcohol, which was not consistent with Special Agent Flynn's observations.

14. The evidence further showed that Ms. Stokes became the managing member of Respondent in June 2010. Ms. Stokes provided the Department with a change of corporate officers and named herself as registered agent, rather than apply for a new license. This distinction would later become important because, as explained by Ms. Nadeau, in the Department's eyes, there is a continuation of ownership. Under a continuation of ownership, Ms. Stokes was required to have business records for the time period before she became the managing member of Respondent.

    Ms. Stokes credibly testified that she did not have any records before June 20, 2010; thus, Respondent was unable to provide records for the audit period.

15. Ms. Stokes candidly admitted that her restaurant had been struggling financially, which is why she had worked to catering special events to draw foot traffic.

    
    

    CONCLUSIONS OF LAW

    
    

16. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. §§ 120.569 & 120.57(1), Fla. Stat. (2011).

17. The Department bears the burden of proof to establish by clear and convincing evidence the allegations in the complaints. See Ferris v. Turlington, 510 So. 2d 292, 294 (Fla. 1987); Pic 'N' Save Cent. Fla., Inc. v. Dep't of Bus. & Prof'l

    Reg., Div. of Alcoholic Beverages & Tobacco, 601 So. 2d 245, 249 (Fla. 1st DCA 1992). The clear and convincing evidence standard:

    requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the evidence must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact the firm belief of [sic] conviction, without hesitancy, as to the truth of the allegations sought to be established.

    
    

    Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983).

    
    

18. Section 561.29(1)(a) provides the Department with authority to suspend or revoke an alcoholic beverage license for violation of state laws.

19. Rule 61A-3.0141(3)(a)1. and 3. requires that:

    
    

    1. Qualifying restaurants receiving a special restaurant license after April 18, 1972 must, in addition to continuing to

       
       

       comply with the requirements set forth for initial licensure, also maintain the required percentage, as set forth in paragraph (a) or (b) below, on a bi-monthly basis. Additionally, qualifying restaurants must meet at all times the following operating requirements:

       
       

       1. At least 51 percent of total gross revenues must come from retail sale on the licensed premises of food and non-alcoholic beverages. Proceeds of catering sales shall not be included in the calculation of total gross revenues. Catering sales include food or non-alcoholic beverage sales prepared by the licensee on the licensed premises for service by the licensee outside the licensed premises.

          
          

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

          
          

          * * *

          
          

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

          
          

20. Further, section 561.20(2)(a)4. requires that:

    
    

    Any restaurant having 2,500 square feet of service area and equipped to serve 150 persons full course meals at tables at one time, and deriving at least 51 percent of its gross revenue from the sale of food and nonalcoholic beverages; however, no restaurant granted a special license on or after January 1, 1958, pursuant to general or special law shall operate as a package store, nor shall intoxicating beverages be

    
    

    sold under such license after the hours of serving food have elapsed[.]

    
    

21. Applying the rule of law to the facts here, the Department met its burden of showing by clear and convincing evidence the allegations contained in the two administrative complaints concerning the lack of seating, capacity for serving

    150 customers, and production of the business records.

    
    

22. The testimony clearly and convincingly showed that, on September 8, 2010, Respondent only had seating for 106 patrons; thus, the Department established that Respondent violated section 561.20(2)(a)4., within section 561.29(1)(a), by failing to provide the required service area, seating, and equipment to serve 150 persons full-course meals at tables at one time as required by its license.

23. Next, the record clearly and convincingly showed that Respondent did not provide the requested business records for the audit period of April 1, 2010, through July 31, 2010, and September 8, 2010. Therefore, the Department proved two allegations in the administrative complaints that Respondent violated rule 61A-3.0141(3)(a)1., section 561.29(1)(a).

24. The issue concerning Respondent's failure to derive at least 51 percent of its gross sales from food and non-alcoholic beverages is difficult. The Department has the burden of proof in a licensure proceeding to show by clear and convincing

    
    

    evidence that Respondent violated section 561.20(2)(a)4., within section 561.29(1)(a), by failing to derive at least 51 percent of its gross revenue from sales of food and non-alcoholic beverages. The facts here show that the Department, however, was prevented from conducting a full audit of Respondent's sales based on Respondent's failure to maintain and provide the adequate business records. The Department relies upon rule 61A- 3.0141(1)(a)3., which provides that "[s]ince the burden is on the holder of the special restaurant license to demonstrate compliance with the requirements for the license, the records required to be kept shall be legible, clear, and in the English language." The Department reasons that Respondent's failure to maintain and provide the business records showing compliance with the license requirements means that Respondent failed to show that 51 percent of its sales derived from food and non- alcoholic beverages. In essence, the Department's position shifts the burden of proof to Respondent to demonstrate compliance with its licensing requirements.

25. Sections 561.20 and 561.29, however, do not impose a burden on the holder of a 4COP/SRX license to prove its compliance with the 51 percent gross sales requirement. In fact, case law suggests that the burden of proof is on the licensing agency to prove the violation by clear and convincing evidence. Harry's Rest. & Lounge, Inc. v. Dep't of Bus. &

    
    

    Prof'l Reg., Div. of Alcoholic Beverages & Tobacco, 456 So. 2d 1286 (Fla. 1st DCA 1984); and Dep't of Bus. & Prof'l Reg., Div. of Alcoholic Beverages & Tobacco v. Flavor of Brazil, Inc., Case No. 00-3507 (Fla. DOAH Dec. 4, 2000; Fla. DBPR April 5, 2001).

    Requiring the Department to prove that special restaurant license holder did not meet the 51 percent gross sales may create the situation where a party attempts to avoid compliance by not having adequate business records. Obviously, it is difficult to prove a restaurant's amount of gross sales, if there are no records. On the other hand, the difficulty with the

    Department's position that the license holder must show compliance with the 51 percent gross sales is two-fold: first, neither section 561.20 nor section 561.29 places a burden on the license holder to show compliance with the 51 percent requirement; and second, the statutes do not create a legislative presumption that a license holder is presumed not to meet the 51 percent threshold if the license holder fails to produce the required business records. Absent a legislative directive that places the burden on the license holder or creates a presumption of fact, the undersigned finds that the Department bears the burden of showing by clear and convincing evidence that Respondent did not meet the 51 percent threshold of gross sales for food and non-alcoholic beverages.

    
    

26. Turning to the facts here, the record showed that Respondent was primarily a late-night bar, as opposed to a restaurant. The pertinent facts supporting this conclusion showed that on two afternoon inspections Respondent had no customers, no menus, and very little food in a small kitchen. Further, the facts established that Respondent's premises had a large dance floor, a disc jockey booth, and advertised drink specials for late-night parties. Although these facts show that Respondent was operating a bar, the facts do not reach the level of clear and convincing proof, for a licensure revocation proceeding, that Respondent's gross sales of food and non- alcoholic beverages did not reach the 51 percent threshold. Absent testimony from the Department as to the estimated or actual percentages of gross sales or testimony concerning the amount of sales of alcoholic beverages on the premises, the undersigned finds that the Department did not reach its evidentiary burden.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, enter a final order revoking Respondent's alcoholic beverage license and finding that Respondent violated:

1. Section 561.20(2)(a)4., within section 561.29(1)(a), on September 8, 2010, by failing to provide the required service area, seating, and equipment to serve 150 persons full-course meals at tables at one time as required by its license;

2. Rule 61A-3.0141(3)(a)1., within section 561.29(1)(a), the audit period of April 1, 2010, through July 31, 2010, by not providing the requested business records; and

3. Rule 61A-3.0141(3)(a)1., within section 561.29(1)(a), on September 8, 2010, by not providing the requested business records.

It is further RECOMMENDED that the final order find that the Department did not prove by clear and convincing evidence that Respondent violated section 561.20(2)(a)4., within section 561.29(1)(a).

DONE AND ENTERED this 23rd day of September, 2011, in Tallahassee, Leon County, Florida.

S

THOMAS P. CRAPPS

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

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

Filed with the Clerk of the Division of Administrative Hearings this 23rd day of September, 2011.

ENDNOTE

1/ Unless otherwise indicated, all references to the Florida Statutes are to the 2010 version.

COPIES FURNISHED:

Jaakan A. Williams, Esquire Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 40

Tallahassee, Florida 32399

Bridgette Stokes

Club Manhattan Bar and Grill 1349 31st Street

Sarasota, Florida 34234

Layne Smith, General Counsel Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

John R. Powell, Director Division of Alcoholic Beverages

and Tobacco

Department of Business and Professional Regulation

Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-1020

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 11-002957

Orders for Case No: 11-002957