The Issue The issue presented is whether Respondent is guilty of the allegations contained in the Order to Show Cause filed against it, and, if so, what disciplinary action should be taken, if any.
Findings Of Fact Respondent is a Florida corporation with its principal place of business at 8001 Southwest 36th Street, Davie, Florida. Respondent is certified by the Department as a premium finance company in the State of Florida. Although Respondent was incorporated in 1988, it did not become actively engaged in the premium finance business until sometime during 1992. On March 1, 1992, Respondent entered into a contract with Seminole Marketing Corporation located in Grand Rapids, Michigan. Pursuant to that contract, Seminole became responsible for marketing to Florida insurance brokers Respondent's premium finance program. In exchange for those services, Respondent agreed to pay Seminole: . . . on a monthly basis a fee to be mutually agreed upon based on the results of your efforts. This fee will be paid no later than 30 days after the close of each month with full statement as to the details of the per contract earnings by broker. A fee for an open contract will be credited to you only upon the contract being in force with an initial payment to us by the insured. Thereafter, Respondent began paying Seminole monthly pursuant to Seminole's invoices which read only "For Marketing Services Rendered," as follows: June, 1992 $ 1,417.00 July, 1992 4,616.00 August, 1992 5,120.00 September, 1992 9,716.25 October, 1992 16,158.00 November, 1992 16,087.00 December, 1992 13,324.00 February, 1993 20,785.17 March, 1993 23,009.67 April, 1993 18,020.67 May, 1993 12,632.17 June, 1993 14,503.17 July, 1993 16,009.17 $171,398.27 No additional documentation was submitted by Seminole to Respondent with those one-line invoices although the contract required additional documentation. Respondent does not know how Seminole Marketing Corporation computes its invoices submitted to Respondent. No objective criteria exist or are used in Respondent's determination of the reasonableness of the invoices received from Seminole. The reasonableness of the invoices is simply a subjective determination on the part of Respondent which assumes that all contracts it receives are a result of Seminole's efforts to secure agents. Respondent does not know what services are provided by Seminole, which services form the basis for the invoices rendered to Respondent. Respondent does not know if Seminole visits agents to solicit business and does not know if Seminole has ever provided agent training in Florida on behalf of Respondent. Seminole has never provided any market analysis to Respondent, and Respondent does not know if Seminole has ever placed any advertisement in Florida on behalf of Respondent. Respondent has never conducted an audit of Seminole and does not know what records Seminole maintains on behalf of Respondent or relating to Respondent's business. Respondent has no knowledge of how Seminole obtains agents to place contracts with Respondent. Respondent has never gone with Seminole on a visit to an insurance agent to assure that Seminole's conduct of business on behalf of Respondent is done in compliance with law. In approximately December of 1992, the Department conducted an examination of Respondent. As part of that examination, the Department requested certain documents relating to Respondent's premium finance activities with Seminole. Thereafter, the Department directed several letters to Respondent specifying the additional documentation it desired in order to complete the examination. It is uncontroverted that the first two letter requests were not received by Respondent. Respondent did receive a faxed copy of an August 19, 1993, letter requesting the additional documents, and Respondent responded to that fax by letter dated August 20, 1993. The additional documents sought by the Department to complete its examination of Respondent were as follows: Management agreements, any and all in existence, detailing the responsibilities of the contracted management company(ies). A listing of all payments made to said management company(ies), along with the invoices detailing the basis for such payments. All payments issued by the management company(ies) for the period June 1, 1992 thru September 30, 1992. (Copies of front and back of cancelled checks as well as copies of the invoices or other documentation sufficient to support the liability and payment.) Agreements by the management company(ies) with anyone else relative to the above management agreement (agents, sales reps, suppliers, etc.). Financial statements of the management company(ies) for the years ended 12/31/91 and 12/31/92. [Emphasis in original.] Respondent forwarded to the Department a copy of its March 1, 1992 agreement with Seminole and copies of the invoices submitted by Seminole to Respondent covering the months of June 1992 through July 1993. Respondent has supplied no documentation to the Department in response to requested items numbered 3, 4, and 5. Respondent instead took the position that the documents requested in items numbered 3-5 were not in Respondent's custody nor under Respondent's control and Respondent was, therefore, not able to provide such information. By letter dated August 24, 1993, the Department acknowledged receipt of Respondent's correspondence, reiterated its request for the documents that had not been provided, and requested details regarding the basis for payments made to Seminole. That letter further requested ". . . copies of the statements called for in the [March 1, 1992] agreement relating to fees due Seminole Marketing for open contracts and 'details of the per contract earnings by broker'. " In its August 27, 1993 response, Respondent advised the Department that it had complied with the Department's request for information to the best of its ability and suggested that the Department contact Seminole if the Department wished further information concerning Seminole's activities. The only attempt by Respondent to obtain Seminole's records of its activities on behalf of Respondent was a November 30, 1993 letter to Seminole from Respondent advising that the Department sought access to Seminole's records related to Respondent, specifying the documents the Department desired, and asking Seminole to cooperate. Respondent made no attempt to obtain those records from Seminole in order that Respondent could provide them to the Department. The documents requested by the Department are records related to Respondent's business activities and the activities of Seminole on behalf of Respondent. Further, the March 1, 1992 agreement between Respondent and Seminole envisioned that Seminole would retain records belonging to Respondent by specifically providing that Seminole would return to Respondent all of Respondent's company records upon termination of services. In September 1992, two men visited insurance agent Steven Schnur at his office. They said they were representing Respondent, asked if he would use Respondent for his premium financing, and said they would pay him $5.00 for each contract he financed with Respondent. From November 1992 through July 1993, Schnur financed insurance contracts with Respondent. He received a $5.00 fee from Seminole for every contract he financed with Respondent. Seminole sent him a check each month. When he stopped financing contracts with Respondent, Seminole sent him no further payments. Seminole never provided Schnur with any training or assistance regarding financing his insurance contracts. Similarly, Schnur performed no services for Seminole. In July of 1992, insurance agent Stacy Fischer financed two contracts with Respondent. In August of 1992, she received a check from Seminole payable to her in the amount of $10.00 with the notation "July 2 @ $5". Although she financed two additional contracts with Respondent thereafter, Seminole did not send her another check. Respondent did not directly compensate agents for financing contracts with it. Seminole compensated agents for financing contracts with Respondent. Respondent's lack of direct knowledge of the payments Seminole made to agents resulted from Respondent's purposeful business arrangement with Seminole whereby Respondent asked no questions regarding what services Seminole was performing and how those services were being performed and whereby Respondent simply paid Seminole whatever monies Seminole requested.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered revoking the certificate of authority of Respondent to engage in the business of premium financing in the State of Florida. DONE and ENTERED this 11th day of March, 1994, at Tallahassee, Florida. LINDA M. RIGOT 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 11th day of March, 1994. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 93-5873 The Department's proposed findings of fact numbered 1, 3-11, 13, 14, 20-36, and 38-40 have been adopted either verbatim or in substance in this Recommended Order. The Department's proposed findings of fact numbered 2 and 37 have been rejected as not constituting findings of fact but rather as constituting conclusions of law, argument of counsel, or recitation of the testimony. The Department's proposed findings of fact numbered 12 and 15-19 have been rejected as being not supported by the weight of the credible and competent evidence in this cause. Respondent's proposed findings of fact numbered 2-6, 10, 11, 18, and 19 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 7 and 17 have been rejected as not constituting findings of fact but rather as constituting conclusions of law, argument of counsel, or recitation of the testimony. Respondent's proposed findings of fact numbered 1, 12-16, and 20 have been rejected as being not supported by the weight of the credible and competent evidence in this cause. Respondent's proposed findings of fact numbered 8 and 9 have been rejected as being subordinate to the issues for determination herein. COPIES FURNISHED: Elise M. Matthes, Esquire Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 Michael Camilleri, Esquire Paul A. Lester, Esquire ADORNO & ZEDER, P. A. One Boca Place 2255 Glades Road, Suite 342W Boca Raton, Florida 33431 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil, General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue in this case is whether certain statements by officials of Respondent Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco (ABT), constitute an unpromulgated rule that is invalid pursuant to Subsection 120.54(1)(a), Florida Statutes (2006).1/
Findings Of Fact The Parties Petitioner TWM is a licensed retail vendor of alcoholic beverages. It operates nine stores in Florida that sell alcoholic beverages, including distilled spirits, by the package. Respondent ABT is the state agency authorized by Section 561.02, Florida Statutes, to regulate the alcoholic beverage industry, including manufacturers, distributors and vendors of alcoholic beverages within the State of Florida. Intervenor ABC is a licensed retail vendor of alcoholic beverages, holding in excess of 100 licenses authorizing the sale of alcoholic beverages, including distilled spirits, by the package. The Alleged Unpromulgated Rule Florida has a three-tiered system of alcoholic beverage distribution. Manufacturers produce the product and sell to distributors, distributors sell the product at wholesale to licensed vendors, and vendors sell the product to the general public at retail. §§ 561.14(1)-(3), Fla. Stat. The term "in-store servicing" refers generally to activities by distributors or manufacturers on the vendor's premises, such as placing stock on shelves, rotating stock, and affixing prices. On April 4, 2007, Renee Alsobrook emailed a message to John Harris, a governmental consultant, which included the following statement: In researching the coupon rule, I reviewed prior opinions I had provided and determined that this opinion provided to you in March, 2006, was wrong. I WAS WRONG. Section 561.424, F.S., clearly excludes in-store servicing of distilled spirits. Please communicate the position of ABT to your wholesalers and Trone. On April 24, 2007, Stephen Hougland emailed the following message to Mr. Harris: John, after considerable research and consultation, ABT's opinion is that FL law does not permit in-store servicing for spirits. I'd be glad to talk to you about the decision as I am sure you are concerned about the impact on your clients. These two email messages were cited by TWM in its Petition as expressions of a new policy that has not been adopted as a rule and is, therefore, invalid and unenforceable. In the course of discovery, other written statements by ABT employees were found that were also made in April 2007, which TWM contends are expressions of the new policy. In a letter dated April 9, 2007, from Lisa Comingore, assistant general counsel for DBPR, to Charles Bailes of ABC, Ms. Comingore states: Wholesalers and manufacturers of distilled spirits are not authorized to provide in- store servicing by section 561.424, Florida Statutes and would be providing aid to retailers in the form of providing labor for the retailer. Such aid to the retailer could constitute a violation of section 561.42, Florida Statutes. In a letter dated April 30, 2007, from Director Hougland to Mr. and Mrs. John Schaeffer of Great Spirits Liquor & Fine Wine, Director Hougland states: Florida law allows in-store servicing of beer and malt beverages as well as vinous beverages, however, in-store servicing of distilled spirits is not authorized . . . Section 561.424(2), Florida Statutes, specifically excludes in-store servicing of distilled spirits. Wholesalers and manufacturers of distilled spirits are not authorized to provide in- store servicing by section 561.424, Florida Statutes and would be providing aid to retailers in the form of providing labor for the retailer. Such aid to the retailer could constitute a violation of section 561.42, Florida Statutes. The Governing Statutes The federal government and many states, including Florida, enacted "Tied House Evil" laws to prevent the "evils" that arose from relationships between vendors of alcoholic beverages and manufacturers and distributors which caused the vendors to be controlled by or "tied" to the distributors and manufacturers. Winn Dixie Stores, Inc., v. Schenck Co., 662 So. 2d 1021, 1023 (Fla. 5th DCA 1995); Musleh v. Fulton Distributing Co. of Florida, 254 So. 2d 815, 817 (Fla. 1st DCA 1971). Florida's Tied House Evil law, set forth in Subsection 561.42(1), Florida Statutes, provides: No licensed manufacturer or distributor of any of the beverages herein referred to shall have any financial interest, directly or indirectly, in the establishment or business of any vendor licensed under the beverage laws; nor shall such licensed manufacturer or distributor assist any vendor by any gifts or loans of money or property of any description or by the giving of any rebates of any kind whatsoever. No licensed vendor shall accept, directly or indirectly, any gift or loan of money or property of any description or any rebates from any such licensed manufacturer or distributor; provided, however, that this does not apply to any bottles, barrels, or other containers necessary for the legitimate transportation of such beverages or to advertising materials and does not apply to the extension of credit, for liquors sold, made strictly in compliance with the provisions of this section. ABT contends that Subsection 561.42(1), Florida Statutes, prohibits in-store servicing of alcoholic beverages by distributors or manufacturers because it constitutes a gift of "free labor" to the vendor. TWM does not dispute ABT's interpretation of Subsection 561.42(1), Florida Statutes, as prohibiting in-store servicing as a form of gift, but TWM contends that subsequent legislation resulted in the removal of the prohibition. In 1975, Section 561.423, Florida Statutes, created an exception for in-store servicing of beer and malt beverages: Nothing in s. 561.42 or any other provision of the Beverage Law shall prohibit a distributor of beer or malt beverages from providing in-store servicing of malt beverages. "In-store servicing" as used herein means quality control procedures which include, but are not limited to: rotation of malt beverages on the vendor's shelves, rotation and placing of malt beverages in vendor's coolers, proper stacking and maintenance of appearance and display of malt beverages on vendor's shelves, price stamping of malt beverages on vendor's licensed premises, and moving or resetting any product or display in order to display a distributor's own product when authorized by the vendor. In 1977, Subsection 561.424(2), Florida Statutes, created an exception for in-store servicing of wine: Nothing in s. 561.42 or any other provision of the Alcoholic Beverage Law shall prohibit a distributor of wine from providing in- store servicing of wine sold by such distributor to a vendor. "In-store servicing" as used herein means: placing the wine on the vendor's shelves and maintaining the appearance and display of said wine on the vendor's shelves in the vendor's licensed premises; placing the wine not so shelved or displayed in a storage area designated by the vendor, which is located in the vendor's licensed premises; rotation of vinous beverages; and price stamping of vinous beverages in a vendor's licensed premises. This section shall not apply to distilled spirits. (Emphasis added) No similar statute was created to expressly authorize in-store servicing of distilled spirits by distributors. After the enactment of Section 561.423 and Subsection 561.424(2), Florida Statutes, there should have been little doubt that the Tied House Evil law was intended by the Legislature to prohibit in-store servicing of alcoholic beverages and that only by express exception was in-store servicing of beer and wine by distributors permitted.2/ The only evidence in the record that tends to explain why distilled spirits were treated differently from beer and wine with regard to in-store servicing is a statement made by Charles Bailes of ABC in a letter to Ms. Alsobrook that, "Historically, in-store servicing of perishable products such as wine and beer have been allowed so as to maximize freshness and minimize the chances of consumers purchasing spoiled merchandise." Mr. Bailes goes on to state that distilled spirits are not perishable. Florida Administrative Code Rule 7A-4.058 The main cause of the current confusion about in-store servicing of distilled spirits can be traced to a rule adopted by ABT in 1985. The year before, Subsection 561.42(12), Florida Statutes, was amended to add the following directive: The Division shall make reasonable rules governing promotional displays and advertising, which rules shall not conflict with or be more stringent than the federal regulations pertaining to such promotional displays and advertising furnished vendors by distributors and manufacturers. ABT responded by promulgating Florida Administrative Code Rule 7A-4.058, entitled "Promotional Displays and Advertising," effective January 2, 1985. The rule adopted certain federal regulations by reference: The Division adopts by reference the provisions of subpart D, Chapter 6, of Title 27, Code of Federal Regulations, regulations 6.81 through 6.101 inclusive. It shall be a violation of Section 561.42, F.S., for any vendor to accept or for any manufacturer or distributor to give a retailer promotional displays, advertising or other such items, services or assistance governed by the regulations adopted by subsection (1) when given in a manner not in strict conformity with the adopted regulations. Subpart D was entitled "Exceptions" and established exceptions to the federal Tied House Evil law. It included exceptions clearly related to promotional displays and advertising, such as "Product Displays," "Inside Signs," "Retailer Advertising Specialties," "Consumer Advertising Specialties," and "Advertising Services." However, Subpart D also included exceptions on subjects that did not appear to involve promotional displays or advertising, such as "Educational Seminars" (for the employees of vendors), "Participation in Retailer Association Activities," "Joint Ventures," "Coil Cleaning Service," and "Stocking, Rotation and Pricing Services." Section 6.99 of the federal regulations, entitled "Stocking, Rotation and Pricing Services," provided: Industry members may, at a retail establishment, stock, rotate and affix the price to distilled spirits, wine, or malt beverages which they sell, provided products of other industry members are not altered or disturbed. The rearranging or resetting of all or part of a store or liquor department is not hereby authorized. Because stocking, rotation, and pricing services are synonymous with in-store servicing, ABT's adoption of Section 6.99 by reference in Florida Administrative Code Rule 7A-4.058 authorized in-store servicing of distilled spirits by distributors and manufacturers in Florida, in apparent conflict with the governing statutes. The adoption by reference of Section 6.99 also conflicted with Section 561.423 and Subsection 561.424(2), Florida Statutes, because these statutes only authorized in-store servicing of beer and wine by distributors, but the federal regulation authorized in-store servicing by "industry members," a term that includes manufacturers. Soon after the adoption of Florida Administrative Code Rule 7A-5.048, ABT's 1986 compliance guidelines included a statement that "27 CFR 6.99 and F.S.S. 561.424" authorize "manufacturers or distributors of distilled spirits or wine to stock, rotate and affix the price to their products at a licensed retailer's premises." ABT's 1988, 1993, and 1995 compliance guidelines contained the same statement.3/ Promotional Displays and Advertising The term "promotional displays and advertising" is not defined in Chapter 561, Florida Statutes, but insight into the Legislature's intended meaning for the term can be gleaned from the 1985 amendment of Subsection 561.42(12), Florida Statutes. Following the sentence that directs ABT to adopt rules regarding promotional displays and advertising, the 1985 amendment added "provided, however," followed by eight new paragraphs dealing with specific situations involving promotional displays and advertising: If a manufacturer or distributor of malt beverage provides a vendor with expendable retailer advertising specialties such as trays, coasters, mats, menu cards, napkins, cups, glasses, thermometers, and the like, such items shall be sold at a price not less than the actual cost to the industry member who initially purchased them, without limitation in total dollar value of such items sold to a vendor. Without limitation in total dollar value of such items provided to a vendor, a manufacturer or distributor of malt beverage may rent, loan without charge for an indefinite duration, or sell durable retailer advertising specialties such as clocks, pool table lights, and the like, which bear advertising matter. If a manufacturer or distributor of malt beverage provides a vendor with consumer advertising specialties such as ashtrays, T-shirts, bottle openers, shopping bags, and the like, such items shall be sold at a price not less than the actual cost to the industry member who initially purchased them, but may be sold without limitation in total value of such items sold to a vendor. A manufacturer or distributor of malt beverage may provide consumer advertising specialties described in paragraph (c) to consumers on any vendor’s licensed premises. Coupons redeemable by vendors shall not be furnished by distributors of beer to consumers. Manufacturers or distributors of beer shall not conduct any sampling activities that include tasting of their product at a vendor’s premises licensed for off-premises sales only. Manufacturers and distributors of beer shall not engage in cooperative advertising with vendors. Distributors of beer may sell to vendors draft equipment and tapping accessories at a price not less than the cost to the industry member who initially purchased them, except there is no required charge, and a distributor may exchange any parts which are not compatible with a competitor’s system and are necessary to dispense the distributor’s brands. A distributor of beer may furnish to a vendor at no charge replacement parts of nominal intrinsic value, including, but not limited to, washers, gaskets, tail pieces, hoses, hose connections, clamps, plungers, and tap markers. None of the examples in the statute suggest that in-store servicing of alcoholic beverages comes within the Legislature's intended meaning of promotional displays and advertising. The common meanings of the words "stocking," "rotation," and "pricing" do not match up with the common meanings of the words "promotional displays" and "advertising." As noted above, there were other federal exceptions adopted by reference in Florida Administrative Code Rule 7A-4.058 that involved neither promotional displays nor advertising. ABT offered no explanation for the agency's indiscriminate adoption by reference of all the federal regulations in Subpart D, including those regulations that were not related to promotional displays and advertising. ABT now acknowledges that the 1985 rule was "non-compliant" with statutory law. TWM presented no evidence to show that stocking, rotation, and pricing are, as a matter of fact, forms of promotional displays or advertising. Instead, TWM argues that ABT's 1985 adoption by reference of Section 6.99 and ABT's subsequent representations that in-store servicing of distilled spirits was authorized in Florida, "determined" and "defined" in-store servicing as a promotional display or advertising. ABT changed its position sometime after 1995. In 1997, ABT repealed Florida Administrative Code Rule 7A-4.058 (which had been renumbered 61A-4.058). Although ABT replaced that rule with a new rule that regulated promotional displays and advertising, the new rule did not adopt any federal regulations by reference and the subject of stocking, rotation, and pricing services was abandoned, along with some of the other subjects covered by the federal regulations previously adopted by reference.4/ ABT's repeal of Florida Administrative Code Rule 61A-4.058 and its adoption of Florida Administrative Code Rule 61A-1.010 in 1977 was announced in public notices published in the Florida Administrative Weekly and through industry bulletins. Two public hearings were held on Florida Administrative Code Rule 61A-1.010, which were attended by industry representatives. The rule prohibited any gift from distributors or manufacturers to vendors that was not specifically identified in the rule or specifically authorized by statute. In-store servicing of distilled spirits is not listed in the rule and, as discussed above, is not specifically authorized by statute. In 1998, ABT issued an industry bulletin to industry representatives on the specific subject of in-store servicing. The bulletin notes that there is no statutory exception for in-store servicing of distilled spirits as there is for beer and wine and states that "Unauthorized services to a vendor would be considered a gift of financial assistance, unless the vendor paid for the services provided to them [sic]." The 1998 bulletin concludes by stating that because of the "confusion about these in-store servicing provisions," no enforcement action would be taken against a vendor, distributor, or manufacturer for unauthorized services provided before the date of the bulletin. After the 1997 repeal of Florida Administrative Code Rule 61A-4.058, the main cause of confusion on the subject of in-store servicing of distilled spirits had been removed. However, the 1998 bulletin and any other efforts ABT made to inform and educate the regulated industry about its change of position were not completely successful. In-store servicing of distilled spirits by distributors continues to some extent today.5/ ABT does not dispute that the prohibition of in-store servicing of distilled spirits has general statewide application and that rulemaking on the subject is not infeasible or impractical. ABT's position is that the prohibition of in-store servicing of distilled spirits does not require a rule because the prohibition is established by statute.
Findings Of Fact Respondent Gilimar Corporation holds a beverage license issued by Petitioner. Guillermo Leon Ramirez is the sole owner of the stock of Respondent corporation and is an officer of the corporation. After Guillermo Ramirez had been convicted of "distribution of methaqualone, a Schedule II controlled substance; in violation of Title 21, U.S. Code, Section 841(a)(1), "Petitioner's Exhibit No. 1, he was sentenced on January 30, 1981, to 18 months' imprisonment and two years' parole thereafter. Petitioner's Exhibit No. 1.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That Petitioner revoke Respondent's license. DONE AND ENTERED this 20th day of August, 1981, in Tallahassee, Leon County, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of August, 1981. COPIES FURNISHED: Dennis E. LaRosa, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Gilimar Corporation d/b/a The Ultimate Club 766 East 25th Street Hialeah, Florida Charles A. Nuzum, Director Division of Alcoholic Beverages and Tobacco 725 South Bronough Street Tallahassee, Florida 32301 ================================================================= AGENCY FINAL ORDER =================================================================
The Issue Whether Respondent committed the violations alleged in the Emergency Order of Suspension and Notice to Show Cause and, if so, what penalty should be imposed.
Findings Of Fact The Petitioner is the state agency charged with the responsibility of regulating licensed alcoholic beverage establishments. At all times material to the allegations in this case, the Respondent, Café Iguana, Inc., doing business as Café Iguana, held alcoholic beverage license number 23-01868 which is a series 4-COP license. At all times material to the allegations in this case, Iguana was located at 8505 Mills Drive, D-75, in Miami, Dade County, Florida. At all times material to the allegations in this case, the following persons were officers and/or shareholders of the Respondent corporation: Mark Vasu, Shannon Miller, David Lageschulte, and Gerald Joe Delaney. Prior to the issuance of the Emergency Order of Suspension which is at issue in this proceeding, the Department conducted an investigation of alleged acts of recurring illegal narcotic activity on the licensed premises. In furtherance of such investigation Special Agent Bartelt, Detective Fernandez, and Detective Robertson entered the licensed premises in an undercover capacity for the purpose of purchasing illegal substances. In this regard Special Agent Bartelt observed the two detectives as they attempted to acquire illegal substances from persons within the licensed premises. The investigation at Iguana began on March 15, 1997, and was concluded on June 12, 1997. In total, the detectives made seven purchases of a substance which was later tested and determined to contain cocaine. Respondent did not object to, nor dispute the accuracy of, the lab reports received into evidence which confirmed the substances contained cocaine. As to the purchase which occurred on March 15, 1997, Detective Fernandez approached a female bathroom attendant and represented that she wanted "to get hooked up." According to Detective Fernandez this type of language is commonly used to ask for illegal drugs. She sought cocaine, by implication in the language of such transactions. The attendant referred her to an individual known in this record as "Anthony" who was the men's restroom attendant. Standing in the doorway to the men's restroom, Detective Fernandez exchanged $20.00 for approximately one-half gram of cocaine. The cocaine was in a clear plastic zip-lock style bag that was no larger than two inches by two inches. Upon receipt of the bag, Detective Fernandez placed it in her pocket and left the restroom area. All of the transactions later described were completed in the same manner. Detective Fernandez made no effort to be noticed by the club's management. She was not conspicuous in the purchase of the illegal substance. Instead, she made every effort to mimic her perception of a drug transaction. The next purchase occurred on April 4, 1997. On this date, Detective Fernandez went back to Anthony and again requested drugs. She was told to wait. Approximately forty-five minutes later she returned to the doorway area adjacent to the men's room. At that time other females were also waiting for Anthony. After transferring $25.00 to the attendant, Detective Fernandez received approximately one-half gram of cocaine. During this purchase, Detective Fernandez believes Respondent's employees may have walked past to use the restroom but could not verify that anyone observed her transaction. Additionally, Detective Fernandez did not observe a sale of a similar type to the other females in line at the restroom corridor. On April 12, 1997, Detective Fernandez went to Anthony and asked him if she could "get a half." Noteworthy on this date was the fact that Detective Fernandez went inside the men's room to make the transaction. During her stay in the restroom she saw a bartender and a security person who were using the facility. Neither asked why she was inside the men's restroom. Neither interfered with her discussion with Anthony. Instead, Anthony introduced her to a white male who was using the telephone in the room who is identified in this record as "Juan." Anthony reported that Juan was "my man." In exchange for $40.00 Anthony delivered approximately one gram of cocaine to Detective Fernandez. There is no evidence that the bartender or the security person observed any of the transaction which took place. On May 9, 1997, Detective Fernandez again went to Respondent's club and sought illegal drugs. This time she asked a bartender how to "hook up." He referred her to the restroom. Anthony was not at the men's room, so she went to the female attendant known in this record as "Rica." Inside the female's restroom Rica exchanged approximately one-half gram of cocaine for $25.00. On May 15, 1997, Detective Fernandez purchased one-half gram of cocaine from Anthony for $30.00. Later, during the early morning hours of May 16, 1997, Detective Fernandez made a second purchase from Anthony. Although there were other patrons of the bar within the restroom, there is no evidence that any of them witnessed either of these transactions. The final purchase by Detective Fernandez was on June 11, 1997. On this date she contacted Rica and again sought to purchase drugs. She handed Rica $30.00, and the attendant left the restroom and returned a short while later with approximately one-half gram of cocaine. Although there were numerous patrons entering and exiting the facility, there is no evidence that anyone observed Detective Fernandez receive the bag of cocaine. At all times material to the allegations of this case, Iguana was a popular club which was well attended on the nights of this investigation. The audio system for the club, although especially dominating on the dance floor, distributed music throughout the licensed premises. In this regard it is uncertain if any of the conversations between the undercover officer and the parties selling drugs could be easily overheard. As to the lighting system for the club, at all times material to this investigation, lighting would have been set at its lowest levels of illumination throughout the licensed premises. Consequently, only the restrooms would have been well- lit. As a result it is uncertain as to how visible transactions occurring outside the restrooms would have been. At all times material to the allegations of this case, the restroom attendants were not employees of Iguana or its management company but were contract personnel through a third party valet service operated by David Cook. Iguana paid Cook to provide restroom attendants. This contract was terminated on June 13, 1997, when Respondent learned of the attendants' alleged involvement in the illegal transactions described above. Further, Iguana notified Cook of its intention to assist in the prosecution of such individuals. Iguana is managed by a company known as Chameleon Concepts. In order to effectively identify and minimize potential losses for Iguana, Chameleon Concepts contracted with a company whose purpose was to audit operations to ensure the overall integrity of the business operation. This auditor, a forensic fraud examiner, was to identify losses or potential losses due to fraud, embezzlement, policy or procedure violations, or other improprieties. Thus, effective October 1, 1996, Iguana was voluntarily being reviewed by an independent company, with an on-going, monthly retainer, to determine if there were any potential improprieties. The auditor for the company, John Capizzi, found no violations of policy, alcoholic beverage rules, or regulations. Prior to the investigation of this case, Iguana employees were required to participate in responsible vendor programs. Prior to the investigation of this case, Iguana managers were required to participate in responsible vendor programs. Iguana management routinely conducts meetings wherein responsible vendor practices are discussed. Iguana and Chameleon Concepts have developed written employee handbooks and policies which specifically admonish employees regarding illegal substances on the licensed premises. Iguana employees and managers are instructed to advise the management of any suspected illegal substances on the licensed premises. In the past, Iguana has participated in campaigns designed to retain false identification used by suspected underage drinkers to gain entrance to licensed premises. The testimony of Mr. Vasu regarding efforts of the company to comply with all rules and regulations of the Department has been deemed credible and persuasive regarding Iguana's position on illegal drug transactions. Management would not condone or allow illegal drug sales if it were known to them. None of the officers or shareholders of Iguana were aware of the illegal drug transactions occurring on the licensed premises. The only Iguana employee alleged to have been connected to a sale was one incident wherein a bartender referred Detective Fernandez to the restroom. Cocaine is a controlled substance, the sale of which is prohibited by Florida law. None of the purchases described herein were of such a nature or were so conspicuously transacted that a reasonable person would have known illegal sales were taking place. None of the patrons of the club who testified for Respondent were aware that illegal drug sales took place within the licensed premises. The detective making the purchases did not act in a flagrant or open manner. Moreover, the detective did not attempt to verify whether or not bartenders, security guards, or managers employed by Iguana were aware of the restroom attendants' illegal activities. At best, one bartender knew to refer the detective to the restroom. In addition to selling illegal drugs, the restroom attendants handed out towels to club patrons and offered for sale personal toiletry items at tables maintained within the restroom. For a club patron to have money to purchase such items or tip the attendant would be a reasonable assumption.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, enter a final order dismissing the Emergency Order of Suspension. DONE AND ENTERED this 23rd day of July, 1997, in Tallahassee, Leon County, Florida. J. D. PARRISH 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 23rd day of July 1997. COPIES FURNISHED: Miguel Oxamendi, Senior Attorney Department of Business and Professional Regulation Division of Alcoholic Beverages and Tobacco 1940 North Monroe Street Tallahassee, Florida 32399-1007 Louis J. Terminello, Esquire Chadroff, Terminello & Terminello 2700 Southwest 37th Avenue Miami, Florida 33133-2728 Richard Boyd, Director Division of Alcoholic Beverages and Tobacco Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Lynda L. Goodgame, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue The issue is whether the Board of Pharmacy (board) should revoke or otherwise discipline the Respondent’s license as a registered pharmacy technician (RPT) because his application for licensure failed to disclose a felony criminal conviction.
Findings Of Fact The Respondent was convicted of the crime of committing a lewd act upon a child in 1996. In 2015, the Respondent took a course at Anthem College, now called Florida Career College, to qualify to be licensed as an RPT in Florida. Towards the end of the course, an application for licensure was submitted to the department. The application required the Respondent to answer the question whether he had been convicted of a crime other than a minor traffic offense. The answer on the application said, “NO.” Based on the application, the department issued the Respondent license RPT 64709 in January 2016. Later, the Respondent’s criminal conviction came to the attention of the department and board, and an Administrative Complaint was filed charging the Respondent with violating section 465.016(1)(a) for obtaining his license by misrepresentation or fraud or through an error of the department or board. The Respondent explained at the hearing that he was not being dishonest and did not willfully obtain his license by fraud or intentional misrepresentation. He testified that he disclosed his criminal conviction to Beth Shelton, his instructor at Anthem, when he went online to create an account to apply for licensure and saw the application and the question regarding his criminal conviction. He testified that she told him his conviction was not an absolute bar to licensure, but that he would have to write a letter explaining the conviction and his rehabilitation from it to submit to the department with his application, along with copies of the court records. The Respondent testified that he put his application on hold and logged out of his account. He testified that the answer on the application at the time he logged out was, “YES.” He testified that he then wrote the letter suggested by his instructor, got the court records, and gave them to her. He testified that he assumed she took care of it for him. He was thrilled when he received his license in the mail in January 2016, and he was crestfallen and dismayed when he received the Administrative Complaint a few months later. Charles Stuard, who was Ms. Shelton’s supervisor at Anthem in 2015, and is now the associate director of education at Florida Career College, testified that it would have been against Anthem’s policy for Ms. Shelton to help the Respondent answer questions on the application or offer to help the Respondent as he said she did. Neither party called Beth Shelton to testify. Some of the Respondent’s testimony could be interpreted as inconsistent, but those possible inconsistencies seemed to arise from misunderstandings and confusion. The essence of the Respondent’s testimony is accepted as true—namely, he was not being dishonest and did not willfully obtain his license by fraud or intentional misrepresentation. The Petitioner did not prove by clear and convincing evidence that the Respondent was dishonest or willfully obtained his license by fraud or intentional misrepresentation, or that the Respondent’s license was issued through an error of the department or board. However, it is clear that the Respondent’s license was obtained by a misrepresentation of fact.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board of Pharmacy enter a final order revoking his license RPT 64709, which was obtained by an honest and unintentional negligent misrepresentation, and allowing him to reapply so that the board can consider the true facts regarding his criminal conviction. DONE AND ENTERED this 23rd day of November, 2016, in Tallahassee, Leon County, Florida. S J. LAWRENCE JOHNSTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of November, 2016.
The Issue The issue in this case is whether Petitioner has grounds for refusing to renew Respondent’s registration as an intrastate mover, where Respondent is currently a defendant in a civil enforcement action brought by Petitioner, which action Respondent’s president allegedly failed to disclose in the subject application for renewal registration.
Findings Of Fact The Department is the state agency responsible for, among other things, licensing and regulating household moving services in the State of Florida. Moving Systems is a Florida corporation registered with the Department as a licensed mover authorized to engage in the intrastate transportation and shipment of household goods. Moving Systems’ registration (IM1939) was scheduled to expire on February 11, 2020. Accordingly, it timely submitted an application for renewal registration (the “Renewal Application”), which was signed by James Fischer (“Fischer”), the corporation’s president, on February 9, 2020. Question number 9 of the Renewal Application asks: Has the mover or any director, officer, owner, or general partner of the business: been convicted of a crime involving fraud, dishonest dealing, or any act of moral turpitude? YES * * * NO not satisfied a civil fine or penalty arising out of any administrative or enforcement action brought by any governmental agency or private person based upon conduct involving fraud, dishonest dealing, or any violation of Chapter 507, Florida Statutes? YES NO a pending criminal, administrative, of [sic] enforcement proceeding in any jurisdiction, based upon conduct involving fraud, dishonest dealing, or any act of moral turpitude? YES NO had a judgment entered in any action brought by the department or the Department of Legal Affairs pursuant to Chapter 507 or ss. 501.201-501.213, Florida Statutes? YES NO Fischer checked the answer “NO” to each of these items. Moving Systems and Fischer are among the defendants in State of Florida, Department of Agriculture and Consumer Services v. Florida Licensed Moving Corporation, et al., Case No. 2018-CA-002516, which is pending in the Circuit Court for Seminole County, Florida (the “Action”). The Action is a civil proceeding brought by the Department under section 507.10, seeking to enforce compliance with chapter 507. The Department alleges in the Action that the defendants, including Moving Systems and Fischer, engaged in actions involving fraud or dishonest dealing. Moving Systems and Fischer have each vigorously denied the allegations made against them in the Action, which remained pending as of the final hearing in this case. The Department’s intended agency action in this case does not depend upon proof of the allegations upon which the Action is based. No findings of fact concerning the merits of such allegations will be made herein. By letter dated March 11, 2020, the Department notified Moving Systems that it intended to deny the Renewal Application for two reasons. First, the Department asserted, then as here, that both Moving Systems and one of its officers (Fischer) have pending against them an enforcement proceeding, i.e., the Action, “based upon conduct involving fraud, dishonest dealing, or any other act of moral turpitude,” which the Department contends provides grounds for nonrenewal pursuant to section 507.03(8)(d). Second, the Department alleged, and has here sought to prove, that Fischer knowingly made a false statement in the Renewal Application when he denied that the mover “has … a pending … enforcement proceeding in any jurisdiction, based upon conduct involving fraud, dishonest dealing, or any act of moral turpitude.” Fischer disputes that his answer to question number 9(c) was knowingly false. He maintains that this question is confusing because it (i) is syntactically awkward and (ii) employs legal terminology, which is unfamiliar to ordinary laypersons. There is some merit to these criticisms of the question. Question number 9(c) attempts—not entirely successfully—to paraphrase section 507.03(8)(d), which authorizes the Department to deny, refuse to renew, or revoke a registration if a mover or one of its principals “[h]as pending against him or her any criminal, administrative, or enforcement proceedings in any jurisdiction, based upon conduct involving fraud, dishonest dealing, or any other act of moral turpitude.” (Emphasis added.) The prepositional phrase (“pending against him or her”) makes clear that the verb (“has”), as used in the statute, is operating semantically as a standalone, transitive verb, which denotes that the mover stands in a certain relationship to the pending proceeding, i.e., he or she is a party to such proceeding. Question number 9(c) omits the prepositional phrase, without which the verb “has” is not clearly a transitive verb, but instead can be misread as an auxiliary verb. Confusion then arises because there is no verb phrase of which “has” is a part. Instead, the question asks, “[h]as the mover … a pending” proceeding? This may cause applicants to wonder, “Has the mover what with respect to a pending proceeding?” Testified in? Heard about? Been named as a party to? The undersigned believes that an applicant could reasonably read this somewhat affected language and decide that the question does not apply to him or her, based upon a simple misunderstanding of, or uncertainty about, what is being asked.1 In addition, the terms “enforcement proceeding,” and “fraud, dishonest dealing, or any act of moral turpitude,” are legalistic in nature, as Fischer argues. An applicant who is a party to a legal proceeding could reasonably conclude, even so, that the proceeding is not based upon historical conduct involving fraud, dishonest dealing, or an act of moral turpitude as he understands those terms. Increasing the likelihood of an applicant’s reaching such a conclusion is that the question does not distinguish between alleged conduct and actual conduct. As a result, an applicant who is certain of his innocence might answer “no” to question number 9(c) rather than appearing to admit that his conduct was fraudulent or dishonest. Indeed, a falsely accused applicant would probably view any pending enforcement proceeding as based upon, not his conduct, but upon unfounded allegations. Why should such an applicant not answer “no” to question number 9(c), when answering “yes” might give the impression that he did something which he knows that he did not do? Consequently, the undersigned credits Fischer’s testimony that he did not knowingly make a false statement on the Renewal Application. Reinforcing this finding is that Fischer had no reason to knowingly attempt to conceal the Action because the Department is the plaintiff therein. Obviously, the Department was aware of the Action, and thus falsely denying its existence would have been both foolish and futile. Fischer had no motive to lie, and while this is not dispositive, it is corroborative circumstantial evidence. It is found as a matter of ultimate fact that the evidence fails to show Fischer knowingly made a misrepresentation in the Renewal Application in violation of chapter 507. See § 507.07(2), Fla. Stat. 1 Question 9(c) is not wrong, grammatically, nor is it necessarily ambiguous in a legal sense. But, the question is stilted and likely confuses applicants who are not wordsmiths. The other ground, however, is the true crux of the Department’s case. The pendency of the Action is an undisputed fact, and Moving Systems and Fischer are defendants in that case. There can be no genuine dispute, moreover, that the Action is an “enforcement proceeding” based upon allegations of “dishonest dealing” as those terms are used in section 507.03(8)(d). Viewed in isolation, paragraph (d)’s plain and literal language makes for a seemingly open-and-shut case against Moving Systems, which has pending against it an enforcement proceeding based upon dishonest dealing. Yet, paragraph (d) does not stand alone but is just one part of subsection (8), all of whose provisions must be read as a whole and construed together. When paragraph (d) is considered in conjunction with the other paragraphs of subsection (8), it becomes far less clear that a license may be revoked or nonrenewed on the basis of mere allegations of wrongdoing by the licensee, where such allegations have yet to be proved. The undersigned concludes as a matter of law, for reasons explained below, that subsection (8) is clear and unambiguous with respect to the Department’s authority to deny an initial application based upon the pendency of a proceeding described in paragraph (d), but is ambiguous as to whether paragraph (d) provides grounds for taking away a valuable and legally protected property interest via revocation or nonrenewal of an existing license simply because unproved allegations of misconduct have been made against the licensee. Because subsection (8) is penal in nature, this ambiguity must be resolved in Moving Systems’ favor.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order approving Moving Systems’ Renewal Application and renewing registration IM1939. 3 A license might also be revoked under paragraph (a) if the licensee ceased to meet the requirements for registration under chapter 507, but this provision is not implicated in this case. DONE AND ENTERED this 5th day of October, 2020, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM 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 5th day of October, 2020. COPIES FURNISHED: Genevieve Hall, Esquire Department of Agriculture and Consumer Services Mayo Building, Room 520 407 Calhoun Street Tallahassee, Florida 32399-0800 (eServed) Donald Goldrich, Esquire Donald S. Goldrich, P.A. Post Office Box 970735 Coconut Creek, Florida 33073-2734 (eServed) Tom A. Steckler, Director Division of Consumer Services Department of Agriculture and Consumer Services Mayo Building, Room 520 407 South Calhoun Street Tallahassee, Florida 32399-0800
