The Issue The issue in this proceeding is whether Respondents committed the offenses set forth in the Administrative Complaint and, if so, what penalties should be imposed.
Findings Of Fact General Findings of Fact The Department of Banking and Finance (the Department) is the agency responsible for the administration of Chapter 516, Florida Statutes, the Florida Consumer Finance Act (the Act). At all times material hereto, Respondents were not licensed by the Department as required by the Act. Cash Cow F1 LLC is located at 1362 Lake Bradford Road, Tallahassee. Cash Cow F2 LLC is located at 220 West Tennessee Street, Tallahassee, Florida. Cash Cow F3 LLC is located at 1 West Jefferson Street, Quincy, Florida. Cash Cow F4 LLC is located at 2107 South Bryon Butler Parkway, Perry, Florida. Cash Cow F5 LLC is located at 2002 South Monroe Street, Tallahassee, Florida. Cash Cow F6 LLC is located at 4157 Lafayette Street, Marianna, Florida. Cash Cow F7 LLC is located at 1246 North Jefferson Street, Monticello, Florida. Cash Cow F8 LLC is located at 2705 Northwest 10th Street, Ocala, Florida. Cash Cow F9 LLC is located at 601 Ridgewood Avenue, Holly Hill, Florida. Cash Cow F10 LLC is located at 700 Eglin Parkway Northeast, Fort Walton Beach, Florida. Cash Cow F11 LLC is located at 234A Miracle Strip Parkway, Fort Walton Beach, Florida. Cash Cow F12 LLC is located at 606-A Beal Parkway, Fort Walton Beach, Florida. Cash Cow F13 LLC is located at 146 West John C. Sims Boulevard, Valparaiso, Florida. Cash Cow F14 LLC is located at 750 John Sims Parkway, Niceville, Florida. Cash Cow F15 LLC is located at 618 South Ferdon Boulevard, Crestview, Florida. Respondent Jeffery Swank is the manager of Cash Cow F1 LLC, Cash Cow F2 LLC, Cash Cow F3 LLC, Cash Cow F4 LLC, Cash Cow F6 LLC, Cash Cow F7 LLC, Cash Cow F8 LLC, Cash Cow F9 LLC, Cash Cow F10 LLC, Cash Cow Fll LLC, Cash Cow F12 LLC, Cash Cow F13 LLC, Cash Cow F14 LLC, and Cash Cow F15 LLC (herein after collectively referred to as "Cash Cow".) Cash Cow engaged in Discount Title Voucher transactions (DTV transactions) within the State of Florida. EZ Cash, Inc., a/k/a EZ Cash Inc. of Georgia (EZ Cash) is a Georgia corporation. Respondent Swank is the president of EZ Cash. EZ Cash also engaged in DTV transactions with the State of Florida, as evidenced by corporate checks bearing that name issued to customers and customer checks made payable to that entity. Description of Typical Transaction Cash Cow and EZ Cash received a check from a customer typically in the amount of $122.00. In exchange for the customer's $122.00 check, Cash Cow and EZ Cash tendered its corporate check in the amount of $100.00, which the customer could cash anywhere but at Cash Cow, and provided the customer with a piece of paper entitled "discount title voucher." The 22-dollar difference between the customer's check and the Cash Cow/EZ corporate check is described in the customer agreement as the "purchase price" of the discount title voucher. Originally, the discount title voucher entitled the bearer to a 50 percent reduction in the first month's interest on a new title loan. Subsequently, the discount title voucher entitled the bearer to 100 percent reduction in the first month's interest on a new title loan. Cash Cow/EZ Cash provided checks to a customer in $100.00 increments. Should the customer have wished to receive $200.00, the customer would have received two $100.00 checks from Cash Cow/EZ Cash in return for writing two $122.00 personal checks. The customer agreement further provides "that the personal check used to purchase the 'Discount Title Voucher' may be redeemed by the customer within 15 days of purchase." Essentially, the customer had two options. A customer could present a cashier's check or money order to Cash Cow in the amount of 122 dollars per 100 dollars borrowed on or before the 15th day, or the customer could extend the date the check could be picked up for an additional 15 days by paying an additional 22 dollars per 100 dollars borrowed on or before the 15th day. If the customer elected to extend the date, an additional discount travel voucher was given to the customer. The amount of times that a customer could extend a transaction was unlimited. The annual percentage interest rate charged by Cash Cow/EZ Cash on a typical transaction equates to 535 percent. In some earlier transactions, customers were charged 25 dollars per 15-day period which equates to an interest rate of 608 percent. Respondents Swank and Shovlain participated in the creation of the DTV transaction. Swank possesses in-depth knowledge of the mechanics of the DTV transaction. Respondents Swank, Cash Cow, and EZ Cash designed and implemented the DTV transaction as a replacement for a previous lending scheme invalidated by the Department. The appearance of the present DTV transaction appeared just two months following the cessation of the previous method of operation. The manager of the Perry, Florida store from April of 1996 until July of 1998 was Beth Hotvedt. Although not involved in the creation of the DTV transaction, she heard Swank refer to the DTV transaction as a "check loan." Internal documents of Cash Cow also characterize the DTV transaction as a loan. A "DTV Checklist" was distributed to various Cash Cow/EZ Cash stores before the stores began engaging in DTV transactions, explaining procedures to be followed when engaging in the transactions. The DTV Checklist was included in the Policy and Procedures Manual, the formulation and writing of which involved the efforts of Respondent Swank. Operational Notes distributed to Cash Cow/EZ Cash stores contained statements that DTV's could be re-written "continually" at 25 dollars interest for 15 days. The Notes emphasized that "[a]ny increase in DTV time must be Refinanced!" The 25 dollar amount was later lowered to 22 dollars. His conversational description of the DTV transaction as a "check loan"; the script which he prepared for stores' use which detailed how the DTV transactions should be described to customers so that "check loans" could be made under the guise of discount title voucher sales; and his involvement in the writing of the Policy and Procedures Manual with its DTV check list emphasizing "Receive check for Loan and Interest," provides ample evidence that Swank knew that each DTV transaction was a loan and that the 22 dollars charged to customers was interest. Cash Cow and EZ Cash knew the DTV transaction was a loan. Each entity was aware that the 22 dollars charged per loan was interest. The Policy and Procedures Manual contains the DTV Checklist which emphasizes that checks are received for "Loan and Interest." Operational Notes state that DTV's "can be re-written continually" at 25 dollars "interest for 15 days." Additionally, Swank, Cash Cow's manager and EZ Cash's President, knew the DTV transaction was a loan. Swank, as Cash Cow's manager and EZ Cash's President knew that Cash Cow and EZ Cash were not registered pursuant to the Act and consequently, Cash Cow and EZ Cash knew they were not registered. Swank knew that the annualized interest rate charged DTV customers was greater than 18 percent. He demonstrated his interest calculation abilities at regulatory proceedings in Georgia where he testified in regard to title pawn loan interest contrasted with DTV costs, reciting calculations and noting a savings with DTVs. Again, Swank's knowledge that the annualized interest rate for DTV customers exceeded 18 percent per annum must be imputed to Cash Cow, which he managed, and EZ Cash, of which he was the President. Swank, and thereby Cash Cow and EZ Cash, intentionally charged, contracted for and received interest of more than 18 percent per annum on DTV transactions. Respondents were subject to joint investigation by the Department, the Office of Statewide Prosecution, and the Department of Florida Highway Safety and Motor Vehicles. As a result of this investigation, a joint investigation of David Arrington and Edward Easterly, and companies owned by them, was begun. The joint investigation of Arrington, Easterly, and their companies has not yet concluded or resulted in charges. Consequently, no administrative proceedings have been initiated against them by the Department. The Department has refused licensure to Southern Cash Man, Inc., as a consequence of Arrington's association with the company. A successor corporation, Check Man, Inc., has been licensed by the Department upon review and determination that Arrington is not now associated with that company. Companies owned by Easterly that have applied for licensure have not been licensed. The applications have been withdrawn. The Department has served an Emergency Final Order to Cease and Desist Unlicensed and Usurious Lending Activities (EFO) and an Administrative Complaint for Entry of a Cease and Desist Order, Order of Imposition of Fines and Notice of Rights (Complaint) against International Title Loan, Inc., John Pierce McDonald, and others (ITC). The Complaint in that case is virtually identical to the Administrative Complaint in the instant case. Specific Transactions Kevin Bundage, a four-year resident of Leon County, Florida, engaged in DTV transactions with Cash Cow and EZ Cash. His intent in going to both businesses was to obtain a loan. He evidenced this intent by asking "How do I go about exchanging or getting a loan for a check?" Bundage did not go to Cash Cow or EZ Cash to obtain a DTV and never entered into a title loan with either entity. Gretchen Seigler, formerly known as Gretchen Boggs, is a 32-year resident of Leon County. She engaged in DTV transactions with Cash Cow. Her intent was to obtain a loan. She did not go to Cash Cow to purchase a discount title voucher. In fact, Seigler entered into the DTV transaction with Cash Cow at a time when she did not even have title to a car. Cheryl Winbourne is a 16-year resident of Leon County, Florida. She engaged in DTV transactions with Cash Cow and EZ Cash. Both with Cash Cow and EZ Cash, her intent was to obtain a loan. She engaged in approximately 20 transactions with Cash Cow. She did not intend to purchase a DTV and never entered into a title loan. Janice Sperry is a five-year resident of Leon County, Florida, and engaged in a DTV transaction with Cash Cow. She intended to obtain a loan. She did not go to Cash Cow to purchase a discount title voucher. She never entered into a title loan with Cash Cow or EZ Cash. Gloria Rowls, a 14-year resident of Leon County, Florida, engaged in DTV transactions with Cash Cow and EZ Cash. She intended to obtain a loan but was required to sign the customer agreement and accept the voucher in order to get the money she needed. She does not own a vehicle and never entered into a title loan with Cash Cow or EZ Cash. The universal intent of the foregoing individuals was to obtain a loan from Cash Cow or EZ Cash. None intended to purchase a discount title voucher. Their receipt of a discount title voucher was not germane to their decision. While there were occasional anomalies where an individual actually used the discount title voucher on a title loan, most people involved in a DTV transaction either threw their discount title vouchers in the trash can, gave them to friends, left them on the counter, or simply accepted the voucher as a requirement to getting the loan. During three months, August 1997 to October 1997, the Cash Cow/EZ Cash store located on Tennessee Street in Tallahassee, Florida, engaged in at least 4,634 DTV transactions. In 1997 alone, the Perry store engaged in at least 1,859 DTV transactions. These two locations therefore engaged in a total of at least 6,493 transactions.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED: That the Department of Banking and Finance enter a Final Order to Cease and desist Cash Cow, EZ Cash and Swank from violating Chapter 516, Florida Statutes, and from further efforts to collect moneys allegedly due to Cash Cow, EZ Cow or Swank on DTV transactions which have not been repaid by the customer; Fine Cash Cow, EZ Cash and Swank, jointly and severally, the sum of $1,298,600.00. DONE AND ENTERED this 29th day of September, 2000, in Tallahassee, Leon County, Florida. ___________________________________ DON W. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of September, 2000. COPIES FURNISHED: Robert Alan Fox, Esquire Paul C. Stadler, Esquire Assistant General Counsels Department of Banking and Finance Suite 526, The Fletcher Building East Gaines Street Tallahassee, Florida 32399-0350 Richard M. Powers, Esquire 315 South Calhoun Street, Suite 308 Tallahassee, Florida 32301 Honorable Robert F. Milligan Comptroller Office of the Comptroller The Capitol, Plaza Level 09 Tallahassee, Florida 32399-0350 Robert Beitler, Acting General Counsel Department of Banking and Finance Fletcher Building, Suite 526 101 East Gaines Street Tallahassee, Florida 32399-0350
Findings Of Fact General Findings of Fact The Department of Banking and Finance is the agency responsible for the administration of Chapter 560, Florida Statutes, the Money Transmitters' Code, which in material part governs the registration and regulation of payment instrument sellers and check cashers in Florida. Section 560.102(1),Florida Statutes. At all times material hereto, Cash Cow was registered with the Department as a check casher pursuant to part III of the Money Transmitters' Code ("Code"). At all times material hereto, Cash Cow was not registered as a payment instrument seller pursuant to part II of the Code. At all times material hereto, Cash Cow was not licensed pursuant to the provisions of Chapter 516, Florida Statutes, the Florida Consumer Finance Act. At all times material hereto, Jeffery C. Swank was President of Cash Cow and the individual who oversaw the daily operations of Cash Cow. Petitioner's Exhibit No. 30; Petitioner's Exhibit No. 34, pages 10-11, and 42. Description of Typical Transaction Cash Cow received a check from a customer typically in the amount of $110.00. In exchange for the customer's $110.00 check, Cash Cow tendered its check in the amount of $100.00, which the customer could cash anywhere but at Cash Cow. The $10.00 difference between what the customer paid and the amount of the Cash Cow check is described in the customer agreement as a "check cashing fee." Petitioner's Exhibit Nos. 1, 2, and 4-8. In addition to the $110.00 check, the customer also wrote a second personal check in the amount of $20.00. This $20.00 amount is described in the customer agreement as a "non- sufficient funds charge." Cash Cow provided checks to a customer in $100.00 increments. Should the customer have wished to receive $200.00, the customer would have received two $100.00 checks from Cash Cow, and the customer would write two $110.00 checks and two $20.00 checks. The customer agreement further provides, "that the customer could pick up the two checks within three days upon payment of $110.00, or redeem the cashed check no later than" a date specified in the agreement approximately two weeks from the date of the agreement. Petitioner's Exhibit Nos. 1, 2, and 4-8. The customer could present a cashier's check or money order to Cash Cow in the amount of $130.00 on or before the specified date and pick up the $110.00 and $20.00 checks; or Cash Cow might permit the customer to extend the date the check could be picked up for two weeks by paying an additional $30.00 in cash per $100.00 borrowed. Cash Cow assessed the "non-sufficient funds charge" if the customer extended the obligation or paid the obligation after three days without extending the obligation. In some cases Cash Cow, having received an additional $30.00, retained the customer's original checks without giving the customer a new Cash Cow check or any other tangible object; or in other cases, Cash Cow returned the customer's original checks, obtained new checks from the customer totaling $160.00 and gave the customer a new Cash Cow $100.00 check. In still other cases, Cash Cow changed the date on the customer's checks it held and gave the customer a new Cash Cow check which the customer was required to endorse immediately back to Cash Cow. Sales of Payment Instrument Respondents knew that payment instrument sellers were required to be registered pursuant to the Code. Respondents knew Cash Cow was not registered as a payment instrument seller pursuant to part II of the Code. Respondents knew Cash Cow was selling or issuing its own corporate check in return for accepting a customer's check. Respondents knew Cash Cow was receiving consideration in the amount of ten dollars over and above the amount of the check it issued in return for issuance of its check. This constitutes the sale of a payment instrument under the statutes. Knowingly Violating Payment Instrument Requirement Provisions By application dated July 13, 1995, Cash Cow sought to register as a check casher pursuant to Chapter 560, Florida Statutes. The application was signed by Swank. Prior to the approval of the dated July 13, 1995 application, Cash Cow began advertising as a check casher. Specific Transactions (a) Thomas Antony Bush has been a resident of Leon County, Florida, for approximately 19 years. He engaged in his first transaction with the Cash Cow in 1996. On his first visit he obtained a check in the amount of $100.00 from the Cash Cow. Within 15 days he paid the Cash Cow back $130.00. Mr. Bush engaged in two transactions where he obtained $200.00 from the Cash Cow, which he paid back the amount of $260.00 within 15 days. With respect to a third $200.00 transaction with the Cash Cow, Mr. Bush was late in repaying the Cash Cow back the amount of $260.00. With respect to the third $200.00 transaction, Mr. Bush was told that his check would be turned over to the Office of the State's Attorney. Ultimately, Mr. Bush paid the Cash Cow at least $260.00 with respect to the third $200.00 transaction. The total amount of money paid by Mr. Bush to the Cash Cow in the above transactions exceeds the $700.00 received from the Cash Cow by $210.00. This amount includes seven $10.00 "check cashing" fees and seven $20.00 "insufficient funds" fees. 20. (a) Janice Sperry has lived in Leon County for 4 years. (b) She received a $100.00 check from the Cash Cow with respect to her first transaction. Within 15 days she paid the Cash Cow back $130.00. Ms. Sperry engaged in three other transactions with the Cash Cow and paid them all back within 15 days. The total amount of money paid by Ms. Sperry to the Cash Cow in the transactions above exceeds the $400.00 received from the Cash Cow by $120.00. This amount includes four $10.00 "check cashing" fees and four $20.00 "insufficient funds" fees. (a) Gail Diane Hinson is presently a resident of Leon County. Prior to living in Leon County, Ms. Hinson lived in Gadsden County for 17-18 years. Ms. Hinson received a $200.00 check from the Cash Cow. She was unable to pay the Cash Cow the amount of $260.00 after 15 days and obtained an extension of 15 days by paying the Cash Cow $60.00. Ms. Hinson obtained a total of three extensions before paying the Cash Cow the amount of $260.00. The total amount of money paid by Ms. Hinson to the Cash Cow in the transactions above exceeds the $200.00 received from the Cash Cow by $240.00. This amount includes two $10.00 "check cashing" fees, two $20.00 "insufficient funds" fees, and six $30.00 extension fees. (a) Debbie J. Whited is a resident of Sopchoppy, Florida. Ms. Whited's first transaction involved a $100.00 check from the Cash Cow. Ms. Whited paid the Cash Cow $130.00 within 15 days. Ms. Whited engaged in at least one $200.00 transaction with the Cash Cow. Ms. Whited paid the Cash Cow $260.00 within 15 days. The total amount of money paid by Ms. Whited to the Cash Cow in the transactions above exceeds the $300.00 received from the Cash Cow by $90.00. This amount includes three $10.00 "check cashing" fees and three $20.00 "insufficient fund" fees. (a) Sheila Fields is a resident of Tallahassee, Florida. The first transaction Ms. Fields engaged in with the Cash Cow involved the amount of $100.00. After two weeks, Ms. Fields went to the Cash Cow and engaged in a $200.00 transaction because she did not have the money to pay off the first transaction. Ms. Fields used $100.00 of the $200.00 received from the Cash Cow during the second transaction to pay off the first transaction. It cost Ms. Fields a total of $130.00 to pay off the first transaction. Ms. Fields was unable to repay the $200.00 transaction within two weeks. Ms. Fields paid the Cash Cow the amount of $60.00 every two weeks for three months. Ultimately, one of Ms. Fields' $110.00 checks cleared her account. The total amount of money paid by Ms. Fields to Cash Cow in the transactions above exceeded the $200.00 received from the Cash Cow by $400.00. This amount includes two $10.00 "check cashing" fees, one $20.00 "insufficient fund" fee, and twelve $30.00 extension fees. (a) May Allen lives in Quincy, Florida. May Allen has had two or three transactions with the Cash Cow. In one transaction, Ms. Allen was not able to repay the transaction within 15 days. She was offered and obtained an extension. After obtaining the extension, Ms. Allen repaid the Cash Cow the amount of $130.00 within three or four days of obtaining the extension. Petitioner's Exhibit 8 relates to the last Cash Cow transaction that Ms. Allen entered into. Ms. Allen repaid the last transaction into which Ms. Allen entered. Ms. Allen repaid the last transaction within 15 days. The total amount of money paid by Ms. Allen to the Cash Cow in the transactions above exceeds the $100.00 received from the Cash Cow by $90.00. This amount is derived form two $10.00 "check cashing" fees, two $20.00 "insufficient fund" fees and one $30.00 extension fee. The universal intent of all of the foregoing individuals in going to Cash Cow was to obtain a loan. All of the individuals above did not go to Cash Cow to "cash a check," or to purchase a negot4iable instrument. They went to Cash Cow to obtain a loan. That they received a negotiable instrument and that they paid $30.00 for the use of $100.00 for two weeks was not germane to their decision. Their agreements do not indicate that the transactions are loans or the usurious rate they were charged. The Respondent argued that this "service" was socially useful. From these comments by Respondents' officers, it is clear that they were aware of the lending nature of their activities. (a) A payment of $20.00 on a principal amount of $100.00 for 12 days, is an annualized interest rate of 600%. A payment of $30.00 on a principal amount of $100.00 for 15 days is an annualized interest rate of 730%. A payment of $30.00 on a principal amount of $100.00 for 14 days is an annualized interest rate of 782%. A payment of $20.00 on a principal amount of $100.00 for 15 days is an annualized interest rate of 486%. A payment of $10.00 on a principal amount of $100.00 for 3 days is an annualized interest rate of 1,216%. A payment of $30.00 on a principal amount of $100.00 for 7 days is an annualized interest rate of 1,564%. (a) From January through December 1996, the Cash Cow engaged in 4,619 transactions. (b) In most transactions the customers of the Cash Cow would pay $30.00 for a $100.00 Cash Cow check and redeem their personal checks in two weeks. The $30.00 is considered an interest payment, and the annualized rate is 782%.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED: That the Department of Banking and Finance enter a Final Order to Cease and desist Cash Cow and Swank from violating Chapters 516 and 560, Florida Statutes, and from further efforts to collect moneys allegedly due to Cash Cow on "check cashing" transactions which have not been repaid by the customer; Revoke any and all Chapter 560, Florida Statutes, registrations issued; Remove Swank as a money transmitter affiliated-party, as that term is defined in Section 560.103(11), Florida Statutes, of Cash Cow; and Fine Cash Cow and Swank, jointly and severally $230,000.00. DONE AND ENTERED this 2nd day of February, 1999, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 2nd day of February, 1999. COPIES FURNISHED: Robert Alan Fox, Esquire Paul C. Stadler, Esquire Assistant General Counsels Department of Banking and Finance Suite 526, The Fletcher Building 101 East Gaines Street Tallahassee, Florida 32399-0350 Richard M. Powers, Esquire 315 South Calhoun Street, Suite 308 Tallahassee, Florida 32301 Honorable Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 Harry Hooper, General Counsel Department of Banking and Finance Suite 526, The Fletcher Building 101 East Gaines Street Tallahassee, Florida 32399-0350
Findings Of Fact Willie J. Woods is a farmer. He entered into an agreement with W. R. Ward, Jr., President of Growers Marketing Service, Inc. (GMS) concerning the disposition of watermelons which he had grown. The testimony of Woods and Ward concerning the nature of the agreement is conflicting. In the absence of a written contract, the nature of the agreement must be determined from the other documents surrounding their transactions. From these documents, it is determined that the agreement between the parties was not for the purchase of Woods' watermelons by GMS. The documentation surrounding the transactions by GMS, show that GMS was acting as a broker or middle man in introducing Woods' watermelons into the stream of commerce. According to Mr. Ward's records, each shipment was assigned a transaction number, and each sale from a lot of watermelons was also assigned a transaction number. The record of each of these transactions was examined in detail. Below each of these transactions is discussed, and where portions of the record are particularly pertinent, they have been copied and attached to this order for ease of reference. In some instances, the settlement statement has been reproduced and corrected to reflect what the actual charges should have been based upon the underlying record. A handwritten explanation of the adjusting entries has been added to these statements. Transaction number 1439: On June 4, 1991, Woods delivered 43,750 pounds of watermelons to GMS The documentation surrounding this transaction shows that GMS, sold the load of watermelons FOB Brooksville, Florida for a price of 14 cents per pound.The purchaser's driver transported the load from Brooksville to Canada where the purchaser "rejected" the load because the melons were immature. By purchasing the watermelons FOB Brooksville, the purchaser waived any right to reject the melons upon their arrival at their destination. Further, the only evidence of immaturity is an inspection report which states that the inspection was limited and may not reflect the condition of the whole load. The inspection report itself is hearsay. The dollar value of this load as stated in the Bill of Lading/Customs Declaration was $6,125.00. The cost of freight was not shown in the file because it was delivered FOB Brooksville and the costs were borne by the purchaser. The GMS's handling fee was 1 cent per pound or $438.00. GMS owed Woods $5,687.00 on transaction number 1439. GMS paid Woods $2,879 on this transaction. GMS still owes Woods $2,808 on this transaction. Transaction number 1424: On June 4th, GMS sold in behalf of Woods $4,320 pounds of watermelons for 20.25 cents per pound. W. R. Ward stated that the price was reduced from 15 to 5 cents per pound, and was a bookkeeping error. The file reflects the sales price for the 46,320 pounds of watermelons was $9,380. The file reflects that transportation on this load of watermelons was $1,683.00, and GMS, was entitled to 2.5 cents per pound for packing and 1 cent handling for a total of $1,621. The total expenses were $3,304.00 for transaction number 1424. GMS owed Woods $6,077.00 for transaction 1424, but only paid him $1,844. GMS still owes Woods $4,233 on this transaction. Transaction number 3534: On June 4th, GMS, handled a load of yellow meat watermelons weighing 4,071 pounds for Willie J. Woods. Subsequently, GMS sold portions of this load of watermelons in transactions number 1565, 1507, 1461, 1403, and 1476. On June the 6th, GMS sold 13,337 pounds of watermelons at 17 cents a pound for a total sales price of $2,267.29 in transaction 1461. On June 6th, Growers Marketing Service sold 18,909 pounds at 14 cents a pound for a total of $2,647.26 in transaction number 403. On June 7th, Growers Marketing Service sold 1,945 pounds at 22 cents a pound for a total of $427.90 in transaction 1476. On June 14th, Growers Marketing Service sold 5,347 pounds on transaction 1565 which were subsequently rejected because of severe decay. See, Dump Report dated July 5 in Transaction 1565. Growers Marketing Service showed no income nor expense to the grower on transaction 1565. Because these melons were not sold until June 14, it is possible that they decayed. GMS's treatment of the transaction on the settlement statement is contrary to the notes on transaction 1565 which treat is as a wash with no income or expense to Woods. The assessment of freight and handling charges was not inappropriate under the circumstances, and are disallowed. See, Corrected Invoice 3534 attached to this Order. The total revenue from the remaining transactions was $6,142. The expenses on the various loads total $2,285. GMS owed Woods $3,857 on this load, but only paid him $1152. GMS still owes Woods $2705 on this transaction. Transaction number 3541: On June 7, 1991, Growers Marketing Service handled 9,997 pounds of watermelons for Willie J. Woods on transaction number 1565. This load was sold to Castellini Produce on transaction 1565, discussed above, where it was rejected for excessive decay. The assessment of the freight charges and handling charges on this load which was handled 10 days after it was picked was inappropriate, and is disallowed. It is treated also as a wash in this transaction just as it was in 3534, and just as GMS treated it in transaction 1565. Transaction number 3546: On June 11th, Growers Marketing Service received 4,949 pounds of yellow meat watermelons from Woods. It subsequently sold these watermelons for Woods in transactions 1589, 1607, and 1613. Regarding transaction 1589, the Growers Marketing Service's settlement statement to Woods reflects that this transaction is subject to PACA Audit; however, GMS included the 14,121 pounds of watermelons in its settlement at a expense to Woods of 5 cents per pound on a sales price of 1.67 cents per pound. Because this transaction is still subject to audit, it was inappropriate to settle with the farmer. For purposes of this accounting, 1589 is not considered. In transaction 1607, GMS sold 16,775 pounds of yellow meat watermelons received from Woods on transaction 3546. Transaction 1607 and the funds received from the transaction are discussed in full below with regard to transaction 3548; therefore, it is not discussed or accounted for as part of transaction 3546. In transaction 1613, Growers Marketing Service sold 10,053 pounds of watermelons at 11.6 cents per pound for a total of $1,069.00. Expenses attributable to transaction 1613 were $554.00. Woods was entitled to $614.00 on transaction 1613; however, he was paid nothing on this transaction; GMS owes Woods $614 on this transaction. Transaction 1475: On June 11th, Growers Marketing Service received 45,050 pounds of watermelons from Woods. Growers Marketing Service asserts that the original price of these watermelons was dropped from 15 cents to 12 cents; however, the checkstub attached to the invoice shows a total payment to GMS of $7,298.10 at the original purchase price of 17.2 cents per pound. Growers Marketing Service's costs in this transaction were $2,358. Because this transaction clearly shows the original price was paid, it reflects adversely on creditability of the witnesses for Growers Marketing Service with regard to their testimony in other transactions that the original price was reduced due to fall in the market. Growers Marketing Service owed Woods $4,940 on transaction 1475, and paid him $4,484. GMS still owes Woods $456 on this transaction. Transaction number 1508: On June 11, 1991, Growers Marketing Service received 46,000 pounds of watermelons from Willie J. Woods. Growers Marketing Service sold these melons at a price of 10.25 cents per pound. Growers Marketing Service received $4,715.00 on transaction 1508 and had expenses in the amount of $2,259.00. Growers Marketing Service owed Woods $2,456.00 on transaction 1508, and paid Woods $2,284. GMS still owes Woods $172 on this transaction. Transaction number 1497: On June 11, 1991, Growers Marketing Service received 45,340 pounds of watermelons in this transaction. Growers Marketing Service sold these watermelons at 16.35 cents per pound and deducted freight of 4.35 cents per pound, showing a net sales price of 12 cents per pound. This resulted in sales revenue of $5,441 from which GMS deducted its 1 cent handling charge and an additional $4,750 listed as a harvesting advance. GMS paid Woods $204. GMS introduced no proof of a harvesting loan; however, Woods' complaint admits this loan. Nothing is owed to Woods on this transaction. Transaction number 3548: On June 12, 1991, Growers Marketing Service received 41,132 pounds of watermelons from Willie J. Woods. Subsequently, Growers Marketing Service sold watermelons received from Woods on this transaction in its transaction numbered 1613, 1607 and 1627. Growers Marketing Service asserts that 24,457 pounds of watermelons were rejected and destroyed on transaction 1607. The records regarding transaction 1607 show handwritten notation on the invoice that Growers Marketing Service received a total after expenses of sale of $3,286.00 on transaction 1607. In transaction 1613, Growers Marketing Service sold 10,032 pounds of watermelons at 11 cents a pound and in transaction 1627 Growers Marketing Service sold 7,899 pounds of watermelons at 7 cents a pound. The original settlement statement reflected incorrectly that Woods owed GMS $810. A corrected settlement statement on transaction 3548 is attached to this Order and reflects that Willie J. Woods was owed the amount of $1,019.00 in transaction 1607, $624.00 in transaction 1613, and $1,019.00 in transaction 1627. GMS paid Woods no money on this transaction, and owes Woods a total of $1,873. Transaction number 1527: On June 12, 1991, Growers Marketing Service received 50,080 pounds of watermelons from Willie J. Woods. Growers Marketing Service sold these watermelons for 17.35 cents per pound receiving a total of $8,689.00 less expenses of $2,441.00. GMS owed Willie J. Woods $6,248.00 on transaction 1527, and paid Woods $247. GMS owes Woods $6,001. Transaction number 1536: On June 12, 1991, Growers Marketing Service received 41,320 pounds watermelons from Willie J. Woods. Growers Marketing Service consigned these watermelons and received $2,078.00 less expenses of $1,473.00. Woods owed $605.00 from Growers Marketing Service on transaction 1536, and paid Woods $307. GMS still owes Woods $298. Transaction number 1535: On June 12, 1991, Growers Marketing Service received 43,240 pounds of watermelons from Willie J. Woods in this transaction. Growers Marketing Service subsequently sold these watermelons at 16.45 cents per pound receiving a total of $7,113.00 less expenses of $2,357.00. Growers Marketing Service owed Willie J. Woods $4,856.00 on transaction 1535, and paid Woods $2,802. GMS still owes Woods $2,054. Transaction number 1505: On June 13, 1991, Growers Marketing Service received 44,950 pounds of watermelons from Willie J. Woods on this transaction. Subsequently, Growers Marketing Service sold these watermelons for a total of $6,967.00 to a dealer in Canada. The dealer in Canada rejected the watermelons upon their receipt serving that they were overripe on June 15, 1991, when they were received. A Canadian agricultural inspection was ordered and conducted on June 21, 1991, which revealed that 28% of the melons showed decay. However, the inspection was not timely and the report is hearsay. GMS failed to exercise due diligence in obtaining a prompt inspection and seeking recovery in behalf of Woods. Therefore, after absorbing expenses of $2,747.00, Growers Marketing Service owed Woods $4,220.00 for his loss in this transaction. GMS paid Woods $1,250 salvage on the load; however, it still owes him $2,970. Transaction number 1520: On June 13, 1991, Growers Marketing Service received 45,940 pounds of watermelons from Willie J. Woods in this transaction. The front of the folder shows that Growers Marketing Service sold this load of watermelons to Winn Dixie in South Carolina for 12 cents per pound, or $5,513. Upon receiving the watermelons on June 15 1991, Winn Dixie rejected the melons because they were "cutting white, green fresh." See copy of front of file. Growers Marketing Service asked another broker to move the load, and that broker and Growers Marketing Service arranged to have the load inspected at its next destination, Staunton, Virginia. The truck broke down in route to Staunton, Virginia and did not arrive until June 18, 1991. The other broker described the melons as looking "cooked" on arrival. Growers Marketing Service charged Woods with freight on this load. Because Growers Marketing Service had a legitimate freight claim against the trucking company, yet charged the loss and freight charges to the grower, GMS owes Woods $5,940 less the salvage, freight and expenses totaling $2,125. GMS owes Woods $3,816. Transaction number 3553: On June 13, 1991, Growers Marketing Service received 29,478 pounds of watermelons from Willie J. Woods on transaction 3553. Subsequently, Growers Marketing Service sold these melons to various concerns realizing $3,450.76 on these sales. GMS's settlement statement with Woods on this transaction reflects a deficit on transaction 1505 of $822.50. According to the records reviewed by the Hearing Officer there was no deficit in transaction 1505; therefore, the deduction of $822.50 was inappropriate. Adding this money back into the amount due Woods, Woods should have received $1,615.74 on transaction number 3553. GMS paid Woods $675, and still owes Woods $941. Transaction number 3552: On June 13, 1991, Growers Marketing Service received 32,769 pounds of watermelons from Willie J. Woods on this transaction. A review of the records reflects that Growers Marketing Service subsequently sold 10,403 pounds of these melons at three cents a pound, realizing $312.09. Growers Marketing Service also sold 19 bins of these melons weighing 22,366 pounds for nine cents a pound for a total of $2,012.94. Growers Marketing Service's settlement statement reflects a packing charge of two and a half cents per pound for 22,366 pounds of melons that were in bins. This is excluded as an expense because the adjustment for packing charges was included in the Hearing Officer's recomputation of the price of nine cents per pound. Similarly, the price adjustment of one and a half cents per pound was included in the recomputation of the price and is therefore excluded. The settlement statement which is attached to this Order reflects total receipts of $2,325 and total expenses of $750. Growers Marketing Services owed Willie J. Woods $1,575 on transaction number 3552, and paid Woods $1,551. GMS owes Woods $24 on this transaction. Transaction number 3549: On June 13, 1991, Growers Marketing Service received 32,564 pounds of watermelon from Willie J. Woods on this transaction. Subsequently, Growers Marketing Service sold 4,008 pounds of watermelons at three cents a pound on transaction 1669, realizing $120.24 on the sale. Growers Marketing Service sold seven bins of watermelons weighing 8,400 pounds at $217.66 for each bin, realizing a total of $1,523.66 on transaction 1532. Growers Marketing Service sold 1,346 pounds of watermelon at eight cents a pound, realizing $107.68 on transaction 1678. Growers Marketing Services sold 18,810 pounds of watermelons at sixteen and a half cents a pound, realizing $3,104 on transaction 1530. The Growers Marketing Services' settlement statement on transaction 3549, corrected as indicated above, shows that Growers Marketing Services received a total of $4,855 on this transaction. Growers Marketing Services' statement reflects packing charges of four cents per pound for 24,164 pounds. This packing charge was not applicable because the melons are indicated to have been in bins, not in cartons. Further, the price adjustment of one and a half cents per pound on 18,810 pounds was included in the Hearing Officer recomputation of the price per pound. Taking into account these corrections, total revenue was $4,855, and the total expenses of Growers Marketing Services were $1,613. Growers Marketing Services owed Woods $3,242 on transaction 3549, and paid him $1,690. GMS still owes Woods $1,552. Transaction 3556: On June 13, 1991, Growers Marketing Services received 32,898 pounds of watermelons from Willie J. Woods on this transaction. Subsequently, Growers Marketing Services sold 2,086 pounds of these watermelons for 12 cents a pound on transaction 1622. Growers Marketing Services sold 2,096 pounds of these watermelons at 10 cents a pound realizing $210 on transaction 1575. Growers Marketing Services sold 1,983 pounds of these watermelons at 10 cents a pound realizing $198 in transaction 1647. Growers Marketing Services' settlement for transaction 3556 is attached to this Order and reflects an original price for these melons of 4 cents per pound; however, Growers Marketing Services sold 1,029 of these watermelons at 11.6 cents a pound in transaction 1613. The settlement statement, a copy of which is attached, is corrected to reflect the sales price of 11.6 cents a pound, and the resulting change in the monies received from $41.16 to $119. GMS sold 2086 pounds of melon for 12 cents per pound realizing $250 on transaction 1622. GMS sold 3,841 pounds of watermelons for 10 cents per pound realizing $384 on transaction 1707. Growers Marketing Services sold 21,862 of these watermelons at 7 cents a pound realizing $1,530 on transaction 1627. The total received by Growers Marketing Services was $2,691 less expenses of $1,952. Growers Marketing Services owed Willie J. Woods $739, and paid him $662 on transaction 3556. GMS still owes Woods $77. Transaction number 3557: On June 14, 1991, Growers Marketing Services received 20,013 pounds of watermelons from Willie J. Woods on this transactions. Subsequently, Growers Marketing Services sold 9,214 watermelons at 12 cents a pound on transaction 1616. Growers Marketing Services 3,418 pounds of watermelons at 3 cents a pound in transaction 1669. Growers Marketing Services sold three bins of watermelons weighing 3,525 pounds at 16.5 cents a pound and an additional 3,852 pounds of watermelons at 16.5 cents a pound in transaction 1530. This is a total of 16,162 pounds of watermelons. The Growers Marketing Service's settlement statement, which is attached, is corrected to show the correct number of pounds sold and the correct amounts of money received by Growers Marketing Service. Growers Marketing Service received a total of $3,301.50 for the sell of these watermelons. Concerning the expenses shown by Growers Marketing Service, the number of pounds handled is adjusted to show that 16,162 pounds was handled. In addition, the 4 cent packing charge for 16,484 pounds of watermelons is deleted since these melons were not packed in cartons but in bins. In addition, the 1.5 cent price adjustment for 3,525 pounds of watermelons handled in transaction 1530 is in the recomputation of the price. The corrected expense total is $254. Growers Marketing Service owes Willie J. Woods $3,048 on transaction 3557. GMS paid Woods $643; however, it still owes Woods $2,405. The total of the sums still owed Mr. Woods by GMS is $32,999.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is recommended that the parties be notified of these findings, and GMS permitted the opportunity to pay to Willie J. Woods $32,999 within 30 days, and if GMS fails to settle with Mr. Woods, Mr. Woods should be permitted to obtain settlement from the Respondent's bond in the amount of $32,999, or to the limits of the bond. DONE and ENTERED this 29th day of July, 1992, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of July, 1992. COPIES FURNISHED: Bob Crawford, Commissioner Department of Agriculture The Capitol, PL-10 Tallahassee, Florida 32399-1550 Willie J. Woods 1022 Piercewood Point Brooksville, Florida 34602 W. R. Ward, Jr., President Growers Marketing Srevice, Inc. Post Office Box 2595 Lakeland, Florida 33806 Brenda Hyatt, Chief Department of Agriculture Division of Marketing, Bureau of Licensure and Bond Mayo Building Tallahassee, Florida 32399-0800
The Issue The basic issue is whether the fines were properly assessed. This issue is determined by a consideration of whether the shipments in question were traveling in interstate or intrastate commerce. A secondary issue is which party has the burden of proof.
Findings Of Fact Yowell Transportation Services, Inc. is a company based in Dayton, Ohio, and doing business in Florida. It maintains an office in Melbourne, Florida. William Cantillon is the General Manager in the Melbourne office. Yowell has authority granted by the Interstate Commerce Commission to operate as a contract carrier, by motor vehicle, in interstate or foreign commerce. The State of Ohio is not a member of the International Registration Plan (IRP) which permits commercial vehicle operation in member states. Commercial vehicles from non-member states are required to have Florida registration for intrastate operations. Ohio and Florida have a reciprocity agreement only for interstate movement of commerce. In mid July 1987, William Cantillon was contacted regarding a shipment of 1,000 drums of frozen apple juice concentrate originating in Buenos Aires, Argentina. Yowell was hired to transport the shipment from Port Canaveral to Bradenton, where it was to be processed by Tropicana into reconstituted apple juice. The cargo was discharged from the vessel on July 23, 1987, and was placed in a freezer owned by Mid-Florida Freezer Warehouses, Ltd., in Cape Canaveral. An international bill of lading was not obtained because the cargo cleared customs in Port Canaveral. On July 29, 1987, a Yowell truck transporting part of the concentrate was stopped by a DOT Motor Carrier Compliance Officer at the Plant City scales on Interstate 4. The officer weighed the vehicle and checked the registration and bill of lading. The vehicle was registered in the State of Ohio and the bill of lading reflected movement between Cape Canaveral, Florida and Bradenton, Florida. The officer issued a load report and field receipt reflecting a fine of $2,104.00 for non-registered overweight. The fine was paid and the truck was released the same day. On August 11, 1987, another Yowell vehicle carrying frozen concentrate was detained by a DOT Motor Carrier Compliance Officer at the Plant City scales. The vehicle was registered in Ohio and not in Florida. The vehicle was weighed and the bills of lading were examined. There was a bill of lading from Mid- Florida Freezer and another from Yowell. Both showed the shipping point as Cape Canaveral, Florida and the destination as Bradenton, Florida. The Yowell bill of lading described the commodity as apple juice, originating in Argentina, arriving in the U.S. on 7/22/87, on the vessel Betty B. The officer issued a load report and field receipt imposing a $1,796 fine for non-registered overweight. The fine was paid the same date. In both instances, based on the documentation produced by the Yowell drivers, DOT considered the shipments to be in intrastate commerce. If there had been an international bill of lading, the shipments would not have been questioned by the officers. William Cantillon's contact regarding his company's services was with the Florida agent for the Argentine company that produced the apple juice. The only evidence presented by Yowell regarding the juice sales transaction is a photocopy of a statement dated November 23, 1987, on Jucoman S. A. letterhead, addressed to Camerican International, Inc., 480 Alfred Avenue, Teaneck, N.J., 07666, USA: This is to certify that 1000 drums of apple juice concentrate were packed and shipped by us to Bradenton, Florida on the merchant vessel Betty B sailing June 22, 1987 from Buenos Aires, Argentina. The signature is illegible. No person from Jucoman or from Camerican International testified to explain this statement.
Recommendation Based on the foregoing, it is, hereby RECOMMENDED: That a final order be entered finding that Yowell failed to prove entitlement to an exemption and that the fines levied were proper. DONE and RECOMMENDED this 8th day of July, 1988, in Tallahassee, Florida. MARY CLARK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of July, 1988. COPIES FURNISHED: William H. Cantillon General Manager Yowell Transportation Services, Inc. 7830 Ellis Road Melbourne, Florida 32904 V. L. Whittier, Jr., Esquire Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450 Kaye N. Henderson, P. E., Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450 ATTN: Eleanor F. Turner, M.S. 58 Thomas H. Bateman, III, Esquire General Counsel Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450
The Issue Whether respondents owe petitioner money on account of watermelon sales?
Findings Of Fact Last spring, her first working on behalf of respondent McKay & Associates, Inc., Pat Harper nee ' Maddox accompanied Randy Finch, the company president, to Florida to help buy and ship produce. Because petitioner Bubba Hurst had sold watermelons to Ms. Harper season before last, she sought him out again. On Tuesday night, May 28, 1991, Ms. Harper orally agreed on behalf of McKay & Associates, Inc. (after Ruth Neuman, the company's secretary-treasurer, had been consulted by telephone) to pay Mr. Hurst 12 cents a pound for two truckloads of watermelons "as is." (Earlier she had seen the watermelons piled in the smaller trucks in which petitioner's crew had brought them from the fields to the melon yard, after harvesting them that day.) With Wednesday morning came a truck and driver (engaged by Ms. Harper or Mr. Finch) to haul the watermelons from petitioner's melon yard to truck scales some ten miles away, then to a farm in Denton, Georgia, for crating and transshipment to their ultimate intended destinations in Maryland and Pennsylvania. After the first truck left at 4:58 that afternoon, loaded with watermelons aggregating 43,280 pounds, Petitioner's Exhibits Nos. 1 and 2, a second truck and driver arrived. Mr. Finch had agreed to pay Mr. Hurst cash for the watermelons, but a complication arose before they could settle that night: Only after the crew had gone home was it discovered that the second truck was overloaded by some 9,000 pounds; and the driver refused to risk the fines he might incur by hauling an overload. As a result, it was not clear exactly how many watermelons McKay & Associates, Inc. would owe petitioner for. After some discussion, Mr. Finch wrote and signed a check in petitioner's favor but left blank the amount; petitioner then endorsed and returned the check. The plan was, once the exact amount was known, for Mr. Finch to complete the check, cash it, and give Mr. Hurst the proceeds. Afterwards it occurred to Mr. Hurst that if the check were made out for more than what he was to be paid for the watermelons, he could have problems with the Internal Revenue Service. Apprehensive, he asked Mr. Finch to void the check, which he did, by writing "VOID" across it. Respondent's Exhibit No. 1. Later somebody filled in an amount ($5,193.60, which corresponds to the first load, 43,280 pounds at 12 cents per) and wrote "melons no good," perhaps in anticipation of a formal administrative proceeding like the present one. The check was never negotiated. On Thursday, May 30, 1991, while watermelons were being unloaded from the second truck, two men with a brief case full of cash expressed an interest in the lightening truckload. When Ms. Harper told Mr. Hurst, he said the watermelons were hers to do with as she pleased. She then sold the load to the two men for 12 cents a pound cash, and handed the money over to petitioner. The excess watermelons on the second truck had been offloaded onto a third truck. Of like capacity as the first, the third truck was empty when it accompanied the overloaded truck to the melon yard on Thursday morning. With the departure of the second truck, Ms. Harper and Mr. Finch told Mr. Hurst to fill the third truck up and agreed to buy that truckload. For a while, Mr. Finch was actually "in the line" handing some watermelons along for loading in the third truck, and rejecting others. They weighed 20 pounds each on average. Meanwhile, when Ms. Neuman saw the first truckload, after its arrival in Denton, Georgia, on Thursday morning, she exclaimed, "My God! These are sun scald[ed]!" At hearing, she testified she was incredulous Florida would let such watermelons leave the state. Ms. Neuman telephoned Mr. Finch and told him she was sending the first load back, but that she would take the other load if it "meets federal." She also called the trucking company (then reportedly owned by the late Sam Walton), however, and told the trucker not to load any more watermelons. When Evelyn Hurst, Bubba's mother, answered the telephone at the melon yard lunchtime Thursday, she was asked to tell the driver of the third truck to call home because there was an emergency. The driver made a telephone call, after which he told Mrs. Hurst nothing was wrong at his home. Then he made a second telephone call. After that call, he ordered a stop to the loading then in progress. Bubba Hurst was eating when his mother called with word that no more watermelons were being loaded onto the third truck. He then telephoned the motel where Mr. Finch was staying, and inquired. Mr. Finch told him to finish loading the third truck; and later went to the melon yard and told the driver that loading should go forward. Loading resumed. Later Mr. Finch raised with the driver the possibility of taking the load to New York, but the driver declined the suggestion. Around four o'clock Thursday, the renewed efforts to fill the third truck with watermelons came to an abrupt end, about 250 melons shy of a full load, and the driver, who had ordered the halt, drove away. Mr. Hurst called the motel, and spoke to Ms. Harper, in hope of obtaining the cash he had been promised for his watermelons, but to no avail. The next day the first truck returned from Georgia with the watermelons whose presence on the other side of the state line had so surprised Ms. Neuman; and a federal agricultural inspector, a friend of Mr. Hurst's father, arrived at petitioner's melon yard to inspect them. Mr. Hurst told the inspector (who had been called by Ms. Neuman) that he was welcome to inspect but that the whole load had been sold "as is" and that he - Mr. Hurst - would not be paying for the inspection. Hearing this, the inspector left. Disinterested testimony established that inspections by USDA- certified inspectors are routinely called for by shippers when produce is refused by buyers claiming that produce spoiled before reaching them; but that, at least in the environs of Wildwood, Florida, it is not customary to call for a federal inspection at the point from which watermelons are shipped (unless the shipment is to the Government itself.) Of course, these particular watermelons had already been to Georgia and back. After the inspector left, the driver of the first truck asked that the watermelons be removed from his truck. When Mr. Hurst told him he was trespassing and asked him to leave the melon yard, the driver (or Ms. Neuman by long distance telephone call) summoned a Sumter County deputy sheriff. But the deputy sheriff, informed upon his arrival that the melon yard was a good quarter mile on the Marion County side of the county line, left to perform other duties. Still loaded, the first truck eventually left the melon yard a second time.
Recommendation It is, accordingly, RECOMMENDED: That DACS order McKay & Associates, Inc. to pay petitioner nine thousand seven hundred eighty seven dollars and twenty cents ($9,787.20) within fifteen (15) days of the final order. That, in the event McKay & Associates, Inc. fails to pay petitioner nine thousand seven hundred eighty seven dollars and twenty cents ($9,787.20) within fifteen (15) days of the final order, DACS order payment by State Farm Fire & Casualty Co., to the extent necessary to satisfy the requirements of Section 604.21(8), Florida Statutes (1991), for disbursal to petitioner. DONE and ENTERED this 7th day of May, 1992, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of May, 1992. APPENDIX Petitioner's proposed findings of fact Nos. 1, 2, 3, 4, 5, 8, 9 and 10 have been adopted, in substance, insofar as material. With respect to petitioner's proposed finding of fact No. 6, see findings of fact Nos. 5 and 6. With respect to petitioner's proposed finding of fact No. 7, petitioner said the load may have been as many as 250 melons light. With respect to petitioner's proposed finding of fact No. 11, the value of the second load established by the evidence is $4,591.60, representing 38,280 pounds at 12 cents a pound. Respondent's proposed finding of fact No. 1 has been adopted, in substance, insofar as material. With respect to Respondent's proposed findings of fact Nos. 2 and 3, Ms. Neuman's testimony that she directed her agents to procure federal inspection before the first truck left has not been credited, but she did try to arrange one later. With respect to respondent's proposed finding of fact No. 4, the second truck load was never rejected. Respondent's proposed finding of fact No. 5 is rejected. With respect to respondent's proposed finding of fact No. 6, see paragraphs 5 and 6 of the findings of fact. Respondent's proposed finding of fact No. 7 is immaterial. With respect to respondent's proposed finding of fact No. 8, Mr. Finch agreed to buy the third truckload and ordered that loading go forward even after Ms. Neuman registered her dissatisfaction with the first load. COPIES FURNISHED: Honorable Bob Crawford Commissioner of Agriculture Department of Agricultural and Consumer Services The Capitol, PL-10 Tallahassee, Florida 32399-0810 Richard Tritschler, General Counsel Department of Agricultural and Consumer Services The Capitol, PL-10 Tallahassee, Florida 32399-0810 Julian E. Harrison, Esquire 324 West Dade Avenue Bushnell, Florida 33513 John Sowa, Esquire Robert L. Rehberger, Esquire 5025 North Henry Boulevard Stockbridge, Georgia 30281
Findings Of Fact Pursuant to an Invitation to Bid issued by the Respondent, Palm Beach County School Board ("School Board") dated February 21, 1990, the School Board solicited bid proposals for the award of contracts to supply the schools under the School Board's jurisdiction with three separate items: milk and milk products, milkshake mix, and juice products. The contracts were to cover the period June 16, 1990 through July 15, 1991. The award of the contracts for two of the three items included in the Invitation for Bid, milkshake mix and juice products, are not at issue in this proceeding. (For purposes of the Recommended Order, references to the "Contract" refer only the proposed award of a contract for Item 1 of the Invitation to Bid.) Petitioner, Land-O-Sun Dairies, Inc. ("Land-O-Sun") and Intervenor, John Hart Distributors, Inc. ("John Hart") submitted bids pursuant to the Invitation to Bid. The bid opening took place on March 21, 1990. The School Board posted the bid tabulations on April 9, 1990. The bid tabulation along with the recommendation to award the contract to the lowest bidder, Land-O-Sun, was scheduled to go before the School Board for final action at its May 2, 1990 meeting. However, prior to presentation to the School Board for award of the contract, the bid tabulation was "pulled". Within seventy-two hours of posting the bid tabulations, the School Board's Department of Purchasing advised the School's Board Department of School Food Services that it had some concerns regarding milk delivery by the Petitioner, who was the apparent low bidder for the contract. As a result, the School Board's Department of Purchasing "pulled" the bid posting in order to review those concerns. By letter dated April 10, 1990, John Hart expressed dissatisfaction with the School Board's decision to award a separate contract for each of the three items contained in the Invitation of Bid. John Hart also expressed a concern that some of the low bidders did not meet the qualifications in Paragraph Q of the Invitation of Bid. The School Board did not consider this April 10, 1990 letter to be a formal protest under Section 120.53, Florida Statutes because it did not contain the specificity required under the statute and also because the bid tabulations was "pulled" within seventy-two hours after posting. After representatives from the School Board's Department of Purchasing met with Land-O-Sun's representatives and resolved the concerns, the School Board decided to re-post the bid tabulation. The bid tabulation was posted for a second time on May 16, 1990. The bid tabulation posted on May 16, 1990 indicated an intent on the part of the Superintendent of Schools to recommend the award of the contract for Item 1 under the Invitation to Bid to Land-O-Sun, the low bidder for that item. Subsequent to the second posting, John Hart submitted an affidavit to the School Board affirming that it had not been convicted of a public entity crime as defined in Section 287.133(1), Florida Statutes. That affidavit was not included with the initial bid package submitted by John Hart. John Hart contacted certain representatives of the School Board and advised them that the other bidders for the contract would not be able to truthfully submit a similar affidavit. The bid form specifically stated that, by signing the bid form, each of the bidders certified that they had not been convicted of a public entity crime. However, none of the bid packages included an affidavit specifically attesting to lack of conviction of a public entity crime. Paragraph Q of the Invitation to Bid ("Paragraph Q") provides as follows: Q. PUBLIC ENTITY CRIMES: Bidder by virtue of bidding and signature on page one (1) of Invitation to Bid: Authorized Signature (Manual), certifies that they have not been convicted of a public entity crime as defined in Section 287.133 of the Florida State Statutes. A public entity crime as defined in Section 287.133 of the Florida State Statutes includes a violation of any state or federal law by a person with respect to and directly related to the transaction of business with any public entity in Florida or with an agency or political subdivision of any other state or with the United States, including, but not limited to, any bid or contract for goods or services to be provided to any public entity or such agency or political subdivision and involving antitrust, fraud, theft, bribery, collusion, racketeering, conspiracy or material misrepresentation. In addition, bidders certify that they have not been suspended and/or debarred from Federal Programs per Executive Order 12549 of February 18, 1986. Thus, pursuant to Paragraph Q, persons or entities "convicted of a public entity crime" as defined in Section 287.133, Florida Statutes or debarred/suspended from federal programs pursuant to Executive Order 12549 of February 18, 1986 were excluded from the bidding process and not eligible to bid. Within seventy-two hours of the posting of the bid tabulation, on May 16, 1990 the posting was "pulled" because of the allegations made by John Hart that the other bidders could not provide an affidavit verifying that they had not been convicted of a public entity crime. After John Hart suggested to School Board officials that the other bidders did not meet the requirements of Paragraph Q, counsel for the School Board contacted the other bidders and requested them to submit affidavits verifying that they had not been convicted of a public entity crime. In response to the request from the School Board's attorney, Land-O-Sun filed an affidavit which was signed by Mary Callahan on behalf of Land-O-Sun on May 16, 1990. The notary certificate for that affidavit is dated May 15, 1990. However, the evidence estabished that the affidavit was actually executed in the presence of the notary on May 16, 1990. That affidavit was executed after consultation with the general counsel for the company, Brian Kelly, who determined that Land-O-Sun should indicate affirmatively in the affidavit that it had been charged and convicted of a public entity crime as defined in Chapter 287 of the Florida Statutes but that it had not been placed on Florida's convicted vendor list. Attached to the affidavit was an explanation of the circumstances surrounding the conviction. Subsequent to the time that the affidavit was submitted to the School Board, Mr. Kelly has reviewed Chapter 287, Florida Statutes and has concluded that, in his opinion, Land-O-Sun has not been convicted of a public entity crime as defined therein since Land-O-Sun was not charged with the crime prior to July 1, 1989. Therefore, Mr. Kelly believes that he erroneously instructed the Land-O-Sun employees to affirmatively indicate on the affidavit that Land-O-Sun had been convicted of a public entity crime. After receipt of the executed affidavits from the various bidders, the bid results were again posted on May 23, 1990 indicating an intent on the part of the School Board's Department of Purchasing to recommend the award of the contract to the low bidder, Land-O-Sun. Subsequent to the May 23 posting of the bid tabulation, John Hart timely submitted a written Notice of Protest on May 25, 1990. That Notice of Protest objected to the award of the contract to Land-O-Sun on the grounds that Land-O-Sun was not a qualified bidder under the terms of the Invitation to Bid. On June 1, 1990, an informal hearing was held between representatives of the School Board and John Hart to discuss the bid protest. (This June 1, 1990 hearing will referred to as the "Informal Hearing.") Land-O-Sun was not notified of the June 1, 1990 Informal Hearing and was not present during that hearing. At the Informal Hearing, John Hart provided the School Board representatives with information regarding a guilty plea entered by Land- O-Sun to a charge of an antitrust violation of price rigging in connection with a contract to provide milk and milk products to the School Board of Pinellas County between August, 1985 and August, 1986. John Hart also provided the School Board representatives with information indicating Land-O-Sun had been placed on a list of vendors prohibited from doing business with the federal government. Based upon the information presented by John Hart at the June 1, 1990 Informal Hearing, the general counsel for the School Board sent a letter dated June 4, 1990 to all bidders advising them that the Superintendent of Schools intended to recommend rejection of the bid submitted by Land-O-Sun for Item 1 and to recommend award of the contract for that item to John Hart. The parties were advised that they could contest this recommendation by filing a written request for an administrative hearing within seven days from the date of receipt of the letter in which case the recommendation would be abated until after a hearing was completed. Land-O-Sun timely requested a hearing within the time frame set forth in the letter. In its May 25, 1990 Notice of Protest, John Hart also challenged the proposed award of the contract on the grounds that the bid instructions were confusing. In the June 4, 1990 notification to the bidders, the general counsel for the School Board rejected John Hart's contention that the bid instructions were confusing. No evidence was presented in this case regarding the contention that the bid instructions were confusing. Land-O-Sun was not provided with an opportunity to respond to or refute the information provided by John Hart at the Informal Hearing until after it received the June 4, 1990 notification of the proposed change in the recommendation and the formal administrative hearing process was initiated. Prior to this formal administrative hearing, Land-O-Sun provided the School Board with information regarding investigations by both state and federal authorities concerning the Pinellas County bid rigging case. After reviewing the information, the School Board was uncertain whether Land-O-Sun was a qualified bidder so it decided to refer the case to the Division of Administrative Hearings to conduct a formal hearing. Land-O-Sun purchased the assets of Pet Dairy in December, 1985. At the time of the purchase, Pet Dairy, through one of its employees, Lee F. Hallberg ("Hallberg"), was involved in a conspiracy with various other dairy companies to rig bid prices in connection with the award of contracts to supply milk, dairy products and fruit juices to the School Board of Pinellas County. The conspiracy commenced sometime prior to May of 1985 and involved contracts with the Pinellas County School Board for the school year beginning August, 1985 through August, 1986. The contracts were awarded in August, 1985, before Land-O-Sun acquired the assets of Pet Dairy. There is no indication that Land-O-Sun was aware of the existence of the conspiracy at the time of the purchase. After Land-O-Sun acquired Pet Dairy in December of 1985, Mr. Hallberg remained with the company for an additional period of time and the company continued to supply products to the Pinellas County School Board pursuant to the contract for the 1985/1986 school year. In 1987 or early 1988, Land-O-Sun was one of a number of dairy companies that was investigated by the Attorney General for the State of Florida in connection with the dairy industry school milk bidding process. A federal investigation also was begun. From the time it first became aware of the investigation, Land- O-Sun cooperated fully with both the state and federal investigators. After extensive negotiations, Land-O-Sun entered into a Settlement Agreement with the Florida Attorney General's Office on February 24, 1988. Pursuant to that Settlement Agreement, Land-O-Sun paid $225,843.36 to the State of Florida antitrust litigation fund. The state agreed not to bring civil or criminal charges against Land-O-Sun. The state also signed a Covenant Not to Sue Land-O-Sun and informed the Pinellas and Sarasota School Boards that Land-O-Sun had settled with the state and had cooperated with the investigation. The federal investigation focused on the same conduct and contract as the state investigation and resulted in criminal antitrust charges being filed against Land-O-Sun pursuant to a Criminal Information dated June 19, 1989 (the "Information"). That Information was filed in connection with a plea arrangement which had been negotiated over several months preceeding the filing of the Information. In accordance with that plea arrangement, Land-O-Sun entered a guilty plea in United States v. Land-O-Sun Dairies Inc., Case No. 89-116-Cr-T13(A) in U.S. District Court for the Middle District of Florida. on July 25, 1989 to the Information charging that a single violation of Section 1 of the Sherman Antitrust Act involving a conspiracy to rig school milk contract bids in Pinellas County for the 1985-1986 school year. In accordance with the plea arrangement, Land-O-Sun was fined $325,000 and the guilty plea settled all civil or criminal charges which could have been brought against Land- O-Sun as a result of the federal investigation. The fines and penalties imposed against Land-O-Sun as a result of the federal and state investigations were minor in comparison with the fines imposed against the various other companies involved in the conspiracy. Hallberg was the only individual employee of Land-O-Sun who was charged with any crime in connection with the price rigging conspiracy. Hallberg was terminated by Land-O-Sun as a result of the information obtained during the state and federal investigation. Following the entry of the guilty plea to the federal criminal charge, Land-O-Sun was debarred from bidding on procurement and sales contracts of the executive branch of the federal government and placed on a list of parties excluded from federal procurement and non-procurement programs. However, there is no evidence that Land-O-Sun was debarred under Executive Order 12549, which is the provision referred to in Paragraph Q. Land-O-Sun's debarment from contracting with the Executive Branch of the Federal Government in no way affected its right to bid on state contracts. Land-O-Sun has not been placed on the State of Florida's Convicted Vendor List. The Convicted VEndor's Lists is provided for in Section 287.133(3)(d), Florida Statutes, which was enacted by the 1989 Florida's Legislature session. It is not clear whether the List has, in fact, been established at this point in time. Land-O-Sun's conviction was not disclosed on the bid proposal submitted by Land-O-Sun in response to the Invitation to Bid. In addition to the Affidavit described in Findings of Fact 18 above, employees of Land-O-Sun have executed affidavits on at least two other occasions indicating that Land-O-Sun has been convicted of a public entity crime. Each of those affidavits were executed after consultation with the company's general counsel, Brian Kelly. Mr. Kelly has subsequently changed his opinion as to whether Land-O-Sun's conviction falls within the definition of a public entity crime under Section 287.133, Florida Statutes. The value of the contract for Item 1 of the Invitation to Bid is approximately $1.27 million. Land-O-Sun's bid proposal for Item 1 was approximately six thousand six hundred dollars less than the bid proposal submitted by John Hart. John Hart held the contract for supplying milk, milk products and milk shake mix to the School Board for the school year June 16, 1989 through June 16, 1990. In fulfilling that contract, John Hart has utilized some dairy products produced by Land-O-Sun. Since the expiration of the contract for the 1989/1990 school year, John Hart has continued to provide milk, milk products and milk shake mix to the School Board. John Hart has never been convicted of any bid rigging or other public entity crime. The School Board is concerned that awarding the contract to Land-O-Sun may somehow jeopardize federal funding for its breakfast program. However, no evidence or legal authority has been presented to establish that any such funding would be jeopardized by the award of the contract to Land-O-Sun.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Palm Beach County School Board enter a Final Order awarding the contract for Item 1 in Invitation to Bid #91C-5R to Land-O-Sun Dairies, Inc. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 22nd day of August, 1990. J. STEPHEN MENTON 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 22nd day of August, 1990.
The Issue Whether UWF should redraw the bid specifications and issue another invitation for bids? If not, whether UWF should award the contract to Canteen, or disqualify Canteen's bid as unresponsive? Whether, if the specifications were valid but Canteen's bid was not responsive, UWF should award the contract to Livendco, or disqualify Livendco's bid, too, as unresponsive?
Findings Of Fact In response to UWF's invitation to bid, which was mailed to thirteen potential bidders, Livendco, Canteen, Pensacola Tom's Sales, Buffalo Rock Pepsi- Cola Company, and Hygeia Coca-Cola Bottling Company submitted bids for installation and maintenance of some or all of the vending machines UWF's invitation to bid called for on campus. Preparation of the invitation to bid had fallen to UWF's business manager, Thomas W. Henderson, III, who examined the "revenue history" of the 64 machines in place at UWF and used previous bid specifications as a model. The invitation solicited bids on three bases: (1) for all food and drink vending machines; (2) for all canned drink vending machines; and (3) for all food and drink vending machines other than canned drink vending machines. The bid specifications provided: The University will contract with a maximum of two vendors, a canned drink vendor and a vendor of cup drinks, snacks, candy, gum and sandwiches. ... [A]n award will be made to a single contractor unless the best financial return from the best multiple contractor proposal exceeds the best single contractor proposal by 10 percent or more. Only Canteen, Livendco and Pensacola Tom's Sales bid on food and drink vending machines other than canned drink machines. After evaluating the bids, UWF announced its intention to award two contracts, one to Hygeia Coca-Cola Bottling Company, and one to Canteen. The decision to award two contracts, instead of one, and the choice of Hygeia Coca-Cola Bottling Company have not been called into question in these proceedings. Hygeia Coca-Cola Bottling Company proposed to install machines in each of the dormitories for unmarried students on the north side of the UWF campus. Specifications The information and instruction sheet for prospective bidders on UWF vending program bid specifications, Petitioner's Exhibit No. 3, comprises some 18 pages. In pertinent part, the specifications provide: [T]he commission offered to the University shall not be the exclusive factor in determination of the best proposal;... service, product quality, consumer cost, ability to perform, and business reputation in the community will also be considered in the selection... * * * Each proposal shall be accompanied by a letter from the chief executive officer of the company providing the following information: History and business experience of the company. Six local businesses served by the company, three of which must be accounts of similar size as the University. Include the name and telephone number of an individual who can provide information about your performance. * * * Description of products to be vended and source of supply. Description of vending equipment to be provided. * * * There are eight dormitory buildings on the north side of campus... The University would prefer a snack machine and a drink machine in all of these dorms except the [two devoted to] married student housing, but recognizes that there may be insufficient volume to satisfactorily support the machines. Please include in your bid proposal a statement as to how your company would plan to service these locations... * * * CONDITIONS: Dollar bill changers may be provided at the discretion of the contractor... New installations will be requested as deemed necessary by the University Office of Auxiliary Services. At any time that the vendor's records indicate a machine is operating at a loss, upon approval of the Office of Auxiliary Services, the machine may be withdrawn. The University reserves the right in every instance to grant, or to remove, or to refuse installation of a machine in any particular location on campus... * * * 10. All machines furnished under this contract shall have a new or nearly new appearance... Petitioner's Exhibit No. 3. The specifications contain a list of locations for some 16 canned drink machines and about 46 other vending machines. Among the locations listed are two of the six dormitories for unmarried students on the north side of the campus. The specifications document announced "a pre-bid conference to review these specifications and to answer questions," Petitioner's Exhibit No. 3, which occurred on June 26, 1986, with representatives from Livendco and Canteen, among others, in attendance. At this conference, Mr. Henderson stated that he was not looking for references whose contracts called for the same volume as UWF anticipated, but only for references who knew about the bidders' performance under contracts of similar size and complexity, or words to that effect. No Problem Nobody complained at the conference, or at any other time before UWF announced its intention to let the contract to Canteen, that the specifications were inadequate, unintelligible, vague or otherwise defective. Dan Livingston, Livendco's vice president and general manager, prepared Livendco's bid in response to UWF's invitation for bids. He had no difficulty preparing a responsive bid. Bids Evaluated On July 8, 1986, Mr. Henderson opened the bids and calculated the return UWF could expect under competing bids, assuming historical revenues (stated in the specifications) persisted. On this basis, Mr. Henderson concluded that an award to Hygeia Coca-Cola Bottling Company of the canned drink vending machine contract, coupled with an award to Livendco of a contract for the other vending machines, would yield UWF annually $52,431; while awarding the contract for the other vending machines to Canteen, instead of Livendco, would increase the total to $53,728 per year. Canteen proposed to install dollar bill validators or acceptors on each snack vending machine, while Livendco offered to place "[s]nack machines with dollar bill validators...in any high volume snack locations," Petitioner's Exhibit No. 5, but only identified three such locations. These devices, which cost $500 each, would permit people without change to use the snack vending machines, if they had dollar bills. Studies at other locations have demonstrated significant increases in sales attributable to dollar bill validators, increases ranging from 28 to 35 percent. Canteen, but not Livendco, offered to install all new vending machines on the UWF campus. The products Canteen and Livendco proposed to sell in vending machines on the UWF campus and the prices for which they proposed to sell them do not differ significantly. Canteen, but not Livendco, would offer 18-ounce iced drinks. Livendco would sell danish pastry for less ($.45 v. $.50) while Canteen would sell a slightly larger cup of coffee for the same price (8 1/4 oz. vs. 8 oz.). Pastry sales are a tiny fraction of total sales. Livendco would sell six sticks of gum for $.35, while Canteen would sell five-stick packs for $.30 each. Petitioner's Exhibit No. 4. On the other hand, Canteen proposed to sell ten mint packages for $.30, while Livendco would charge a nickel more for packages containing eleven mints. Northside Dormitories Canteen failed to make any comment on or proposal about the four unmarried student dormitories on the north side of the campus not listed as vending machine locations in the specifications. After opening the bids, Mr. Henderson so informed Scott G. Overley, Canteen's assistant general manager, who responded, "That would be no problem," or words to that effect. In a separate conversation, Mr. Henderson also brought this omission to the attention of Dan and Jack Livingston of Livendco. Livendco offered to install snack machines in each of the northside dormitories in which unmarried students live, but agreed to keep in place there only those machines into which people dropped $100 or more a month. Whether revenues below $100 per month would have meant a machine was operating at a loss was not established by the evidence. References Mr. Henderson never telephoned the references Livendco listed, because he knew Livendco, the largest company of its type in the southeastern United S ates, to be "a first class operation." Livendco has had the UWF vending machine contract at UWF for the last 19 years, and Mr. Henderson was aware that Livendco's service had been exemplary. Dan Livingston complained at hearing that UWF's failure to telephone Livendco's references (and Pensacola Tom's Sales' references) was prejudicial because, he said, Livendco and Pensacola Tom's Sales had listed as references customers who had switched to them on account of dissatisfaction with Livendco. Over a two-day period, Mr. Henderson spoke to the persons Canteen had listed as references, representatives of Champion International, Armstrong World Industries, Sacred Heart Hospital, The Russell Corporation, The Lewis Bear Company and Aero Technical Services. Everybody gave good reports. Armstrong World Industries had six clusters with four or five of Canteen's vending machines in each. Canteen stationed a serviceman at Armstrong World Industries eight hours a day, as it proposed to do at UWF. Aero Technical Services had dealt with Canteen for two years. Their plant, which has nine of Canteen's machines, is open 24 hours a day, seven days a week. Ralph Fisk of The Lewis Bear Company, where Canteen had installed seven to ten machines, spoke approvingly not only of the vending machine service but also of the meals Canteen served there twice weekly. Mr. Fisk recommended Canteen highly. At hearing, however, Lewis Bear, Jr. testified on Livendco's behalf. He reported that, on one occasion, hot food was not served on one of the customary days of the week, but this was on Memorial Day and notice had been posted in advance, in keeping with Canteen's agreement. Although The Lewis Bear Company contract only called for the machines to be refilled once a day, Canteen undertook trips to refill them twice daily at the request of an employees' committee. After a while, Canteen stopped making the second trip each day; sales did not justify it, in Canteen's employees' opinion: of 400 items in each machine, only 50 a day sold. At the renewed request of The Lewis Bear Company employees, however, Canteen has recently resumed making a second trip each day. Personnel at Sacred Heart Hospital where approximately nine Canteen machines had been installed said Canteen paid commissions promptly. Canteen had some six machines at Champion International, and only one or two at the Russell Corporation facility, but more were contemplated for Russell's new plant. Like Canteen, Pensacola Tom's Sales was unable to list three references with as many machines as UWF had in place. Mr. Henderson visited the headquarters both of Livendco, where he found some 20 employees, and of Canteen, where seven or eight people were at work. He satisfied himself that either could perform the contract, and the evidence adduced at hearing convincingly established this fact. After discussing the bids with UWF's vice-president for administrative affairs, John G. Martin, Mr. Henderson advised the bidders on July 14, 1986, of UWF's intention to contract with Hygeia Coca-Cola bottling Company and with Canteen. Mr. Henderson's testimony that, in evaluating the bids, he ignored the remark Mr. Overley made when told about Canteen's failure to address the dormitory locations on the north side of the campus, was not contradicted. At the Livingstons' request, Mr. Henderson arranged a meeting between them and Mr. Martin, after UWF had decided to award the contract to Canteen. At this meeting, Dan Livingston told Mr. Martin he thought Canteen would do a good job for UWF. On August 5, 1986, long after UWF had announced its decision, Mr. Martin made a list he entitled "Significant Aspects of the University's Recent Vending/Concession Bid." Petitioner's Exhibit No. 7. Inadvertently, this document was not furnished to petitioner's counsel until the hearing. It contains a reference to promotional techniques Canteen proposed at an unspecified time, in discussions described as "not part of bid requirements." Petitioner's Exhibit No. 7. Other William H. Bonifay testified on deposition that the Recreational Association of Air Products & Chemicals Employees he heads had substituted Pensacola Tom's Sales for Canteen because of "displeas[ure] with...[Canteen's] service." At p.6. When asked to name specific deficiencies in Canteen's service, he reported, "Nothing particularly noteworthy.... [A]ny time we asked Canteen to perform a function, they did, but it seemed...we were spending much of our time asking.... At p.7. This was a major contract, involving some 40 machines. A little over three years ago when Linda Stacks began as an inventory clerk in a Gulf Power Company warehouse, she began purchasing food from a vending machine on the premises. At this location was a single machine, which belonged to Canteen, and contained stale chips and crackers. Some of the chips and some of the candy were out of date. Chewing gum and mints seemed never to be replenished. Ms. Stacks complained to the man who occasionally restocked the machine, and also telephoned Canteen's offices to complain. She was relieved some three months back, when Canteen removed its machine and Livendco replaced it with one of its machines. Things have been better since. Taste Test In response to complaints from members of the public, Gulf Power Company changed its policy of allowing construction workers to drive the power company's trucks to restaurants for coffee on their breaks. A member of the public driving by and seeing a power company truck parked outside a restaurant might not realize, seeing the same truck parked outside the same restaurant several hours later, that different employees were taking a coffee break. Gulf Power's Charles Bobe had charge of making coffee available to the men on site, once they were forbidden to leave the job to obtain it. He decided a vending machine should be installed, but felt the men should choose between one of Canteen's machines and one of Livendco's machines, and asked both companies to install machines. The test did not go off without incident: both machines broke down, but both were repaired promptly. A majority of the men at Gulf Power voted in favor of installing the Livendco machine permanently. The water in coffee vending machines should be hotter than 180 degrees F. but not as hot as 212 degrees F. If the water is not hot enough, flavor and aroma suffer. If the water boils, oil from the coffee cakes on the machinery, and affects the taste adversely. It is more difficult to keep coffee vending machines clean than just about any other vending machine, except machines vending milk. As far as the evidence showed, however, the Livendco machine's victory (by an undisclosed margin) was not attributable to uncleanliness or any other problem with Canteen's machine. At least as likely an explanation is the different blends of coffee used in the different machines. Canteen was told to use Hill & Brooks coffee in its machine, and did so. Livendco used Maxwell House. The supplementary schedule referenced in UWF's specifications calls for Chase & Sanborn coffee.
Recommendation It is, accordingly, RECOMMENDED: That UWF award the contract for food and drink vending machines, other than canned drink vending machines, to Canteen. DONE and ENTERED this 18th day of September, 1986 in Tallahassee, 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 18th day of September, 1986. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-2888BID Petitioner's proposed findings of fact Nos. 1, 2, 3, 4, 5, 7, 12 and 13 have been adopted, in substance, insofar as material. Petitioner's proposed finding of fact No. 6 is slightly inaccurate. Although UWF had 64 machines in place it (apparently inadvertently) failed to list one or two of them. On the other side of the ledger can be counted the northside dormitories not already having machines. Petitioner's proposed finding of fact No. 8 has been adopted, except for the last sentence, which is rejected as having no support in the evidence. Petitioner's proposed finding of fact No. 9 has been adopted, in substance, except that the numbers of machines serviced may be slightly overstated. Petitioner's proposed finding of fact No. 10 has been adopted, in substance, except that sixty-four ("six-four" as written) is not precisely accurate, see ruling on petitioner's proposed finding No. 6, and Mr. Henderson also testified at hearing that no reference came closer than 30-some machines to having as many as UWF. Petitioner's proposed finding of fact No. 11 has been adopted, in substance, except that thirty should need "no more than thirty." Petitioner's proposed finding of fact No. 14 relates to the Martin memorandum, prepared about a month after UWF announced its intention to award Livendco the contract. It has been adopted in substance, except for the final sentence. It is not clear what discussions the memorandum refers to, or when or in what context they occurred. Petitioner's proposed finding of fact No. 15 is of questionable materiality but these matters are treated in the findings of fact under the heading "Other." Respondent's proposed findings of fact A, B, C, D, E, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, W and X have been adopted, in substance, insofar as material. Respondent's proposed finding of fact F has been adopted, in substance, insofar as material, except that, as to F.3., the evidence was that Tom's Pensacola Sales did not have three local references with as many machines as UWF had. Intervenor's proposed findings of fact have been adopted, in substance, in their entirety, although the $100 figure in intervenor's proposed finding No. 4 is approximate, and conservatively assumes historical revenues. COPIES FURNISHED: Charles C. Sherrill, Esquire 435 East Government Street Pensacola, Florida 32581 Stephen B. Shell, Esquire SHELL, FLEMING, DAVIS & MENGE Seventh Floor, Seville Tower 226 South Palafox Place Pensacola, Florida 32598 Sam A. Viviano, Esquire LEVIN, WARFIELD, MIDDLEBROOKS, MABIE, THOMAS, MAYES & MITCHELL, P.A. 226 South Palafox Street Pensacola, Florida 32598 Dr. James A. Robinson President University of West Florida Pensacola, Florida 32514
