Findings Of Fact The airport security officers are principally involved in enforcing parking regulations and directing traffic at the airport. Although they carry basically the same equipment as do Orlando City police officers, they wear blue shirts and the Orlando police wear brown shirts. Further, the Orlando police are civil service, and the airport guards are not. There was some testimony that the security officers are not sworn officers, and do not have the peace officer's powers of arrest; however, those so testifying demonstrated less than a full understanding of the meaning of arrest. These security officers are sworn in by the mayor of the city, are issued badges, guns, handcuffs, nightsticks, mace, radios, etc.; and Exhibit 51, General Rules for Airport Security Officers contains a section on arrest and provides that arrests shall be made in the manner provided for peace officers. Accordingly, it seems clear, despite the apparent opinion of the Orlando police department to the contrary, that airport security officers are peace officers within the meaning of the Florida Statutes. Several witnesses testified to numerous interfaces between the security officers and other airport employees such as directing traffic while emergency road, or other, repairs are being made; providing security when a gate must be kept open for repairs; and assisting in turning off valves, placing or removing barricades when emergency conditions require. The Operations Technician exercises certain authority over security officers during emergencies or at nighttime when other supervisory personnel are off duty. The exercise of this authority is normally through the duty security sergeant. Airport security officers stand duties on 8 hour shifts as do Operations Technicians and Communications clerks. No testimony was presented that maintenance personnel stand similar shifts, but, it would be presumed that if not actually on duty during the 24 hour day, certainly some of these employees are on immediate call during the period normally regarded as other than normal working hours. Security Officers are paid on a biweekly schedule as are some other airport personnel; most maintenance employees are paid on a weekly basis. The pay scales of security officers and other airport employees proposed to be included in the appropriate bargaining unit are comparable. Some of these employees have a higher pay grade and others a lower pay grade than that of the security officers. There is little, if any, interchange in jobs or duties between security officers and maintenance personnel; nor is there interchange of jobs between electricians and plumbers, for example, within the Maintenance Division. The City and County (Orange) have approved the formation of an airport authority to operate both Herndon Airports and Orlando Jetport, and await legislative approval from the State. When approved and established, the authority will be the public employer for all airport employees. In a separate representation hearing, Laborer's International Union, Local 517, in a proceeding involving so called blue collar workers employed by the City of Orlando, has disclaimed any interest in including airport employees in their proposed unit. Disputes have arisen in the past regarding inspecting and servicing vehicles used by security officers, and the City takes the position that if security officers and maintenance personnel are not in the same bargaining unit a greater likelihood of jurisdictional disputes exists. The City takes the position that having fewer unions with which to bargain will simplify or reduce the problems associated therewith and permit more efficient administration. Such benefit would perhaps be more significant when, and if, the airport authority is created. Concrete facts to support this position could not be presented since there is no history of collective bargaining at the City airports; however, it would not be unreasonable to conclude that reaching bargaining agreements with two unions would be easier than reaching agreements with three.
The Issue Whether Petitioner, Rusty Santangelo, was subject to an unlawful employment practice by Respondent, Owens Facility Services (Owens), based on his disability, in violation of the Florida Civil Rights Act; and, if so, what remedy is appropriate.
Findings Of Fact Owens provides maintenance and custodial services to multiple public facilities in Orange County, Florida. Owens does not own any of the facilities, but oversees the conversions of the facilities from one event to the next. Owens secures services from various staffing companies to fulfill its obligations. In order to accommodate its staffing requirements, Owens will contact a subcontractor, discuss the event specifics, determine how many laborers are necessary, and how many laborers the subcontractor can provide. Once a verbal agreement is reached, Owens issues an initial purchase order to the subcontractor requesting the necessary staff for an event. Thereafter, the subcontractor notifies Owens of the specific laborers, their shift schedules and where those laborers will report. Once the event is completed, the laborers complete a timekeeping report, and the hours are reviewed. The subcontractor generates an invoice and Owens then pays the subcontractor. The subcontractor then pays the laborers. The entire process may take 90 days for payment to be issued to the laborers. Ace Staffing (Ace) was one of the subcontracting companies that provided day laborers to Owens. Mr. Santangelo was an employee of Ace. Ace could send Mr. Santangelo to various locations to work. Mr. Santangelo preferred to work for Owens, and specifically wanted to work during the basketball season at the Amway Center. It is undisputed that Ace set the pay scale for Mr. Santangelo, and that Mr. Santangelo received his paychecks from Ace. Owens does not have any ownership interest in Ace. Owens is not responsible for any hiring decisions by Ace. Owens has the ability to review the background checks performed on Ace employees who are sent to work for Owens, but Owens does not hire or evaluate those workers. Owens has the ability to ask that certain Ace employees not return to work for Owens, but does not have the ability to fire or terminate an Ace employee. Mr. Santangelo attempted to resolve a perceived discrepancy in his pay. Mr. Santangelo brought the pay issue to the attention of Mr. Lichtarski, who in turn brought the pay issue to an Ace employee. Communication between Owens, Ace and Mr. Santangelo deteriorated. Mr. Santangelo was paid, but his employment by Ace ended. Mr. Santangelo was not employed by Owens. He was, at all times, employed by Ace. Mr. Santangelo failed to present any credible evidence that Respondent discriminated against him.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing the Petition for Relief filed by Mr. Santangelo in its entirety. DONE AND ENTERED this 8th day of November, 2017, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK 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 8th day of November, 2017.
The Issue Whether Petitioner is liable for sales or use tax, plus interest and penalties, as asserted by the Respondent's Notice of Decision dated March 16, 1995.
Findings Of Fact Petitioner is a Florida for-profit corporation whose sole stockholder is Corwin Zimmer. At all times pertinent to this proceeding, Petitioner operated an air taxi charter service out of the Fort Lauderdale, Florida, airport. Respondent is the agency of the State of Florida charged with the responsibility of enforcing the Florida Revenue Act of 1949, as amended, including the provisions of Chapter 212, Florida Statutes. At the times pertinent to this proceeding, Petitioner utilized three Learjets in its operations. At all times pertinent to this proceedings, each of these three jets was owned by a separate corporation and each corporation was owned by a single shareholder. Each jet was owned by a corporation to limit the liability of the individual shareholder. Each of the following owned one of these three jets: Alamo Jet, Inc., a Florida corporation wholly owned by Charles Schmidt; RLO, Inc., a Florida corporation wholly owned by Richard Owens; and Gulfstream Flight Services, Inc., a Florida corporation wholly owned by Dr. David Brown. These three corporations and their individual shareholders will be collectively referred to as the owners. These owners were unrelated to each other. Except for the agreements at issue in this proceeding, the owners were also unrelated to the Petitioner and Mr. Zimmer. None of the owners possessed the FAA licensure necessary to transport passengers for hire. At all times pertinent to this proceeding, each of the three owners had an agreement with Petitioner that was styled "Aircraft Management Agreement" (the agreement). Although written agreements could not be located for all three owners, Mr. Zimmer testified, credibly, that there existed a written agreement for each owner and that there was no material difference between the written agreement that was produced at the formal hearing and the other agreements. None of the owners fully utilized the jet it owned before entering into the agreement with Petitioner. As to each agreement, the owner was referred to as "owner" and his jet was described. Petitioner was referred to as "operator". The agreements do not contain the term "lease". The following are the responsibilities of the Petitioner as the operator pursuant to the agreement between Petitioner and Alamo Jet, Inc.: Place the Aircraft on its Air Carrier Certificate Number AT 705264 for the purpose of utilizing the aircraft in FAR 135 operations. Oversee all aircraft maintenance, aircraft records, aircraft time components, in accor- dance with the Learjet Model 55 maintenance program, Federal Aviation Regulations, and its operating certificate. Train flight crews, maintain crew records in accordance with Federal Aviation Regula- tions conduct initial, recurrent, six month proficiency flight checks. Provide the Owner with a flight crew at a rate of $450.00 per day, not to exceed $600.00 per month. Schedule all Aircraft, flight, crews and passenger activity through its dispatch department. Reimburse the Owner all moneys received from placing the Aircraft on the Garrett Engine Fleet Operations Program. Insure the Aircraft on its fleet operators policy and financially participate to recover the additional premium required for FAR 135 operations. Hanger the Aircraft at its Fort Lauder- dale facility at no charge to the owner. Provide fuel to the Owner at its Fort Lauderdale facility at $.25 above purchase cost. Insure that the aircraft [is] maintained in a like new condition with the exception of normal wear. Pay the Owner $800.00 per flight hour for the aircraft when it is utilized for FAR 135 operations. Provide the Owner with an aircraft state- ment and activity report by the 7th of the following month, and payment for the utiliza- tion of the aircraft by the 25th day of the month. Provide all charts, maps, and expendable storage at no charge to the Owner. Aggressively market the aircraft for maximum utilization. The Alamo Jet, Inc. agreement provided the following pertaining to aircraft flight utilization: Owner utilization: The Owner is responsible for all direct costs incurred from the flight. Maintenance Test Flights: The owner is responsible for all direct costs of operation. There will be no charge for the crew conducting the test flight. Flight Crew Training: The Operator shall be responsible for the direct cost of operation. This includes MSF payment, hourly maintenance cost, [and] fuel. FAR 135 Air Carrier Flights: The Operator is responsible for all cost incurred in addition to the payment of $800.00 per flight hour to the owner. The Alamo Jet, Inc. agreement provides that the Owner agrees to and is responsible for the following: Payment of the insurance premium less the additional amount required for commercial operations. Cost of maintaining the aircraft. To coordinate all flights with the Operators dispatch department. The Alamo Jet, Inc. agreement provides the following general conditions: Operator will aggressively market the charter utilization of the aircraft, and estimate its use at 600 hours the first year. No guarantee as to the amount of aircraft revenue hours are included in this agreement. Generally, Petitioner's flights are in the continental United States. During the audit period, each owner used its aircraft approximately ten days a month. Each owner could use its aircraft except when it was undergoing a major inspection or was down for maintenance. Other than those times, each owner had a key and unlimited access to its aircraft. Each owner had bumping privileges with respect to their aircraft. If an owner's aircraft was booked for a flight by Petitioner when the owner wanted to use it, the Petitioner would make the owner's aircraft available to the owner and re-book the passenger on another aircraft. Petitioner provided the pilot and crew when an owner wanted to use its aircraft at a per hour rate that was less than that charged for its taxi service. When an owner wanted to use his aircraft, he would contact one of Petitioner's employees to coordinate his use with the Petitioner. Mr. Zimmer testified that he did not intend the agreements with the owners to be leases. From the inception of the agreements, Mr. Zimmer viewed the arrangements as being contracts for the management of the aircraft so that his company and each owner could use its jet but also generate revenue when its jet was being used by Petitioner in its air taxi operations, referred to as FAR 135 operations. Mr. Zimmer testified that he intended that his relationship with the owners of the aircraft to be a marriage of operations and aircraft. Petitioner had the air carrier certificate, and the personnel and facilities to maintain the aircraft and provide air taxi service. 1/ During the audit, Mr. Dreker told Mr. Zimmer that the Respondent was treating the payments to the owners as lease payments. Before that time, no one had told Mr. Zimmer that the relationship constituted a lease. Each agreement required the owner to deliver its aircraft to Petitioner for use pursuant to the terms of the agreement. The owner gave up its exclusive possession, control, and dominion of its aircraft pursuant to the terms of the agreement. Petitioner controlled the use of the aircraft, subject to the terms of the agreement, which set forth the rights of the owner. Each agreement permitted the owner to fully utilize its jet. For the years 1987, 1988, 1989, 1990, and 1991, the Petitioner reported for federal income tax purposes in connection with its use of the three jets under the category "cost of goods sold - other costs - Jet Leases" the respective amounts of $650,531.00, $753,181.00, $923,374.00, $899,917.00, and $693,603.00. For the years 1987, 1988, 1989, 1990, and 1991, the Petitioner referred to the payments made to the owners as "Lease Payments". For the years 1987, 1988, 1989, 1990, and 1991, the Petitioner's books referred to the payments made to the owners as "Lease Payments". Mr. Zimmer was involved in the operation of the Petitioner from the time it was incorporated. He did not, however, become the sole stockholder until 1982. During 1982, Petitioner leased an airplane from American Jet in St. Louis, Missouri. The lease of that airplane is reflected on Petitioner's 1982 Federal income tax return, which was prepared by Rosen and Santini, P.A. Beginning in 1983, after Mr. Zimmer purchased the stock of the Petitioner, Robert J. Dreker, a CPA employed by Schmidt & Co., prepared all of Petitioner's federal tax returns. Petitioner's books were set up before Mr. Dreker became its CPA. Mr. Dreker did not believe that referring to the payments to owners as lease payments in Petitioner's Federal tax return or in its chart of accounts was significant because the payments were clearly deductible for tax purposes. Consequently, he retained the nomenclature reflected on the 1983 tax return and in the chart of accounts as he found them. Petitioner's chart of accounts was maintained on a daily basis by a bookkeeper. Three individuals filled the bookkeeper position at different times, none of whom had any special training or experience in tax matters. Mr. Dreker was of the opinion that referring to the payments to owners as lease payments did not conform to generally accepted accounting principles and mischaracterizes the relationship. Mr. Dreker was of the opinion that the payments to owners should be called management expenses or owner revenue payments. Mr. Dreker or his accounting firm had never been employed to prepare a certified financial statement for the Petitioner. Respondent audited Petitioner for the period May 1, 1987, through April 30, 1992. The auditor, Cynthia McHale, reviewed Petitioner's books and records, including the agreement with Alamo Jet, and interviewed Mr. Zimmer. Based on that audit the Respondent determined that the agreements between Petitioner and the owners constituted leases and that Petitioner was liable for sales or use taxes on those leases. Ms. McHale understood that Mr. Zimmer and Mr. Dreker did not intend the agreements to be leases. The amounts determined to be due were reflected by the Notice of Decision dated March 16, 1995, which is the agency action challenged by Petitioner. Respondent asserts that Petitioner owes taxes in the amount of $238,454.24, penalty in the amount of $59,613.55, interest through August 12, 1993, in the amount of $102,633.11, for a total of $400,700.90, plus interest accruing from August 12, 1993, at the rate of $77.46 per day. Petitioner disputes that the agreements constitute leases and asserts that no tax is due. Petitioner does not challenge the underlying calculation that produced the figures contained in the Notice of Decision dated March 16, 1995. Pursuant to its agreement with the owners, the Petitioner provided hangar storage space for the storage of the jets. Respondent has not assessed any tax for that storage. Petitioner did not assess taxes on the charges made by Petitioner to the passengers using its air taxi service since these charges are specifically exempt from taxation. In 1981, Petitioner corresponded with Respondent about its need to register with Respondent for sales tax purposes. The Respondent's reply, dated July 30, 1981, advised that Petitioner did not need to register for sales tax purposes because the Petitioner's business was a nontaxable service. At about the time the sales tax on services went into effect, Mr. Dreker talked with two employees of the Respondent in separate conversations and described the Petitioner's operations to them. Based on those conversations, Mr. Dreker formed the opinion that Petitioner was not subject to either sales tax or service tax. Petitioner did not pay to the Respondent or to the owners a service tax on the payments made to the owners between July 1, 1987, and December 31, 1987, the dates the service tax was in effect in Florida. The 1981 correspondence and Mr. Dreker's telephone conversations are the only evidence that supports Petitioner's estoppel argument. Mr. Dreker did not receive a written response to his telephone inquiry and he did not send a written inquiry to Respondent requesting a Letter of Technical Advice, a request for a Technical Assistance Advisement, or a Declaratory Statement.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order that adopts the findings of fact and conclusions of law contained herein and sustains the assessments contained in the Notice of Decision dated March 16, 1995, that Petitioner owes taxes in the amount of $238,454.24, penalty in the amount of $59,613.55, interest through August 12, 1993, in the amount of $102,633.11, for a total of $400,700.90, plus interest accruing from August 12, 1993, at the rate of $77.46 per day. DONE AND ENTERED this 6th day of May 1996 in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of May 1996.
Findings Of Fact Based upon the evidence adduced at the evidentiary hearing on the Department's Motion, and the record as a whole, the following Findings of Fact are made: In October of 1995, Petitioners, who desired to construct a single-family, concrete dock in the Hillsboro Canal (in Broward County, Florida) for their 171-foot yacht and to perform dredging adjacent to the dock (Project), filed with the Department a Joint Application for Environmental Resource Permit/Authorization to Use State Owned Submerged Lands/Federal Dredge and Fill Permit (Application). In the Application, Petitioners indicated that their mailing address was: c/o Flynn Enterprises 676 N. Michigan Ave., Suite 4000 Chicago, IL 60611 Flynn Enterprises, Inc., is a business owned by Petitioner Donald Flynn. The Application listed "Jeff Adair, Project Manager" of "Keith and Schnars, P.A., 6500 N. Andrews Avenue, Ft. Lauderdale, FL 33309," as the "agent authorized to secure permit" for Petitioners. The application form that Petitioners used to submit their Application contained the following signature page: By signing this application form, I am applying, or I am applying on behalf of the applicant, for the permit and any proprietary authorizations identified above, according to the supporting data and other incidental information filed with this application. I am familiar with the information contained in this application and represent that such information is true, complete and accurate. I understand this is an application and not a permit, and that work prior to approval is a violation. I understand that this application and any permit issued or proprietary authorization issued pursuant thereto, does not relieve me of any obligation for obtaining any other required federal, state, water management district or local permit prior to commencement of construction. I agree, or I agree on behalf of my corporation, to operate and maintain the permitted system unless the permitting agency authorizes transfer of the permit to a responsible operation entity. I understand that knowingly making any false statement or representation in this application is a violation of Section 373.430, F.S. and 18 U.S.C. Section 1001. Typed/Printed Name of Applicant (if no Agent is used) or Agent (if one is so authorized below) Signature of Applicant/Agent Date (Corporate Title if applicable) AN AGENT MAY SIGN ABOVE ONLY IF THE APPLICANT COMPLETES THE FOLLOWING: I hereby designate and authorize the agent listed above to act on my behalf, or on behalf of my corporation, as the agent in the processing of this application for the permit and/or proprietary authorization indicated above; and to furnish, on request, supple- mental information in support of the appli- cation. In addition, I authorize the above- listed agent to bind me, or my corporation, to perform any requirement which may be necessary to procure the permit or authorization indicated above. I understand that knowingly making any false statement or representation in this application is a violation of Section 373.430. F.S. and 18 U.S.C. Section 1001. Typed/Printed Name of Applicant Signature of Applicant Date (Corporate Title if applicable) Please note: The applicant's original signature (not a copy) is required above. PERSON AUTHORIZING ACCESS TO THE PROPERTY MUST COMPLETE THE FOLLOWING: I either own the property described in this application or I have legal authority to allow access to the property, and I consent, after receiving prior notification, to any site visit on the property by agents or personnel from the Department of Environ- mental Protection, the Water Management District and the U.S. Army Corps of Engineers necessary for the review and inspection of the proposed project specified in this application. I authorize these agents or personnel to enter the property as many times as may be necessary to make such review and inspection. Further , I agree to provide entry to the project site for such agents or personnel to monitor permitted work if a permit is granted. Typed/Printed Name Signature Date (Corporate Title if applicable) The name "Jeff Adair" appears on the "Name of Applicant (if no Agent is used) or Agent (if one is so authorized below)" line under the first paragraph on the signature page of Petitioners' Application; however, neither Adair's signature, nor any other signature, appears on the signature line under this paragraph. Petitioner Donald Flynn's signature appears on the signature lines under the second (agent designation and authorization) and third (access to property) paragraphs on the page. By letter dated November 17, 1995, the Department informed Petitioners of the following: Preliminary evaluation of your project leads staff to the conclusion that the project as proposed cannot be recommended for approval. While this is not final agency action or notice of intent, it does represent the staff review of your application based on consider- able experience in permitting matters. We are sending you this letter at this stage of the processing to allow you to assess fully the further commitment of financial resources for design dependent on permit issuance. . . . In summary, please revise plans to: (1) reduce the amount of dredging; (2) reduce impacts to natural resources; (3) reduce the size of the dock; (4) reduce encroachment on navigational channel; (5) reduce encroachment on adjacent properties; and (6) after minimization, offer mitigation plans that would address the loss of seagrass in the vicinity (watershed or basin) of the project site. Your application is currently "incomplete" and Final Agency Action will not occur until a reasonable amount of time is allowed for the submittal of a revised plan. A completeness summary has been sent under separate cover, addressing the items that are still outstanding. Staff will continue to process your application in the normal manner; however, I suggest you contact Tim Rach of this office . . . to discuss these possible alternatives regarding your project. The Department's November 17, 1995, letter was addressed to Petitioners "c/o Jeff Adair, Project Manager, Keith and Schnars, P.A., 6500 North Andrews Avenue, Fort Lauderdale, FL 33309-2132," as were subsequent requests for additional information made by the Department and other correspondence from the Department concerning the Project. Adair responded to the Department's requests for additional information and otherwise corresponded and communicated with the Department on behalf of Petitioners. In July of 1996, Adair participated in a telephone conference call during which the Department advised him that, if the Application was not withdrawn, it would be denied. On August 13, 1996, Adair sent the following letter to the Department concerning the Project: Pursuant to our recent discussions pertaining to the proposed mitigation plan and final review and processing of the Flynn Dock application, we have been advised via Mr. Flynn's attorney not to withdraw the application. Therefore, we await the Department's final decision relative to the permittability of this project. As you have indicated, we are anticipating the Depart- ment's response toward the end of this month. In making your decision, we strongly urge you to consider the merits or our innovative and "no risk" mitigation plan. We believe our mitigation plan more than compensates for proposed impacts and provides substantial net benefits to the environment and the research community. In particular, information obtained from our proposed research effort would not only benefit our project, but would also facilitate scientific analysis and review of similar applications and issues. As always, please do not hesitate to call should you have any questions or concerns. On August 19, 1996, the Department sent the following letter to Petitioners "c/o Flynn Enterprises, 676 N. Michigan Ave., Suite 4000, Chicago, IL 60611," the address that Petitioners had indicated in the Application was their mailing address: We have reviewed the information received on May 31, 1996 for an Environmental Resource Permit and authorization to use sovereign submerged lands. The Department has deemed the application complete as of this date. Final action on your application for an Environmental Resource Permit and sovereign[] submerged lands authorization will be taken within 90 days of receipt of your last item of information unless you choose to waive this timeclock. If you have any questions, please contact me at . . . . A copy of this August 19, 1996, letter was sent by the Department to Adair. On August 27, 1996, the Department issued a Consolidated Notice of Denial (Notice) in which it announced its preliminary decision to deny Petitioners' Application. The Notice contained the following advisement: A person whose substantial interests are affected by the Department's action may petition for an administrative proceeding (Hearing) in accordance with Section 120.57, Florida Statutes. Petitions filed by the permittee and the parties listed below must be filed within 14 days of receipt of this letter. Third party Petitioners shall mail a copy of the petition to the permittee at the address indicated above at the time of filing. Failure to file a petition within this time period shall constitute a waiver of any right such person may have to request an administrative determination (hearing) under Section 120.57, F.S. The Petition must contain the information set forth below and must be filed (received) in the Office of General Counsel of the Department at 3900 Commonwealth Boulevard, Mail Station 35, Tallahassee, Florida 32399-3000: The name, address, and telephone number of each petitioner, the permittee's name and address, the Department Permit File Number and county in which the project is proposed; A statement of how and when each petitioner received notice of the Depart- ment's action or proposed action; A statement of how each petitioner's substantial interests are affected by the Department's action or proposed action; A statement of the material facts disputed by petitioner, if any; A statement of facts which petitioner contends warrant reversal or modification of the Department's action or proposed action; A statement of which rules or statutes petitioner contends warrant reversal or modification of the Department's action or proposed action; and A statement of the relief sought by petitioner, stating precisely the action petitioner wants the Department to take with respect to the Department's action or proposed action. If a petition is filed, the administrative hearing process will constitute a renewed determination of the Department's decision on the application. Accordingly, the Department's final action may be different from the position taken by it in this letter. Persons whose substantial interests will be affected by any decision of the Department with regard to the permit have the right to petition to become a party to the proceeding. The petition must conform to the requirements specified above and be filed (received) within 14 days of receipt of this notice in the Office of General Counsel at the above address of the Department. Failure to petition within the allowed time frame constitutes a waiver of any right such person has to request a hearing under Section 120.57, F.S., and to participate as a party to this proceeding. Any subsequent intervention will only be at the approval of the presiding officer upon motion filed pursuant to Rule 28-5.207, and 60Q-2.010, F.A.C. This Notice constitutes final agency action unless a petition is filed in accordance with the above paragraphs or unless a request for extension of time in which to file a petition is filed within the time specified for filing a petition and conforms to Rule 62-103.070, F.A.C. Upon timely filing of a petition or a request for an extension of time this Notice will not be effective until further Order of the Department. . . . The Notice was mailed (by certified mail, return receipt requested) to Petitioners "c/o Flynn Enterprises, 676 N. Michigan Ave., Suite 4000, Chicago, IL 60611." Although the Notice's certificate of service reflected that a copy of the Notice had been mailed to Adair "before the close of business on AUG 27 1996," in fact, as a result of inadvertence on the part of Department staff, a copy of the Notice had not been mailed to Adair. On September 3, 1996, the Notice sent to Petitioners was received by a Flynn Enterprises, Inc., employee at the address to which it was mailed. The employee executed a return receipt upon receiving the Notice. The Notice was referred to Victor Casini, Esquire, the general counsel of Flynn Enterprises, Inc., on September 4, 1996. Casini set the document aside for filing. He did not believe that there was any immediate action that he or anyone else in the Flynn Enterprises, Inc., office in Chicago needed to take in response to the Notice. Casini noted that Adair's name was listed in the Notice as among those who purportedly had been furnished copies of the Notice. He knew that Adair was handling all matters relating to the permitting of the Project for Petitioners. He therefore assumed that any action that needed to be taken in response to the Notice would be taken by Adair on behalf of Petitioners. Inasmuch as it appeared (from his review of the Notice) that the Department had already furnished Adair with a copy of the Notice, he saw no reason to contact Adair to apprise him of the issuance of the Notice. In taking no action in response to the Notice other than setting it aside for filing, Casini acted reasonably under the circumstances. Adair first learned of the issuance of the Notice during a telephone conversation he had on September 9, 1996, with an employee of Broward County, who mentioned to him, in passing, that the Department had denied Petitioners' Application. 2/ Adair thereupon immediately telephoned the Department to confirm that the Application had been denied. The Department representative to whom he spoke confirmed that the Notice had issued, apologized for the Department's failure to have sent him a copy of the Notice, and promised to rectify the error by sending him a copy of the Notice as soon as possible. Keith Skibicki, the vice president of Flynn Enterprises, Inc., in charge of its day-to-day operations, served as the liaison between Adair and Petitioners. On September 12, 1996, Adair telephoned Skibicki to inquire (for the first time) if Petitioners had received a copy of the Notice. Skibicki, who previously had neither seen nor heard about the Notice, asked around the office and learned that the Notice had been received and was in Casini's files. Skibicki related this information to Adair. Later that same day, September 12, 1996, Adair received the copy of the Notice that the Department had sent him. He then faxed a copy of the Notice to Harry Stewart, Esquire, the Florida attorney who had been retained by Petitioners to assist them in their efforts to obtain favorable action on their Application. Shortly thereafter Adair telephoned Stewart to discuss what they should do in response to the Notice. During their conversation, Stewart expressed the opinion that the 14-day period for filing a petition for an administrative proceeding began to run only upon Adair's receipt of the Notice and that therefore Petitioners had until September 26, 1996, to file their petition. During the two-week period that followed their telephone conversation, Adair and Stewart worked together to prepare such a petition. The petition was filed with the Department on September 26, 1996 (which was 23 days after the Notice had been delivered to the Chicago office of Flynn Enterprises, Inc., but only 14 days after Adair, Petitioners' designated agent in their dealings with the Department, had received a copy of the Notice). The actions taken on behalf of Petitioners in response to the Notice were intended to preserve Petitioners' right to challenge the proposed denial of their Application. At no time was there any knowing and intentional relinquishment of that right.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter an order finding that Petitioners' petition challenging the proposed denial of their Application is not time-barred and remanding the matter to the Division of Administrative Hearings for a Section 120.57(1) hearing on the merits of Petitioners' challenge. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 6th day of February, 1997. STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 6th day of February, 1997.
The Issue Whether the application of the Biscayne Bay Pilots' Association for an increase in the pilotage rates for the Port of Miami should be granted in whole or in part or denied.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: In their Prehearing Stipulation, the parties stipulated to the following facts, which are deemed admitted: The Cargo Carriers Association is a Florida not-for- profit corporation with its principal office in Miami, Florida. The purpose of the Cargo Carriers Association is to promote, advance, and secure laws, rules, and regulations concerning vessels utilizing the navigable waters of the State of Florida, in particular the Port of Miami and Port Everglades, in order that the waters, harbors, and ports of the state and the environment and property of all persons be protected to the fullest possible extent consistent with sound financial principles. A substantial number of the members of the Cargo Carriers Association are affected by the rates of pilotage currently set for the Port of Miami, inasmuch as they are required by Florida law, Chapter 310, Florida Statutes, to utilize and compensate the Port of Miami pilots whose rates are established by the Board, and they are, in fact, utilizing and compensating pilots in accordance with the rates established for the Port of Miami. Accordingly, the Cargo Carriers Association is substantially affected by and has standing to maintain this challenge to the Board's Decision dated March 9, 2000. The Board is an agency of the State of Florida created pursuant to Section 310.151, Florida Statutes, which is invested with the authority and responsibility to determine the rates of pilotage at the various ports of Florida, including the Port of Miami. Section 310.151, Florida Statutes (2000). The Pilots' Association is an association of harbor pilots that is treated as a partnership for tax purposes and that performs the pilotage services at the Port of Miami. The offices of the Pilots' Association and its affiliate, Biscayne Bay Pilots, Inc., are located in Miami, Florida. In October 1999, the Pilots' Association submitted to the Board an application for an increase in the pilotage rates for the Port of Miami. On October 28, 1999, the Investigative Committee for the Board convened a fact-finding public hearing on the Pilots' Association's application in Miami, Florida, at which numerous interested persons provided comments and testimony, both for and against the Pilots' Association's requested rate increase. On November 29, 1999, the Pilots' Association submitted to the Board a version of its application that, in its words, "has been edited to correct scrivener's errors." On December 9, 1999, the Investigative Committee for the Board completed its review and investigation of the Pilots' Association's application and presented its written findings to the Board as required by Rule 61E13-2.007(4), Florida Administrative Code. On January 21, 2000, the Board met in Miami, Florida, to review the rate increase application of the Pilots' Association and heard comments and testimony from persons who supported or opposed the application in whole or in part. At the conclusion of this meeting, the Board preliminarily determined to grant the Pilots' Association's application in part with a phased-in increase in rates. The Board's written decision was filed with the agency's clerk on March 9, 2000. The Cargo Carriers Association timely filed its petition for a proceeding under Sections 120.569 and 120.57(1), Florida Statutes (1999). The Pilots' Association requested in its application a 10 percent increase in the rate for draft charges, for tonnage charges, for shifting or anchoring charges, and for minimum fees, effective immediately, with an additional increase of 5 percent in these rates and fees six months after the effective date of the initial increase. The requested increase would result in a total 15.5 percent increase in pilotage rates and minimum fees at the Port of Miami. The Board hired an Investigative Committee composed of two consultants, one a Certified Public Accountant and the other a retired Coast Guard officer, to examine the Pilots' Association's application in light of the statutory factors set forth in Section 310.151(5)(b) and (c), Florida Statutes (1999). The Investigative Committee held a public hearing in which it received testimony from interested parties. The Investigative Committee Report was presented to the Board at the public hearing on January 21, 2000. The Board included in its written Decision findings of fact and comments with respect to each of the criteria set forth in Section 310.151(5), Florida Statutes (1999), 3/ an analysis and statement of its decision to approve an increase in the pilotage rates at the Port of Miami, and an order specifying the approved increases. The Board stated its intention to grant the Pilots' Association's application in part and to increase the rates of pilotage at the Port of Miami 3 1/2 percent for draft charges, tonnage charges, shifting or anchoring charges, and the minimum fees, effective on the date of its order, 4/ with an additional 3 percent rate increase in each of the charges effective 12 months from the effective date of the first increase and another 3 percent increase in each of the charges effective 24 months after the effective date of the first increase. This increase is 63.16 percent of the increase requested by the Pilots' Association. The public interest in having qualified pilots available to respond promptly to vessels needing their service. Section 310.151(5)(b)1., Florida Statutes (2000). 5/ In its Decision, the Board accepted the findings in the Investigative Committee Report with regard to this statutory criterion, which facts are found at page 11 of the report. 6/ The record of the hearing held before the Division of Administrative Hearings does not contain any evidence sufficient to form a basis for findings of fact different from, or in addition to, the facts relied on by the Board in its Decision with respect to this criterion. 7/ A determination of the average net income of pilots in the port, including the value of all benefits derived from service as a pilot. For the purposes of this subparagraph, "net income of pilots" refers to total pilotage fees collected in the port, minus reasonable operating expenses, divided by the number of licensed and active state pilots within the ports. Section 310.151(5)(b)2., Florida Statutes (2000). In its Decision, the Board accepted the findings in the Investigative Committee Report with regard to this statutory criterion, which facts are found at pages 12 and 13 of the report, with the following modification to the depreciation adjustment included in the calculation of the pilots' total compensation if the requested rate increase were approved in toto and the resulting modification in the projected "adjusted (all inclusive) income per pilot": The depreciation adjustment projected for the year 2000 was decreased from $6500.00 to $1600.00, resulting in an adjusted (all inclusive) income per pilot for the year 2000 of $340,800.00; the depreciation adjustment projected for the year 2001 was decreased from $6500.00 to $4800.00, resulting in an adjusted (all inclusive) income per pilot for the year 2001 of $340,000.00. The Investigative Committee Report included in the computation of average net pilot income the value of health and retirement benefits, pension valuation, and discretionary costs such as political contributions, lobbying expenses, and business promotion expenses. The Investigative Committee identified the actual total pilot compensation for pilots at the Port of Miami, including adjustments for pension valuation and discretionary costs but not for depreciation, as $308,200.00 for 1998, and it projected the total pilot compensation for 1999, 2000, and 2001, without a rate increase, as $288,200.00, $296,200.00, and $290,200.00, respectively. The record of the hearing held before the Division of Administrative Hearings does not contain evidence sufficient to form a basis for findings of fact different from, or in addition to, the facts relied on by the Board in its Decision with respect to this criterion, except as specifically set forth in the following paragraphs. Since 1993, the Pilots' Association has tried to maintain a roster of 18 active pilots at the Port of Miami, although this number has fluctuated from time to time. Currently, there are 17 pilots and one deputy at the Port of Miami. Excluding adjustments for pension valuation and discretionary costs, compensation in 1997 and 1998 for pilots at the Port of Miami was $281,000.00 and $278,000.00, respectively; compensation at Port Everglades was $329,000.00 and $344,000.00, respectively; compensation at the Port of Palm Beach was $154,000.00 and $230,000.00, respectively; and compensation at the Port of Jacksonville was $250,000.00 and $254,000.00, respectively. Because of the exclusions noted above, these amounts understate actual compensation. Compensation for the Port of Miami pilots increased 38.4 percent between 1989 and 1996. In 1989, pilot income at the Port of Miami was $203,000.00, and, in 1990, it was $181,000.00. The pilots received an effective 32 percent rate increase as a result of a 26 percent rate increase in 1992 and a 5 percent rate increase in 1993, and gross pilotage revenue increased 72 percent between 1989 and 1996, an increase primarily attributable to an increase in the number of larger vessels using the port. As a result of the revenue increase, pilot income rose to over $281,000.00 in 1997. In addition to piloting, the pilots at the Port of Miami carry out the duties of Harbor Master, which involve coordinating all of the ship traffic in the port. The pilots receive no additional compensation for this service. Reasonable operating expenses of pilots. Section 310.151(5)(b)3., Florida Statutes (2000). In its Decision, the Board accepted the findings of the Investigative Committee Report with regard to this statutory criterion, which facts are found at pages 13 through 16 of the report. In the report, the Investigative Committee found that, with the exception of the costs associated with the Pilots' Association's retirement plan, the operating expenses included in the Pilots' Association's application were reasonable. The Investigative Committee Report included a detailed discussion of the Pilots' Association's retirement plan. The retirement plan of the Pilots' Association is a non-qualified plan under the Internal Revenue Code and is unfunded and, therefore, contingent on the future operations at the Port of Miami. The plan is in the form of a consulting agreement between the Pilots' Association and its retirees, pursuant to which each pilot who reaches 55 years of age and completes 20 years of service as a full-time active pilot, and who agrees to act in the best interests of the Pilots' Association, is eligible to be paid up to 50 percent of an active pilot's income, provided that the aggregate amount paid to retirees may not exceed 20 percent of the annual total gross pilotage revenue. The payments are to be made from future pilotage revenue. The total costs associated with retired pilot compensation and benefits (equity buy-outs, surviving spouse accrual, and health insurance) included in the Investigative Committee Report for 1998 were $2,093,086.00, of which $1.4 million was attributable to payments to 11 retirees for consulting services. The Investigative Committee questioned the reasonableness of this operating expense at page 16 of its report, although it noted that there are similar plans in other Florida ports. The record of the hearing held before the Division of Administrative Hearings does not contain evidence sufficient to form a basis for findings of fact different from, or in addition to, the facts relied on by the Board in its Decision with respect to this criterion, except as specifically set forth in the following paragraphs. In 1998, payments to the five retired pilots at Port Everglades totaled $962,714.00. The retirement plan for the Port Everglades pilots has the same limits as the plan for the pilots at the Port of Miami: A Port Everglades retiree's benefit is limited to 50 percent of the income of an active pilot, and the aggregate benefits paid to Port Everglades retirees may not exceed 20 percent of the pilots' annual gross revenue. The plan at Port Canaveral limits the aggregate benefits paid to retirees to 33 1/3 percent of gross annual revenue; the limitation at the Port of Jacksonville for current retirees is 28 percent of gross annual revenue and 22 percent for new retirees. There are no aggregate limits on the amounts paid to retirees at the ports in Charleston, South Carolina, or Savannah, Georgia. Pilotage rates in other ports. Section 310.151(5)(b)4., Florida Statutes (2000). In its Decision, the Board accepted the findings of the Investigative Committee Report with regard to this statutory criterion, which facts are found at pages 16 and 17 of the report, and stated its intention to confine its comparative rate analysis to ports in Florida and the southeastern seaboard. It was noted in the Investigative Committee Report that, in 1998, the Port of Miami was ranked the seventh highest of 12 Florida ports with respect to the cost for piloting both a standard large and a standard small vessel and the eighth highest out of the 12 Florida ports in the amount of revenue per handle. 8/ As part of its comparison of pilotage rates in other ports, the Investigative Committee included in its report a chart based on 1998 data setting out the number of handles in each of the 12 Florida ports surveyed, together with 1998 revenue, average handle time, number of pilots, revenue per handle, and revenue per handle hour for each of the 12 ports. In 1998, the Port of Miami had 8,909 handles, revenue of $8,433.539.00, average handle time of 2.0 hours, 18 pilots, revenue per handle of $947.00, and revenue per handle hour of $473.00. Based on 1998 data, Port Everglades, the port closest geographically to the Port of Miami, had 10,168 handles, revenue of $6,899,006.00, average handle time of 1.9 hours, 16 pilots, revenue per handle of $679.00, and revenue per handle hour of $357.00. In its Decision, the Board recognized that pilotage rates cannot be considered in a vacuum and that a rate increase or decrease is not justified simply because a rate is comparatively low or high. Rather, the Board found that consideration must be given to the size and number of vessels using the port, the time required to service the vessels, and the characteristics of the port that impact positively or negatively on the gross revenue and net income derived from the rate structure. The record of the hearing held before the Division of Administrative Hearings does not contain evidence sufficient to form a basis for findings of fact different from, or in addition to, the facts relied on by the Board in its Decision with respect to this criterion, except as specifically set forth in the following paragraphs. The Investigative Committee determined that Port Everglades was the closest and most relevant competitive port to the Port of Miami. The Port of Miami handles primarily cruise ships, excluding daily cruise ships, and container cargo vessels. Port Everglades handles both container cargo vessels and vessels containing bulk and neo-bulk products such as petroleum, cement, steel, and lumber, as well as a mix of large cruise ships and smaller, daily cruise ships. Port Everglades is one of the largest petroleum ports in the southeastern United States. The Port of Miami handles fewer but generally larger vessels than Port Everglades. The distance between the sea buoy 9/ and the turning basin where the pilots turn and dock cruise ships in the Port of Miami is approximately six miles; the distance between the sea buoy and the turning basin where the pilots turn and dock cruise ships in Port Everglades is approximately two miles. In Port Everglades, the distance from the sea buoy to the channel is short, so that there is little room to position the vessel properly for entry into the channel. The channel is, however, straight. In the Port of Miami, there is a 40-degree turn mid- channel. Currently, Port Everglades has 16 pilots and two deputies. A comparison of the pilotage rates in the Port of Miami and in Port Everglades shows that, without considering the rate increase proposed by the Board, the current draft rate in the Port of Miami is 38 percent higher than that in Port Everglades and the current tonnage rate is 7.5 percent higher in the Port of Miami than in Port Everglades. With the Board's proposed rate increase, the draft rate at the Port of Miami is roughly 40 percent higher than that at Port Everglades, and the tonnage rate is roughly 16 percent higher. Without a rate increase, total pilotage fees at the Port of Miami are 18 percent higher for small vessels and 14 percent higher for large vessels than the total pilotage fees at Port Everglades. Using the cruise ship Enchantment of the Seas as an example, without the rate increase, pilotage fees are $5,700.00 per trip in and out of the Port of Miami, or $260,000.00 annually; with the Board's proposed rate increase, pilotage fees are $6,270.00 per trip, or $326,000.00 annually. In contrast, the pilotage fees for the Enchantment of the Seas at Port Everglades are $5,150.00 per trip in and out of the port, or $268,000.00 annually. 10/ The amount of time each pilot spends on actual piloting duty and the amount of time spent on other essential support services. Section 310.151(5)(b)5., Florida Statutes (2000). In its Decision, the Board accepted the findings in the Investigative Committee Report with regard to this statutory criterion, which facts are found at page 18 of the report. The record of the hearing held before the Division of Administrative Hearings does not contain any evidence sufficient to form a basis for findings of fact different from, or in addition to, the facts relied on by the Board in its Decision with respect to this criterion. The prevailing compensation available to individuals in other maritime services of comparable professional skill and standing as that sought in pilots, it being recognized that in order to attract to the profession of piloting, and to hold the best and most qualified individuals as pilots, the overall compensation accorded pilots should be equal to or greater than that available to such individuals in comparable maritime employment. Section 310.151(5)(b)6., Florida Statutes (2000). In its Decision, the Board accepted the findings in the Investigative Committee Report with regard to this statutory criterion, which facts are found at pages 18 and 19 of the report. In its report, the Investigative Committee recognized that the Board, in the Port Everglades case, concluded in its Final Order that the profession most comparable to that of a port pilot is that of a captain of a large United States-flagged vessel. The Investigative Committee further recognized that the Board, in the Port Everglades case, concluded that pilot compensation should be equal to or greater than $203,000.00, represented by the Investigative Committee in its report as the annualized compensation of a "U.S. master." The Investigative Committee found, further, that the skills, risks, and working conditions of a ship's captain and a pilot are considerably different in that a pilot must have a wider range of technical skills to pilot a variety of vessels of different sizes; a pilot assumes more physical risks because of the need to board and disembark each vessel; a pilot is constantly in a stressful situation while piloting a vessel into port; and a pilot is a private businessman rather than an employee and must face all of the attendant risks and obligations. In its Decision, the Board established the "floor" compensation for pilots at approximately $200,000.00 to $220,000.00, which represents the wage of the highest-paid ship's master on a United States-flagged ship. 11/ The Investigative Committee found in its report that the amount of compensation above the floor established by the Board depends on several factors, including the size of the ships calling on the port, the difficulty of the port, the cost of living in the surrounding community, and pilot compensation in other United States ports. Finally, the Board expressly recognized in its Decision that, unlike ships' masters, pilots are not employees of a corporation but are independent businessmen, with all of the financial risks that status implies. The record of the hearing held before the Division of Administrative Hearings does not contain evidence sufficient to form a basis for findings of fact different from, or in addition to, the facts relied on by the Board in its Decision with respect to this criterion, except as specifically set forth in the following paragraphs. 12/ The education and training of a pilot and a ship's master is, in many cases, the same. A ship's master operating on the high seas, however, has the responsibility for the ship's well-being 24 hours a day, seven days a week during the course of the voyage. The scope of responsibility of a ship's master requires a wider array of skills than those of a pilot; he or she must make judgments regarding matters extending beyond the navigation of the ship. The ship's master is responsible for the ship's crew and, if the ship is a cruise ship, for the welfare of the passengers, and he or she must deal with the hazards of the ship catching fire, disease onboard, and a variety of other matters requiring non-technical skills. A ship's master must have navigational skills and must be knowledgeable about many ports throughout the world and many weather systems. Even when a ship is being piloted into port, the ship's master retains the ultimate responsibility for the ship, and the ship's master will sometimes dock the ship once the pilot has brought it to the docking area. Pilots are licensed to operate in a particular port, and they must have an intimate knowledge of that port. Because pilots must handle almost every vessel calling at the Port of Miami, they must be familiar with the peculiarities of numerous types and sizes of vessels, and they must continually take courses to keep up with the changing technology used on new vessels. Consequently, the knowledge and skills required of a pilot are more specialized and more narrowly focused than those required of a ship's master. When a vessel is ready to come into the Port of Miami, the pilot is taken to the vessel, which, depending on its size, may be located two-to-three miles east of the sea buoy. The pilot must, therefore, board and disembark from a vessel in open water. A pilot at the Port of Miami must guide vessels, sometimes exceeding 1,000 feet in length, through a 500-foot wide channel cut in rock, make a 40-degree turn, and guide the vessel into the port's turning basin and, ultimately, to its berth. There is little maneuvering room, and the pilot must deal with the ever-changing winds, currents, and tides that affect a vessel's passage to the berthing area. For ships of 1,000 feet or longer, there is adequate but not generous room for maneuvering in the turning basin. The number of large vessels using the Port of Miami has increased since 1989. Piloting large vessels increases the complexity of the pilot's job and increases the potential for an accident, necessarily increasing the amount of stress experienced by pilots routinely bringing such vessels into the Port of Miami. A pilot must direct the crew of a vessel when bringing the vessel into and through the channels leading to the turning basin and from the turning basin to the berths, and his or her success depends on his ability to communicate instructions to crewmembers. This communication is becoming more difficult because crewmembers are recruited from many different countries, including those from Eastern Europe, and they may or may not understand English. The stress experienced by a pilot is significantly increased when he must depend on crewmembers who do not understand English, because disaster could result if the pilot's instructions are not followed precisely. The stress experienced by pilots when they are on the job is much more intense, though of shorter duration, than that experienced by ship's masters. A pilot at the Port of Miami will pilot between six and 18 ships each week and is on-call 24 hours each day while on piloting duty, under conditions that are physically and mentally stressful. The pilots at the Port of Miami are not employees of the Pilots' Association. Rather, the Pilots' Association is operated as a partnership of the pilots, and it is funded from the pilotage revenue at the Port of Miami. There are significant operating expenses deducted from gross pilotage revenue before the pilots are paid. The Pilots' Association owns and maintains a building at the far eastern end of the Port of Miami that houses the pilots' business office and also contains bedrooms, restrooms, a lounge, and a chart room for use by the pilots. The Pilots' Association employs office staff to handle billing and accounting functions. The Pilots' Association owns and operates four pilot boats used to transport pilots to and from vessels arriving at and departing from the Port of Miami, and it employs six full- time boat operators. Replacement costs for the pilot boats exceed $2 million. The pilots must absorb rising fuel costs, which cannot be passed on as a surcharge to those using the port and are also responsible for the costs of maintaining the boats. The pilots provide communications services to the vessels entering the Port of Miami, and the Pilots' Association maintains three Federal Communications Commission licenses, a marine coastal station, a high power UHF repeater, and VHF radios in all of the pilot boats. The pilots have invested approximately $50,000.00 in communications equipment that they make available to the Port of Miami, including a 100-watt VHF long range radio and tower, as well as the UHF repeater, and they also maintain the equipment. In addition, the pilots employ dispatchers who handle the radios. The pilot's income is a function of the volume and size of traffic in and out of the port, and they are, consequently, affected by decisions made by the Port of Miami authorities with respect to services to be provided vessels using the port and with respect to port charges. The financial risks faced by the pilots at the Port of Miami are, for the most part, shared by all independent business owners. However, even though pilots of the Pilots' Association are the only pilots allowed to provide services in the Port of Miami and even though pilotage rates are highly regulated and, to an extent, non-competitive, pilots, unlike most private independent business owners, cannot pass on increases in operating expenses; rather, the pilots must absorb these increases until, and unless, an application for a rate increase is approved. 13/ The impact rate change may have in individual pilot compensation and whether such change will lead to a shortage of licensed state pilots, certificated deputy pilots, or qualified pilot applicants. Section 310.151(5)(b)7., Florida Statutes (2000). In its Decision, the Board accepted the findings in the Investigative Committee Report with regard to this statutory criterion, which facts are found at page 19 of the report. In its report, the Investigative Committee found that all-inclusive pilot compensation for the pilots at the Port of Miami would increase 8.76 percent if the increase requested by the Pilots' Association were approved by the Board. As a result, the compensation of pilots at the Port of Miami would still be lower than that of the pilots at Port Everglades, but only slightly. The Investigative Committee noted that an opening at any of the four major Florida ports, the Port of Miami, Port Everglades, Tampa, and Jacksonville, draws 20 to 30 applicants from all over the United States. The Investigative Committee observed that, with or without a rate increase, any of these four ports would attract qualified pilots because they are likely to find more attractive compensation and working and living environments than provided by their present situations. The record of the hearing held before the Division of Administrative Hearings does not contain any evidence sufficient to form a basis for findings of fact different from, or in addition to, the facts relied on by the Board in its Decision with respect to this criterion. Projected changes in vessel traffic. Section 310.151(5)(b)8., Florida Statutes (2000). In its Decision, the Board accepted the findings in the Investigative Committee Report with regard to this statutory criterion, which facts are found at pages 20 and 21 of the report. The Investigative Committee accepted the estimated handles provided by the Pilots' Association in its application, which reflects an increase from 8,909 handles in 1998, to an estimated 9,200 handles in 1999, 2000, and 2001. The Investigative Committee noted in its report that the number of cruise passengers at the Port of Miami has remained steady since 1991 and that, although the number of handles decreased between 1992 and 1995, there was steady growth in cargo tonnage between 1988 and 1998. Even with the decrease in the number of handles, the average revenue per handle increased from $545.00 in 1990 to $978.00 in 1998, accounting for a 73 percent increase in the gross annual revenue and a 79 percent increase in the average revenue per handle. The Investigative Committee found that the data suggests that the increase in the pilots' average revenue per handle, and, therefore, its gross annual revenue, is more a function of the increase in the size of the vessels calling at the Port of Miami than a function of the 32 percent rate increase in 1992 and 1993. The Investigative Committee found in its report, and the Board recognized in its Decision, that Port Everglades and the Port of Miami have a strong competitive relationship and that a large increase in pilotage rates at the Port of Miami might result in a decision by Maersk Shipping, a large shipping company currently calling at the Port of Miami and at Port Everglades, to consolidate its operations and use Port Everglades rather than the Port of Miami, resulting in a material decrease in the revenue of the Port of Miami pilots. Prior to the rate increase proposed by the Board, Maersk Shipping paid the pilots at the Port of Miami $1.08 million each year in pilotage fees. A change in operations to Port Everglades would result in a decrease in each pilot's annual income of approximately $48,000.00, with a $24,000.00 decrease in each retiree's benefits. 14/ The record of the hearing held before the Division of Administrative Hearings does not contain evidence sufficient to form a basis for findings of fact different from, or in addition to, the facts relied on by the Board in its Decision with respect to this criterion, except as specifically set forth in the following paragraphs. In choosing ports of call, ship owners, particularly cargo lines, consider many factors, including marketing factors, the availability of berths, the availability of terminal space, the availability of inland transportation, and port congestion, as well as port costs. Port costs, also known as port call expenses, at the Port of Miami are composed of many elements in addition to pilotage fees, such as terminal fees ($8,800.00) 15/ , dockage fees ($3,349.00), wharfage fees ($3,400.00), tug boat fees ($3,009.00), agent fees ($1,500.00), custom and agriculture entry fees ($1,995.00), and harbor fees ($162.00), for a total of $5,570.00; pilotage fees at the Port of Miami for a standard large vessel, according to 1998 data, were $1,085.40, or approximately 15-to-20 percent of port call expenses for a standard large vessel. Therefore, while pilotage fees are a significant part of the mix of port call expenses considered by ship owners in determining whether to call at the Port of Miami, pilots have no control over most of the fees and tariffs comprising port call expenses or over the many other factors that might influence the competitive posture of the Port of Miami vis-à-vis Port Everglades or changes in vessel traffic in the Port of Miami. The Port of Miami consists of Lummus and Dodge Islands, and it is run by the Miami-Dade County Seaport Department. The port rates at the Port of Miami increased approximately 30 percent between 1991 and 1998, generating a revenue increase of approximately 76 percent. Operating expenses increased approximately 44 percent during that time period, but, in general, the port's rate increases have gone primarily to finance improvements in the port's infrastructure and to provide its customers with facilities to accommodate their larger vessels. The port has also received a number of federal and state grants to fund construction programs to improve the port, as well as federal funds for the Port of Miami's dredging program. POMTOC, the Port of Miami Terminal Operating Company, recently received approval to raise its gate fee and empty container storage fee 2.7 percent. The Miami-Dade County Seaport Department also increased its harbor fee for large vessels from $195.00 in 1999 to $235.00 in 2000. In addition, the majority of the port's tariff items increased between 1999 and 2000. Competition is very aggressive among the ports along the eastern seaboard of the United States and along the Gulf of Mexico. As one response to the competitive nature of the market, the Port of Miami has, since 1998, entered into volume incentive agreements with several of its largest customers. The purpose of these agreements is to increase the level of activity at the port by offering a reduction in the port's tariff rate, while at the same time having a guaranteed minimum level of revenue for the port. The Port of Miami has entered into volume incentive agreements with Carnival Cruise Lines, Royal Caribbean Cruise Lines, Seaboard Marine, Maersk, Columbus Lines, and Chilean, and it is in the process of negotiating other such agreements. As a result of the agreements, these lines have brought additional business to the port or have brought new lines to the port. Cost of retirement and medical plans. Section 310.151(5)(b)9., Florida Statutes (2000). In its Decision, the Board accepted the findings in the Investigative Committee Report with regard to this statutory criterion, which facts are found at pages 22 through 25 of the report. In its report, the Investigative Committee determined that the estimated cost of the medical plan available to active and retired pilots for 1999, 2000, and 2001 was $8,125.00, $8,235.00, and $8,400.00, respectively, for each active pilot (or a gross for active pilots of $143,000.00, $140,000.00, and $148,000.00, respectively), and $4,636.00, $5,083.00, and $5,083, respectively, for each retiree (or a gross for retirees of $51,000.00, $61,000.00, and $61,000.00, respectively). The Pilots' Association funds both a money purchase pension plan and a 401k plan for all of its employees, after they have completed one year's service. The total annual contribution averages $6,000.00 per employee. Because the pilots are members of a partnership, they are not considered Pilots' Association employees. Their retirement plan is unfunded, and, as noted above, is in the form of a lifetime consulting agreement pursuant to which eligible pilots receive income that is limited to 50 percent of an active pilot's income, with the aggregate payments to retirees capped at 20 percent of the pilots' gross annual revenue. A surviving spouse of a retired pilot is entitled to receive 25 percent of an active pilot's income for life. The equity interests of retiring pilots in the Pilots' Association are also purchased by the Pilots' Association. These benefits result in an aggregate cost to the Pilots' Association of $2,093,086.00 per year. The Investigative Committee valued the pension plan at a conservative $30,000.00 per year, a figure that the Board accepted over objections by the Pilots' Association. The record of the hearing held before the Division of Administrative Hearings does not contain evidence sufficient to form a basis for findings of fact different from, or in addition to, the facts relied on by the Board in its Decision with respect to this criterion. Physical risks inherent in piloting. Section 310.151(5)(b)10., Florida Statutes (2000). In its Decision, the Board accepted the findings in the Investigative Committee Report with regard to this statutory criterion, which facts are found at pages 25 and 26 of the report. The Investigative Committee found that boarding a vessel at sea is the most difficult and dangerous aspect of a pilot's job, and that several pilots were injured between 1996 and 1999. Pilots board vessels in the open sea under many different conditions, with considerable risk, and the pilot often receives minimal support from a vessel's crew. The record of the hearing held before the Division of Administrative Hearings does not contain evidence sufficient to form a basis for findings of fact different from, or in addition to, the facts relied on by the Board in its Decision with respect to this criterion, except to the extent specifically set forth in the immediately following paragraphs. Even though they may refuse if conditions are unsafe, as a general rule pilots board and disembark from vessels in the open sea, in all kinds of weather, day and night, on rope ladders that are not fixed, that are sometimes not consistent with standards established by the International Maritime Organization, and that are sometimes in poor repair. Whenever possible, the vessels turn to create a lee, or sheltered side, where the pilot can board and disembark from the vessel with less risk, although it is always possible, even in a calm sea, for a cross swell to hit the vessel during boarding or disembarking. Another point at which a pilot is physically at risk is upon moving from the ladder to the deck of the vessel. Many cruise ships have pilot doors low on the side of the vessel to shorten the distance a pilot must ascend or descend a ladder to board and disembark from the ship. Once the pilot is on board the vessel, he is escorted to the bridge, which is accessible only by stairs, sometimes totaling 100 steps in many modern cargo ships. Special characteristics, dangers, and risks of the particular port. Section 310.151(5)(b)11., Florida Statutes (2000). In its Decision, the Board accepted the findings in the Investigative Committee Report with regard to this statutory criterion, which facts are found at pages 26 and 27 of the report. In its report, the Investigative Committee identified several special characteristics, dangers, and risks of the Port of Miami. It recognized that, due to the velocity and direction of the currents, the proximity of the Gulf Stream presents a variety of challenges to pilots as vessels approach the Outer Bar Channel and that the Gulf Stream, together with northerly winds and a flooding current, make transiting the jetties especially difficult. Because the channel bottom is hard coral from the sea buoy to the berths, it is extremely difficult to handle large, deep-draft vessels to and from the gantry berths, and the current and wind conditions require special handling of these vessels when they dock or turn. In addition, reefs lining the approaches to the Port of Miami are unmarked, and the background light from Miami-Dade County makes it difficult to identify land and navigational marks. Weather can cause hazards to navigation in the Port of Miami, with rapidly changing wind conditions resulting from thunderstorms and with changing tidal conditions resulting from heavy rains. In addition, northwesterly and northeasterly winds cause heavy sets on a flood tide for vessels passing through the jetties. The record of the hearing held before the Division of Administrative Hearings does not contain evidence sufficient to form a basis for findings of fact different from, or in addition to, the facts relied on by the Board in its Decision with respect to this criterion, except to the extent specifically set forth in the immediately following paragraphs. 16/ The complexity of the waterway poses a high risk to vessels being piloted into the Port of Miami. Waterway complexity at the Port of Miami includes the amount of crossing traffic, turns in the channel, converging traffic from different channels, background lighting, and the large number of small pleasure craft in and around the channels. The hard rock bottom of the channels poses a high risk to vessels being piloted into the Port of Miami. The channel is dredged in a "U" shape, forming a narrow underwater trench through which vessels must pass, and vessels can be seriously damaged if they come into contact with the sides of the trench. Any other factors the board deems relevant in determining a just and reasonable rate. Section 310.151(5)(b)12., Florida Statutes (2000). In its Decision, the Board determined that there were no such factors. The record of the hearing held before the Division of Administrative Hearings does not contain any evidence sufficient to form a basis for findings of fact different from, or in addition to, the Board's finding. The board may take into consideration the consumer price index or any other comparable economic indicator when fixing rates of pilotage; however, because the consumer price index or such other comparable economic indicator is primarily related to net income rather than rates, the board shall not use it as the sole factor in fixing rates of pilotage. Section 310.151(5)(c), Florida Statutes (2000). In its Decision, the Board accepted the findings in the Investigative Committee Report with regard to this statutory criterion, which facts are found at pages 28 and 29 of the report and in the attachments thereto. In its report, the Investigative Committee found that the Consumer Price Index ("CPI") had increased 17.8 percent since January 1, 1993, the date of the last pilotage rate increase, and 22.9 percent since October 1991, the date of the Pilots' Association's last application for a rate increase. In reaching its conclusion that some increase in pilotage rates at the Port of Miami is justified, the Board noted in its Decision that it considered it compelling that the CPI had increased 17.8 percent since the last rate increase and that pilotage rates at the Port of Miami had not increased for seven years. The record of the hearing held before the Division of Administrative Hearings does not contain any evidence sufficient to form a basis for findings of fact different from, or in addition to, the facts relied on by the Board in its Decision with respect to this criterion. Taken in its entirety, the evidence presented by the Cargo Carriers Association and the Pilots' Association in this proceeding with respect to the statutory factors set forth in Section 310.1151(5)(b) and (c), Florida Statutes (2000), yielded findings of fact in addition to those found by the Board in its Decision. There was not sufficient credible and persuasive evidence presented by the Cargo Carriers Association to support a finding of fact contrary to the findings of the Board in its Decision.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Pilotage Rate Review Board consider the additional facts established by the evidence presented at the hearing before the Division of Administrative Hearings in determining, in accordance with its interpretation of its statutory mandate, its expertise, and the appropriate policy considerations, whether the Decision on the Biscayne Bay Pilots' Association Pilotage Rate Increase Application in the Port of Miami, filed March 9, 2000, will result in fair, just, and reasonable pilotage rates at the Port of Miami. DONE AND ENTERED this 11th day of January, 2001, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of January, 2001.
Findings Of Fact The Orlando Police Department is organized on paramilitary lines and headed by a Director of Public Safety. Directly under him comes the Chief of Police who is the principal administrative officer of the department. His immediate staff which consists of 1 captain, 7 lieutenants, sergeants and patrolmen, includes an Administrative Aide who holds the rank of lieutenant and attends all staff meetings conducted by the Chief. In such position he is privy to all classified information received by the Chief and would appear to fit the definition of "confidential employee" under Section 447.02(5), Florida Statutes. Also in the Chief's Staff is a Research and Development Section and a Special Investigative Services Division. The former is headed by a lieutenant and is primarily responsible to research, develop and prepare all directives, regulations and general orders for the Department. The Special Investigative Services Division is headed by a Captain and contains an Internal Affairs Section, a Staff Inspection Section and an Intelligence Section, each headed by a lieutenant. The Internal Affairs Section handles all internal investigations of a confidential nature and monitors all disciplinary cases involving the police department. The staff Inspection Section conducts routine inspections of police units to insure compliance with guidelines and orders of the department. The Intelligence Section gathers information on organized crime and criminal acts on a larger scale than those routinely handled by the C.I.D. They interface with law enforcement agencies of the Federal government and keep the Chief apprised of developments. The Administrative Service Bureau is headed by a major and staffed with two captains, two lieutenants, 3 sergeants, seven patrolmen, sixteen civilians, cadets, and recruits for training. From this Bureau is assigned a patrolman as aide to the Mayor. This Aide attends all meetings involving the Mayor and the police department and is privy to all disciplinary actions within the police department that reach the attention of the Mayor. He also acts as courier between the Mayor and Police Department for confidential police records. Within the Administrative Services Bureau are numerous divisions and sections. The Personnel and Training Division handles personnel accounting, payroll records, training and records of personnel in detached service. Under this division is the Community Relations Section, Training Section and Personnel Section. The general function of the Community Relations Section is to handle public relations for the police department. This involves presentations at schools, civic associations, press releases, etc. The Training Section conducts recruit training and provides range the target practice ranges. Recruits are graded by the training officers, and these grades are based upon written exams given to all recruits. Similarly, the scores attained on the firing range are certified by the range officer and become part of the personnel record of the individual. The staff Support Bureau is headed by a major and includes two captains, one lieutenant, five sergeants, 14 patrolmen and 70 civilians. A forthcoming reorganization will reduce the number of patrolmen to two. Numerous divisions and sections come under the staff Support Bureau. In all of the above Bureaus, the personnel of which the City seeks to have excluded from the approved bargaining unit, the police officers generally wear civilian clothes and work a regular 40 hour workweek, 8:00 A.M. to 5:00 P.M., Monday through Friday. In this regard they differ from the uniformed personnel in the Field Operations Bureau who maintain personnel on duty 24 hours per day 7 days per week. The Field Operations Bureau contains the majority of the sworn officer personnel and is comprised of 1 major, 2 captains, 15 lieutenants, 44 sergeants and 285 patrolmen. In addition, there are 18 civilian positions consisting of secretarial personnel and parking meter attendants. A patrolman is assigned as aide to the major. He prepares written orders and letters put out by the major and reviews all disciplinary actions within the Bureau. One patrolman is assigned as court liaison and assists the State Attorney's office in scheduling witnesses and performing general liaison between the department and the State Attorney's office. The Field Operations Bureau consists of the Criminal Investigative Division (C.I.D.) and the Uniform Division. The former are plain clothed police officers divided into a youth section, vice section, crimes-again-person section, crimes-against-property section and the general assignment section. The latter encompasses the control section, jetport section, special operations section, and traffic section. Watches are maintained with 60-80 patrolmen assigned at one time who stand an 8-hour tour of duty with three watches assigned daily. Each watch has seven squads or sections with a sergeant in charge of each squad. The Detention Bureau has 1 lieutenant, 6 sergeants, and 61 civilians assigned. The sergeants work regular 8-hour shifts and review every arrest report to determine appropriateness and legality. One sergeant is responsible for the protection and custody of evidence in criminal cases and control of lost and found property. They supervise the performance of the assigned civilians. Since the duties and responsibilities of the various ranks are a necessary ingredient in the determination of their exclusion or inclusion in the appropriate bargaining unit, the evidence relating thereto will next be presented. Sergeants are the lowest rank the City contends should be excluded for the reason that there would be a conflict of interest between sergeants and patrolmen if they are in the same bargaining unit. Accordingly these duties and responsibilities will be first discussed. Sergeant's duties and responsibilities are generally contained in Section 100, Regulations of the Orlando Police Department Exhibit (7) which list them under Supervisory Members of the Department. Supervisors are therein described as employees having as one of their major responsibilities the general authority in the interest of the Orlando Police Department to direct other employees or members, to review grievances or the recommendations of such action, and to make effective recommendations regarding disciplinary matters, transfers, dismissals, etc. In carrying out their assignments sergeants prepare evaluation reports on patrolmen assigned under them. In order for patrolmen drawing specialist pay to continue to do so they must receive satisfactory performance ratings. Unfavorable efficiency reports affect eligibility for promotion exams and rank certification. Sergeants have authority to mete out punishment for minor transgressions. The highest level of punishment that can be awarded by a sergeant is a letter of censure which is placed in the personnel record of the recipient. The sergeant in charge of a patrol section prepares the zone assignment sheet (Ex. 31) wherein he assigns sectors and duties to the patrolmen in his section. In making these assignments independent judgment is exercised. In the event a patrolman reports out of uniform or is otherwise unprepared for assignment to duty the sergeant has the authority to relieve the man from duty without pay and send him home to get into proper uniform. Personnel requests such as transfers, leave, etc. are endorsed by those in the chain of command until they reach the approving authority. The sergeant's endorsement is effective in approving or disapproving the request. Sergeants can submit recommendations for commendation of the patrolmen under him. He also has authority to authorize up to one hour overtime without higher approval and to grant compensatory time off. Sergeants and above do not qualify for overtime pay. When the Lieutenant Watch Commander is absent from duty the senior sergeant assumes command and exercises the watch commander's authority. Sergeant's uniforms were changed from brown to white shirts in late 1974. At the same time they were authorized to discipline patrolmen for minor transgressions. Uniforms of lieutenants and above have consisted of white shirts for many years. On the other hand all members of the police force are paid at the same interval, have the same fringe benefits, all must maintain the same basic training standards, all are classified by the Civil Service System as "police officers", all are eligible for revenue sharing incentive pay from the State, all are paid from the wage classification plan, and all have the same powers of arrest. Article XIII of the Orange County PBA By-Laws provides for grievance procedures whereby a patrolman could file a grievance against a fellow member in the same union who disciplined the patrolman and seek to have the fellow member removed from the union. Art. XIII Section 2 provides: Any member of this association who voices criticism of another member, group of members or the association itself, without first seeking recourse through the provisions of Section 1 of this Article, shall be sub- ject to suspension of his membership, or ex- pulsion from the association..." This provision has not been exercised in the Orlando Police Department and the president of petitioner stated the interpretation of the bylaw provision is that grievance there refers to social rather than departmental action. Other members of petitioner testified that they didn't feel that membership in PBA would interfere with their carrying out duties that involved disciplining a fellow member of the PBA. With respect to those ranks above sergeant, little evidence was presented of specific duties and whether these duties required a finding that these officers are managerial employees. The general duties of these ranks were presented in Section 100, Exhibit 7. Furthermore, throughout the testimony was the clear import that majors had more authority and responsibility than captains who had more authority and responsibility than lieutenants who had more authority and responsibility than sergeants.
Recommendation In The Matter of City of Bridgeport (Police Department) and Bridgeport Local No. 1159, Selected Decisions [paragraph 49,868] the Connecticut Board held that the fact that sergeants, lieutenants, and captains of a city's police department exercised supervisory functions did not exclude them from the benefits of Connecticut's Municipal Employees Relations Act (MERA). Here these same officers had voted a year earlier not to be included in the overall bargaining unit and the Board appears to have affirmed the prior determination that the MERA did not preclude supervisory employees from being in the same bargaining unit as rank and file employees. The provisions of the MERA so construed does not appear in the decision. In Town of Stratford and Stratford Police Union, No. 407, 63 LRRN 1124 (1966) the Board determined that an election was proper for the captains and lieutenants to vote whether they wanted to be included in an overall police unit or to be separately represented by a unit of supervisors. The expressed policy of the Board in determining appropriate bargaining units is that the unit should be the broadest possible which will reflect a community of interest. At the same time it respects the special interests of certain groups of employees. I am not aware that such a policy has been announced by PERC. In the Matter of Borough of Rockway and Patrolmans Benevolent Association, Local 142, LLR paragraph 49,999 A.22 the New Jersey Board held that lieutenants and sergeants were properly included within a bargaining unit with patrolmen. The Board found that the lieutenants and sergeants lacked an authority to effectively hire, fire or discipline patrolmen. In the Matter of Kalamazoo Township and Lodge No. 98 F.O.P., L.L.R. paragraph 49,996.20 (1969) the Board held that although corporals had the authority to suspend patrolmen for breach of department duties this was always reviewed by higher authority; and since corporals were engaged in the exact same work as police patrolmen for the majority of their working time, they did not identify or align themselves with management. Therefore, they were not supervisors and were properly included within the proposed unit with the patrolmen. In accordance with Section 447.009(3)(a), Florida Statutes, no recommendations are submitted. DONE and ENTERED this 30th day of June, 1975. K. N. Ayers Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida
The Issue Are the February 13, 2014, letters of Respondent, Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering (Division), requiring totalisator reports to "identify the Florida [permitholder] in reports as both host and guest when applicable," statements that amount to a rule, as defined in section 120.52(16), Florida Statutes (2013).1/
Findings Of Fact Florida permits and regulates betting on greyhound racing,2/ jai alai games,3/ quarter horse racing,4/ and harness racing.5/ The Division is responsible for administration of Florida's statutes and rules governing this betting. JKC and OPKC are separate, individually permitted facilities. Jacksonville Greyhound Racing owns and operates both the JKC and the OPKC. It is not, however, a party to this proceeding. The betting system is a pari-mutuel system. This "means a system of betting on races or games in which the winners divide the total amount bet, after deducting management expenses and taxes, in proportion to the sums they have wagered individually and with regard to the odds assigned to particular outcomes."6/ Each race, contest, or game is an "event."7/ The aggregate wagers called "contributions" to pari-mutuel pools are labeled "handle." § 550.002(13), Fla. Stat. An "intertrack wager" is "a particular form of pari-mutuel wagering in which wagers are accepted at a permitted, in-state track, fronton, or pari-mutuel facility on a race or game transmitted from and performed live at, or simulcast signal rebroadcast from another in-state pari-mutuel facility."8/ The JKC offers intertrack wagering at its permitted facility located in Jacksonville, Florida. It does not offer live events. The OPKC offers intertrack wagering and wagering on live events conducted at its permitted facility in Orange Park. The Racetracks are host tracks when they transmit live greyhound racing to other in-state and out-of-state facilities for off-track wagers.9/ They are guest tracks when wagers are made at their separate permitted locations on pari-mutuel races or games conducted at third-party facilities.10/ Florida statutes and the Division's rules require detailed reports from permitholders to the Division and other permitholders, including tables of wagers, pool data, and winnings.11/ These reports are generated by "totalisators." A totalisator is "the computer system used to accumulate wagers, record sales, calculate payoffs, and display wagering data on a display device that is located at a pari-mutuel facility."12/ The Division's Form DBPR-PMW-3570 requires host permitholders to report intertrack wagering "handle" by guest on a monthly basis. The host permitholders must sign and attest to the accuracy of the information submitted in the form. Also, Florida Administrative Code Rule 61D-7.023(2) requires generation of reports for each pool within each contest to be printed immediately after the official order of finish is declared. On March 9, 2012, the Division issued a letter to AmTote International ("AmTote"), a licensed totalisator company, and copied Jacksonville Greyhound Racing, notifying AmTote that Florida permitholders and the Division would need a breakdown of the handle of the Racetracks in order to pay appropriate purses, taxes, or other liabilities. It sent a similar letter to other totalisator companies. This was an effort to be accommodating and flexible. The letter concluded: "Please continue to provide handle information broken down by source, which is required by rule to all those in the state of Florida who have been users of that information in the past." The Racetracks rely upon AmTote to provide their totalisator services. Between March 2012 and March 2014, AmTote commingled the Racetracks' wagering data into a single "community," reporting all wagering as coming from the OPKC in order to reduce interface fees paid for the totalisator service. The guest track wagering data and reports exchanged with the other totalisator companies from the Racetracks show up on the AmTote settlement files as OPKC. The reports do not differentiate between wagers made at each of the Racetracks. Before March 1, 2012, AmTote segregated wagering data as coming from either JKC or OPKC. During the two years reported by the Racetracks as a single community, the Racetracks separately provided Florida host tracks a supplemental report breaking down the sources within the common community. The Racetracks provided these supplemental reports--via email or other means--to assist Florida host tracks with reporting requirements. They did not provide them simultaneously with the other reports and data. There were frequently errors that had to be identified and corrected. In an effort to be flexible and work with the Racetracks, the Division tolerated this method of reporting for two years. But it created problems for both the Division and for the other permitholders in the state. On February 13, 2014, the Division prepared and issued correspondence to AmTote, as well as the two other Florida totalisator companies, announcing that it intended to require proper reporting of the data required by rule, including reports of each permitholder. The letter states: This letter is to address the issue of proper and complete identification of each individual permitholder in totalisator reports. Rule 61D-7.024(1), Florida Administrative Code, requires all Florida pari-mutuel permitholders to use an electronically operated totalisator. Rule 61D-7.023(9), F.A.C. states in part, ". . . Each report shall include the permitholder's name . . .," and Rule 61D-7.024(4), F.A.C. states in part, ". . . reports shall be kept logically separate . . . ." Further, Rule 61D-7.023(1), F.A.C. states, "The totalisator licensee shall be responsible for the correctness of all tote produced mutual accounting reports. " In accordance with Florida Administrative Code, the division requires each permitholder to be properly and uniquely identified by totalisator reports provided to the division and to the permitholders. In addition, the totalisators are responsible for the correctness of all tote produced mutual accounting reports. Reports provided after February 28, 2014 must properly identify the Florida Permitholder in reports as both host and guest when applicable. Improper identification of permitholders will be considered a violation of the Florida Administrative Code. On March 11, 2014, AmTote began segregating wagering data from the Racetracks in compliance with the February 13, 2014, letter. The Racetracks will incur additional financial costs if AmTote ends the reporting of all wagering data as coming from OPKC for purposes of reports provided to other totalisator companies licensed in Florida and begins segregating their wagering data by individual permitholders. These costs stem from additional interface fees incurred outside the regulatory jurisdiction of Florida. The only evidence of these costs is the testimony of Matthew Kroetz, vice-president of Operations for Jacksonville Greyhound Racing. The testimony of Mr. Kroetz about the cost of the required change is confusing because he mingles assumed costs for a third closed track as if it were reactivated and operational. Bayard Raceways is that track. The Racetracks' parent company owns it. But the likelihood and timing of that reactivation is speculative. In addition, Bayard is not a party to this proceeding. Neither is the parent company. Mr. Kroetz' testimony establishes that the current cost for the two petitioners is a total of $1,500 per month. He projects that costs for reporting, as the letter requires, would be $4,500 per month for the two Petitioners and the track that may reopen in the future. That testimony is unrebutted and consistent with his testimony that the recurring fees for all three tracks would total over $50,000 annually. It is accepted as accurate. But the $3,000 increase from $1,500 to $4,500 per month is not due solely to the reporting requirement. It is also due to lumping in the non-active track. The evidence does not support including that track, the opening of which is speculative. The monthly fee for the two operating tracks is $1,500 divided by two or $750. Subtracting that, as the current cost for an existing track, from the $3,000 increase, lowers the estimated increase to $2,250. Dividing that by three gives the increased monthly cost per track, or $750 per track. This results in the projected annual cost increase for each of the Racetracks of $9,000. Although Mr. Kroetz testified in summary that the changes would result in an increased cost of "about a thousand dollars per month per facility," that testimony is not persuasive. It is inconsistent with the more detailed testimony relied upon above and would require the improbable and unsupported conclusion that the monthly increase would be more than the existing fees.
Findings Of Fact The Respondent Marinatown Realty, Inc., is a corporate real estate broker, holding license number 0208680 and located at 3440 Marinatown Lane, Northwest, North Fort Myers, Florida. Marinatown Realty is a wholly owned subsidiary of Seago Group, Inc., a publicly held land development and rental corporation whose president is Thomas P. Hoolihan. In late 1977, Hoolihan met L. E. Hutchinson, the complainant in this case, through another broker for whom Hutchinson at the time was employed. In December, 1977, Hoolihan and Hutchinson discussed the marketing of two condominium projects being developed by Hoolihan and reached an oral agreement whereby Hutchinson would be paid $18,000 in salary with a 1 1/2 percent commission on all sales. When the condominium units were completed and mostly sold, the parties' employment agreement was revised in late December, 1979. Under the new agreement, Hutchinson was to receive $30,000 a year salary, commissions on the remaining condominium units that had not yet closed and any commissions on outside property listings neither owned nor controlled by Seago. In return for the $30,000 guarantee, Hutchinson was to forego commissions on future properties owned or controlled by Seago Group, Inc. During the period from 1977-1978 when Hutchinson was receiving $18,000 plus a 1 1/2 percent commission, sales were handled through Lee Hutchinson Realty, Inc., which held license number 0182945. In early 1979, Marinatown Realty was incorporated to market Seago's real estate inventory, to identify and list outside properties and to act as a management agent for purposes of renting condominium units previously sold in recent projects. When Marinatown Realty was formed, the complainant became its active broker. While employed as the broker for Marinatown and receiving $30,000 a year as a salaried employee, Hutchinson held two other broker's licenses, one as L. E. Hutchinson Realty, Inc., and another as L. E. Hutchinson. In January, 1980, Hoolihan agreed to pay a $15,000 bonus to Hutchinson in lieu of a salary increase. Since at that time sales were minimal, Hoolihan decided to pay the bonus in installments as sales occurred. Because Hutchinson left in May, 1980, he received only $10,000 of the bonus which represented moneys previously paid. On April 23, 1980, Hutchinson and Chuck Bundschu, a licensed real estate broker, negotiated and obtained a sales contract between Hancock Harbor Properties, Ltd., a wholly owned subsidiary of Seago Group, Inc., seller, and Frank Hoffer, buyer and licensed real estate broker, in which Hoffer offered to purchase approximately 3.16 acres of unimproved acreage for $500,000. Thomas P. Hoolihan, general partner of Hancock Harbor, executed the contract on behalf of the partnership. Prior to presenting the contract to Hoolihan, Bundschu, Hoffer and Hutchinson decided on a 30 percent, 40 percent 30 percent respective co- brokerage split on the $50,000 commission due on the sale of the Hancock Harbor Property. The co-brokerage fee split was typed on the bottom of the contract submitted to Hoolihan and was signed by the three brokers. The commission due to Hutchinson was made payable to L. E. Hutchinson Realty, Inc. On April 25, 1980, the contract with the original co-brokerage split was presented to Hoolihan who refused to agree to its co-brokerage split provision. In the presence of Hutchinson, Hoolihan informed Bundschu and Hoffer that he would not pay a commission to Hutchinson because he was a salaried employee of the Seago Group and not entitled to a commission on the sale of this property. Accordingly, the co-brokerage fee provision of the executed contract was never signed by the seller, Thomas P. Hoolihan. Instead, on April 25, 1980, Bundschu, Hoffer and Hoolihan agreed to a split of $20,000 to Hoffer and $15,000 to Bundschu in lieu of the split specified on the bottom of the contract. At the closing on July 18, 1980, which was held at Coastland Title Company, a closing statement was prepared which shows that real estate commissions were disbursed to Chuck Bundschu Realty, Inc. ($15,000), Marinatown Realty, Inc., ($15,000) and Hoffer's firm, Landco, Inc., ($20,000). The checks were written and disbursed following a conversation between an official of Coastland Title Company and Hoolihan in which Hoolihan informed the official that Hutchinson was a Seago employee and he would not agree to pay a $15,000 commission to him under such circumstances. On July 18, 1980, a check for $15,000 was issued by Coastland Title Company to Marinatown Realty, Inc. The $15,000 represented Hutchinson's share of the co-brokerage agreement. When received on July 18, 1980, by Billie Robinette, the broker for Marinatown Realty, the check was signed over by her to Seago Group, Inc., since in her opinion it did not represent commissions earned by Marinatown Realty. The oral agreement between Hutchinson and Hoolihan was to terminate at the end of April, 1980, or approximately five days after the Hoffer contract was presented. Hoolihan offered to renew the contract without a provision for a guaranteed salary because Marinatown Realty had been consistently losing money since its incorporation. On May 6, 1980, Hoolihan received a letter of resignation from Hutchinson and concluded that his offer had been rejected. In early May, 1980, Hoolihan received a call from Ms. Robinette, who had been employed as Hutchinson's secretary, regarding filling the open brokerage position at Marinatown Realty, Inc. Hoolihan discovered from Ms. Robinette that Hutchinson had paid himself 50 percent of the commissions due Marinatown Realty, Inc., for the management of condominium rentals. After examining the check stubs from Marinatown's bank account, Hoolihan took personal possession of all the books and records of the company and had the office locks changed. When he examined the books and records of the realty company, Hoolihan realized that his assumption that Hutchinson Realty, Inc., became inactive when Marinatown Realty, Inc. was formed in January, 1979, was erroneous and that Hutchinson had operated his own realty company, L. E. Hutchinson Realty, Inc., while employed by Marinatown Realty, Inc. Although he held multiple licenses, Hutchinson denied that a conflict ever existed between his duties to Marinatown Realty, Inc., and his own company, L. E. Hutchinson Realty, Inc. When questioned during the final hearing regarding how he decided where to list properties while he was the broker for both companies, the following exchange occurred between Hutchinson and counsel for Marinatown Realty, Inc.: Q Let me ask you, Mr. Hutchinson, how would it be decided when you were to go out and list property as to whether or not that property would be listed under Marinatown Realty or L. E. Hutchinson Realty, Inc.? Who would make that determination? A I would. Q Solely on your own? A I had no contract with anyone. I had nothing in writing to direct me where to place any business. Q So this would be solely your decision as to how you would list the property? Either Marinatown Realty or L. E. Hutchinson Realty? A If I secured the listing it was my dis- cretion as to where I listed the real estate. I had the choice of one of two companies. * * * Q If you were to list property in my hypo- thetical with Marinatown Realty, is it not a fact that they would receive, and being Marinatown Realty, would receive one half of the commission and you, as the broker, would receive the other half? A That was what I did. Q So it would certainly be beneficial to Seago to have you list as much property as you could with Marinatown Realty because they, in fact, owned the stock with Marinatown Realty, is that not true? A Yes, sir. Q When you would list property with L. E. Hutchinson Realty, Inc., would you do this with the full knowledge, consent and permission of Marinatown Realty, Inc.? A Yes, sir. Q How would you say that you gave full consent when you just testified that it was solely up to you as to how you would list property? A If I solely decided, I give my consent. I don't have anybody else to answer to. (T. pp. 108-110) During the period that Hutchinson was a broker for Marinatown Realty and L. E. Hutchinson Realty, Hutchinson believed his primary duty was toward his own company as illustrated by the following exchange between counsel for Respondent and the complainant: Q It's a fair statement to say that you, as a broker for Marinatown Realty, Inc. didn't make a whole lot of money for Marinatown Realty, did you? A I didn't run the P & L statement. Q I'm asking you as being the broker. You didn't make a lot of money for Marinatown Realty, Inc., did you? A I made as much money for them as I did for the responsibility. Q Well, did L. E. Hutchinson Realty, Inc. make a lot of money during that period of time? MR. FERNANDEZ: Objection as to relevancy, this whole line of questioning. MR. NEEL: Your Honor, it isn't. It's germaine. HEARING OFFICER: Objection overruled. THE WITNESS: I'm sorry, the question? Q Did L. E. Hutchinson Realty, Inc. make a lot of money during this period of time? A That's relative. Q In comparison to what money Marinatown Realty made? A Yes, sir, because L. E. Hutchinson Realty had a thirty thousand retainer that was coming in up until April 30th. Q From Seago? A Certainly. Q So L. E. Hutchinson Realty, Inc. made a lot more money than Marinatown Realty, Inc., didn't they? A That's the way its supposed to work. Q And, again, it was at your sole dis- cretion as to how you would list the properties; under which principal. A Yes, but I asked for a specific con- tract and never got it. (T. pp. 124-125) The Administrative Complaint in this case was filed on July 22, 1981. The preliminary investigative report compiled by Robert Corno, DPR Investigator, was filed on September 24, 1981 and the final investigative report was filed on September 30, 1981. The following is a synopsis of the investigator's findings and recommendation: That the COMPLAINANT [Hutchinson] worked for the SUBJECT [Hoolihan] and their contractual agreement was verbal. COMPLAINANT was paid on a salary/commission basis by companies of which SUBJECT is Chief Officer. That the COMPLAINANT filed civil action suit against SUBJECT in this case and it was dismissed with prejudice. That prior investigation by the DPR re- commended that no action be taken against the SUBJECT in this case. That two weeks after this investigation was undertaken, an Administrative Com- plaint was being filed by the DPR against the SUBJECT. That the existing BROKER for MARINATOWN REALTY, INC. was not involved in this case, and that since the time of the above referenced transaction, the SUBJECT has acquired his BROKER'S license #020462 which had no effect in this case. That conflicting statements by inter- viewers, namely former and present em- ployees and other agents involved in this case revealed that there is a reasonable doubt for probable cause against the SUBJECT. (Respondent's Exhibit 1) As noted by Investigator Corno, this was the second time Marinatown Realty had been investigated in relation to this case. In both instances a recommendation that no action be taken against the Respondent was apparently made. At the final hearing on December 1, 1981, counsel for the Department saw the complete investigative report, including the investigator's recommendation of a lack of probable cause, for the first time. Count II of the Administrative Complaint alleges that Hutchinson is entitled to compensation for services rendered on the following sales contracts: Seago Group, Inc. as seller, to Michael T. and Judith Marchiando as buyers, Seago Group, Inc. as seller, to John E. and Charlotte A. Ferguson as buyers, and Seago Group, Inc. as sellers, to Kenneth J. Dawson as buyer. In regard to the first transaction, the Marchiandos were personal friends of the son-in-law of Seago's major shareholder, Mr. R. Berti. Hutchinson's role in this transaction was limited to preparing the contract and mailing it to the Marchiandos for signature. Hutchinson had no part in selling this property and never met the Marchiandos. The sale of the Ferguson's arose in a manner similar to the Marchiandos. Mr. Ferguson is the manager of a Detroit company owned by Mr. Berti. Similarly, Mr. Dawson works for Mr. Berti in Detroit as an accountant. These sales were made by Mr. Berti and Hutchinson furnished administrative assistance by completing the contracts and sending them to these individuals for signature. Under the terms of the agreement between Hoolihan and Hutchinson, a commission was not due on these properties to Hutchinson since these were not outside listings and his agreement with Hoolihan did not contemplate that commissions be paid in such situations.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Administrative Complaint filed against Marinatown Realty, Inc. be dismissed. DONE and ORDERED this 28th day of April, 1982, in Tallahassee, Florida. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 1982. COPIES FURNISHED: Xavier J. Fernandez, Esquire NUCKOLLS JOHNSON & FERNANDEZ Suite 10, 2710 Cleveland Avenue Fort Myers, Florida 33901 James A. Neel, Esquire 3440 Marinatown Lane, N.W. Fort Myers, Florida 33903 Frederick H. Wilsen, Esquire Assistant General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Samuel R. Shorstein, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Carlos B. Stafford Executive Director Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
The Issue Petitioners' alleged liability for sales tax, interest and penalties under Chapter 212, Florida Statutes.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the arguments of counsel and the stipulation of facts entered herein, the following facts are found. Petitioners are Florida corporations having their principal place of business at Palm Beach International Airport, West Palm 8each, Florida. Petitioners conduct a fixed base aircraft operation by which they provide services to both aircraft owners and aircraft users. Petitioners are licensed, qualified and certified by the Federal Aviation Administration, the Civil Aeronautics Board, the State of Florida, and Palm Beach County to conduct its operation. Petitioners employ qualified mechanics, technicians, flight instructors, pilots, and consulting and sales personnel for conducting these services, which are described in detail below. Petitioners lease and occupy facilities appropriate for the storage, use, and repair of aircraft. Petitioners have written contractual agreements with aircraft owners in which Petitioners obtain the use of the aircraft. Petitioners pay the owners an agreed amount per hour for the use of the aircraft, which amount varies with the aircraft age and type. (Examples of said agreements are attached to Joint Exhibit number 1.) These agreements use the term "lease" to describe the Petitioners' rights to use the aircraft. The agreements provide that Petitioners will have exclusive supervision, control, and custody of the aircraft during the term of the agreement. The agreements permit the owner of the aircraft to use the aircraft for personal needs, however, so long as such use does not conflict with Petitioners' scheduled use thereof. Petitioners use the aircraft to conduct approved flight instruction for the public, to engage in charter transportation of passengers and property, and to rent to qualified pilots. Petitioners charge the third parties for instruction, charter, or rental and report the proceeds as "income" on their federal tax returns. Petitioners' payments to the aircraft owners are reflected as an "operating or overhead expense" for federal tax purposes. When using the aircraft, Petitioners employ and pay qualified flight instructors, pilots, crews and mechanics to fly and service the aircraft. The aircraft owners have no contractual agreement with these persons. Petitioners are responsible for providing all required inspection, maintenance, and repair services to the aircraft, subject to reimbursement by the owners. The aircraft owners pay the costs of fuel and lubricants used during Petitioners' use of the aircraft. Petitioners provide property damage insurance on the aircraft and liability insurance for the pilots, crew, and third parties who charter or use the aircraft. Petitioners are responsible, at the expiration of the agreement, to return the aircraft to the owner in substantially the same condition as at the commencement of the agreement, except for normal wear and depreciation. Petitioners advertise themselves to the public as a charter flying service and flying instruction service and actively solicit customers for these services. Petitioners are also in the business of selling aircraft and are authorized dealers for Cessna and Piper aircraft companies. Some of Petitioners' purchasers enter into agreements like those attached hereto, granting Petitioners exclusive use and control of the aircraft. Petitioners' purchasers properly pay sale tax under Chapter 212, Florida Statutes, when they purchase aircraft. They do not, insofar as Petitioners are aware, furnish Petitioners with resale certificates which certify that the purchase is solely for resale, in the manner designated by Rule 12A-1.38, Florida Administrative Code. Some of the purchasers have furnished exemption certificates, however, so those purchases were not taxed. Petitioners contend that they are an integrated business for the selling, storing, maintenance, and servicing of aircraft for aircraft purchasers and the provision of chartering and instruction services for third parties. Petitioners contend that their experience and expertise in providing all these services to owners and the general public is economically feasible only through an integrated operation of this nature, or through a substantially greater capital investment. Petitioners assert that the agreements by which they obtain exclusive use of the aircraft are agreements to provide expert management services to the owners, and are not subject to sales tax under Chapter 212, Florida Statutes. Respondent contends that the agreements by which Petitioners obtain exclusive use of the aircraft are separate and distinct from the rest of Petitioners' business, for sales tax purposes. Respondent also contends that the remainder of Petitioners' business is immaterial to the incidence of the tax. Respondent asserts that the agreements described herein are agreements to lease tangible personal property which are taxable as "sales" under Chapter 212, Florida Statutes. Petitioners also assert that certain of the agreements are not taxable because the aircraft owner paid sales tax on the initial purchase of the aircraft, as described in Paragraph 13 above. The Respondent contends that the prior payment of tax at the time of purchase is immaterial, since the purchase was not for resale. The issues thus presented herein are: whether the agreements are taxable transactions, as disputed in Paragraphs 14 and 15; and whether certain of the agreements are specifically nontaxable by virtue of the owner's payment of tax at the time of purchase, as disputed in Paragraph 16. The Respondent originally assessed Petitioners for tax, penalty, and interest in the amount of $19,149.08. It then appeared that in certain of Petitioners' transactions, the aircraft owners were already remitting sales tax. Respondent thereupon revised its assessment. The Respondent now alleges that the following amounts were due on March 15, 1978: Tax $11,144.68 Penalty 557.22 Interest 1,652.86 Total $13,354.76 The penalty and interest figures are subject to revision with the passage of time. The Respondent will update those figures upon issuance of a final order. Petitioners have paid no part of the foregoing assessment. Petitioners have not placed the computation of the amount due in issue, however, in the event they are held to be liable.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby, RECOMMENDED: That the Revised Notice of Proposed Assessment of Tax, Penalties, and Interest under Chapter 212, Florida Statutes, dated March 15, 1978, be asserted against Petitioners pursuant to applicable law, with interest computed to reflect the passage of additional time. ENTERED this 20th day of August, 1979, in Tallahassee, Florida. JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: John A. Gentry, III, Esquire David K. Miller, Esquire Moyle, Gentry, Jones, Flanigan Assistant Attorney General & Groner, P.A. Department of Legal Affairs Post Office Box 3888 The Capitol, LL04 West Palm Beach, Florida 33402 Tallahassee, Florida 32301
Findings Of Fact From before January 1, 1974, until the time of the final hearing in this matter, petitioner owned a DC-6 airplane, During the calendar year 1974, this airplane was leased to Surinam Air Cargo for approximately a half dozen flights. Petitioner's employees, Messrs. Goodman, Davis and Williams, crewed the airplane back and forth between Miami and Surinam, in accordance with the unwritten agreement between petitioner and Surinam Air Cargo. On some or all of these flights, petitioner transported its own goods as well as Surinam Air Cargo's. The parties stipulated that the purchases listed in schedule B attached to joint exhibit No. 1 were made for the flights back and forth to Surinam. In September of 1975, petitioner entered into agreements with Paul H. Jones & Co., Inc., to lease the DC-6 for approximately four flights, some of which were agreed upon orally; the others were the subject of written agreements. All of the agreements contemplated that petitioner would furnish the airplane crew and petitioner's employees, Messrs. Goodman, Davis and Wright, did in fact operate the DC-6 while it was leased to Paul H. Jones & Co., Inc. Miami International Hatcheries, Inc. (MIH) deals in hatching eggs. CWT Farms of Gainesville, Georgia, is a principal supplier of eggs to MIH and has been for some time. Until the fall of 1975, MIH regularly shipped eggs it received from CWT Farms to Kingston, Jamaica, using the facilities of Pan American Airways or Air Jamaica, which are common carriers. On October 13, 1975, however, petitioner entered into a contract with CWT Farms, which was evidenced by two writings, joint exhibits Nos. 2 and 3. Joint exhibit No. 2 sets up a "proposed flight schedule every Monday and Thursday," requires petitioner "to arrange and pay for cargo insurance" and specifies the manner and amount of CWT Farms' payment to petitioner; payments (covering "all operational costs") vary with the weight of the cargo and are "due and payable at the completion of each flight." Joint exhibit No. 4 is a writing evidencing an extension of the original agreement to a date beyond December 31, 1976. Joint exhibit 3 contains, inter alia, a provision which recites "that the person responsible for the operational control of this aircraft during the term of this lease shall be CWT Farms." The provisions of joint exhibits Nos. 3 and 4 notwithstanding, there was from the beginning a clear understanding between Mr. Goodman, on behalf of petitioner, and Raymond H. Burch, on behalf of CWT Farms, that petitioner would hire the crew and that it was petitioner's "responsibility to take care of the crew and to fly the plane." Petitioner's exhibit No. 5, p. 12. Petitioner's employees, ordinarily Messrs. Goodman, Davis and Wright, did in fact fly the DC-6 twice a week from Miami to Kingston, Jamaica, and back. These employees looked for payment of their salaries to petitioner rather than to CWT Farms or to any predecessor lessee. Occasionally, petitioner transported to Jamaica goods belonging to firms other than CWT Farms, but petitioner did not transport its own cargo on the flights to Jamaica. In aviation jargon, a dry lease is an agreement, analogous to a bareboat charter in maritime law, under which the lessee of aircraft undertakes to furnish the crew and gasoline, takes responsibility for maintenance and pays a pro-rata fee for engine time. A wet lease, in contrast, is an agreement under which the lessor furnishes the crew and gasoline and takes responsibility for maintenance; there is no provision for engine time and no penalty for a failed engine. The Federal Aviation Administration imposes more stringent safety regulations on wet lessors of aircraft than on dry lessors. In February of 1977, the Federal Aviation Administration began an investigation of petitioner which resulted in the filing of a complaint against petitioner and others on April 15, 1977, in the United States District Court for the Southern District of Florida. United States of America v. Kimex, Inc., et al., No. 77-1267-CIV-JE. This proceeding eventuated in a stipulation of dismissal in which petitioner agreed to a civil penalty (partially suspended) of thirty thousand dollars ($30,000.00) and admitted that, under the agreement with CWT Farms, it had "engaged in the carriage of property for compensation or hire in air commerce as a private carrier" and that the leases to CWT Farms "were 'wet leases'." During the period of the lease between petitioner and CWT Farms, MIH was normally in debt to CWT Farms because MIH did not pay in advance for the eggs it received from CWT Farms. At CWT Farms' behest, MIH paid petitioner moneys due petitioner from CWT Farms, in partial discharge of MIH's own obligations to CWT Farms. A practice developed under which MIH drew and delivered four checks to petitioner's employees before each flight, which, in the aggregate, constituted CWT Farms' payment to petitioner for the preceding flight. H. Goodman was the payee on one check, in the amount of one hundred seventy-five dollars ($175.00), C. Wright was the payee on one check in the amount of one hundred fifty dollars ($150.00), R. Davis was the payee on one check, in the amount of one hundred twenty-five dollars ($125.00). These checks also operated to discharge part of petitioner's salary obligations to these employees. Kimex, Inc. was the payee on the fourth check, the amount of which varied, depending on the weight of the cargo petitioner had transported on the previous flight. In calculating the amount of the fourth check, the amount CWT Farms owed petitioner was first computed, and four hundred fifty dollars ($450.00) was then subtracted. Before each flight, MIH delivered eggs in cases, which weighed fifty-two (52) pounds each, to a freight loading company at Miami International Airport. Because MIH kept track of the number of cases it delivered, it was a simple matter to compute CWT Farms' obligation to petitioner, as specified in the lease, viz., "16 per pound for the minimum weight of 26,000 pounds to 30,000 pounds and 15 per pound from 30,001 pounds to 32,000 pounds." Joint exhibit 2. From this figure was subtracted the sum of the checks drawn in favor of petitioner's employees. This procedure obtained until some time after December 31, 1976. By the time of the hearing, however, petitioner's employees were paid with weekly pay checks which petitioner itself drew in their favor; and petitioner received lease payment checks which were not reduced by four hundred fifty dollars ($450.00). Before the change to the practice in effect at the time of the hearing, MIH caused Internal Revenue Service Forms 1099 to be prepared to reflect the total MIH payments to petitioner's employees for each year involved. Petitioner prepared W-2 Forms to reflect the salary moneys it paid to its employees directly for each year involved.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent reduce its proposed assessment to four percent of the total dollar cost of the items listed on schedule B attached to the notice of proposed assessment, together with applicable penalties and interest, if any. DONE and ENTERED this 22nd day of December, 1977, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 APPENDIX Paragraphs one, two, four through thirteen, fifteen and sixteen of petitioner's proposed findings of fact have been adopted, in substance. Paragraph three of petitioner's proposed findings of fact recites that petitioner's lease to Jones & Co. was oral whereas the evidence was that the agreements with Jones & Co. with respect to some of the flights were reduced to writing. Paragraph fourteen of petitioner's proposed findings of fact has been adopted, in substance, assuming that "direction or control" is intended to mean responsibility or authority for navigation of the aircraft. Paragraph one of respondent's proposed findings of fact has been rejected as unsupported by or contrary to the evidence. Petitioner employs Messrs. Goodman, Davis and Wright, Miss Goodman and several mechanics. Mr. Goodman, Mr. Davis and Miss Goodman are petitioner's corporate officers. Petitioner's stockholders are Mr. Davis, Mr. and Mrs. Goodman. The evidence did not establish who petitioner's directors are. Although the evidence showed that petitioner owned a DC-6 airplane based in Miami, it was not proven that petitioner had no other assets. Paragraph two of respondent's proposed findings of fact has been adopted in substance, insofar as relevant, except that there was no evidence that petitioner was exporting its own goods on the flights made pursuant to its agreements with Paul H. Jones & Co. Paragraphs three, four, five and six of respondent's proposed findings of fact have been adopted in substance, insofar as relevant. The final paragraph of respondent's proposed findings of fact lacks support in the evidence. For a given flight, CWT Farms would owe petitioner at least the agreed price for shipping 26,000 pounds of eggs, regardless of how few eggs were in fact shipped. On a given flight, CWT Farms could ship up to 32,000 pounds, but, if CWT Farms shipped less, petitioner sometimes transported eggs for other firms. The semiweekly flight schedule was set by mutual agreement between petitioner and CWT Farms. COPIES FURNISHED: Mr. Norman S. Segall, Esquire Suite 607, 100 Biscayne Tower 100 North Biscayne Boulevard Miami, Florida 33132 Mr. Michael A. Rubin, Esquire Suite 4-B 420 South Dixie Highway Coral Gables, Florida 33146 Mr. Edwin J. Stacker, Esquire Assistant Attorney General The Capitol Tallahassee, Florida 32304
