The Issue The issue in this case is whether Respondent, Department of Business and Professional Regulation, Division of Alcoholic Beverages & Tobacco (the “Department”), is operating under an unadopted rule in its application of sections 210.276 and 210.30, Florida Statutes, which impose a surcharge and an excise tax, respectively, on tobacco products other than cigarettes or cigars, commonly known as other tobacco products (“OTP”), by calculating “wholesale sales price” as the full invoice price charged by OTP manufacturers to distributors, including any federal excise taxes (“FET”) and shipping charges reflected in the invoice price.
Findings Of Fact Each of the Petitioners is a licensed business in the State of Florida engaged in the business of distributing tobacco products. The Department is the government agency responsible for, inter alia, administering and enforcing chapter 210, Florida Statutes, related to the taxation of tobacco products other than cigarettes and cigars. By way of general background, tobacco products are taxed at both the federal and state levels. The first company to produce or import the tobacco products into the United States must pay the federal government a federal excise tax which is based on weight. 26 U.S.C. § 5702. Similarly, when the tobacco is produced or brought into Florida, Florida OTP tax applies at the rate of 85 percent of the “wholesale sales price.” Technically, Florida OTP tax has two components: an excise tax and surcharge as defined by sections 210.30 and 210.276. Section 210.30 was first enacted in 1985; it imposes a 25-percent tax on OTP. Section 210.276 was enacted in 2009; it levies a 60-percent surcharge on OTP. For convenience, the excise tax and surcharge will be referred to collectively as the OTP tax. The phrase “wholesale sales price” is defined as “the established price for which a manufacturer sells a tobacco product to a distributor, exclusive of any diminution by volume or other discounts.” § 210.25, Fla. Stat. Section 210.25(11) defines "tobacco products" as follows: [L]oose tobacco suitable for smoking; snuff; snuff flour; cavendish; plug and twist tobacco; fine cuts and other chewing tobaccos; shorts; refuse scraps; clippings, cuttings, and sweepings of tobacco, and other kinds and forms of tobacco prepared in such manner as to be suitable for chewing, but ‘tobacco products’ does not include cigarettes . . . or cigars. In 2012, the Second DCA interpreted “wholesale sales price” to apply to the price at which the manufacturer sells tobacco products to the distributor. Micjo, 78 So. 3d at 127. In that case, in which the Second DCA described the dispute as “not complicated,” the Court determined that OTP tax applies only to the charge for tobacco and not to other charges to bring the tobacco to market, such as FET and shipping charges. Id. at 126-127. There are no relevant adopted rules in which the Department has interpreted “wholesale sales price.” State agencies are required to follow the Courts’ interpretations of statutes. See Costarell v. Fla. Unemplmt. App. Comm’n, 916 So. 2d 778, 782 (Fla. 2005). Subsequent to the ruling in Micjo, the Department followed the ruling set forth by the Second DCA and stopped imposing a tax on distributors based upon on FET or shipping charges. Beginning in 2013, the Department commenced enforcing a new “policy” interpreting Micjo to exclude FET and shipping charges only when such charges were separately stated. As a result of this policy, the Department paid some refunds and did not assess OTP tax if the FET and shipping charges were separately stated. The Department began relying upon a new policy in mid- 2013 to the effect that if the domestic manufacturer of the tobacco paid FET when it produced the product, Micjo did not apply and the phrase “wholesale sales price” included non- tobacco charges, such as FET and shipping charges. This was due to the fact that the manufacturer would pass down the cost of the FET and shipping charges to the distributor as part of the “wholesale sales price.” As for foreign manufacturers who did not pay FET, Micjo operated to exclude FET and shipping charges from the taxable base. That is because the distributor who purchased the tobacco products would be responsible for paying the FET separately; it would not be part of the “wholesale sales price.” In other words, the Department’s policy was that “wholesale sales price,” as interpreted by Micjo, applies differently depending on whether the tobacco is manufactured foreign or domestically. The Petitioners seek to invalidate this non-rule policy. The Department confuses wholesale sales price (i.e., “the established price for which a manufacturer sells a tobacco product to a distributor”) with the invoice amount, which may or may not include something other than the price for the tobacco product. The Micjo decision clearly delineates the cost of the tobacco from “the various other distributor invoice costs for reimbursement of FET, shipping costs, and other charges [which are] not part of tobacco.” Micjo, 78 So. 3d at 127. After the Micjo ruling, the Department determined that it would not include FET and shipping charges in its determination of “wholesale sales price” for purposes of calculating OTP taxes. It did not promulgate a rule to that effect, but began nonetheless using the policy uniformly. In early October 2013, when the Department decided to rescind its policy in favor of a new statement of general applicability, it again failed to promulgate the policy as a rule. Instead, it unilaterally began to impose the new policy on all distributors of OTP in the state. It is clear from the record that the current policy is applicable to all distributors and that the policy delineates which distributors must pay taxes based on total invoice amounts, including FET and shipping charges, and which distributors do not have to pay taxes based on those items. It is not clear from the record how the domestic versus foreign manufacturer dynamic was argued to the Micjo Court or in the case from which the appeal arose. Micjo specifically addressed the domestic distributors, but did not make a distinction between domestic and foreign manufacturers. To the extent the Department’s position in the instant case seeks to revise the facts of Micjo, that argument is rejected.
The Issue Whether or not on or about the 2nd day of April, 1976, the Respondent, Charter Distributing Company, licensed under the Cigarette Laws, did unlawfully attempt to evade or defeat the state tax by attempting to gain a cigarette tax rebate on unstamped cigarettes, contrary to s. 210.18(1), F.S.
Findings Of Fact At all times material to the Notice to Show Cause, the Respondent, Charter Distributing Company was licensed under License No. 26-106, CWD, with the State of Florida, Division of Beverage. On April 2, 1976, Mr. Jesse Bob Cooper, an Excise Auditor II, with the State of Florida, Division of Beverage went to the licensed premises at 975 Broad Street, Jacksonville, Florida to cancel certain cigarette imprints to enable the licensee to get a refund of cigarette taxes paid. Those cigarettes upon which the imprints were to be cancelled were cigarettes which were taken out of commercial circulation because they were stale. These cigarettes were part of a quantity of cigarettes which were being returned by manufacturers representatives of the various cigarette companies to Charter Distributing Company. The arrangement was to have the cigarette company representative bring the cigarettes into the warehouse area and stack those cigarettes in a "dump area" and receive credit for them. The amounts being brought in by the manufacturers representatives were from 30 to 250 cartons on each occasion. The president of the Respondent, William Moore, would then ask the manufacturers representative if the cigarettes had the appropriate stamps for cancellation. When he was prepared, he would contact the Petitioner's representative to come over and cancel the cigarettes for refund. On April 2, 1976, when Mr. Cooper arrived to cancel the Cigarettes, the cigarettes were placed on a table and examined for proper stamps. On that date, eleven (11) packs of cigarettes were discovered which had inappropriate stamps. Nine of those packs of cigarettes were meter stamped, that is, had meter imprints that were inappropriate. One pack of the eleven packs had the heat or Addco stamp and the final pack had a hand stamp. Although the latter two packs of cigarettes had the appropriate form of stamp, the cellophane wrapper around the pack had been taped there and the stamps were not correct for those two packs. The process was being conducted by having Mr. Moore cancel the packs of cigarettes that were being examined, while Mr. Cooper witnessed. There was no effort at concealing the inappropriate packages of cigarettes made on the part of Mr. Moore. The eleven packs of cigarettes had been brought in by some undisclosed manufacturer's representative and had not been discovered until the point of checking for tax refunds, which was the activity on April 2, 1976. The Respondent, after discovery of the inappropriate stamps had been made, did not make any further request for tax refund and has not received such refund. Finally, there was no showing that the Respondent had any knowledge of the impropriety of the stamps prior to the discovery on April 2, 1976 when these eleven packs and other cigarettes were being cancelled.
Recommendation It is recommended that the Respondent, Charter Distributing Company, License No. 26-106, CWB, be released from further responsibility to answer to the Notice to Show Cause herein. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Charles T. Collette, Esquire Division of Beverage Department of Business Regulation The Johns Building 725 Bronough Street Tallahassee, Florida 32304 Stephen D. Busey, Esquire 500 Barnett Bank Building Jacksonville, Florida 32202
Findings Of Fact On or about August 12, 1986, Appellants, Ronald and Philip Hitchcock, through their authorized representative, Carlos Yepes of Cay Oil Enterprises, Inc., applied to the Planning And Zoning Board for conditional alcoholic beverage sales use of their general commercial zoned property at the corner of Belcher Road and Coachman Road in Clearwater. Specifically, they applied to enable the prospective buyer of their property, Cay Oil, to use a State I-APS beverage license (package sale of beer only for consumption off-premises) in connection with Cay Oil's planned convenience food and gasoline store, Choice Food Mart. Cay Oil obtained the license by transfer from a previous tenant of a portion of the property, Jewel T Discount Grocery. The Planning And Zoning Board conducted a public hearing on the application on September 2, 1986. At the conclusion of the hearing, the Board voted unanimously (with one abstention) to deny the application. At the public hearing, there was ample competent, substantial evidence that Appellants' property is within 500 feet of at least one church and school. In fact, the closest church and school is on property immediately adjacent to Appellants' property. There also was ample competent, substantial evidence on which the Board could have found that conditional 1-APS use would not be compatible with the rest of the neighborhood. Appellants' notice of appeal essentially restates the presentation it made before the Board; likewise, Appellants' presentation at the appeal hearing essentially repeated the presentation to the Board.
Findings Of Fact On November 2, 1979, petitioner's Officer Favitta visited respondent's premises in order to notify respondent that his beverage license had been suspended for failure to pay a civil penalty. While on the premises, Officer Favitta discovered a display rack full of cigarette packages stamped in red ink with a certain meter number. He confiscated 936 packages of cigarettes so stamped from the display rack. Other packages of cigarettes in a storage room nearby were similarly imprinted. The meter number appearing on each cigarette package had been assigned to Barone Sales, a wholesale dealer in cigarettes who sells cigarettes marked in this fashion to the Seminole Indians. Red ink is used to signify that cigarette tax has not been paid and that the cigarettes are destined for the reservation. Respondent admitted to Officer Favitta buying the cigarettes on the reservation, but argued that this was lawful so long as no more than three cartons were purchased at one time.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent dismiss the notice to show cause. DONE and ENTERED this 29th day of July, 1980, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: James M. Watson, Jr., Esquire 725 South Bronough Street Tallahassee, Florida 32301 Michael R. Shinn 244 S.W. 3rd Place Dania, Florida 33004
The Issue The issue is whether Respondent's alcoholic beverage license should be disciplined on the ground Respondent allegedly violated Section 561.20(2)(a)4., Florida Statutes.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: When the events herein occurred, Respondent, David Carl Boston, operated a restaurant and lounge under the name of Mr. D's Restaurant and Lounge at 2262 Orchard Street, Jacksonville, Florida. Respondent has been issued special restaurant license number 26-0701, series 4COP SRX, by Petitioner, Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (Division). Respondent began operating his restaurant and lounge in February 1996, but ceased doing business in July 1997. Respondent's license authorizes him to sell alcoholic beverages on the premises, so long as the restaurant has at least 2,500 square feet of service area, it can seat at least 150 patrons at tables, and at least 51 percent of the gross revenue is derived from the sale of non-alcoholic beverages and food. Respondent was aware of this requirement when he applied for a license. Indeed, item 10 on his application specifically noted these special requirements. Accordingly, Respondent knew, or should have known, that he would need adequate records to show that these requirements were being met. To enforce the above requirements, the Division performs periodic audits of all restaurants holding special licenses. As a part of that audit process, on February 3, 1997, special agent Myers contacted Respondent and requested that he "[p]roduce within 14 days all records including but not limited to all sales receipts, register tapes, invoices for food, alcoholic bev. & non-alcoholic bev., employee time records, all purchase and sales receipts, as required per Florida law." The records were to cover the twelve-month period from February 1996 through January 1997. Respondent acknowledged receiving the Notice to produce the records on February 3, 1997, by signing the Notice in agent Myers' office. Within a few days, Respondent produced a large plastic shopping bag full of records, which has been received in evidence as Petitioner's Exhibit 3. The bag includes receipts for alcoholic beverage purchases and other miscellaneous items, but virtually no receipts for food purchases. There are also so- called "summary sheets," which are handwritten summaries of receipts for food and alcoholic beverage sales for most of the months during the audit period, and cash register tapes which ostensibly support the entries on the summaries. The records are poorly organized and unsophisticated, and they are very difficult for a third person to analyze. Thus, they fail to comport with Division Rule 61A-3.0141(3)1., Florida Administrative Code, which requires that a licensee must "maintain separate records of all purchases and gross retail sales of food and non-alcoholic beverages and all purchases and gross retail sales of alcoholic beverages." Because of the lack of receipts for food purchases, the Division could not establish a percentage of food sales for the audit period. Receipts for food purchases are typically used by the Division as a measuring stick against purchases of alcoholic beverages to determine an allocation of revenues. Despite several subsequent conversations between agent Myers and Respondent in an effort to obtain further clarification and documentation, agent Myers could not establish the appropriate division of revenues between food and alcoholic beverages. On the evening of February 6, 1997, agent Myers visited Respondent's premises between 8:00 p.m. and 9:00 p.m. He found approximately five customers on the premises, all at the bar, and only one employee, who was acting as bartender. The kitchen was shut down, and no food was visible to the naked eye. Agent Myers did notice a bag of frozen chicken wings in a freezer, but no other food was on the shelves or in the refrigerator. He also counted the chairs on the premises and found only 111. On February 18, 1997, agent Myers returned to the premises and found only 107 chairs for patrons. On both visits by agent Myers, Respondent had less seating capacity for food customers than is required under his special license. In addition, contrary to a Division rule requirement, full-course meals were not available at those times even though the restaurant was serving alcoholic beverages. At hearing, Respondent initially contended that he was confused as to the requirements for his license. Given the plain language in item 10 of his application, however, which clearly identifies the restrictions, this explanation has not been accepted. At the same time, it is noted that Respondent offered to voluntarily surrender his license to the Division in July 1997, since he knew that he could not meet the special conditions imposed under the law. The Division refused, however, on the ground an Adminstrative Action was pending against his license. Respondent acknowledged that on both February 7 and 18, 1997, he had less chairs for food customers than is required. Therefore, this portion of the charges has been sustained. In mitigation, he attributed this to his birthday party on one of those evenings and a "talent show" to be held on another evening, although virtually no customers were on the premises on either date when the inspections took place. Respondent has a menu from which customers can order, and he says he also has a daily luncheon buffet. In explaining the lack of food purchase receipts, Respondent claimed that most of his food was purchased from Premier Meats in Jacksonville, Florida, a retailer that caters to small businesses, such as Respondent's. According to a representative of Premier Meats, Nathanial A. Griffin, that firm conducts a "cash and carry" business, with no accounts receivables, and thus it does not invoice its customers. Griffin recalled that Respondent regularly made weekly purchases of chicken wings, gizzards, and white filets, which totaled between $60.00 to $80.00 per week, on average. Assuming this to be true, this equates to approximately $250.00 to $300.00 per month in food purchases from that vendor. The undersigned has independently reviewed the summary sheets, which Respondent says were prepared on a contemporaneous basis from cash register tapes. They reflect that the following revenues were derived from food and alcoholic beverage sales during the months of February 1996 Food through December 1996: Alcohol February 119.70 86.00 March 1200.10 851.85 April 3678.10 731.20 May 3121.27 1170.00 June 3026.90 956.00 July 1401.50 770.04 August 1771.25 1540.70 September 1504.85 2789.32 October 372.25 742.25 November 2941.01 2217.50 December 1376.04 948.50 Total 20513.97 12803.36 If the testimony of witness Giffin is accepted, then Respondent's food purchases from Premier Meats during the eleven month period would be no more than $3000.00. Given the lack of any other food receipts, the large number of receipts for purchases of alcoholic beverages, and the description of the premises on the two occasions when agent Myers inspected the closed kitchen, it is found that the summaries are not credible, due to a lack of underlying documentation. Therefore, it is found that Respondent did not derive at least 51 percent of his gross revenue from sales of food and non-alcoholic beverages, as charged in the Administrative Action.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division of Alcoholic Beverages and Tobacco enter a Final Order revoking Respondent's special restaurant license no. 26-07010 for violating Section 561.20(2)(a)4., Florida Statutes, without prejudice to obtain any other type of license, but with prejudice to obtain another SRX special license for five years from the date of the Final Order. Respondent should also have a $1,000.00 administrative fine imposed. DONE AND ENTERED this 24th day of June, 1998, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 Filed with the Clerk of the Division of Administrative Hearings this 24th day of June, 1998. COPIES FURNISHED: Richard Boyd, Director Division of Alcoholic Beverages and Tobacco 1940 North Monroe Street Tallahassee, Florida 32399-1007 Thomas D. Winokur, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-1007 David Carl Boston 2262 Orchard Street Jacksonville, Florida 32209 Lynda L. Goodgame, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact At all times pertinent to the allegations contained in the Notice To Show Cause, Respondent was issued Florida Alcoholic Beverage License 2APS Number 66-248 for the Plaza Grocery located at 2233 North 25th Street, Ft. Pierce, Florida. The parties stipulated, and it is found, that Respondent had the cigarettes as alleged in the Notice To Show Cause in the quantities referred to and that said cigarettes were, in fact, untaxed. The parties further stipulated that on September 15, 1983, during a search conducted by officers of the St. Lucie County Sheriff's Department and the Division of Alcoholic Beverages and Taxation in Respondent's premises, the officers found in the retail rack behind the counter, twenty (20) packages of Salem Menthol 100's, and nine (9) packages of Salem Menthol Light 100's, that were untaxed. The nine (9) packages indicate that one package out of a carton of ten (10) packs was missing. In addition to the above, officers found in a box behind the counter, three (3) cartons of Salem Menthol Light 100's and four (4) cartons of Salem Menthol 100's; all untaxed and mixed in the box with cartons of taxed cigarettes. In a storeroom off from the sales area, officers found fifty-one (51) cartons of Salem Menthol Light 100's and nineteen (19) cartons of Salem Menthol 100's. Detective Alfonzo Washington who has served in that capacity for two (2) years and for the Sheriff's office in other capacities for ten (10) years has known Respondent for twenty- five (25) years. On September 15, 1983, he received a report from a friend who runs a convenience store in that area that someone had offered untaxed cigarettes for sale. Because of his relationship with Respondent, Officer Washington went to the Respondent's store to warn him. Arriving sometime between 11:30 a.m. and noon, Washington talked with Respondent outside the store near his unmarked police car. Washington was in the car and Respondent was outside it. He advised Respondent that if anyone tried to sell him cigarettes to contact him; that he wanted Respondent to, "help me." Washington did not ask Respondent to buy the cigarettes if offered: only to be a lookout and to contact him if anyone offered to sell. Whether there was an actual request or not, it is clear that Respondent thought there was and he acted on what he considered to be the request of a bona fide law enforcement officer. A finding of this nature was subsequently made in Respondent's criminal trial in the same facts and while not binding in this hearing, that court order is of some probative value. Respondent did not, however call Washington when, as it appears, an individual did in fact offer to sell him cigarettes, the cigarettes in question here, later on in the day. Respondent, Boatwright, in addition to running the Plaza Grocery Store, a convenience store which sells mostly dried and prepackaged foods, wine, beer, and cigarettes, operates a fruit harvesting and hauling business. He confirms Washington's story that he was leaving his store approximately noon on September 15 when Washington approached him and asked him if anyone had offered to sell him cigarettes. Boatwright also confirms Washington's testimony that he explained what had happened but contends that Washington asked for his help in solving the case. Respondent agreed that Washington left after a very short conversation and no detailed instructions were given. Respondent then ran some errands, going to the bank, and to a car dealership, arriving back at the grocery store at approximately 2 or 2:30 p.m. While he was working on some equipment in his repair shop in back of the store, a black male who he knew as "Peanut" drove up in a blue and white Cadillac. Peanut asked Respondent if he was interested in buying any cigarettes. This immediately rang a bell with Respondent who then asked Peanut how many he had and how much he wanted. Peanut said he had about eighty (80) cartons and was willing to sell them for $400.00. When Respondent asked if he would take less, Peanut, after talking with the other individual in the car, agreed to sell the entire lot for $300.00. At this point, Respondent advised Peanut he would have to come back later in the day because he, Respondent, did not have that much money with him. If fact, Respondent did have $300.00 with him at the time and contends he used this subterfuge only to allow him time to attempt to get Washington to the store. After talking with his friends in the car, Peanut agreed to come back later and he, Peanut, took the cigarettes which were in unopened cartons packed in two (2) brown boxes, into the store and in the storeroom where Respondent told him to put them. This was approximately 3:00 p.m. in the afternoon. The cigarettes were placed just inside the storeroom door next to some groceries, completely out in the open. After depositing the cigarettes, Peanut indicated that he would be back between 4:00 and 5:00 p.m. Respondent contends that he expected Officer Washington to come by on his way home from work somewhere around 4:00 p.m. Washington agreed that he, usually, got off work and passed by the Plaza Grocery on his way home and that he sometimes stopped in to talk with Respondent. However, while Washington indicated he failed to come in more than he stopped in, Respondent contends that Washington stopped in more often than not and that it was because of this that he did not call Washington intending to see him on the way home. He indicates that if Washington went by without stopping, he was going to call Washington at home and have him come over to be there when Peanut returned. On balance, it would appear Respondent is in error here. As it happened, however, approximately a half an hour after Peanut left, beverage agents and sheriff's department detectives, as their last stop in their check of several area convenience stores for the stolen cigarettes, came into the store while Respondent was outside talking. The agents came up in a brown car and Respondent thought it was relating to fruit harvesting. Respondent went inside the store to see what the agents wanted and found that several of the officers, including Officer White, had already gone behind the counter to the cigarette rack. At this point Respondent asked what was the problem. White replied that he wanted to check cigarettes and when White asked who Respondent bought the cigarettes from, Respondent who did not know who any of these people were replied, the Eli Witt Company. When one detective asked him if he had any more cigarettes, he said "yes" and attempted to show him where the cigarettes were in the storeroom. Ultimately the detectives advised Respondent of his right to remain silent, but he waived this right and fully explained what had happened. When Investigator White, a new beverage agent with whom respondent was not familiar, found cigarettes that were untaxed in the cigarette retail rack, he advised Respondent of his testimonial rights and Respondent indicated a desire to make a statement. In this statement, respondent reiterated the story outlined above to the effect that Washington had approached him earlier in the day to solicit his help in watching for untaxed cigarettes. He then went on to indicate the story of how Peanut had come and left the cigarettes there. September 15, 1983 was on a Thursday. The following Sunday, Investigators Young's wife called White and indicated that Respondent had called her in an effort to talk to Young. White called Respondent back and was told by Respondent that Peanut had come back that day in another car to threaten him into either returning the cigarettes or paying for them. Respondent advised White that he had a partial tag number and a description of the vehicle. He also advised White that he had reported this to the Sheriff's Department through the 911 number. At this, White advised Respondent to keep an eye out and to call if anything else developed. The cigarettes in the retail rack were in plain view and were not hidden as were the cigarettes in the box behind the counter. Investigator White confirms Respondent's story that the cigarettes in the storeroom were not hidden and were left out in the boxes with the end labels of each carton showing. This was somewhat contradicted by the testimony of Petitioner's rebuttal witness, Detective Williams from the County Sheriff's office, who stated that the cigarettes were somewhat concealed. Nonetheless, it would appear that the cigarettes were not concealed and there is no evidence to show that Respondent attempted to hide the cigarettes or make them unavailable to the investigating officers. In fact, it appears the cigarettes were where Peanut had left them with the exception of those few cartons taken from the storeroom and put into the retail rack behind the counter. In that regard, Respondent denies having moved the cigarettes and contends his five (5) employees denied moving them. It is clear that they were moved, however, more likely by an employee who now denies it.
The Issue Whether proposed Rules 61A-7.003, 61A-7.007, 61A-7.008, and 61A-7.009 constitute invalid exercises of delegated legislative authority, pursuant to Section 120.52(8), Florida Statutes,1/ for the reasons described by Petitioner in its Petition.
Findings Of Fact Petitioner and Intervenor are companies whose substantial interests will be affected by the proposed rules and they have standing to bring this rule challenge. The State of Florida, Department of Business and Professional Regulation (the Department), is the state agency responsible for adopting the proposed rules which are the subject matter of this proceeding. The Division of Alcoholic Beverages and Tobacco (the Division) is vested with general regulatory authority over the alcoholic beverage industry within the state. The Division issues both general and special alcoholic beverage licenses. See Chapters 561-565, Fla. Stat. The general licenses which permit consumption on the premises are: 1COP licenses which permit consumption of beer and certain wine and distilled spirit products; 2COP licenses which permit consumption of beer, wine, and certain distilled spirit products; and 4COP licenses which permit the consumption of beer, wine, and all distilled spirits. See §§ 563.02(1)(b)-(f), 564.06(5)(b), and 561.20(1), Fla. Stat. The 4COP licenses are known as quota licenses, are issued based on the population of the county, and are limited in number. § 561.20(1), Fla. Stat. Quota liquor licenses range in value, depending on the county involved, from a low of approximately $20,000, to a high of approximately $300,000. (stipulation of parties) The SBX or special bowling license is issued by the Division pursuant to Section 561.20(2)(c), Florida Statutes. The owner or lessee of a bowling establishment having 12 or more lanes and necessary equipment to operate them may obtain this special license which permits consumption of beer, wine, and distilled spirits. Alcohol can only be sold for consumption on the licensed premises. Another special alcoholic beverage license listed in proposed Rule 61A-7.003 is the 12RT license. The holder of such a license must be a caterer at a dog track, horse track, or jai alai fronton. In this context, Section 565.02(5), Florida Statutes, reads in pertinent part as follows: (5) A caterer at a horse or dog racetrack or jai alai fronton may obtain a license upon the payment of an annual state license tax of $675. Such caterer’s license shall permit sales only within the enclosure in which such races or jai alai games are conducted, and such licensee shall be permitted to sell only during the period beginning 10 days before and ending 10 days after racing or jai alai under the authority of the Division of Pari- mutual Wagering of the Department of Business and Professional Regulation is conducted at such racetrack or jai alai fronton. . . . Petitioner participated, to some degree, in the rule development process. The extent of that participation is unclear from the record. The text of the proposed rules as published in their final form in the Florida Administrative Weekly on October 10, 2003, is as follows: 61A-7.003 Premises Not Eligible For Smoking Designation. Licensed premises shall not be designated as a stand-alone bar if the qualifications for licensure require the premises be devoted predominantly to activities other than the service of alcohol. The following licenses are not eligible for a stand-alone bar designation: S = Special Hotel SH = Special Hotel in counties with population of 50,000 or less SR = Special Restaurant issued on or after January 1, 1958 SRX = Special Restaurant SBX = Special Bowling SAL = Special Airport SCX = Special Civic Center SCC = Special County Commission SPX = Pleasure, Excursion, Sightseeing, or Charter boats X = Airplanes, Buses, and Steamships IX = Railroad Cars XL = Passenger Waiting Lounge operated by an airline PVP = Passenger Vessels engaged in foreign commerce FEX = Special Public Fairs/Expositions HBX = Special Horse Breeders HBX = Special County Commission 11AL = American Legion Post permitted to sell to general public 11C = Social, Tennis, Racquetball, Beach, or Cabana Club 11CE = Licensed vendors exempt from payment of surcharge tax 11CS = Special Act Club License 11CT = John and Mable Ringling Museum 11GC = Golf Club 11PA = Symphony, Live Performance Theatre, Performing Arts Center 12RT = Dog or Horse Track or Jai Alai Fronton 13CT = Catering Specific Authority 386.2125, 561.695(9) FS. Law Implemented 386.203(11), 561.695 FS. History--New 61A-7.007 Formula For Compliance With Required Percentage of Gross Food Sales Revenues. In order to determine compliance, the division shall use the formula of gross food sales revenue, including but not limited to non-alcoholic beverages, divided by gross total sales revenue, in any consecutive six- month period. The results of the formula will represent the percentage of food sales revenues as defined herein and in s. 561.695, Florida Statutes. Specific Authority 386.2125, 561.695(9) FS. Law Implemented 386.203(11), 561.695(6) FS. History--New 61A-7.008 For Percentage of Gross Alcohol Sales Revenue Formula. In order to determine compliance, the division shall use the formula of gross alcohol sales revenue divided by gross total sales revenue, in any consecutive six-month period. Specific Authority 386.2125, 561.695(9) FS. Law Implemented 386.203(11), 561.695(6) FS. History--New 61A-7.009 Method Used to Determine Whether an Establishment is Predominantly Dedicated to the Serving of Alcoholic Beverages. In order to determine whether an establishment, other than one holding a specialty license designated in Rule 61A- 7.003, F.A.C., is predominantly dedicated to the serving of alcoholic beverages, the division shall compare the percentage of gross food sales revenue with the percentage of gross alcohol sales revenue. If the percentage of gross alcohol sales revenue is greater than that of the gross food sales revenue, an establishment is deemed predominantly dedicated to the serving of alcoholic beverages. Specific Authority 386.2125, 561.695(9) FS. Law Implemented 386.203(11), 561.695(1)(9) FS. History--New Article X, Section 20, Florida Constitution, was adopted by the electorate in 2002, and generally prohibits smoking in enclosed indoor workplaces. This constitutional provision includes certain exceptions from this general prohibition including the "stand-alone bar" exception. Section 20(d) instructs the Florida Legislature to adopt legislation to implement its provisions and specifies that the Legislature is not precluded from enacting any law constituting or allowing a more restrictive regulation of tobacco smoking than is provided in Section 20. The legislature implemented the constitutional amendment by amending Part II, Chapter 386, Florida Statutes. Section 386.204 prohibits smoking in enclosed indoor workplaces, except as provided in Section 386.2045. Section 386.2045 enumerates exceptions to the general prohibition, including the exception of a stand-alone bar. Section 386.2045(4), Florida Statutes, reads as follows: (4) STAND-ALONE BAR- A business that meets the definition of a stand-alone bar as defined in s. 386.203(11) and that otherwise complies with all applicable provisions of the Beverage Law and this part. A stand-alone bar is defined in Section 386.203(11) as follows: (11) 'Stand-alone bar' means any licensed premises devoted during any time of operation predominately or totally to serving alcoholic beverages, intoxicating beverages, or intoxicating liquors, or any combination thereof, for consumption on the licensed premises; in which the serving of food, if any, is merely incidental to the consumption of any such beverage; and the licensed premises is not located within, and does not share any common entryway or common indoor area with, any other enclosed indoor workplace, including any business for which the sale of food or any other product or service is more than an incidental source of gross revenue. A place of business constitutes a stand-alone bar in which the service of food is merely incidental in accordance with this subsection if the licensed premises derives no more than 10 percent of its gross revenue from the sale of food consumed on the licensed premises. Deborah Pender is the chief of licensing for the Division. According to Ms. Pender, the Division included the SBX or special bowling license in the list of special licenses that cannot qualify for stand alone bar status in proposed Rule 61A- 7.003 because its predominant business is a bowling alley. Similarly, the 12RT license was included because its predominant business is a racetrack: "Because that’s a specialty license that is issued at race tracks, and if it wasn’t a race track business, the caterer . . . couldn’t have a license anywhere else." Marie Carpenter is the chief of the Bureau of Auditing of the Division. According to Ms. Carpenter, the provision regarding the six consecutive months in proposed rules 61A-7.007 and 61A-7.008 was intended to give the Division enough of a period of time to get a good picture of whether the business met the criteria for compliance and to give licensees an opportunity to build up business records that were not previously required to be kept.2/ The licensee would be required to keep daily records. Ms. Carpenter acknowledged that in using the six month auditing period in the proposed rule, a licensee could exceed the 10 percent requirement on one or more occasions during the audit period. Sandy Finkelstein is President of Petitioner and is the operating partner of Shore Lanes Bowling Center in Merritt Island, Florida. According to Mr. Finkelstein, there is at least one bowling facility in Florida that was issued a 4COP license. A bowling facility with a 4COP license is not automatically excluded from the stand-alone bar designation, whereas a bowling facility with an SBX license is automatically excluded from the stand-alone bar designation by virtue of proposed rule 61A-7.003.
The Issue The issue in this case is whether Respondent violated Sections 569.006 and 569.007, Florida Statutes (1995), by selling cigarettes to a person under 18 years of age and by failing to have the cigarette vending machine in the line of sight, and, if so, what, if any, penalty should be imposed pursuant to Florida Administrative Rule 61A-2.022, 2/
Findings Of Fact Petitioner is the state agency responsible for regulating the sale of retail tobacco products. Respondent holds retail tobacco products permit number 58-05704T. The licensed premises are located at 8445 International Drive, Orlando, Florida (the "licensed premises"). Respondent operates the licensed premises for the sale of liquor at tables and a bar. On August 7, 1996, special agents Walter Russell and Linda Greenlee initiated a routine tobacco compliance investigation of the licensed premises. Agents Russell and Greenlee directed investigative aide Megan Holbrook, age 15, to enter the licensed premises and attempt to buy cigarettes from the vending machine. Ms. Holbrook and agents Russell and Greenlee entered the licensed premises at approximately 3:30 p.m. The cigarette vending machine was located just inside the doorway of the licensed premises. Agents Russell and Greenlee sat at the bar. Ms. Holbrook inserted the necessary amounts into the vending machine and purchased one package of Winston cigarettes. None of Respondent's employees questioned Ms. Holbrook concerning her age or identification. Approximately three employees were engaged in a conversation behind the bar during the time that Ms. Holbrook purchased the cigarettes. No patrons were present at the time except Ms. Holbrook and agents Russell and Greenlee. The cigarette vending machine was positioned so that a person standing behind the bar could not see the face of anyone purchasing cigarettes unless the purchaser was at least six feet tall. A view of the purchaser is obstructed by beams and shelves. The vending machine is approximately five feet tall. It is not in the direct line of sight of an employee who is responsible for monitoring the purchase of cigarettes. Ms. Holbrook and agents Russell and Greenlee exited the premises after the purchase. Ms. Holbrook turned over the cigarettes to agents Russell and Greenlee. Agents Russell and Greenlee returned inside the premises. They advised the employees inside that an unlawful sale of cigarettes had occurred and served the required documents.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondent guilty of violating Sections 569.06 and 569.07 and imposing a fine of $750. DONE AND ENTERED this 18th day of November, 1997, in Tallahassee, Florida. DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 1997.
