The Issue Whether the Petitioner, Sheila A. Cunningham, was subject to an unlawful employment practice by Respondent, Florida Credit Union, on account of her race or due to retaliation for her opposition to an unlawful employment practice in violation of section 760.10, Florida Statutes.
Findings Of Fact Petitioner, who was at all times relevant to this matter an employee of Respondent, is African-American. There was no direct testimony as to the number of persons employed by Respondent. However, given the testimony describing a large financial institution with multiple departments, including a data scanning department and a call center, there is sufficient competent, substantial evidence to establish an inference that Respondent employs more than 15 full-time employees at any given time. Petitioner was first hired by Respondent on November 20, 2007. On February 2, 2008, she was transferred to the position of Courtesy Pay Credit Advisor (CPCA), a position held until her termination on March 21, 2014. From 2012 through the time of her termination, Jennifer Perez was Petitioner’s direct supervisor. Ms. Perez reported to Mr. Colson, who supervised the credit advisor department. Over the years, Petitioner received a number of certificates and awards for good performance in her position. CPCAs are responsible for collections on delinquent accounts of members by bringing the account to a positive balance within 60 days of delinquency. If a credit union member’s account is delinquent for more than 60 days, it must be written off, resulting in a loss to Respondent. Failure to timely write-off a negative account can subject Respondent to fines and negative audit ratings. A common way of bringing an account current is to arrange a loan with Respondent to pay the delinquent balance. Loan types include a “bounce-free” loan and a “work-out loan.” Both are designed to allow for payment of the negative account in installment payments. The bounce-free loan has only the negative account balance involved, while the work-out loan combines the negative balance with another existing loan. CPCAs receive additional compensation for such loans, known as “incentives,” of $10 to $15, though the record suggests that a dispute over an incentive of $40 was a triggering cause of the adverse employment action in this case. CPCAs are also responsible for “packing” loans, which includes taking the loan paperwork to the optical department to input and image the documents into Respondent’s system. The optical department periodically provides reports on loans for which documentation has not been submitted for input and imaging. Petitioner testified credibly that the optical department would occasionally neglect to scan loans that were submitted. However, there was no evidence to suggest that to be a frequent or pervasive problem. Respondent routinely employs one or two CPCAs at any given time. The CPCAs are assigned a “queue,” which is an alphabetical assignment of member accounts. The evidence suggests that Petitioner served as the CPCA for all delinquent member accounts for a period of almost one year, a practice that ended when Vikki Martello was hired as a CPCA on February 27, 2012. Upon her hiring, Ms. Martello was assigned the accounts of members with last names beginning with the letters A through K, and Petitioner was assigned the accounts of members with last names beginning with the letters L through Z. Ms. Martello was transferred to another position on July 11, 2013. Jennifer Munyan was hired as a CPCA on May 20, 2013, and was assigned the A through K queue. Since Petitioner’s termination, Ms. Munyan has handled all delinquent accounts. Petitioner mentioned several incidents over the course of her employment that she believed to be evidence of her poor treatment by Respondent. These incidents appear to have occurred more than one year before Petitioner filed her employment complaint of discrimination. They are cited here for purposes of background. Petitioner testified that starting in 2010 or 2011, Respondent began to hire younger credit advisors on the basis of their friendship with management. The new employees engaged in childish activities such as throwing paper clips and blowing bubbles. Petitioner indicated that they were “written up” for those activities. There was no suggestion that either the hiring or the write-ups were based on race. For a period of time, Petitioner was assigned what she believed to be a disproportionate share of holiday weekend shifts. Mr. Colson “corrected that and then that was okay.” There was no suggestion that the issues with scheduling were based on race. Shortly after Ms. Martello was hired on February 27, 2012, she was asked to accompany Mr. Colson and Ms. Perez to a branch office to train employees. Petitioner felt “that was not right,” and that she was being excluded from performing certain job tasks. She testified that Respondent’s assignment of training and other duties to persons other than herself led to a sympathetic nick-name of “invisible credit advisor.” Petitioner admitted that, in her opinion, Ms. Martello was an excellent employee. Mr. Colson testified credibly that Petitioner was not asked to assist in the new hire training since she was already behind on managing her accounts, and that “[t]here’s no compensation or award or anything for training another employee, it's just additional work.” There was no suggestion that the decision to have Ms. Martello assist with training was based on race. Petitioner alleged that despite her requests, she was not allowed to shadow other employees, particularly in the call center, so that she could learn the responsibilities of the member service representative position. She testified that in response to her requests, Ms. Perez would say “okay, we'll see about it, but nothing never happened. And I asked like three or four times and it was always we'll see about it.” Petitioner did not claim in her testimony that she was denied these opportunities because of her race. Petitioner generally claimed she was denied promotional opportunities because she was not allowed to train as a back-up. However, she failed to present any evidence of an open and available position for which she had applied, or for which she was denied. Furthermore, there was no suggestion that race played a role in any such denial. Respondent’s employees are informed of work performance issues in several ways, including informal discussions, e-mail communication, individual or group meetings, coaching reports, and annual evaluations. On March 19, 2012, Petitioner received her annual performance review. Although Respondent was complementary of Petitioner’s improvements in her work, and spoke favorably of her interpersonal relationships and work ethic, the review noted a number of “improvement opportunities and development areas” to be implemented over the course of the following year. Deficiencies in job performance included Petitioner’s practice of making initial contact with a delinquent member by letter, rather than the more effective practice of a phone call; the failure to provide sufficiently descriptive account notations; the failure to “charge off” loans correctly resulting in errors for others to correct; the failure to close checking accounts after workout options or loans were complete resulting in further delinquencies; and the failure to set up loan distributions correctly, resulting in unwarranted loan delinquencies and resultant customer complaints. The performance review also cited issues with Petitioner’s negative accounts extending beyond the required time frame, which was noted in Respondent’s quarterly audit report. The deficiencies noted in the performance review resulted in higher than normal charge-offs, and losses to Respondent. Petitioner improved her performance in some areas, but only for short periods of time. Mr. Colson did not issue Petitioner any coaching reports in 2012 because he believed that Petitioner’s mistakes were not intentional, that she had a positive attitude, that she had no attendance issues, and that “she seemed to like her job a lot.” It was Mr. Colson’s belief that with additional training and a cooperative approach, Petitioner’s performance issues could be corrected. On February 27, 2013, Petitioner received her next annual performance review. Petitioner was again complemented on her interaction with members, her teamwork, and her general positive work ethic. It was noted that Petitioner had responded well to coaching such that she rarely made mistakes in setting up automatic loan payments. The review noted, however, a number of areas for improvement, including some that had not been resolved from the previous year’s review. Of particular concern was the high number of missing loan packets, some of which were months past due; the failure to meet consecutive deadlines for submitting completed work; and the failure to begin work on accounts in an appropriate and timely manner. Petitioner was again instructed to make initial contact with delinquent members by phone or email, rather than by letter; and was advised of several of her accounts that were charged-off after missing the 60-day deadline. Finally, Petitioner was provided with a printout of the 142 overdrawn checking accounts in her queue, only 40 of which (28 percent), had been worked in the previous 60 days. Although some early-stage overdraft accounts carried a “high self-cure rate,” the low number of accounts worked was deemed unacceptably low. After receiving her 2013 performance review, Petitioner improved in some areas of her performance, but again only for a short period of time. Beginning on July 15, 2013, Petitioner, Ms. Martello (until she completed her transfer from the collections department), and Ms. Munyan (upon her assignment to the collections department) were provided with periodic email updates from Ms. Perez on the number of loan packets for which each was responsible that had not been submitted to the optical department. The updates and related correspondence between Petitioner and Ms. Perez revealed the following: July 15, 2013 Petitioner - 37 missing loan packets Ms. Martello - 4 missing loan packets July 19, 2013 Petitioner - 36 missing loan packets Ms. Martello - 6 missing loan packets July 30, 2013 Petitioner - 34 missing loan packets Ms. Martello - 5 missing loan packets August 5, 2013 Petitioner - 29 missing loan packets Ms. Martello - 2 missing loan packets Ms. Munyan - 1 missing loan packet August 14, 2013 Petitioner - 31 missing loan packets Ms. Munyan - 2 missing loan packets August 19, 2013 Petitioner - 38 missing loan packets Ms. Munyan - 5 missing loan packets August 27, 2013 Petitioner - 42 missing loan packets Ms. Munyan - 4 missing loan packets September 3, 2013 Petitioner - 38 missing loan packets Ms. Munyan - 5 missing loan packets September 10, 2013 Petitioner - 42 missing loan packets Ms. Munyan - 5 missing loan packets September 16, 2013 Petitioner - 32 missing loan packets Ms. Munyan - 4 missing loan packets On September 18, 2013, Ms. Perez sent an email to Petitioner and Ms. Munyan advising them that credit union auditors were scheduled to arrive on September 30, 2013. Thus, Petitioner and Ms. Munyan were instructed to “[m]ake sure all of your loan packets are up to date, so that no one comes to us requesting something that cannot be located.” October 1, 2013 (for loan packets through September 27) Petitioner - 38 missing loan packets Ms. Munyan - 3 missing loan packets The October 1, 2013, update further advised Petitioner and Ms. Munyan that “[t]he auditors are here for the next three weeks. If they review any of these loans, it will be a problem that we do not have them scanned yet and if we are missing documents. Please get these turned in this week!” On October 12, 2013, Petitioner sent Ms. Perez an email stating that “I worked on some loan packets on 10/12. Please don’t send email until I turn my loan packets in on 10/16.” October 25, 2013 Petitioner - 20 missing loan packets Ms. Munyan - 7 missing loan packets November 4, 2013 Petitioner - 28 missing loan packets Ms. Munyan - 4 missing loan packets November 12, 2013 Petitioner - 33 missing loan packets Ms. Munyan - 5 missing loan packets On November 15, 2013, Petitioner sent Ms. Perez an email stating that “Optical have some loan packets that were turned in today, please don’t send out list until after 11/18/13.” November 22, 2013 Petitioner - 35 missing loan packets Ms. Munyan - 7 missing loan packets December 11, 2013 Petitioner - 41 missing loan packets Ms. Munyan - 1 missing loan packet December 18, 2013 Petitioner - 32 missing loan packets Ms. Munyan - 2 missing loan packets On October 9, 2013, Mr. Colson met with Petitioner and Ms. Munyan to discuss the results of an attorney audit that was critical of several collections practices. In particular, too many accounts were not being worked until the later stage of delinquency; too much time was allowed to elapse between contacts with the members; and workflow notations were not properly completed. A spreadsheet provided during the October 9, 2013, meeting revealed that Petitioner had 92 accounts in her queue, 57 of which had never been worked. Ms. Munyan had 90 accounts in her queue, 25 of which had never been worked. In November of 2013, Petitioner spoke with Ms. Perez regarding an incident in which Petitioner alleged that Ms. Munyan claimed one of her incentive credits. Ms. Perez advised Petitioner to come back to her if it occurred again. Ms. Perez discussed the incentive issue with Mr. Colson. They determined that, due to a high volume of negative accounts anticipated over the upcoming holidays, and in recognition of the priority on not missing an opportunity to resolve negative accounts, a policy for incentives when a CPCA had to handle incoming calls and loan requests from members who were not in the CPCA’s queue was warranted. On November 19, 2013, Ms. Perez sent an e-mail to Petitioner and Ms. Munyan setting out the policy for handling calls when the other CPCA was not available. Outgoing calls and loan initiation were limited to customers within the CPCA’s queue. However, if a CPCA was not in the office or was unavailable to handle a customer request, the other CPCA was instructed to accept incoming calls from members not in their queue. The CPCA who first entered notes of a customer contact prior to a loan being booked was to receive the incentive. On December 9, 2013, Ms. Munyan received a communication from a member with a negative account, entered the first notes of contact with the member into the workflow history, and sent loan paperwork for a bounce-free loan to the member. On December 10, 2013, Petitioner spoke with the customer and took additional application information over the phone. Later that same day, Petitioner went to Mr. Colson to approve a refinance loan for the customer. Mr. Colson approved Petitioner to proceed with the refinance loan based on the customer’s income, but did not know at the time that Ms. Munyan had already started the loan process. Since Ms. Munyan made the first contact with the customer, the incentive was credited to Ms. Munyan. Petitioner proceeded to make several entries on the workflow history asserting her claim to the incentive. Petitioner apparently discussed the matter within the office, leading to her testimony that “[t]he department was upset about it because I showed it to them.” In December 2013, having been made aware of the workflow history comments regarding the disputed incentive; having received complaints regarding Petitioner from the manager of Respondent’s contact center; and having continuing issues with Petitioner’s failure to submit loan documents to the optical department, Mr. Colson prepared a series of coaching reports to individually address the issues. It was decided to issue separate coaching reports for each issue of concern, rather than a single lengthy report, in order to keep the issues separate. Respondent has previously issued multiple coaching reports to employees under comparable circumstances. On December 20, 2013, Petitioner was called into a meeting with Mr. Colson. She thought the meeting was to discuss the disputed incentive. Instead, she was presented with the coaching reports. The first coaching report was issued for Petitioner’s notations into the workflow system related to her intent to claim the disputed incentive credit. Petitioner had previously received training on the information to be entered in the workflow system. During the training sessions, which were conducted periodically, and which included the distribution of printed materials, it was stressed that the workflow notes should not be editorial or contain side comments. Mr. Colson explained that, in the event of a legal dispute with a member regarding their account, the collection record, including the notations entered into the workflow system, would be made part of a court record. As applied to Petitioner’s notations, Mr. Colson was concerned about having to testify about notations in the collection record regarding incentives or commissions for working on a work-out request. Petitioner alleged that Ms. Martello and other unidentified credit advisors made similar notations in the workflow system without being written up, but provided no evidence to support her assertion. Mr. Colson knew of no other instance of a CPCA making notations in the workflow system related to an incentive dispute or other internal employee dispute. Mr. Colson believed that the notations made by Petitioner regarding the incentive dispute were not pertinent to the collection record, thus violating Respondent’s policy and warranting the issuance of the coaching report. Petitioner signed the first coaching report, with the comment that “I thought that I was doing the right thing on this acct.” The second coaching report addressed Petitioner’s act of taking a fee refund voucher to Respondent’s contact center department for approval. The contact center has staff on duty beyond Respondent’s normal 8:30 a.m. to 5:00 p.m. business hours. The fee refund had to be done on November 25, 2013, since that was the 60th day of the negative account, after which the account would have to be written off. The fee refund was for an amount that exceeded Petitioner’s approval authority. Despite the time frame involved, Petitioner did not get the fee refund voucher approved by the clerk of the collections department, which would be the normal course, before the 5:00 p.m. close of business. During the December 20, 2013, meeting, Mr. Colson discussed the practice of taking vouchers to the call center for processing after 5:00 p.m. Mr. Colson had been approached by the assistant vice president of the contact center regarding Petitioner’s multiple visits after 5:00 p.m. to his department “to have transactions done, fees refunded, things of that nature on members' accounts.” As a result, call center employees were being pulled away from their normal tasks to do transactions that were not a normal function of their job. Petitioner alleged that other credit advisors went to the call center to have such transactions processed, including Ms. Martello, Melonice Lindsey, and Howard Miller, but provided no evidence to support her assertion. Mr. Colson had no knowledge of other credit advisors who engaged in this activity, or any other improprieties regarding the processing of fee refunds. The second coaching report addressed additional issues related to the November 25, 2013, fee refund transaction, including the fact that Petitioner did not work on the sixty-day negative account when she arrived to work that morning, and that she did not enter any notation in the workflow history regarding the fee refund. Mr. Colson believed that the issues regarding the fee refund transaction warranted the issuance of the coaching report. Petitioner signed the second coaching report, with the comment that “I didn’t do this intentionally. I forgot to get voucher back from Katie to give to [Mr. Colson] to sign.” The third coaching report addressed the ongoing problem of Petitioner’s failure to provide loan documentation to the optical department for input and scanning, the details of which are set forth in paragraph 22 above. Petitioner signed the report with the comment that “[s]ome of these loans have been turned into optical. I will review this matter.” Petitioner alleged that other employees had fallen behind on submitting paperwork, but were not written up or terminated. Petitioner did not identify, by name or race, any of the allegedly comparable employees, or establish that they had a comparable history of failing to submit loan documentation. The only evidence adduced at the hearing established that Ms. Martello and Ms. Munyan were not comparable to Petitioner in the number or frequency of late-submitted loan packets. Petitioner stated that she had previously advised Ms. Perez of her intent to work on Saturday, December 21, 2013, to catch up on her loan paperwork. Mr. Colson was not aware of Petitioner’s intent to do so but, given the length of time that the problem continued to exist, would still have issued the coaching report to Petitioner. At some point after January 2, 2014, during Mr. Colson’s daily review of compliance reports, he noted an account that was over 60 days, requiring that it be written off. The account was assigned to Petitioner, and Mr. Colson saw from the workflow history that Petitioner did not begin work on the account until it was 58 days past due. Working her accounts earlier in the delinquency stage had been previously addressed with Petitioner. On January 6, 2014, Petitioner was given a coaching report and placed on a 60-day probation for deficient work performance related to the written-off account. Petitioner signed the January 6, 2014, coaching report with the comment that “voucher was paperclip to another voucher by mistake. I usually check these daily.” Petitioner testified that other employees failed to timely charge-off accounts but were not counseled, but provided no evidence to support her assertion. The only comparator for whom evidence was received was Khrissy Adams, a Caucasian woman, who was given a coaching report and placed on a 30-day probation for failing to timely write-off an account. There was no evidence of Ms. Adams having received previous coaching reports so as to warrant a lengthier period of probation, as was given to Petitioner. As part of the process established after the December 20, 2013, meeting and coaching reports, Petitioner was to submit her loan packets to either Ms. Perez or Mr. Colson for review before they were sent to be scanned. That review revealed that a large number of the loan packets contained significant errors in the consumer lending plan, which is the contract a member signs to obtain a loan. Many of the consumer lending plans had missing signatures, and some packets had no consumer lending plan at all. Furthermore, Petitioner indicated that some members elected to purchase loan insurance when the member had, in fact, declined insurance, resulting in unapproved charges to a member. The errors noted by Respondent were serious, potentially resulting in the loan contracts being invalid and unenforceable. The errors could have been violative of Regulation Z, which governs fair lending practices and, if there were a sufficient number of instances, resulted in a class action lawsuit against Respondent, exposing it to considerable cost. Due to the ongoing performance issues, as well as the severity of the issues related to Petitioner’s completed loan packets, the decision was made that termination of Petitioner’s employment was appropriate. Petitioner was thereafter terminated from employment on March 21, 2014. Petitioner identified no instance of any racially- disparaging comments directed at herself or any other employee by anyone affiliated with Respondent. There was no non-hearsay evidence of any employee outside of Petitioner’s protected class who engaged in conduct similar to that of Petitioner, but without consequence, upon which to support a finding that the employee was treated more favorably. Mr. Colson testified credibly that Petitioner’s race had no bearing on the decision to terminate her employment. Rather, Mr. Colson testified convincingly that the decision was based solely on Petitioner’s continuing and increasingly poor job performance. Mr. Colson felt Petitioner’s poor performance was not due to a lack of trying on Petitioner’s part; it was simply the result of a lack of ability on her part. Petitioner asserted that she was written up, placed on probation, and subsequently terminated from employment in retaliation for complaining that Ms. Munyan improperly claimed her incentive. In that regard, she testified that: I know that by me going to management . . . it really started all this, I think, because I’m thinking to myself, if I would have just kept my mouth shut, maybe I would have had my job, but other employees have went to Mr. Colson before with problems like that . . . . But my thing is, after I went to management I get written up out of retaliation. I got blind-sided. I didn’t know that was going to happen. And, to me, that’s retaliation. Petitioner does not claim that she was denied the incentive credit because or her race. Finally, Petitioner complained that some of her personal belonging were damaged or not returned to her after her employment was terminated, testifying that “[t]hey broke up all of my things and, to me, that was not right. To me, that was discriminative.” Even if there were some evidence that Petitioner’s belongings had been damaged on purpose -- which there was not -- there was no evidence that such damage was the result of racial animus. A review of the entire record of this proceeding reveals not a shred of evidence that any of the employment actions of which Petitioner complains were the result of racial bias or discrimination. The only testimony that can be reasonably read as suggesting some racial bias behind the employment actions at issue are Petitioner’s testimony as follows: and I know that discrimination do exist. I do know that’s a problem all across the board in America . . . [a]nd if I did not feel that I was discriminated against I would never have did all this . . . but my thing is I know there’s favorites at that credit union. I know that certain people get away with things. To me, I was discriminated against, I'm gonna say for the record, because of my race, because if I think that I know within my heart if the tables were turned, if I was white and went to management, I would still had a job because to me it just got blown out of proportion by me going to management. And as everyone can clearly see, it all started from there, because if it wasn't started from there, why would I have gotten written up in first place for my work that happened prior to, you know, that -- you know, that year? So, that's what started that. So my point is, is that if I wouldn't have never said anything, I would have probably still been working there. In the absence of some corroborative evidence, Petitioner’s statements alone cannot provide the support to sustain a charge of racial discrimination. Ultimate Findings of Fact There was no competent, substantial evidence adduced at the hearing to support a finding that the decision to terminate Petitioner from employment was made due to Petitioner’s race. Rather, the decision was based on Petitioner’s performance in her job as reflected in the employee coaching reports. Furthermore, there was no competent, substantial evidence adduced at the hearing that persons who were not African-American were treated differently from Petitioner, or were subject to dissimilar personnel policies and practices. There was no competent, substantial evidence adduced at the hearing to support a finding that the decision to terminate Petitioner from employment was made in retaliation for Petitioner’s opposition to an unlawful employment practice. Rather, to the extent there was some retaliation involved, it was for bringing an internal employee complaint over a disputed incentive to management, a complaint that had no implication of race.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations issue a final order finding that Respondent, Florida Credit Union, did not commit any unlawful employment practice as to Petitioner, Sheila A. Cunningham, and dismissing the Petition for Relief filed in FCHR No. 2014-00645. DONE AND ENTERED this 6th day of May, 2015, in Tallahassee, Leon County, Florida. S E. GARY EARLY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of May, 2015. COPIES FURNISHED: Sheila Annette Cunningham 1835 Northwest 27th Avenue Ocala, Florida 34475 Tammy Scott Barton, Agency Clerk Florida Commission on Human Relations 4075 Esplanade Way, Room 110 Tallahassee, Florida 32399 R. Michelle Tatum, Esquire John E. Duvall, Esquire Ford and Harrison, LLP 225 Water Street, Suite 710 Jacksonville, Florida 32202 (eServed) Cheyanne Costilla, General Counsel Florida Commission on Human Relations 4075 Esplanade Way, Room 110 Tallahassee, Florida 32399
The Issue Whether the Petitioner was required to secure workers' compensation insurance for employees as delineated by Subsection 440.107(2), Florida Statutes (2008), and, if so, whether he did so. If Petitioner was required to provide insurance and did not, this case must also address what penalty for such failure is appropriate.
Findings Of Fact The Department is the state agency responsible for administering and enforcing the statutory requirement that employers secure workers' compensation insurance for the benefit of their employees. § 440.107, Fla. Stat. At all times material to this case, the Department alleged the Petitioner is an "employer" as that term is used within the law. In contrast, the Petitioner has denied being an employer and maintains he was not required to secure workers' compensation insurance for anyone. The Petitioner is from Mexico but is domiciled in Florida. He has been engaged in the business of roofing for approximately twenty years. Roofing is a construction activity under the workers' compensation law. On February 15, 2006, the Department's investigator, Kathleen Petracco, along with an investigator from the Martin County Building Department, Contractor Licensing, made a random stop at 861 SW Bay Pointe Circle, Palm City, Florida. Investigator Petracco observed nine workers performing roofing work at that location. Of the nine workers, only one spoke English well enough to respond directly to inquiries presented by Investigator Petracco. That individual, identified in this record as "Victor," served as the translator for the other workers who spoke Spanish. According to Victor, the lead worker (later known to be Victor Briceno), he and the other eight workers all worked for an individual by the name of “Jesse.” “Jesse” or "Jessie" was later determined to be Jesus Mijares, the Petitioner. Through Victor, Investigator Petracco also interviewed Remigio Lopez, Luis Velasquez, Rubin Hernandez, Antonio Briceno, Jose Velasca, Sebastian Rodriguez and Marco Duran. All of the workers represented that they worked for the Petitioner who paid them $100.00 per day in either cash or by check. Investigator Petracco contacted the Petitioner who informed her that he was asked by “Steve” (later determined to be Steve Thaden) from All American General Construction (All American) to go to the worksite with a crew to tear off a roof. At that time the Petitioner admitted that the workers on the site were his employees whom he paid $100 per day in either cash or by check. Joe Jameson is one of the owners of All American. The company has been in busy since Hurricane Andrew struck Florida. Mr. Jameson acknowledged that Steve Thaden (his nephew) had been employed by the company but claimed that Mr. Thaden was not authorized to hire the Petitioner or others to perform work on jobsites. There is no evidence that the Petitioner and the nine men at the jobsite in question were employees of All American on the date Inspector Petracco visited the site. An individual may be exempt from workers’ compensation benefits. To be exempt, an application must be filed and the procedures of the law must be met. None of the nine men on the jobsite were exempt under the law. The Department maintains a database (the Coverage and Compliance Automated System or CCAS) of all workers’ compensation exemptions in the State of Florida. Inspector Petracco found a construction exemption for Jesus Mijares through the Paul E. Hahn Corporation, with an effective period of February 28, 2004, through February 27, 2006. 11. Sections 440.107(3) and 440.107(7)(a), Florida Statutes, authorize the Department to issue stop work orders to employers unable to provide proof of workers’ compensation coverage. Failure to provide such proof is deemed “an immediate serious danger to public health, safety, or welfare. . . ,” and the Department has no discretion in issuing a stop-work order. See § 440.107(7)(a), Fla. Stat. Prior to issuing a stop-work order, the Department’s investigator must determine: the identity of the employer; whether the employer has secured the payment of workers’ compensation for the workers on a job site, either through a policy or employee leasing; the type of work being performed by the workers; and the type of remuneration (for example, check or cash). In this case, Investigator Petracco accepted the representations of the Petitioner and the nine workers at the site. Accordingly, Investigator Petracco determined that the Petitioner had employees operating at a job site for whom he had failed to secure the payment of workers’ compensation insurance. Based upon this determination, on February 15, 2006, the Department issued to, and personally served on Petitioner, a stop-work order and order of penalty assessment for failing to obtain coverage that meets the requirements of Chapter 440, Florida Statute, and the Insurance Code, Chapter 726, Florida Statutes (2006). Also at that time, Investigator Petracco issued a Request for Production of Business Records for Penalty Assessment Calculation (Records Request) to Petitioner. The Records Request required Petitioner to produce business records for a period of three years, from February 15, 2003, through February 15, 2006. Employers working on job sites in Florida are required to keep business records that enable the Department to determine whether the employer is in compliance with the workers' compensation law. At the time the Order was issued, and pursuant to Section 440.107(5), Florida Statutes, the Department had in effect Florida Administrative Code Rule 69L-6.015. The Rule provides, in part: In order for the Department to determine that an employer is in compliance with the provisions of Chapter 440, F.S., every business entity conducting business within the state of Florida shall maintain for the immediately preceding three year period true and accurate records. Such business records shall include original documentation of the following, or copies, when originals are not in the possession of or under the control of the business entity: All workers’ compensation insurance policies of the business entity, and all endorsements, notices of cancellation, nonrenewal, or reinstatement of such policies. * * * Records indicating for every pay period a description of work performed and amount of pay or description of other remuneration paid or owed to each person by the business entity, such as time sheets, time cards, attendance records, earnings records, payroll summaries, payroll journals, ledgers or registers, daily logs or schedules, time and materials listings. All contracts entered into with a professional employer organization (PEO) or employee leasing company, temporary labor company, payroll or business record keeping company. If such services are not pursuant to a written contract, written documentation including the name, business address, telephone number, and FEIN or social security number of all principals if an FEIN is not held, of each such PEO, temporary labor company, payroll or business record keeping company; and For every contract with a PEO: a payroll ledger for each pay period during the contract period identifying each worker by name, address, home telephone number, and social security number or documentation showing that the worker was eligible for employment in the United States during the contract for his/her services, and a description of work performed during each payperiod by each worker, and the amount paid each pay period to each worker. A business entity may maintain such records or contract for their maintenance by the PEO to which the records pertain. * * * All check ledgers and bank statements for checking, savings, credit union, or any other bank accounts established by the business entity or on its behalf; and All federal income tax forms prepared by or on behalf of the business and all State of Florida, Department of Unemployment Compensation UCT-6 forms and any other forms or reports prepared by the business or on its behalf for filing with the Florida Department of Unemployment Compensation. The Petitioner failed to provide any of the requested records, including his federal tax returns. The Petitioner failed to provide a credible explanation as to why he did not provide the records requested. Further, the Petitioner's self- serving assertions at the hearing that the nine men were not his employees has not been deemed credible. It is undisputed that nine workers were performing a roofing construction service at the jobsite. They were dispatched to the site by the Petitioner, paid a daily wage by the Petitioner, and were accountable to the Petitioner for the quality of their work performance. When an employer fails to provide requested business records that the statute requires it to maintain and to make those records available to the Department, the Respondent may impute that employer’s payroll using the statewide average weekly wage as defined in Section 440.12(2), Florida Statutes, multiplied by a factor of l.5. See § 440.107(7)(e), Fla. Stat., and Fla. Admin. Code R. 69L-6.028. Based upon the foregoing, the Department imputed the gross payroll for the entire period for which the requested business records were not produced. By imputing the gross payroll of the employees utilizing the average weekly wage in effect at the time the stop- work order was issued, the Department calculated a penalty for the time period of October 1, 2003, through February 15, 2006. The average weekly wage was $683.00 in 2006. Investigator Petracco assigned a class code to the type of work performed by Petitioner utilizing the SCOPES Manual, multiplied the class code’s assigned approved manual rate by the imputed gross payroll per $100.00, and then multiplied all by 1.5. She then utilized the imputed payroll for the same number of employees for each of the years assessed pursuant to Florida Administrative Code Rule 69L-6.028(2). The Amended Order was issued and assessed a penalty of $635,727.60. That Amended Order was served on Petitioner by certified mail on August 3, 2006. Investigator Petracco acknowledged that the approved manual rate for class codes may fluctuate from year to year and the penalty worksheet reflected any such fluctuations for the computations she performed. Additionally, Investigator Petracco did not include the Petitioner on the penalty worksheet, and did not factor him into the penalty calculation because he possessed a valid workers’ compensation exemption for the penalty period. Later, after further reflection on the matter, Investigator Petracco recalculated the penalty assessment. This decision was based, in part, upon Investigator Petracco giving the Petitioner the benefit of the doubt in accepting the assertions that the employees were paid at a rate of $100 per day and by going back only to January 1, 2005. The Department relied on these assertions and thus recalculated the penalty to the reduced amount of $236,209.79. Investigator Petracco issued the Second Amended Order which was served via a Motion to Amend Order of Penalty Assessment. The Motion to Amend Order of Penalty Assessment was granted by order on February 11, 2008. Investigator Petracco also utilized business records that were subsequently provided by Petitioner’s counsel in response to the prior records request. In so doing, Jesus Mijares was included in the penalty for the period of May 15, 2003, through January 23, 2004, for which he was paid remuneration (in the form of checks written to him), and during which he did not have a current, valid workers’ compensation exemption. These checks were made payable directly to Jesus Mijares from the Paul E. Hahn Company. That company did not have a workers’ compensation policy or any coverage for its employees. Although the Petitioner claimed that all of the workers were employees of various companies that he procured them for, there are no copies of checks or any records that would corroborate this assertion. The Petitioner further asserts that he was the victim of the matter. The credible evidence supports the findings that the Petitioner was contacted to perform roofing construction, that he procured the workers to do the work requested, that the workers were paid a daily rate of $100.00 (either in cash or check), and that the Petitioner was responsible for assuring that the roofing work was performed correctly. The Petitioner has been doing roofing for 20 years. Presumably, he performs the work in a satisfactory manner. The Petitioner does not have workers' compensation insurance coverage for any of the men who work for him. Moreover, the men are not covered by any of the general contractors for whom the Petitioner does the work. Finally, the men are not part of an employment pool that covers them. The Petitioner provided copies of checks to the Department from the Paul E. Hahn Company that were provided to other individuals who were employees of that company. The checks were remuneration to the employees only. In contrast, the Petitioner was unable to explain why some employees received checks and he received checks from which he was to pay other workers. Based upon the most credible assessment of the facts, it must be found that the Petitioner operated as a subcontractor. He paid his employees from the check written to him. Based upon the checks written to him by the Paul E. Hahn Company, based on the lack of records provided by the Petitioner, and the past trend of his work history as a roofing subcontractor, together with the statements from the men on the jobsite, it is found that the Petitioner was an employer within the meaning of the workers' compensation law.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a Final Order sustaining the Second Amended Order of Penalty Assessment and imposing a penalty in the amount of $236,209.79 against this Petitioner. DONE AND ENTERED this 15th day of September, 2008, in Tallahassee, Leon County, Florida. J. D. Parrish Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (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 15th day of September 2008. COPIES FURNISHED: Colin M. Roopnarine, Esquire Kristian Dunn, Esquire Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 R. Patrick Beatty, Esquire 32 East Ocean Boulevard Post Office Drawer 2333 Stuart, Florida 34995 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307
The Issue The issue in this case is whether Respondent is guilty of dishonest dealing by trick, scheme or device in any business transaction in violation of Subsection 475.25(1)(b), Florida Statutes (2008),1 and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency responsible for issuing real estate sales associate licenses and monitoring compliance with all statutes, rules, and regulations governing such licenses. Respondent was at all times relevant to this proceeding a licensed real estate sales associate in the State of Florida and held License No. 3115665. In March 2006, Respondent was introduced to Willie Belle Lewis (Lewis) by a mutual acquaintance. Lewis was interested in selling her house, and Respondent agreed to work for Lewis in that regard. On March 13, 2006, Lewis and Respondent entered into an Exclusive Right of Sale Listing Agreement (the "Agreement"). Under the Agreement, Respondent was to act as Lewis' sales agent for sale of the house. Pursuant to paragraph 7 of the Agreement, Respondent was to receive a commission of six percent of the purchase price. Respondent initially requested a seven percent commission which was the ordinary and customary amount at that time, but agreed to six percent in deference to Lewis' request (and due to the fact that Lewis had recently lost her grandmother and Respondent empathized with her, having just lost her mother). In one version of the Agreement admitted into evidence, there is a notation that any cooperating real estate agent (presumably a buyer's agent) would receive a commission equal to three percent of the purchase price, i.e., one-half of Respondent's six percent commission. Another version of the Agreement admitted into evidence did not address sharing the commission with a cooperating agent. At some point in time (which was not clearly defined during testimony at final hearing) Lewis and Respondent re-negotiated the amount of Respondent's commission.2 Lewis maintains that the re-negotiated commission was three percent; Respondent says the re-negotiated commission was four percent. Respondent's testimony was more credible on this point. The amount of the new commission was not reduced to writing or indicated on either version of the Agreement. There is no indication, for example, what Respondent's commission would have been if a cooperating agent had been involved. It is highly unlikely that Respondent or any other agent would agree to a two percent commission, i.e., one-half of four percent (or 1.5 percent, one-half of three percent). Once the Agreement was signed, Respondent immediately began efforts to sell the Lewis house. Respondent invited Lewis to her (Respondent's) house and offered Lewis plants and flowers from Respondent's yard. Respondent and Lewis dug up various plants and transferred them to Lewis' yard to generate some "curb appeal," i.e., to dress it up for potential buyers. Within days, a potential buyer was found. A Contract for Sale and Purchase (the "Contract") was entered into between Lewis and Mrs. Bibi Khan. Respondent was listed as the seller's agent; no agent was indicated for the buyer. In fact, Respondent agreed to act as buyer's agent as well, performing services as both an agent and a broker. Again, there were two versions of the sales Contract admitted into evidence. On one version, Respondent's signature included only her first name; on the other it included her first and last name. On one version of the Contract, there appears to be "white-out" on Respondent's signature line. Contained and legible under the whited-out portion of the signature is the phrase "3%." Respondent admits she whited out the three percent figure, but that it was done after the closing occurred. The three percent figure appearing at that place in the Contract is confusing. It only makes sense if that was meant to represent Respondent's portion of a six percent commission split between a buyer's agent and a seller's agent. Respondent explained that she whited out the figure because it was not written in both places it was supposed to be. Rather than going through the process of re-doing the entire Contract and re-distributing it to all pertinent parties, she whited it out in one place. The explanation is plausible. However, it seems an unnecessary action inasmuch as the closing had already occurred. When the parties arrived at closing on April 17, 2006, the closing documents--including the HUD Settlement Statement-- indicated a six percent commission for Respondent (as originally stated on the Agreement). Lewis vehemently objected to the commission, saying that it should be three percent as verbally agreed to by her and Respondent.3 Respondent acquiesced at closing and, in front of witnesses, said the commission should be three percent. She asked that a letter be drafted by the closing agent reflecting a three percent commission. In effect, Respondent re-negotiated her commission at that time. She rues having done so and says she was confused, but she did so nonetheless. The closing was only the third closing Respondent had taken part in since becoming licensed. She was not very experienced with the process and seemed to be thinking she was getting a four percent commission, even when three percent was being discussed.4 It is clear, however, that Respondent did verbally agree to a three percent commission during the closing. The closing agent told Lewis to return on Monday and she would re-calculate the commission and provide Lewis with a final check in the appropriate amount. Meanwhile, Respondent attempted to contact Lewis over the weekend to discuss the discrepancy. Respondent wanted to remind Lewis they had agreed on four percent despite what she said at the closing. All attempts at communication with Lewis over the weekend were futile. When Lewis returned to the closing office on the following Monday, she found the check to still be in error as it reflected a four percent commission instead of a three percent commission. Apparently when Respondent advised the closing agent about her mistake regarding the amount of the commission, Respondent still maintained that the verbal agreement was for four percent. This was contrary to her statements during the closing and is not substantiated by any written documentation. Respondent directed the closing agent to issue a check reflecting a four percent commission, instead of the six percent commission reflected on the Agreement. Lewis ultimately, under protest, accepted her $74,264.92 check reflecting a four percent commission to Respondent. The check contained a shortage of $1,600, if a three percent commission had been applied. Lewis continued to seek repayment of the $1,600 she believed she was entitled to receive. Subsequently, Respondent discussed the entire dispute with her sales team and decided that the disputed amount ($1,600) was not worth fighting about. A check was then sent to Lewis in that amount.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Business and Professional Regulation, Division of Real Estate, imposing a fine of One Thousand Dollars ($1,000) against Respondent, Marian Lemon Coaxum. DONE AND ENTERED this 26th day of November, 2009, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of November, 2009.
Findings Of Fact The Petitioner, Lawrence A. Grolemund, has been in the securities business for over 21 years. Except for two complaints--one in 1986 and a second 1988--he has not been the subject of complaint or investigation by the National Association of Securties Dealers (NASD) or any state. He earned a reputation as a successful securities dealer and, as his career progressed, as manager of securities dealership branch offices. As branch manager, one of Grolemund's primary responsibilities was to insure that his office functioned in compliance with applicable state and federal law, and the rules of the NASD. Due to the reputation Grolemund had earned, the Chairman of the Board of Prudential Bache Securities, Inc., personally recruited Grolemund as a branch manager. After a training period, Grolemund assumed duties at the company's New Orleans office in August, 1982. He did not become a registered options principal for the New Orleans office until December, 1982. For several years before Grolemund's arrival, the company's New Orleans office had been a "problem office." A disproportionate share of securities violations occurred in that office, and management had difficulty controlling the associated persons in the office to achieve compliance. Several branch managers who preceded Grolemund had been disciplined by the NASD for inadequate supervision of the office. Grolemund knew some of the problems--he was hired to try to correct them--but he did not know the extent of the problems he would face when he took over. On August 25, 1986, the District 5 Business Conduct Committee filed a complaint against Howard Hampton, E.F Hutton & Company, Inc., Prudential-Bache Securities, Inc., Grolemund and others. The gist of the complaint is that Hampton committed various violations of the Securities and Exchange Act, SEC rules and NASD rules while an associated person with E.F. Hutton and with Prudential-Bache. Hampton was with E.F. Hutton from February, 1981, through August, 1982, and was with Prudential-Bache in the New Orleans office from August, 1982, through February, 1984. The violations involve Hampton's dealings with clients he brought with him from E.F. Hutton to Prudential-Bache. Most of the violations involve the exercise of discretionary power in the accounts of clients without prior written authorization. Some of the alleged incidents occurred while Hampton was at E.F. Hutton. Some occurred while Hampton was at Prudential-Bache but before Grolemund arrived at the New Orleans office. Some occurred after Grolemund arrived but before he became an options principal for the office. In some cases, the information in the file on which Grolemund had to rely was incorrect. Grolemund fired Hampton in December, 1983. (At the time Hampton was fired, no complaints had yet been leveled against Hampton. In fact, all of the clients who ultimately complained against Hampton went with Hampton when he was fired from Prudential-Bache.) Grolemund also fired some other "unsavory" account executives in the New Orleans office. Grolemund was charged, along with other Prudential-Bache options principals, with failure and neglect to establish, maintain, and/or enforce written procedures which would enable Prudential-Bache to exercise reasonable and proper supervision of Hampton and with failure and neglect to supervise Hampton reasonably and properly. Grolemund was represented in the proceedings before the district committee by in-house counsel for Prudential-Bache. Otherwise, Grolemund did not have independent advice of counsel. Prudential-Bache was involved in other proceedings before the SEC which made it in its best interest to resolve the matters arising out of the New Orleans office. For several months, Prudential- Bache tried to convince Grolemund to settle. In addition, Grolemund was concerned whether the District 5 Business Conduct Committee would fairly consider the complaint against him. As part of his successful management of Prudential-Bache's New Orleans office, he competed directly against other securities dealers in the area, some of which were represented on, or had friends who were on, the Committee. When Grolemund came to New Orleans, there were 16 account executives in the office. Under his term of management, after he fired four to five account executives, including Hampton, the New Orleans office grew from 16 to 36 account executives. In addition, Grolemund opened satellite offices in Shreveport and Lafayette, Louisiana. These offices grew in size to 11 and 9 account executives, respectively. Many of the account executives Grolemund added were recruited away from competitors, and he was concerned that there might be hard feelings against him among the members on the Committee. After spending considerable time weighing all factors, Grolemund agreed on or about November 3, 1987, to settle the Hampton matter on terms that included acceptance of a finding that he was guilty of the allegations against him and acceptance of a censure, a 21-day suspension, a requirement that he re- qualify as a registered options principal, and a $7,500 fine. The settlement was reduced to writing in final form on April 25, 1988. As a result of the 21-day suspension, another options principal at Prudential-Bache was required to sign all options agreements during the suspension. Otherwise, Grolemund's job was the same as before the suspension, and Grolemund continued to receive his full normal compensation from Prudential- Bache. Prudential-Bache paid the fine for Grolemund. Re-qualification was a matter of passing a written examination, which did not present a problem for Grolemund. In agreeing to settle, Grolemund misunderstood that the district committee's action would not be the basis of any other proceedings against him. He also misunderstood that the offer of settlement would resolve all pending matters involving the New Orleans office, including the so-called Keel matters. Contrary to Grolemund's understanding, the NASD filed another complaint against Prudential-Bache and Grolemund on May 9, 1988. This complaint, which had been under investigation during the time the Hampton case was proceeding, involved an account executive named Patrick Keel. Like Hampton, Keel was alleged to have exercised discretionary power in the accounts of clients without prior written authorization. He also was alleged to have recommended unsuitable stock and option investments to two clients and to have falsely reported to Prudential-Bache that some of his clients enjoyed profits from the investments he had recommended and made for them, when in fact they had incurred losses. As with the Hampton matter, Grolemund was accused of having failed to establish, maintain, and enforce written supervisory procedures that would have enabled him to exercise proper supervision of Keel and of having failed to properly supervise Keel. The Keel matter went to hearing before the District 5 Business Conduct Committee on August 24-25, 1989. As to what it called Cause One, the Committee found that Keel engaged in unauthorized and unsuitable options transactions in the account of one customer and that Grolemund had failed to supervise Keel properly in connection with the options transactions. Under Cause Two, the Committee found that Keel made unauthorized and unsuitable stock and options transactions in the account of another customer and that Grolemund had ample early warning that Keel was not handling his options accounts properly. The Committee noted that in October, 1984, the customer had lodged complaints regarding Keel's options trading and that Grolemund had daily conversations with a superior concerning problems with Keel's options accounts. The Committee found that, even if Grolemund did not have the benefit of the early warnings of irregularity, his response to the concerns raised by the customer in her December 10, 1984, telephone conversation was inadequate. The Committee found that, given the customer's refusal to sign the activity letter that Grolemund sent her, it was incumbent upon Grolemund to determine whether the customer understood options, whether options transactions were consistent with her financial situation, and whether she had approved the options transactions before their execution. The Committee found that Grolemund did not compile and review the customer's account documentation, which would have revealed that options trading was inconsistent with her objectives and needs and that the customer was only approved for Level II trading although Keel had executed two Level III transactions. Accordingly, the Committee found that Grolemund had violated Article III, Sections 1 and 27 of the Rules of Fair Practice by failing to supervise Keel properly. Under Cause Three, the Committee found that Keel recommended to a customer (the same customer involved in Cause Two) that she commit 25-30% of her net worth to a Hawaiian real estate private placement tax shelter that was not consistent with the customer's needs and objectives. However, the Committee noted that there was conflicting evidence as to whether Grolemund had reviewed the recommendation in light of the customer's personal financial strategy form. Although it was not Grolemund's job at Prudential-Bache to review suitability determinations with respect to private placements, the Committee expressed the view that Grolemund was in the best position to supervise the recommendations of salesmen and that he could not delegate this responsibility to other departments. Accordingly, the Committee found that Grolemund had violated Article III, Sections 1 and 27 of the Rules of Fair Practice under Cause Three. As to Causes Four through Eleven, the Committee dismissed all but two for insufficient evidence. As for the two that were not dismissed, the Committee found that Keel exercised discretion in the accounts of customers without prior written approval and that Grolemund failed to exercise proper supervision over Keel. The Committee reasoned that, by the time at issue, Grolemund had adequate warning of Keel's exercise of discretion without authority and that Grolemund allowed Keel not only to continue options trading but also allowed Keel to continue using special telephone and "bunching" privileges that, in the Committee's view, "greatly facilitated Keel's exercise of discretion." The Committee dismissed Cause Twelve to the extent that it alleged that Grolemund failed to supervise Keel reasonably with respect to the submittal of inaccurate active account information reports by him. The Committee, in its June 21, 1990, decision, censured Grolemund, barred him from associating with any NASD member in any principal capacity and fined him $4,000. Under the bar, Grolemund would not have been permitted to apply for reinstatement for at least ten years. Based on this decision, and the earlier disposition of the 1986 complaint in the Hampton matter, the Department offered to conditionally grant Grolemund's application, prohibiting Grolemund from acting as a principal, supervisor or manager. When Grolemund refused to accept the conditions, the Department denied the application. Grolemund appealed the Committee decision in the Keel matter to the Board of Governors of the NASD. The appeal was heard on October 11-12, 1990. On appeal, the Board reversed the finding that Keel executed out-of-level options transactions. The Board also noted that the record demonstrates a high degree of direct interaction between Grolemund, Keel, Keel's clients, and Prudential-Bache's operations manager and that the firm's records distribution system may have prevented Grolemund from exercising greater supervision over Keel. Because branch managers did not receive copies of customer information relating to limited partnerships, such as the Maui/Waikiki deal, Grolemund had no opportunity to assess the suitability of Keel's customer for the offering, or to compare the documents that Keel had completed in connection with that deal with other account information regarding the customer. The Board also noted that Grolemund engaged in more-than-adequate follow-up with clients following the receipt of complaints and that the customer may have been less than candid regarding her lack of understanding of the investments that Keel recommended for her account. Nonetheless, the Board believed that Grolemund fell short of the standard of reasonable supervision in that it should have been clear to Grolemund that Keel had not been properly trained and lacked a basic understanding of the practices of the securities industry. The well-documented problems that Keel's options trading caused with respect to customers' margins, and Keel's documented confusion of cash and margin accounts, certainly should have put Grolemund on notice that Keel lacked sufficient training to engage in such risky trading strategies as writing options. The Board also thought Grolemund should have inquired why there was no options agreement on file for one customer until after options trading in her account had ceased. The Board concurred with the Committee that Grolemund fell below the standard of reasonable supervision, and thereby violated Article III, Section 1 and 27 of the Rules of Fair Practice. The Board of Governors affirmed the censure and $4,000 fine against Grolemund. However, in light of the various mitigating factors regarding Grolemund's overall conduct, the Board ruled that barring him as a principal was an excessively harsh penalty. Instead, the Board suspended him from acting in any principal capacity for seven days and required him to requalify by examination in all principal capacities. In July, 1985, long before either the Hampton or the Keel complaint was filed, Prudential-Bache promoted Grolemund to the new Tampa office. When Grolemund took over as branch manager, the Tampa office was only nine months old. Grolemund successfully managed the Tampa office until May, 1990, when he applied for registration as an associated person with Advest, Inc. During Grolemund's time as branch manager, the Tampa office grew to 35 account executives. The evidence proved that no violations occurred in the Tampa office during the almost five years that Grolemund was the branch manager there. Since the Hampton and Keel matters, the securities industry has changed remarkably, in part as a result of the October, 1987, stock market crash. Before the crash, options trading generally was viewed as a conservative investment--a way to participate in the market with limited resources and to provide an additional source of income from a conservative investment. The risks of options trading now are widely recognized, and management generally has become sensitive and responsive to those risks. In addition, the data processing and informations systems now in general use in the industry have given management new and effective tools for supervising the activities of account executives. Some of these systems make it impossible for some of the Hampton and Keel violations to occur today. For example, the systems will not process options trades for which there is no record of prior written authorization in the file. For these reasons, it is not likely that activities such as those in which Hampton and Keel were involved in 1981 through 1984 would go undetected today by a manager of Grolemund's caliber or that, detected, they would go unchecked. Advest, Inc., the securities dealer that wants to associate Grolemund to manage its new Clearwater office, is a respectable securities dealer that places reasonably strong emphasis on compliance with the requirements of the various regulatory agencies under which it must operate. It specializes in relatively safe investments, certainly as compared with the activities of the New Orleans office of Prudential-Bache in the early 1980s. Options trading represents only 14 to 15 percent of Advest's total business nationwide. Less than six percent of the business of its new Clearwater office consists of options trading. Advest's compliance department generates a monthly computer report called a "commission versus equity" run which displays the account name and number, the account executive's number, gross commission generated for the month and year, the number of trades for the month and year to date, the amount of cash and securities in the account, and the value of the account in relationship to the trading on a percentage basis. Some variation of the report is provided to the branch managers, to the division managers, and to the branch group manager, with each higher level of management getting more and more information in the report. An options activity report is produced in the Advest compliance department on a daily basis listing all accounts that traded outside their levels, if any, and any accounts that have a trade executed where the appropriate forms are not on file within the allowed period. Advest compliance sends out active account letters to verify customer satisfaction. If the customer does not respond within ten days, a second letter is sent. If the customer does not respond to the second letter within ten days, the account is restricted from further activity. The Advest compliance department reviews all aspects of the branch offices on an annual audit. Compliance then issues a report to the branch manager, the division manager, and the branch group manager. The computer generated commission report would automatically detect a trade executed by a registered representative not assigned to the account for which the trade is completed and would place an asterisk around the account executive number. The manager would then be contacted by the compliance department and asked to explain the discrepancy. In addition to the ordinary compliance procedures in place at Advest, to address the concerns of the Department and other regulatory agencies, Advest proposes several measures to reduce even further the likelihood of violations in the new Clearwater office to which it will assign Grolemund as branch manager. First, it will limit the number of account executives under Grolemund to 15 or less for the first year. Second, it will require another senior registered options principal to supervise the options trading along with Grolemund for the first year. Third, Advest's branch group manager or another Florida branch manager will personally visit Grolemund's office four times during the first year to monitor compliance; during the second year, either he or another Florida branch manager will personally visit Grolemund's office for this purpose at least twice. Fourth, two annual routine compliance monitoring visits will be made, instead of the usual one visit. Finally, the branch group manager personally will review all new account information from Grolemund's office weekly.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Banking and Finance enter a final order granting Grolemund's application for registration as an associated person with Advest, Inc., subject only to the following conditions: First, that Advest limit the number of account executives under Grolemund to 15 or less for the first year; Second, that Advest require another senior registered options principal to supervise the options trading along with Grolemund for the first year. Third, that Advest's branch group manager or another Florida branch manager will personally visit Grolemund's office four times during the first year to monitor compliance and that, during the second year, either he or another Florida branch manager personally visit Grolemund's office for this purpose at least twice. Fourth, that Advest make two annual routine compliance monitoring visits to Grolemund's office, instead of the usual one visit. Finally, that the branch group manager personally review all new account information from Grolemund's office weekly. RECOMMENDED this 21st day of February, 1991, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 21st day of February, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-5880 To comply with the requirements of Section 120.59(2), Florida Statutes (1989), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. Accepted and incorporated. Rejected in part in that the Department did not consider the order of the Board of Governors of the NASD on appeal from the order of the District 5 Business Conduct Committee on the 1988 "Keel" complaint before giving notice of intent to deny the application. Otherwise, accepted and incorporated. Accepted and incorporated. Rejected in the sense that final action has not yet been taken. As it refers to Department notice of intended action, accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but subordinate and unnecessary. 8.-10. Accepted but subordinate and unnecessary. Rejected as not proven. Also, subordinate and unnecessary. Accepted but subordinate and unnecessary. First sentence, accepted and incorporated. Second sentence, rejected as not proven exactly when the uniform guidedlines went into effect. Rejected as not proven exactly when the uniform guidedlines went into effect. Accepted and incorporated to the extent not subordinate or unnecessary. 16.-17. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but subordinate and unnecessary. Accepted but unnecessary. Rejected as not proven that the system was in operation since 1980. 21.-23. Accepted but subordinate and unnecessary. 24. Accepted and incorporated. 25.-28. Accepted and incorporated. 29. Accepted but subordinate and unnecessary. 30.-36. Accepted and incorporated. Rejected as not proven. Accepted but subordinate and unnecessary. Accepted but subordinate to facts contrary to those found and unnecessary. First clause, accepted; second clause, rejected consistent with the NASD orders. Accepted but subordinate to facts contrary to those found and unnecessary. Accepted but subordinate and unnecessary. 43.-46. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated in the form of the findings of the Board of Governors of the NASD on appeal from the 1988 "Keel" complaint. Accepted but unnecessary. 49.-50. Accepted and incorporated. 51.-52 Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but subordinate and unnecessary. Accepted and incorporated. Accepted but subordinate and unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated. Respondent's Proposed Findings of Fact. 1.-2. Accepted and incorporated. Rejected as conclusion of law and unnecessary. Rejected that the orders were entered in 1986 and 1988; otherwise, accepted and incorporated. 5.-7. Rejected as conclusion of law and unnecessary. 8.-12. Accepted and incorporated to the extent not subordinate or unnecessary. Accepted but unnecessary. Accepted that the Committee characterized its decision in those terms by way of explaining why it was just to differentiate between Prudential-Bache and its representatives, including Grolemund, and E.F. Hutton and its representatives. However, in fact, the various dispositions were agreed by the parties. It is unnecessary to include this finding. 15.-18. Accepted and incorporated. 19. Accepted but unnecessary. 20.-21. Accepted and incorporated. 22. Accepted but unnecessary. COPIES FURNISHED: Edward W. Dougherty, Esquire Mang, Rett & Collette, P.A. 660 East Jefferson Street Tallahassee, Florida 32302 Margaret S. Karniewicz, Esquire Assistant General Counsel Department of Banking and Finance Legal Section The Capitol Tallahassee, Florida 32399-0350 Hon. Gerald Lewis Comptroller The Capitol Tallahassee, Florida 32399-0350 William G. Reeves, Esquire General Counsel Department of Banking and Finance The Capitol Plaza Level, Room 1302 Tallahassee, Florida 32399-0350
The Issue The issue to be resolved in this proceeding concerns whether the Petitioner was discriminated against through an adverse employment decision by the Respondent, because of the Petitioner's age.
Findings Of Fact The Petitioner was hired by the Respondent on or about April 27, 1998, as a salesperson. When the Petitioner was hired he was 77 years of age. He is currently 84 years of age. Apparently the principal reason the Petitioner was hired was because of his substantial business contacts and principal client, which was Winn Dixie Stores, Inc. The Petitioner had sold food, principally seafood, to Winn Dixie for a substantial period of time. The Petitioner worked for a division of the Respondent known as the Great Fish Company. The Great Fish Company began operations in October of 1998. Mr. Carter, the president of Great Fish Company was the Petitioner's supervisor. During his employment with the Respondent, the Petitioner worked from his home. He sold seafood to customers, principally Winn Dixie, for which he was primarily paid on a commission basis. During his term of employment his compensation plan was periodically changed by the Respondent. Some of those changes financially benefited the Petitioner in some years and other changes served to reduce his commission or compensation. During the term of the Petitioner's employment with the Respondent, the Respondent also periodically changed the compensation plans of other employees of the Respondent; some of those changes involved reductions of their compensation plans and some involved increases. This depended upon the sales volume of those individual employees or the revenue situation of the company overall. In or about June of 2003, the Respondent changed the Petitioner's compensation plan. This change did not benefit the Petitioner but represented a reduction in compensation. This change to his compensation plan, however, was based upon legitimate business and financial reasons and was non- discriminatory, because it was based upon a down-turn in business, sales, and revenue for the company. Around the same period of time, the Petitioner advised the Respondent that he believed he was underpaid on earned commissions. Because of this the Respondent performed an audit of the Petitioner's commissions to determine if indeed he had been underpaid. The results of that audit did not establish that the Petitioner had been underpaid but rather that he had been overpaid by approximately $9,000.00 dollars. The audit results were provided to the Petitioner and the Petitioner disputed the results. The Petitioner never complained during his employment to any employees of the Respondent or supervisors suggesting that any employees or supervisors had discriminated against him or retaliated against him because of his age or because of his dispute concerning compensation, during his term of employment. There is no evidence that the Petitioner was singled-out or treated less favorably than other employees, including other employees of different ages, in terms of his compensation or other employment conditions. Indeed, there was no persuasive evidence presented at hearing that the Petitioner was treated less favorably in any way than other employees of the Respondent, regardless of their ages. There apparently came a time after June of 2003 and during 2004 when the Petitioner earned very little or no commissions from the Respondent. His employment was never actually terminated by the Respondent. The Petitioner rather either voluntarily quit his employment sometime prior to the final hearing or his sales opportunities dropped off so that, essentially, he was earning little or no compensation from the Respondent, while working out of his home in accordance with their arrangement. This down-turn in business apparently had a great deal to do with the severe financial circumstances his principal customer, Winn Dixie Stores, Inc., found itself in during this same period of time. In any event, the reduction in the Petitioner's commissions and compensation was not shown to be due to any effort or intent by the Respondent to single him out because of his age and reduce his compensation in some effort to force him to resign or retire. The reduction in his compensation was for the business reason of a decrease in revenues generated by the Petitioner himself or being experienced by the company as a whole, necessitating reduction of not only the Petitioner's but other employee's compensation, as a matter of a prudent business practice by the Respondent.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and argument of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Florida Commission on Human Relations dismissing the Petition for Relief in its entirety. DONE AND ENTERED this 11th day of August, 2004, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of August, 2004. COPIES FURNISHED: Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Wyn Samuel 130 Willow Pond Lane Ponte Vedra Beach, Florida 32082 J. Scott Hudson, Esquire 200 South Orange Avenue, Suite 1220 Orlando, Florida 32801 Robert J. Stovash, Esquire Stovash, Case and Tingley, P.A. SunTrust Center 200 South Orange Avenue, Suite 1220 Orlando, Florida 32801
The Issue The issue for consideration in this hearing is whether the Petitioner, Lee C. Smith, was unlawfully discriminated against by the Respondent, Food Lion, Inc., on the basis of his marital status.
Findings Of Fact At all times in issue, Respondent, Food Lion, Inc., operated its food supermarket, No. 728, in Tampa, Florida. Petitioner, Lee C. Smith, was employed by Respondent as manager. Petitioner was discharged from employment with the Respondent on December 2, 1990. The "constructive advice memo" supporting the discharge indicated the action was being taken because of "dishonesty - fraud - reputation of manager." The background to the charge related that 9 checks, totalling $1,100.00 were cashed by Petitioner's wife and "possibly endorsed or OK'd by Mr. Smith." The memo went on to further state that the decision [to discharge] was based on current evidence "and also failure to maintain mgt. role." The memo further indicated that while in management training, Mr. Smith had a problem with returned checks and "was documented on same." The memo was signed by Mr. Legett and was also signed by the Petitioner on December 5, 1990. Petitioner claims that when he first learned of the check situation, during the period March through June, 1990, when he was a management trainee, on his own initiative and without prompting by anyone in authority, he notified his store manager and assistant manager of the situation and suggested they call in a tel-alert advising all Food Lion stores in the area not to cash any checks for his wife. He was not discharged at that time. He also claims that after he was promoted to manager, his wife again started passing bad checks without his knowledge. When he found out about them, in October and November, 1990, before he was discharged, he paid some of them off. He also instituted another tel-alert through the Dunedin store, where some of the checks had been written, but he did not alert the people in his own store not to cash them. Apparently, Mrs. Smith cashed some checks in Store 728 but only one was approved by Petitioner. An area-wide listing of dishonored checks shows some that were cashed by Mrs. Smith. This listing is sent to each store and probably came to Petitioner's store. Petitioner admits he may have seen it but most of the checks written by Mrs. Smith were approved by the assistant manager. Whenever he saw a check listing with his wife's name on it, he redeemed that check, but the listing he saw was for his store only. He claims not to have seen listings from other stores, but from time to time, the manager of other stores would call him to ask if they could take her checks. He claims always to have said no. None of the checks relied upon by Respondent in the discharge action were admitted in evidence. Petitioner claims that at the time in issue, he had no knowledge his wife was writing the bad checks. During this period, he and his wife were having domestic difficulties. Some of the time they were living together and some of the time they were separated. Even when they were separated, she continued to come into the store for purchases and to cash checks. Petitioner claims that as a result of his discharge by the Respondent he has been damaged in a total amount of between $452,122.55 and $518,122.55, including legal fees. These sums are based on his salary at the time of his discharge, modified by certain assumptions regarding sick pay, bonus, profit sharing and holiday pay. At the time of his discharge, Petitioner was earning $550.00 per week and claims he was due an increase to $610.00 per week. Therefore, he claims, his base salary for December, which he was not paid, would have been $2,440.00. Added to that, he claims is 2 percent for sick pay totalling $572.00, a 2 percent bonus of $572.00, a 15 percent profit sharing pay out of $4,290.00 and holiday pay for 6 days at $110.00 per day, for $660.00. This additional amount totals $6,094.00 which, when added to the base salary claimed due amounts to $8,534.00 for December, 1990, not paid to him because of his termination. His base salary of $610.00 per week for calendar year 1991, would have totaled $31,720.00 and his insurance benefit would have been an additional $1,242.60. This totals $32,962.60. Added to that, he claims are the bonuses, sick pay, profit sharing, profit forfeiture, holiday pay at $122.00 per day for 6 days, and two weeks vacation ($1,220.00) for a subtotal of $9,566.00. When this figure is added to his base for 1991, he claims his total income from Respondent would have been $42,528.60 for the year. However, when his actual earnings from Kash & Karry, with whom he found employment after he was discharged by Respondent, in the amount of $13,941.58 are deducted, his actual loss for calendar year 1991 is, he claims, $28,587.60. Following the same formula, using identical factors but with slightly different amounts for each due to a projected increase in weekly salary, the net loss to Petitioner is claimed to be $19,903.32 for calendar year 1992, and through March 5, 1993, the date of the hearing, his calendar year 1993 loss is claimed to be $6,474.39. The sum total of the yearly losses is $71,109.77 to which Petitioner has added a 1 percent per month interest figure which totals $19,910.73 for the 28 months in issue. The sum of these figures is $91,020.50. To this Petitioner has also added a 4 year loss of projected profit sharing pay outs had he stayed with Food Lion which he estimates at between $30,000.00 to $45,000.00 per year. At $30,000.00 the total would be $120,000 to which Petitioner has added an unexplained $200,000.00. Adding this to the $120,000.00, and the $91,020.50 amounts to $411,020.50 to which Petitioner has added 10 percent legal fees of $41,102.05 for a grand total of $452,122.55. Applying the same calculations to a loss of profit sharing figure of $45,000 per year for 4 years, and the unexplained $200,000.00 addition, with similar 10 percent legal fees and the actual claimed out of pocket loss described above, his claim amounts to $518,122.55. In support of his claim of Food Lion earnings, Petitioner submitted only one pay slip, for the period ending 12/01/90 which showed his regular earnings to be $1,100.00 and special earnings of $650.00 for the period. The evidence he presented is insufficient to support his monetary claim. His earnings at Kash and Karry are not questioned. Petitioner's wife's bad check activity first came to light when he was a manager trainee and he paid those checks off immediately. However, in the latter part of 1990, a loss prevention investigation was initiated into alleged cash shortages and bad checks at Petitioner's store. Mr. Satterfield, the Area Perishable Supervisor was told by the investigator that Petitioner was aware of his wife's passing of bad checks. Mr. Satterfield also talked to other employees. One of these, Mr. Koonce, cashed several checks for Mrs. Smith which had been approved by one of the managers. Petitioner was one of those approving managers on only one occasion. Based on that one approval, which he does not know to have been for a subsequently dishonored check, he merely assumed the Petitioner approved the others. An unsworn written statement to the investigator, Mr. Greer, by Kimberly Lantrip, an employee of another Food Lion store, indicates that Petitioner told the grocery manager it was OK to cash his wife's checks and hid the bad check register bearing his wife's name for several weeks when it came in. This evidence is clearly double and even triple hearsay evidence, however, and though admissible here, is of minimal probative value. Furthermore, neither were the checks themselves nor photocopies thereof were offered. Mrs. Smith, by sworn affidavit, also hearsay, indicated that at no time did Petitioner have any knowledge she had written checks in Food Lion stores, nor did he ever approve any for her or tell anyone else to cash them. This statement carries little evidentiary weight. Petitioner clearly had knowledge of his wife's prior check writing activity and, in fact, paid off several. He obviously failed to take appropriate action to correct her activity or to preclude her writing other checks at Food Lion stores. After the investigation, Satterfield met with Petitioner and other supervisors, and as a result of that meeting, where at least one supervisor recommended termination, Mr. Satterfield, who had observed Petitioner over the months in both training and as assistant manager and saw him do nothing wrong, nonetheless decided to put the Petitioner on indefinite suspension with pay pending further investigation. Mr. Satterfield then notified the Regional Supervisor and Mr. Legett, the Area Supervisor, of what he had done. The next he heard about it was when the constructive advice memo terminating Petitioner was issued. He thereafter had nothing more to do with the matter. Mr. Legett was satisfied at the way Petitioner took care of the first series of bad checks written by Petitioner's wife in the Spring of 1990. However, based on what he was told by Mr. Satterfield, and the information contained in the loss prevention investigation, he concluded that Petitioner was aware of the second series of bad checks his wife was writing and did not attempt to stop them. Based on this, which he found showed fraud and dishonesty on Petitioner's part, he decided to discharge Petitioner Before doing so, however, he discussed the matter with Food lion's Vice President for Personnel who agreed with the decision to discharge. While Petitioner's failure to take corrective action to preclude his wife from cashing any further checks at Food Lion stores reflects on his management ability and may support termination for that reason, absent a clear showing of his conspiracy with her, his encouragement of her actions, or his knowing acquiescence in her misconduct, it does not rise to the level of fraud or dishonesty. Regarding Petitioner's claim for damages, Mr. Legett indicates a proposed raise of $60.00 per week in 1990 is not justified. A maximum raise is $20.00 per 6 month increment based on performance. Not all managers get raises each year. In addition, continuing employees do not get paid for holidays they don't take off. If the time is not taken, it is lost. However, if a person is terminated, any unused accrued vacation time for that year is paid. By the same token, sick days are not compensated. Employees receive 2 percent of salary as a sick pay bonus at the end of the year unless too much sick leave is taken. In general, a sick day taken once a week results in a net loss, not earned bonus. Also, profit sharing is not a constant but varies year by year. In 1990 and 1991, the amount was 15 percent. The amount for 1992 had not been determined as of the hearing, but 15 percent is a maximum. In any case, employees do not become eligible to participate in the profit sharing plan until they have been with the company for 5 years. If the employee leaves before the five years are up, the accrued but unpaid profit sharing maintained in his name is forfeited and paid on a pro rata basis to other employees. The most Mr. Legett, an individual relatively high up in management, ever got was 2 percent. He has never received anywhere near 5 percent of his salary. Effective January 1, 1993, employees contribute $21.00 per month for insurance. Prior to that time, there was no contribution.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore, recommended that Lee C. Smith's Petition for Relief from Unlawful Discrimination based on marital status, relating to his discharge from employment by Respondent, Food Lion, Inc., be dismissed. RECOMMENDED this 13th day of April, 1993, in Tallahassee, Florida. ARNOLD H. POLLOCK 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 13th day of April, 1993. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-6047 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: None submitted. FOR THE RESPONDENT: Respondent's counsel submitted Proposed Findings of Fact but failed to number them. They will be treated paragraph by paragraph, however, in this appendix. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and, except for references to hearsay evidence, incorporated herein. Mr. Koonce, the only individual interviewed by the investigator who appeared at hearing indicated he had seen Petitioner approve only one check for his wife and assumed from that, he had approved others. The balance of the hearsay evidence, though admissible for a limited purpose, is considered of minimal probative value. Accepted and incorporated herein. Accepted and incorporated herein. Accepted. Not a Finding of Fact but more a comment on the state of the evidence. Accepted only as to the showing that the issue of Petitioner's knowledge of his wife's check writing activities was a part of the related case involving discrimination based on race. Irrelevant to the issues herein. COPIES FURNISHED: Lee C. Smith P.O. Box 260922 Tampa, Florida 33685-0922 Steven C. Ellingson, Esquire Arnold & Anderson 1200 Peachtree Center Cain Tower 229 Peachtree Street, N.W. Atlanta, Georgia 30303 Margaret Jones Clerk Commission of Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32303-4149 Dana Baird General Counsel Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32303-4149
Findings Of Fact The Petitioner is an Hispanic male who was employed as a sales host in the pastry department of the Respondent, Les Chefs de France, a restaurant located in the French Pavilion of Epcot Center at Walt Disney World. On August 12, 1983, the Petitioner and another employee of the Respondent, Mr. Kenneth Day, a non-Hispanic, were involved in a fight in Respondent's cooler, a refrigerated room located on the Respondent's premises. Ms. Brenda Kennedy was working in the Respondent's salad department at the time and she and another employee, Charles Hammel, were present in the cooler and witnessed the fight. Mr. Day had entered the cooler to pick up some supplies and was in the process of taking a tray out of a tram or rack when the Petitioner walked into the cooler and peremptorily told Day to get out of his way. When Day requested that the Petitioner wait until he was finished, the Petitioner shoved the tray back into the tram and pushed Day towards the back of the cooler. The Petitioner then began hitting Day with his fists. Francois Fourreau, the executive chef for the Respondent, heard a noise in the cooler at that point, looked through the window and saw Day holding the Petitioner and the Petitioner throwing punches at Day. Fourreau entered the cooler, separated the two men and directed them to leave the place of employment immediately. The Petitioner reported to the Walt Disney World infirmary and told the nurse to examine him, that he had been assaulted by another employee. A medical record prepared by that nurse indicated that the Petitioner suffered a laceration on his right hand and abrasions on his left arm. (Petitioner's composite exhibit 1 in evidence). Walt Disney World security was notified of the incident. Written statements regarding their versions of the incident were prepared by the Petitioner, Kenneth Day, Brenda Kennedy, and Francois Fourreau. Copies of them were provided to Bernie Juban, the Respondent's general manager. (See Respondent's exhibits 1 and 3 in evidence). On August 13, 1983, John Thall, who was the -assistant manager of food and beverages for the Respondent, met with Juban to discuss the incident. After reviewing the written statements, the two men decided that both Petitioner and Mr. Day should be terminated from employment in accordance with the established, consistent company policy which prohibited fighting on the job. The Petitioner was notified of this decision by a letter signed by Juban dated August 15, 1983. Day received a similar termination letter. The Petitioner acknowledges the existence of the company policy which provides that fighting may result in termination of all parties involved. This policy is contained in the employee policy handbook, which was in existence at the time of the incident and was given to all employees, including the Petitioner, at the time of their hire (Respondent's exhibit 2 in evidence). No employee who instigated or actively participated in an altercation during restaurant hours has been allowed to continue in the employ of the Respondent according to this policy which was shown to be consistently enforced. A previous incident had occurred between Mr. Fourreau and Eduardo Davilla, in which Davilla began punching Fourreau, his supervisor, in a disagreement over a work assignment. This altercation resulted in Davilla's termination, although Fourreau was not disciplined. Petitioner references this as an instance of Hispanics being discriminated against by the Respondent in favor of French Nationals employed by the Respondent. In that instance, however, Fourreau did not instigate nor actively participate in the altercation and thus the policy was not applicable to him. He simply put his arm in front of his face to protect himself. Mr. Thall had witnessed this incident, intervened in it, and stopped it by restraining Mr. Davilla from behind. This incident is further explained in Respondent's exhibit 5 in evidence. Prior to August 12, 1983, Mr. Day had threatened or in some other manner had an altercation with a supervisor, Christine Grassiot. Mr. Day was not disciplined by the Respondent for that incident. After the Respondent received the notice regarding the alleged discrimination in the instant case, Ms. Grassiot prepared a statement indicating that Mr. Day was only trying to irritate her at the time and that the episode was a totally personal matter between the two of them. The Respondent had no prior knowledge of this incident until the Petitioner alleged it in this cause as a basis for trying to show selective enforcement of the above policy. Prior to August 12, 1983, Day also reportedly had a disagreement of some sort with another employee of the Respondent, Kiki Babalagua, apparently involving him bumping into her with a "sheet pan" in the restaurant. Ms. Babalagua informed Brenda Kennedy of the incident and Day explained to Kennedy that he had accidentally bumped into her and apologized for it. In any event, this was not a fight or altercation as contemplated by the above-mentioned policy. Both Kennedy and Fourreau established that Ms. Babalagua was a difficult employee in terms of her personal relations with others and was "hard to get along with." She was later transferred to another location at her own request because she wanted to broaden her knowledge of the restaurant business and learn to work with pastries. Prior to August 12, 1983, Jean Luc Nichols, an employee of the Respondent working in a test kitchen at Disney Central Foods, was transferred by the Respondent at the personal request of a Walt Disney World manager, Mr. John Cardone, apparently to avoid a personality conflict. There is no evidence to show that Ms. Nichols was transferred because of a fight or other altercation. Finally, Petitioner acknowledges that the phrase "les imigres" translates in English as "the immigrants" and is not a standard cultural slur in the French language. Additionally, the testimony of Mr. Fourreau refuted Petitioner's allegation that this phrase had assumed a particular derogatory or discriminatory meaning among employees and staff at the restaurant.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the arguments of the parties, it is, therefore RECOMMENDED that the petition for relief filed by the Petitioner, Leonardo A. Zapata, be DISMISSED. DONE and ORDERED, this 25th day of July, 1986 in Tallahassee, Florida. MICHAEL RUFF, 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 25th day of July, 1986. APPENDIX Petitioner's Proposed Findings of Fact Paragraph I : accepted, but not material to resolution of the material issues presented. : rejected as irrelevant. : rejected as contrary to the preponderant evidence. (d): rejected as irrelevant. : accepted, but irrelevant. : rejected as contrary to the preponderant evidence. (a): rejected as constituting argument and not supported by the evidence. (b): rejected as constituting argument and discussion of evidence and testimony. (a): rejected as immaterial.- (b): accepted but immaterial in the full context of the witness's testimony. (c): (same as (b). : rejected as not supported by record evidence. (a): accepted, but not supportive of Petitioner's position. : rejected as contrary to the greater weight of the evidence. : (same as (b)) (a): rejected as not supported by the greater weight of the evidence. : accepted, but irrelevant to resolution of the material issues presented. : accepted, but immaterial. (d): accepted, but immaterial. (e): accepted but not dispositive in itself. (f): rejected as to its purported import; merely argument. : rejected as not supported by preponderant testimony and evidence. : accepted, but immaterial to resolution of the issues at bar. : (same as (g) above.) Respondent's Proposed Findings of Fact Paragraph 1. - accepted - accepted - accepted - accepted - accepted - accepted - accepted - accepted - accepted - accepted Copies furnished: Leonardo A. Zapata Post Office Box 1934 Kissimmee, Florida 32742 Susan K. McKenna, Esquire Post Office Box 60 Orlando, Florida 32802 Donald A. Griffin, Executive Director Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32303 Dana Baird, General Counsel Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32303
The Issue The issue in this case is whether Rules 38F-5.04(9) and 38F- 5.042 are invalid.
Findings Of Fact Petitioner provides services, such as underwriting and claims adjusting, to groups of employers that self-insure for workers' compensation. Each group of self-insurers forms a fund, and each fund is operated by trustees, who may contract for services with a service company, such as Petitioner. On December 31, 1992, the Division of Workers' Compensation (the Division) granted Petitioner authority to operate as a service company effective January 1, 1993. Petitioner serves as an authorized service company for only one self-insurance fund in Florida, the Florida Transportation and Industry Self-Insurers Fund (the Fund). The Division has commenced administrative proceedings against Petitioner and the Fund. These proceedings--DOAH Case Nos. 93-5537 and 93-5538- -have been consolidated and are set for hearing commencing April 25, 1994. The allegations against Petitioner and the Fund are contained in an Amended Notice of Intent (NOI) to Withdraw Service Company Authorization, as to Petitioner, and an Amended NOI to Revoke Self-Insurer Fund Authorization, as to the Fund. The Amended NOI in DOAH Case No. 93-5537 alleges that ARM's authorization should be withdrawn because ARM violated Rule 38F-5.040(3)(c) by not providing the safety engineering and loss control specified in its application; Rule 38F-5.031 by not using a safety consulting firm approved under Section 440.56(5); Rule 38F-5.031 through the violation by its agent, a safety consulting firm, of Rule 381-10.004, which prohibits performing safety consulting services for a fee; Rules 38F-5.068(2) and 38F- 5.067(3) by allowing the Fund to assume liability exposure for an employee residing and working in North Carolina; Rules 38F- 5.050(1), 38F-5.062(1)(b), and 38F-5.068(2) Indemnity Agreement, Part III(9)(c), by using unauthorized premium rates; Rule 38F- 5.064(12) by failing to collect and use premium payments in accordance with the provisions of the Rule 38F-5.068(2) Indemnity Agreement, Part III(9)(c); Rule 38F-5.073(17) by failing to provide for the proper refund of premium overpayments; Rules 38F- 5.065(2)(b) and 38F-5.066(1) by soliciting business using an unauthorized "bonus plan"; Rule 38F-5.064(1) and (6)(c) due to the existence of a conflict of interest between related parties and the Fund; Rule 38F-5.064(5) by failing to furnish evidence that the Fund has obtained a proper fidelity bond; Rule 38F- 5.064(7)(a) by failing to furnish evidence that ARM obtained a proper fidelity bond or insurance policy; Rule 38F-5.037(4) by failing to submit to the Division excess contracts in accordance with Rule 38F- 5.036; Rule 38F-5.059(1) by failing to file on behalf of the Fund certified audits or financial statements for all members joining the Fund after its inception date and before the preparation of a certified audit report for the entire Fund; and Rule 38F-5.062(1)(c) by failing to submit properly completed BSI-24 reports for the Fund for the first and second quarters since its inception. The Amended NOI in DOAH Case No. 93-5538 alleges that the Fund's authorization should be revoked because the Fund violated Rule 38F-5.058(4) and (5) by filing an application for self-insurer fund authorization containing false information; Rules 38F-5.064(1) and (6)(d) and 38F-5.068(2) Indemnity Agreement, Part III(6), by delegating fiscal authority to ARM, Rule 38F- 5.064(12) by failing to collect and use premium payments in accordance with the provisions of the Rule 38F-5.068(2) Indemnity Agreement, Part III(9)(c); Rule 38F-5.073(17) by failing to provide for the proper refund of premium overpayments; Rules 38F-5.065(2)(b) and 38F-5.066(1) by soliciting business using an unauthorized "bonus plan"; Rule 38F-5.031 by using an unapproved safety consulting firm to provide safety services to members of the Fund; Rule 38F- 5.031 through the violation by its agent, a safety consulting firm, of Rule 381- 10.004, which prohibits performing safety consulting services for a fee; Rules 38F-5.068(2) Indemnity Agreement, Part III (9)(c), 38F- 5.062(1)(b), and 38F- 5.050(1) by using unauthorized premium rates; Rule 38F-5.064(1) and (6)(c) due to the existence of a conflict of interest between related parties and the Fund; Rule 38F-5.064(5) by failing to furnish evidence of a proper fidelity bond; Rule 38F-5.064(7)(a) by failing to furnish evidence that ARM obtained a proper fidelity bond or insurance policy; Rule 38F-5.037(4) by failing to submit to the Division excess contracts in accordance with Rule 38F-5.036; and Rule 38F- 5.062(1)(c) by failing to submit properly completed BSI-24 reports for the first and second quarters since the inception of the Fund. The Division has promulgated Form BSI-22, which is a Service Company Application that is to be submitted to the Division for the purpose of obtaining authorization to operate as a service company. The BSI-22 requires that the applicant list the addresses of its Florida branch offices; the names and addresses of its owners, partners, or corporate officers; the name and address of its registered agent; and, if the applicant is a subsidiary, the name and address of its parent company. The BSI-22 states above the signature line: I certify that the information submitted supporting this application is true and correct to the best of my knowledge. The applicant agrees to abide by the provisions of Rule 38F-5.[0]40 and all other applicable rules and the Workers' Compensation Law. The instructions on the BSI-22 require two letters of reference pursuant to Rule "38F-5.[0]40," summary data and resumes of personnel pursuant to Rule "38F-5.[0]40," and a "list of all self-insured employers and funds with which you have contracted or intend to contract" together with the "services [that] are to be provided (e.g., claims, safety, underwriting, or all)." The Division has promulgated Form BSI-23, which is a Service Company Annual Report Form. The BSI-23 requires that the information from the BSI-22 be updated, including staff changes in claims, underwriting, and safety engineering. The BSI-23 asks if the service company has made any "substantial changes" in its safety program and, if so, whether they were approved by the Division. The BSI-23 requests a list of all self-insured employers and self- insurer funds for which the service company is currently providing service. The BSI-23 states that the form must be filed by July 1 each year and, if "satisfactorily completed," the service company should receive notice of recertification within 60 days. The language preceding the signature block states: "I certify that the information contained in and accompanying this annual report form is true and correct to the best of my knowledge." On February 18, 1994, Petitioner filed a Petition to Determine Invalidity of Existing Rules. Petitioner challenged Rules 38F-5.041(9) and 38F- 5.042. Rule 38F-5.041, which is set forth in the Conclusions of Law, generally requires service companies to file, or require the self-insured funds by which they are employed to file, the reports required of self-insurers. The specific authority cited for Rule 38F-5.041 is Sections 440.591 and 440.38(2)(a), Florida Statutes. The law implemented is Sections 440.20(16) and 440.38(1)(b), (2)(a) and (b), and (4)(b), Florida Statutes. The Division does not impose upon all service companies the requirement of Rule 38F-5.041(9) that the service company file all required reports or ensure that its self-insurers file the reports. This requirement is imposed only upon a service company that has agreed by contract to provide such a service. Pursuant to a contract between a service company and a self-insurance fund, the service company may assume the obligation to perform various duties, including duties imposed by law upon the fund. Even though the self-insurance fund remains accountable to the Division for the performance of these duties, the Division recognizes the assumption of such duties by a service company. In reliance upon Rule 38F-5.041(4), the Division has determined that the failure of a service company to perform such agreed-upon duties represents a violation of rules that could result in withdrawal of the service company's authorization. Rule 38F-5.042, which is set forth in the Conclusions of Law, provides generally that the Division may withdraw a service company's authorization for the failure to comply with any rule or order of the Division. The specific authority cited for Rule 38F-5.042 is Section 440.38(3), Florida Statutes. The law implemented is Section 440.38(2), Florida Statutes. The Division has determined that the rules for which a violation may result in a withdrawal of authorization are the rules contained in Chapter 38F- The Division has little experience in applying these rules and has attempted to withdraw the authorization of only one service company, Petitioner. The Division anticipates that it would base its decision to withdraw authorization on the facts uncovered following an examination of a fund. For instance, a violation of a rule-imposed filing deadline would unlikely result in a withdrawal proceeding if the deadline were missed by only two days. The Division expects that it would commence a withdrawal proceeding only if the violation presented a danger to the citizens of the State of Florida. However, there are no written standards guiding the Division in its exercise of discretion as to which cases warrant withdrawal of authorization and which cases warrant a lesser response. Management of a service company does not know in advance which violations of the rules may be deemed by the Division as sufficiently material so as to warrant withdrawal of authorization. (Rule 38F- 5.042 predicates withdrawal of authorization upon a violation of any rule or order of the Division, but omits express mention of statutes.) Management of a service company knows only that any violation of any rule may result in a withdrawal proceeding. The Division concedes that the same violation by two service companies might result in the withdrawal of authorization of one company but not the other, depending on the circumstances surrounding each violation with respect to the extent of the risk to the public presented by each violation. However, the Division acknowledges that a service company may continue to operate until a final order is entered revoking its authorization.
Findings Of Fact The Respondent, K-Mart Corporation, d/b/a Waldenbooks, Store 1313 (Waldenbooks), hired the Petitioner, Timothy D. Wood, as a part-time bookseller trainee in April, 1985. Wood's initial pay was $3.35 an hour. Wood completed his training period in July or August, 1985, and became a part-time bookseller. Wood suffers from epilepsy. On five different occasions during 1985, Wood suffered various kinds of seizures while on the job at Waldenbooks. Waldenbooks' manager, Jane Burke, reacted kindly to Wood, allowing him to take as much time as he needed to rest before returning to his work. When Wood went back to work, usually a matter of minutes later, he was able to function normally. Burke did not downgrade Wood's performance evaluations on account of the seizures and did not report the seizures to Waldenbooks because she did not view then as affecting his performance. Burke appraised Wood's performance in accordance with Waldenbooks' personnel policies. Based on the overall "good" evaluation she gave Wood in September, 1985, Wood got a pay increase to $3.55. However, in "Loss Prevention" Wood was rated just "marginal." On November 4, 1985, Wood got a "Performance Discussion Record" for company policy violations involving improper processing of a credit card sale. On November 14, 1985, Wood received another Performance Discussion Record for a company policy violation involving the improper handling of a cash sale and the inadvertent offending of a customer by inappropriately asking if the customer was retired. This time Burke warned Wood: "Further violations of any of the loss prevention policies and cash handling procedures could result in possible termination." On November 24, 1985, Wood received another Performance Discussion Record for a company policy violation involving the improper destruction and disposal of valuable inventory (books) resulting in a monetary loss to the company. Through March, 1986, Wood was not evaluated and received no raises or performance discussion records. Burke erroneously believed that Wood was not due for a reevaluation during this time. Actually, Waldenbooks was expecting a reevaluation for the period September 1 to December 1, 1985, and December 1, 1985, to March 1, 1986. Burke was notified of her error by April 2, 1986. Meanwhile, on Sunday, March 23, 1986, a day Wood was scheduled to work, Wood had double grand mal seizures and, in the course of the seizures, severely bit his tongue. Wood was unable to talk, much less work. Wood's mother notified Burke by telephone and advised her also that Wood would be seeing his doctor the next day. The doctor advised Wood not to work for a few days. Wood followed the doctor's advice, and his mother again called to notify Burke. Wood returned to work on Thursday, March 27, 1986. Because Wood was a part-time employee who did not get sick leave, Burke had no need to and did not report on or explain Wood's absences to Waldenbooks. On April 2, 1986, Burke completed two belated performance appraisals on Wood. Both rated Wood "good" overall, and Burke recommended Wood for pay raises to $3.66 an hour effective December 1, 1985, and to $3.77 an hour effective March 1, 1986. However, in light of the three performance discussion records Wood got in November, 1985, the performance appraisal for the period from September 1 to December 1, 1985, again rated Wood "marginal" in Loss Prevention and noted that, during the appraisal period, Wood was "on probation for violation of Loss Prevention policies." Wood commented on the appraisal: "I totally agree about the concenous [sic] of this performance appraisal." The performance appraisal for the period from December 1, 1985, to March 1, 1986, noted improvement and rated Wood "good" in the area of Loss Prevention. On April 22, 1986, Burke's assistant manager called Burke at home to tell her that $200 worth of magazines to be returned to a distributor for credit were missing. 1/ Burke went to the store and called each of the three employees on duty, one of whom was Wood, individually to the office at the back of the store to ask them whether they had thrown the magazines away. The first two denied it. Burke then confronted Wood with the situation and asked Wood if he threw away the magazines. Wood answered, "yes, I believe I did." Burke sent Wood back up front to work and consulted with some of her superiors. A short time later, Burke again called Wood back and notified him that he was being terminated because he had caused the loss of magazine credit and had "repeatedly violated loss prevention policies [the November, 1985, performance discussion records] resulting in loss to the company [the loss of magazine credit]." Burke told Wood she was sorry she had to terminate him but that she had the support of her superiors. It was not proved that Burke and Waldenbooks discriminated against Wood or terminated him on the basis of his epilepsy. For unexplained reasons, Waldenbooks did not produce the "Loss Prevention Hotline" memo which Burke testified she sent to the company to report the $200 credit loss either before or at final hearing (although she testified that a copy probably was in her office at the local store.) Nor was it explained why Waldenbooks did not produce the "return list" which Burke testified was the source of her information that the $200 worth of magazines were missing. (Burke testified that she had not retained a copy of the "return list" but that a copy might be in Waldenbooks' headquarters.) These two documents would have helped to refute Wood's argument that the loss of valuable magazines was a fabrication and pretext for his termination, and Waldenbooks' failure to produce them or explain its failure to produce them raises suspicions. But, in the end, Wood's case turns on the comparative credibility and reliability of his (and, to some extent, his parents') testimony versus Burke's testimony. Based on careful consideration of the testimony and demeanor of all of the witnesses under questioning, Burke's testimony is found to be the more credible and reliable despite Waldenbooks' failure to produce, or explain the failure to produce, the "Loss Prevention Hotline" memo and the "return list." It is found that Wood did discard magazines that would have entitled Waldenbooks to a credit on their return and that Waldenbooks, through Burke, terminated Wood based on this and other company loss prevention policy violations.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that the Florida Commission On Human Relations enter a final order dismissing the Petition For Relief filed by Timothy D. Wood. RECOMMENDED this 29th day of June 1988 in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 29th day of June, 1988.
