The Issue Whether Respondent, Cox Cable, discriminated against Petitioner, Janice B. Campbell, in violation of the Florida Civil Rights Act of 1992 (“the Act”), sections 760.01–760.11 and 509.092, Florida Statutes, by disciplining and then terminating her, in retaliation for her participation in a protected activity under the Act.
Findings Of Fact Cox Cable (Cox) is a provider of telephone, internet, cable, and digital television service in several regions of Florida. Cox is an employer within the meaning of the Act and Title VII of the Civil Rights Act of 1964, as amended. Petitioner was employed by Cox in its Pensacola office from May 2000, until her termination on March 19, 2012. Petitioner held a number of different positions during her tenure with Cox, including Quality Control, Customer Care Representative and Retention Representative. Petitioner joined the Customer Retention Department in July 2010, as a Retention Representative. The primary duty of a Retention Representative is to take calls from existing customers who are requesting termination or downgrade of their existing service and save those customers for Cox. Cox trains Retention Representatives to use a “call flow” with these customers. The call flow is a quality guideline that shows representatives what offers can be made to the customer at the time of the call. When a customer or potential customer calls Cox, they encounter an automated menu of services and are directed to a specific department based on their menu selections. For example, an existing customer with technical or billing questions is routed to the Customer Care Department; a customer moving out of the area is routed to the Account Services Department; and an existing customer who wishes to downgrade or disconnect service is routed to the Retention Department. Calls waiting for a representative in a particular department are “in the queue” for that department. Calls should be answered in the order received. While a Retention Representative’s primary job is to save existing customers, they may sell services to those customers as a secondary duty. For example, a retention representative may try to save the customer money by offering to provide services the customer is receiving from another provider (e.g., telephone) with services currently provided by Cox (e.g., cable) in order to reduce the customer’s overall service cost while retaining the customer. The term for this practice is offering to “bundle” services. Cox maintains a policy against Retention Representatives taking calls transferred directly to their line from representatives in other departments in order to sell services. This practice is known as “direct transfer calls.” Retention Representatives, however, are not prohibited from taking all sales calls. They may handle, for example, a call from a customer looking to purchase services when that call comes into the retention queue (presumably because the caller pressed the incorrect key). In fact, the Retention Department has sales goals set by Cox corporate office. When goals are set for a particular product or service, Cox provides incentives to boost sales of the particular product or service. The call flow provides Retention Representatives with a tool to sell upgrades to existing services based on availability of promotional offers. The Retention Department was formerly part of the Inbound Sales Department. In May 2010, just two months before Petitioner joined, Retention was created as a separate “stand alone” department with a focus on saving existing customers. The authority of the Retention Representatives with respect to selling services was subject to much confusion during the separation of the Retention Department from the Incoming Sales Department. On September 14, 2011, the Retention Managers, Shannon Boyd-Tibbs and Daniel Lister, met with all the Retention Representatives in a “huddle” to explain the types of calls they could and could not receive. The group meeting was followed up the same day by one- on-one meetings between the Retention Supervisors and each of the Retention Representatives under their supervision. On September 14, 2011, following the huddle meeting, Petitioner met with Ms. Boyd-Tibbs who reviewed with her a document titled “Sales Performance Expectation Clarification.” The “Sales Performance Expectation Clarification” provides, among other expectations, “Closed sales should not be transferred from one sales representative to another which may impact commission or performance metrics” and “Sales representatives are not permitted to transfer sales to another representative, which would cause an increase in commissions or sales performance.” Petitioner acknowledged receipt of the “Sales Performance Expectation Clarification” by her signature dated September 14, 2011. Six days later, Retention Supervisor, Daniel Lister, further clarified the issue in an email to all Retention Representatives on September 20, 2011, stating “[I]f a sales call comes into the queue, you will be able to take care of this customer. It does not mean you should take calls that are sent directly to you by a representative from billing or various other departments.” The reasons for prohibiting direct transfer calls are three-fold. First, the practice skews the Retention Department’s sales goals, which are based on the prior year’s numbers. If sales are up based on direct transfer calls in the prior year, the current year’s sales goal is inflated and may be unattainable. Second, the practice causes customers in the retention queue to wait longer for a representative, potentially causing them to become more irate and less likely to be retained. Finally, it is unfair to other Retention Representatives who compete for incentives and bonuses based on sales. Petitioner admits taking direct transfer calls from a number of sales representatives. Despite management’s clarification of the company policy in September 2011, Petitioner continued the practice throughout the remainder of the year and into 2012. On March 13, 2012, Petitioner was suspended with pay for continuing to take direct transfer calls. Her supervisor, Ms. Boyd-Tibbs, met with Petitioner and explained the basis for her suspension. During Petitioner’s suspension, Ms. Boyd-Tibbs and Mr. Lister requested and reviewed a number of reports documenting Petitioner’s direct-transfer sales and confirming Petitioner’s disproportionate sales numbers. The final decision to terminate Petitioner was made by Dennis Huber, supervisor of both Mr. Lister and Ms. Boyd-Tibbs, but only after consultation with Human Resources and the Customer Care Sales Manager. Petitioner was terminated on March 19, 2012. Ms. Boyd-Tibbs delivered the news over the phone to Petitioner. Petitioner claims she was terminated in retaliation for reporting unethical behavior by another Retention Representative, Belinda Thompson. Petitioner claims Ms. Thompson inflated her performance numbers by failing to disconnect customers who requested termination of service, transferring certain calls back to the queue, giving unauthorized credits to customers, and other questionable practices. The evidence shows Petitioner did complain to Ms. Boyd-Tibbs about Ms. Thompson’s sales practices, which were investigated by Cox and found the complaints to be unsupported. Rather than showing that Petitioner was retaliated against, the evidence demonstrated that Petitioner was terminated by Cox on March 19, 2012, for violating company policy against taking “direct transfer” sales calls from other representatives in different departments.
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 Petitioner’s Discrimination Complaint and Petition for Relief consistent with the terms of this Recommended Order. DONE AND ENTERED this 13th day of November, 2012, in Tallahassee, Leon County, Florida. S Suzanne Van Wyk 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 13th day of November, 2012.
The Issue The issue for consideration herein is whether the Petitioners, MISSCO, GENERAL, AND INTERSTATE should be placed on the convicted vendor list pursuant to Section 287.133 Florida Statutes (1991).
Findings Of Fact The facts stated in the Joint Stipulations to the extent set forth below are hereby adopted as findings of fact: On April 9, 1993, DMS issued notices of intent pursuant to Section 187.133(3)(e)(1), Florida Statutes. Jt. Stips. Appen. at pp. 72-73. On April 13, 1993, MISSCO filed petitions with DMS for a formal hearing pursuant to Section 120.57(1), Florida Statutes, to determine whether it is in the public interest for MISSCO, GENERAL, or INTERSTATE to be placed on the Florida Convicted Vendor List pursuant to Section 287.133, Florida Statutes. Jt. Stips. Appen. at p. 74-77. Subparagraph 287.133(3)(e)e., Florida Statutes, establishes factors which, if applicable to a convicted vendor, will mitigate against placement of that vendor upon the convicted vendor list. On April 5, 1991, General Equipment Manufacturers, Inc., (hereinafter "General"), a Mississippi corporation, and wholly owned subsidiary of MISSCO Corporation, was convicted of the commission of a public entity crime as defined within subsection 287.133(1)(g), Florida Statutes. Jr. Stips. p. 1, Appen. at pp. 41-43. A criminal information was filed in the United States District Court for the Southern District of Mississippi against General Equipment Manufacturers, Inc., alleging a violation of Section 1001, Title 18, United States Code and applicable Federal Acquisition Regulations which occurred on or about December 2, 1988. Jt. Stips. p. 1, Appen. at p. 40. The criminal information filed in the United States District Court, Southern District of Mississippi charged General with falsely representing on or about December 2, 1988 that the equipment schedule and price list submitted to the General Services Administration (hereinafter GSA) was General's established commercial price list. (Jt. Stips. p. 2, Appen. at p. 40. Upon entry of a plea of guilty, the Court entered a judgement against General which was filed April 5, 1991. The judgement required payment of a special assessment of $200, a fine in the amount of $10,000, without interest, and restitution in the amount of $28,000. Jt. Stips. p. 2, Appen. at pp. 40-48. The GSA issued Solicitation No. FCGS-X8-38010-N for FSC Group 66 Part II, Section P, Laboratory/Pharmacy Furniture. General submitted an offer dated August 18, 1988, and signed by Charles H. Wright, General Manager of General's SystaModules Division. In connection with its offer, General submitted its purported commercial price list dated January 31, 1987. Mr. Wright certified in Section M-FSS-330, M.3, Basis for Price Negotiation, Item (c), Certificate of Established Catalog or Market Price, that: The price(s) quoted in General's proposal is based on established catalog or market prices of commercial items, as defined in FAR 15.804-3(c), in effect on the date of the offer or on the dates of revisions submitted during the course of negotiations. Substantial quantities of the items have been sold to the general public at such prices. All of the data, including sales data, submitted with General's offer are accurate, complete, and current representations of actual transactions to the date when price negotiations are concluded. By letter dated December 2, 1988, Mr. Wright, in his capacity as General Manager of General's SystaModules Division, certified on behalf of General that: . . . all data submitted with General's offer pursuant to the discount schedule ad marketing data sheets and any other data submitted as as part of General's offer on Solicitation FGS-X8-38010-N are current, accurate, and complete a of the conclusion of negotiations, which occurred on December 2, 1988. Jt. Stips. p. 2-3, Appen. at pp. 51-53. On the basis of General's offer on Solicitation No. FGS-X8-38010-N, the GSA awarded General Contract No. GS-00F-06709 on December 13, 1988. The contract was for the period February 1, 1989, through January 31, 1992. Jt. Stips. p. 3-4, Appen. at p. 53. An investigation by the Federal Bureau of Investigation determined that General provided the GSA with fabricated price lists in connection with FGS-X8-38010-N. Jt. Stips. p. 4, Appen. at pp. 53-54. The details of the criminal information against General are discussed in the findings and determination made by the GSA Office of Acquisition Policy, dated May 18, 1992, which are incorporated herein by reference. Jt. Stips. Appen. at pp. 49-71). Particular findings are as follows: Federal debarment was imposed on General and its corporate officials Messrs. Wright and Majure. Jt. Stips. Appen. at p. 50. The debarments were effective throughout the Federal Executive Branch. The debarment precluded the award, renewal, or extension of federal contracts. Jt. Stips. Appen. at p. 50. Debarment proceedings were initiated by separate notices dated November 1, 1990 based on a referral from the Federal General Services Administration (GSA), Office of Inspector General (OIG). Jt. Stips. Appen. at p. 51. General bid on GSA Solicitation No. FGS-X3-36426-N and in connection with its offer General submitted a "dealer retail price list," and certified that: its prices were based on established catalog or market prices, substantial quantities of the items had been sold to the general public at said prices: and that all of the data submitted with its offer was accurate, complete and current representations of actual transactions up to the date when price negotiations were concluded. Jt. Stips. Appen. at p. 51. General's offer on the solicitation was accepted and it was awarded contract number GS-00F-70316 on April 19, 1984. Jt. Stips. Appen. at p. 52. On June 28, 1985 General made the same representations as to GSA Solicitation No. FGS-X8-38000-N for laboratory and pharmacy furniture. The award was made to General on December 9, 1985. Jt. Stips. Appen. at p. 52. Identical representations were made by General in response to GSA Solicitation No. FCGS-X8-38010-N issued on July 7, 1988. The solicitation was for laboratory and pharmacy furniture. The award was made to General on December 13, 1988. Jt. Stips. Appen. at p. 53. Criminal Information Number J90-00080(B) was filed in the U.S. District Court for the Southern District of Mississippi on November 15, 1990. The information was based on the FBI investigation of General's submission of false commercial price lists to GSA. The criminal information charged General with violating Title 18, U.S.C. 1001 in connection with its offer on Solicitation No. FGS-X8-38010-N. It alleged that General knowingly, willfully, and falsely represented to GSA that the equipment schedule and price lists submitted with General's 1988 offer was General's established commercial price list. Jt. Stips. Appen. at p. 54. General pled guilty to Criminal Information No. J90-00080(B) on December 19, 1990 and was ordered to pay a fine of $10,000 and to make just restitution to the GSA in the amount of $28,000. The conviction was also used as the basis for the federal debarment of General. Jt. Stips. Appen. at p. 54. Mr. Wright and Mr. Majure were also debarred by virtue of their conduct in connection with the General conviction. Jt. Stips. Appen. at pp. 54- 59. General and MISSCO are affiliated companies. General is a wholly-owned subsidiary of MISSCO. MISSCO is directed and governed by its executive committee which acts in lieu of the board of directors. Mr. Majure was a director of MISSCO, a member of MISSCO'S executive committee, a senior vice president of MISSCO, and president, director, and general manager of General. Jt. Stips. Appen. at p. 59. Mr. Majure held a position of substantial responsibility in both MISSCO and General, and through MISSCO's control group is accountable for the circumstances of General's crime. Jt. Stips. Appen. at p. 60. A decision not to impose federal debarment on MISSCO was predicated on MISSCO management's decision to ensure that it did not supply the Federal government with the same goods and services formerly provided by General during the period of General's debarment: MISSCO management made a commitment to emphasize ethical business practices: the people responsible for General's crime were no longer employed by MISSCO: the GSA administrative record (with the exception of General) does not indicate a lack of business integrity or poor performance on federal contracts. Jt. Stips. Appen. at pp. 61-63. Federal debarment of General was predicated upon the following: conviction of the crime of making false statements posed a substantial risk to government business dealings: General submitted false information on solicitations over an extended period of time: General fabricated price lists and false certification son two prior solicitations: General's crime posed a substantial danger to the integrity of the Federal government's MAS program: the accountable individuals for the crime were high-ranking officials at General. Jt. Stips. Appen. at pp. 63-66. The federal debarment proceedings found mitigating factors in that: the parties pled guilty and cooperated with the Department of Justice throughout the investigation: the parties cooperated with GSA throughout the debarment proceedings: General was not charged with deliberate overcharges on its federal MAS contracts: General promptly paid its fine and restitution: General has made good faith efforts to undertake remedial action. Jt. Stips. Appen. at pp. 68-69. On April 9, 1993, Respondent issued Notices of Intent pursuant to Section 287.133(3)(e)1, Florida Statutes, which were received by the Petitioners. Jt. Stips. p. 5, Appen. at pp. 72-73. On April 13, 1993, Petitions filed petitions pursuant to Section 287.133(3)(e)2, Florida Statutes, and Section 120.57(1), Florida Statutes, requesting an order determining that it is not in the public interest for Petitioners to be placed on the State of Florida Convicted Vendor List. Jt. Stips. p. 5, Appen. at pp. 74-75. MISSCO is a holding company which has a number of operating divisions and two wholly-owned subsidiary corporations, General Equipment Manufacturers (General) and MISSCO Exports Corporation (Exports). Jt. Stips. p. 2, Appen. at pp. 35-36. Interstate of Florida is a Division of MISSCO and is a dealer (re- seller) of General's products. Jt. Stips. p. 2. General and MISSCO are commercially distinguishable and they do not occupy the same facilities. MISSCO's primary lines of business are distribution of school equipment and supplies, office equipment and supplies, and commercial printing. Jt. Stips. p. 4. MISSCO Exports is an entity formed solely for accounting and tax purposes, has no employees, and does not engage in substantive commercial operations. Jt. Stips. p. 4. MISSCO has extensive dealings with the federal government, as supplier of goods manufactured by other entities. General is the only MISSCO entity that contracts with the government under the Multiple Awards Schedule (MAS) program. General's primary line of business is manufacturing institutional furniture. Jt. Stips. pp. 4-5. In compliance with paragraphs 287.133(3)(a) and (B), Florida Statutes, MISSCO made timely notification to the DMS and provided details of the conviction of General, by letter dated March 24, 1992 and provided copies of the criminal information, judgement and related correspondence. Jt. Stips. p. 5, Appen. at pp. 37048. Payment of the fine in the amount of $10,000 and restitution in the amount of $28,000 imposed by the conviction and judgement entered April 5, 1991 were promptly paid by General on April 15, 1991. Jt. Stips. pp. 5-6, Appen. at pp. 47-48. Subsequent to the criminal information filed in the United States District court, Southern District of Mississippi in November of 1990, General entered a plea of guilty to the charge, thus eliminating the necessity for further investigation and trial. Jt. Stips. p. 6. The GSA in its findings and determination dated May 18, 1992, cited mitigating factors favorable to General and MISSCO. The factors included, cooperation with the Department of Justice throughout its investigation; cooperation with the GSA throughout the debarment proceeding; constructive dealings by counsel for MISSCO and General with the GSA Office of General Counsel on issues relating to the restrictions on MISSCO and General's business relationship with the government and government prime contractors. Jt. Stips. p. 6, Appen. at pp. 68-69. MISSCO fully cooperated with the DMS in connection with its investigation initiated pursuant to Section 287.133, Florida Statutes. Jt. Stips. p. 6. MISSCO formally filed its disclosure pursuant to Section 287.133(3)(b), Florida Statutes with the DMS by letter dated March 24, 1992, together with exhibits attached thereto. The letter specifically referred to the criminal information filed against General and the judgement entered by the Federal District Court. A copy of the criminal information and judgement were enclosed with the letter, together with a copy of correspondence between MISSCO and the GSA. Jt. Stips. pp. 8-9, Appen. at pp. 37-39. In response to a request dated April 15, 1992 from the DMS for additional information, MISSCO promptly furnished all such information. Jt. Stips. p. 9. At its meeting held December 17, 1992, the Board of Directors of MISSCO was convened and all of the offices then held by Mr. James T. Majure, former President of General, were declared vacant and other persons were elected to those positions. Jt. Stips. p. 7, Appen. at pp. 2, 67, 70. Mr. Charles Wright was retired from General under a medical disability prior to 1990. Jt. Stips. p. 7. MISSCO Corporation fully cooperated with the GSA by proposing and implementing remedial measures including the presentation of an Ethics Seminar by Mr. Norman Roberts, past chairman of the American Bar Association's section on government contracting. Jt. Stips. p. 7. MISSCO revised its corporate Code of Ethics, revised its Employee Handbook, installed an 800 hotline telephone number permitting employees to communicate any concerns regarding business ethics, designated a Corporate Vice President as the Ethics Compliance Officer, appointed a committee of three corporate executives to monitor corporate business activities, and revised its internal audit procedures to insure that no cash is unaccounted for which might be used for the purpose of kickbacks. Jt. Stips. pp. 7-8, Appen. at pp. 28-33, 62-63. MISSCO's management undertook prompt and verifiable action to comply with the restrictions imposed on MISSCO's business dealings with the government after notices of proposed debarment. General promptly and voluntarily withdrew from the GSA contract that was tainted by the submission of a fabricated commercial price list during negotiations. Jt. Stips. p. 8. MISSCO had a code of business ethics in place when the circumstances leading to General's conviction arose. The code was amended following the initiation of debarment proceedings to specifically address the importance of truthful certifications and providing accurate information in connection with business transactions with the government. Jt. Stips. p. 8. MISSCO substantially expanded its corporate ethics compliance program and undertook extensive training in business ethics. A detailed "ethics audit" was undertaken by MISSCO, and the results of this audit were provided to the GSA. Jt. Stips. p. 8, Appen. at pp. 10-22, 28-34. General sells its products through a dealer network and not through factory direct sales. General has a dealer agreement with Interstate of Florida for the sale of its products in Florida to private and public entities. Jt. Stips. p. 9. Interstate of Florida, a division of MISSCO Corporation of Jackson, is a dealer (re-seller) of General's products. There are other dealers throughout the United States which also market and sell General's products. Interstate of Florida had gross sales of approximately $6.8 million in fiscal year 1990-91. Approximately 99 percent of those sales were to public entities. Jt. Stips. p. 9. Interstate of Florida is primarily an educational sales company which sells educational contract furnishings such as laboratory casework, auditorium seating, and folding bleachers. It has conducted business with almost every school district in Florida. The largest transactions have been conducted with the school districts of Dade and Orange Counties in Florida. The largest municipal transactions have been conducted with the City of Tallahassee. Jt. Stips. p. 10.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED: That the Department not place the names of the Petitioners on the Florida Convicted Vendor List. DONE and ENTERED this 29th day of July, 1993, in Tallahassee, Florida. STEPHEN F. DEAN 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 29th day of July, 1993. COPIES FURNISHED: William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 Susan B. Kirkland, Esquire Department of Management Services Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 C. Graham Carothers, Esquire Ausley, McMullen, McGehee Carothers & Proctor Post Office Box 391 Tallahassee, FL 32392 Terry A. Stepp, Esquire Department of Management Services Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950
The Issue Whether the Respondent Five Brothers Produce owes Petitioner an additional $13,965.00 for snap beans that Five Brothers Produce received, sold, and shipped to buyers as Petitioner's agent/broker.
Findings Of Fact Respondent Five Brothers Produce, Inc. ("Respondent" or "Five Brothers") accepts agricultural products from growers for sale or consignment and acts as an agent/broker for the growers. It has a surety bond issued by Old Republic Surety Company to secure payment of sums owed to agricultural producers. Petitioner Paul Hernandez ("Petitioner" or "Mr. Hernandez") grows snap beans. On March 26, 2010, Mr. Hernandez delivered 400 boxes of hand-picked snap beans to Five Brothers to sell. On March 27, 2010, Mr. Hernandez delivered an additional 750 boxes of snap beans to Five Brothers to sell for him. Five Brothers' Marketing Agreement and Statement included on the Grower Receipt was given to Mr. Hernandez on March 26 and 27, 2010. It provided in relevant part: The grower gives Five Brothers Produce the right to sell or consign to the general trade. No guarantees as to sales price are made and only the amounts actually received by Five Brothers Produce, less selling charges, cooler charges, and any other charges will be paid to the grower. Final settlement will be made within a reasonable length of time and may be held until payment is received from the purchaser. On March 27, 2010, Five Brothers' invoice showed that it shipped 336 of the first 400 boxes of Mr. Hernandez' beans to Nathel and Nathel, Inc., at the New York City Terminal Market. From that shipment, Five Brothers received $12.00 a box, or a total of $4,032.00. After deducting its fee of $1.60 a box, Five Brothers paid Mr. Hernandez net proceeds of $3,494.40. On the next day, Five Brothers' records show it sold the remaining 64 boxes to Tolbert Produce, Inc., for $22.70 a box. On March 26, 2010, the United States Department of Agriculture ("USDA") Fruit and Vegetable Market News Portal reported sales prices ranging from $24.85 to $25.85 a box for round green handpicked snap beans grown in Central and South Florida. Mr. Hernandez had reason to question the accuracy of Five Brother's invoice, given the USDA data and the Tolbert Produce sale. Nathel and Nathel also documented the sales of the 336 boxes of beans and 160 boxes of squash it received from Five Brothers. By the time of its settlement with Five Brothers, it paid a total of $5,643.50, of which $4,032.00 came from the sales of beans as reported on the Five Brothers' invoice. On March 29, 2010, Five Brothers shipped all 750 boxes of beans it received from Mr. Hernandez on March 27, 2010, to A and J Produce, Inc., at the New York City Terminal in the Bronx. Five Brothers' invoice indicated that it received $9.00 a box, or a total of $6,750.00 from A and J. Five Brother's fee for that shipment was also $1.60 a box, or a total of $1,200.00, leaving Mr. Hernandez with a net return of $5,550.00. USDA market data showed prices for the handpicked snap beans, on March 29, 2010, ranged from $20.00 to $20.85 a box. The actual cost of production for Mr. Hernandez, including seeds, water, fertilizer, and labor can range from $6.00 to $10.00 a box. He would not have paid for the labor to hand-pick beans if he had known he could not get an adequate return on his investment. Relying on the USDA data, Mr. Hernandez reasonably expected his net return to be $13,965.20, higher than it was. Five Brothers sold the beans in a rapidly declining market. Pointing to the same USDA data, Five Brothers showed the drop towards the end of March and into April 2010. On March 30, the price was down to $16.85 to $18.85. On March 31, the price was $14.85 to $16.85. And, from April 1 through April 6, a box of snap beans was selling for $10.00 to $12.85. Mr. Hernandez alleged that Five Brothers' invoice for the sale of the 750 boxes was not correct. He pointed to an exhibit that showed Five Brothers shipped A and J Produce 1344 boxes of beans, including the 750 boxes grown by him, and another exhibit that appeared to show that A and J received the 1344 boxes, on March 31, 2010, and paid Five Brothers $20.00 a box. That same A and J document, however, tracks the declining prices as each part of the shipment was sold. In the end the value was 68.82 percent of the target price of $20.00, which equals an average sales price of $13.76. After Five Brothers deducted the $1.60 a box fee, proceeds for Mr. Hernandez were approximately $12.00 a box consistent with that reported as A and J's final settlement with Five Brothers. The evidence that there was no guarantee of a sales price in the agreement, that market prices were declining rapidly, and that the receivers' documents support those of the shipper, Five Brothers, is sufficient to rebut any evidence that Mr. Hernandez is entitled to additional payments for the beans delivered to Five Brothers on March 26 and 27, 2010.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order dismissing the complaint of Paul Hernandez against Five Brothers Produce, Inc. DONE AND ENTERED this 20th day of September, 2010, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER 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 20th day of September, 2010.
The Issue The issue to be determined in this proceeding is whether Respondents Wilson and Son Sales, Inc. (Wilson), and Ohio Casualty Insurance Company, as surety, are indebted to Petitioner for certain Florida-grown agricultural products.
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: Petitioner is a producer of several vegetable crops in Hardee County. Wilson is a dealer in agricultural products. More specifically, Wilson operates an agricultural broker business in Plant City. Wilson’s surety is Ohio Casualty Insurance Company. Although Wilson has written contracts with some producers, Wilson does not have written contracts with all producers. In the absence of a contract, the terms of Wilson’s broker services are almost always the same; that is, Wilson gets a commission of 10 percent on the sale of the produce and $.35 per box for palletizing and pre-cooling the produce, in return for which Wilson makes a reasonable and good faith effort to sell Petitioner’s produce for the best price. Petitioner contacted Wilson in January 2007, about bringing flat beans to Wilson to sell. Wilson expressed interest and informed Petitioner about Wilson’s standards terms as described above. These terms were agreeable to Petitioner and he brought the beans to Wilson later that month. Although Petitioner and Wilson had no written contract, the parties’ mutual understanding of the terms of their agreement created an enforceable oral contract. Wilson sold Petitioner’s beans and no dispute arose from this first transaction. The parties’ subsequent transactions for other produce were undertaken pursuant to the same oral contract terms. Because Wilson works on a commission basis, it is generally in Wilson’s self-interest to sell growers’ produce for the best price. Petitioner contacted Robert Wilson, Wilson’s owner, by telephone in February 2007, and informed Wilson of his plans to grow wax beans and “hard squash.” It was not stated in the record whether all three varieties of hard squash later grown by Petitioner, butternut squash, acorn squash, and spaghetti squash, were discussed by Petitioner and Robert Wilson during their February 2007 telephone conversation. A major dispute in the case was whether the parties’ February discussion about hard squash created some obligation on the part of Wilson beyond the oral contract terms described above. Petitioner claims that Wilson encouraged him to plant the squash and that Petitioner would not have planted the squash otherwise. Petitioner never made clear, however, what additional obligation was created by Robert Wilson’s encouragement beyond the obligation to accept delivery of and make good faith efforts to sell Petitioner’s squash at the best price. Petitioner did not use the word “guarantee,” but his claim seems to be that Wilson became obligated to guarantee that the squash would be sold for a price close to the price published in the Columbia (South Carolina) Market Report, a periodic publication of produce prices. Such an obligation on the part of a broker is contrary to the general practice in the trade. Petitioner’s evidence was insufficient to prove more than that Robert Wilson thought he could sell Petitioner’s squash and had a genuine interest in acting as broker for Petitioner’s squash. The evidence was insufficient to prove the existence of a contractual guarantee that Wilson would obtain a certain price for Petitioner’s hard squash or do more than was promised with regard to the beans that Wilson had sold for Petitioner; that is, to try to sell the produce for the best price. When Petitioner’s wax beans were picked in late April, he brought them to Wilson to sell. No dispute arose regarding the sale of the wax beans. Petitioner brought squash to Wilson in five deliveries between May 12 and May 29, 2007. Petitioner said that on one of these deliveries, he had to leave the boxed squash in the parking lot of Wilson’s facility because there was so much cantaloupe that had been delivered ahead of him. Petitioner says he was told by a Wilson employee that the squash would not be put in the cooler. Petitioner thinks Wilson was more interested in moving the cantaloupe than the hard squash. Petitioner thinks his squash was not put in the cooler or was put in too late. Wilson denies that Petitioner’s squash was not put into the cooler or was put in late. Robert Wilson claims that he made many calls in an effort to sell Petitioner’s squash, but he could not find interested buyers for all of the squash because (1) the demand for hard squash dried up, (2) some of Petitioner’s squash was of low quality, and (3) the squash began to spoil. Petitioner denied these allegations. Petitioner received invoices and other paperwork from Wilson showing that Wilson sold Petitioner’s first delivery of 490 boxes of acorn squash for $10.18 per box. It sold Petitioner’s second delivery of 519 boxes of acorn squash for $2.08 per box. For Petitioner’s third delivery of 110 boxes of acorn squash and 240 boxes of spaghetti squash, Wilson “dumped” the acorn squash by giving it to away for free to the Society of St. Andrews food bank, and sold the spaghetti squash for $5.15 per box. Wilson sold petitioner’s fourth delivery of 279 boxes of butternut squash for $.55 per box.1 Competent substantial evidence in the record established that it is a regular occurrence for agricultural products awaiting sale to decay and become unsellable, and for the broker to dump the products in a landfill or give the products to a charitable organization and then provide the grower a receipt for tax deduction purposes. It was undisputed that Wilson did not notify Petitioner before disposing of his squash. Petitioner claims he should have been notified by Wilson if the squash was beginning to spoil. However, Petitioner did not prove that prior notification was a term of their oral contract. Petitioner claims further that the federal Perishable Agricultural Commodities Act required Wilson to notify Petitioner before dumping the squash and to have the squash inspected to determine whether, in fact, it was spoiled. As discussed in the Conclusions of Law below, this federal law is not applicable. Competent substantial evidence in the record established that the market for agricultural products fluctuates and, at times, can fluctuate rapidly. For hard squash, which is normally prepared in an oven, the market demand can drop dramatically due to the onset of warm weather simply because people tend not to cook hard squash dishes in warm weather. Petitioner’s squash was being marketed in May, which means the beginning of warm weather for most areas of the United States. This fact supports Wilson’s claim that the demand for hard squash had been good, but fell rapidly just at the time Wilson was trying to sell Petitioner’s squash. The problem with the claims made by Petitioner in this case is simply one of insufficient proof. It is not enough for Petitioner to offer theories about what he thinks happened or to raise questions which are not fully answered. Petitioner had no proof that his squash was not put in Wilson’s cooler, that his squash did not begin to decay, that the demand for hard squash did not fall rapidly, that Wilson did not make reasonable efforts to sell the squash, that Wilson had willing buyers for Petitioner’s squash at a better price, or that Wilson sold squash from other growers at a better price. Petitioner’s evidence for his claims consisted primarily of market price reports that he contends show the approximate price Wilson should have gotten for the hard squash. Market price reports have some relevance to the issues in this case, but competent evidence was presented that the prices quoted in the publications are not always reliable to indicate the price a grower can expect to get on any given day, because there are factors that cause the published market price to be an inflated price (and applicable to the highest grade of produce) and because the market price can change rapidly with a change in demand for the product. The oral contract between Petitioner and Wilson required Wilson to try to get the best price for Petitioner’s squash, not some particular price appearing in a particular market price report. Petitioner did not show that Wilson got a better price for hard squash of equal quality, or that other brokers in the area got a better price for hard squash of equal quality at the times relevant to this case. Petitioner’s evidence was insufficient to prove that Wilson did not make a reasonable and good faith effort to sell Petitioner’s squash at the best price.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order dismissing Petitioner’s amended claim. DONE AND ENTERED this 7th day of March, 2008, in Tallahassee, Leon County, Florida. BRAM D. E. CANTER 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 7th day of March, 2008.
The Issue The issue is whether Respondent committed an act of discrimination in employment based on age, in violation of Section 760.10(1)(a), Florida Statutes.
Findings Of Fact Petitioner was born on December 11, 1951. She was employed by Respondent from 1977 until December 27, 1999, at which time Respondent terminated her. During the entire term of her employment, Petitioner has served as an outside sales representative. As an outside sales representative, Petitioner was typically assigned a territory within which she was to serve existing advertisers and develop new advertisers. Petitioner often helped customers prepare their advertisements and plan and budget their advertising campaigns. While employed with Respondent, Petitioner helped train Mr. Fine, who has been employed with Respondent for nearly 13 years. Mr. Fine is currently the National Advertising Director, but, during the time in question, served as the Broward Advertising Sales Manager, and, as such, he supervised Petitioner. He served as the Broward Advertising Sales Manager from September 1998 through February or March 2000. While Broward Advertising Sales Manager, Mr. Fine supervised eight sales representatives. Mr. Fine found that Petitioner was strong in persuasiveness, but weak at times when she displayed a negative attitude and sense of entitlement to her job and her way of doing her job. She also treated customers inconsistently. In February 1999, Mr. Fine disciplined Petitioner for her handling of an internal fax that the Broward office received from an employee of Respondent in another office. The fax was addressed to a member of management and contained salary information about five persons in the office. Petitioner happened to find the fax and revealed its contents to her coworkers before delivering it to the addressee. When Mr. Fine reprimanded Petitioner for her actions, she denied any wrongdoing. Next, Mr. Fine began receiving complaints from various of Petitioner's customers, mostly over a relatively short period of time. A marketing person at the Swap Shop complained that Petitioner was brusque in dealing with her. Another customer representative mentioned that Petitioner had criticized one of her coworkers in suggesting that the customer place all of its business with Petitioner. A similar situation arose with another customer, to whom Petitioner claimed that its outside sales representative handled only smaller accounts. A representative of the Florida Philharmonic Orchestra requested that Mr. Fine assign it a new outside sales representative because Petitioner raised her voice and talked down to its young, inexperienced marketing person. On June 29, 1999, Mr. Fine sent a memorandum to his supervisor, Donna Sasser, who was then Advertising Director. The memorandum describes Petitioner as "dynamite" and expresses concern as to when she "will blow and who she will hurt." At the time, Mr. Fine was concerned that Petitioner's actions might undermine morale among the other staff for whom he was responsible. Ms. Sasser advised Mr. Fine to communicate to Petitioner specific expectations in terms of job performance and customer interaction in particular. Mr. Fine met with Petitioner and detailed his problems with her job performance and his expectations for improvement. By memorandum dated July 30, 1999, Mr. Fine memorialized the meeting, including specific customer complaints, and warned that Petitioner's job "will end, even within the next few weeks, if you are unable to achieve the following: no additional customer complaints, monthly goals [met] on a consistent basis; positive, collaborative attitude with co-workers, customers, and managers; [and] acceptance of responsibility for what goes well and what does not go well." Petitioner resisted Mr. Fine's criticism. By memorandum dated August 22, 1999, she defended her actions by pointing to shortcomings elsewhere within Respondent. Significantly, the memorandum does not address the complaints about brusque, discourteous treatment of employees of customers. At this point, Mr. Fine, who was a young manager, was legitimately concerned about whether Petitioner's attitude would undermine his ability to do his job. Mr. Fine resolved to assess over the next three to six months whether Petitioner met the goals that he stated in the July 30 memorandum. In late October 1999, a representative of the Cleveland Clinic complained about Petitioner's handling of its account. The complaints included Petitioner's "flip attitude" and "lack of professionalism." Two months later, Mr. Fine received a more serious complaint because it involved a loss of revenue to Respondent and the advertiser. Due to some miscommunication, Respondent published the wrong advertisement for a customer. When the customer's representative telephoned Petitioner and complained, she blamed someone at the Fort Lauderdale Sun Sentinel, who had supplied her the wrong advertisement for publication. When she did not call him back on the day that she had promised, the customer representative called Respondent, complained about the poor handling of the account, noted the reduction in advertising from his company over the past year as compared to the prior year, and requested a different outside sales representative. Mr. Fine consulted with Ms. Sasser and Janet Stone, the Human Relations specialist assigned to advertising. The three agreed that Respondent should terminate Petitioner. Their decision was submitted through four levels of management--up to the level of Publisher--and each level approved the decision before it was implemented. On December 27, 1999--six days after the receipt of the last complaint--Mr. Fine and Ms. Stone met with Petitioner and told her that she had been terminated. At the hearing, Petitioner presented evidence of a contemporaneous complaint about age discrimination that she had made to a Human Relations specialist who had since left the employment of Respondent. Respondent contested this assertion, but Petitioner's August 22 memorandum states that, as a "female over 40 I feel the harassment and stress that you have been putting on me is totally unnecessary." Although not a formal complaint concerning age discrimination, this memorandum is an early mention of Petitioner's age within the context of harassment. Based on the testimony of coworkers, Mr. Fine was a high-pressure manager, given to yelling, but he did not make age-related comments to Petitioner. Even if Petitioner had timely made comprehensive complaints about age discrimination, the record in this case does not support her claim that her termination was due to age discrimination. Mr. Fine hired two outside sales representatives over 40 years old, and the only other outside sales representative whom he fired was under 40 years old. More importantly, he treated employees the same without regard to age. Most importantly, Petitioner's job performance provided Mr. Fine with ample reason to fire her. Without regard to the quality of the support that Petitioner received, customer satisfaction is paramount in advertising. In a competitive environment, Mr. Fine justifiably sought satisfaction of all customers, not just favored customers. Mr. Fine could not reasonably allow Petitioner to continue to treat discourteously representatives of advertisers, regardless of the merits of her claims of inadequate support. Past evaluations suggest that interpersonal relations was never Petitioner's strength. Despite an obvious talent at advertising sales and considerable experience, Petitioner's frustrations with the perceived incompetence of her coworkers and customers' employees weakened her interpersonal skills beyond a critical point, so that her other strengths no longer offset this important deficit.
Recommendation It is RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing Petitioner's Charge of Discrimination. DONE AND ENTERED this 2nd day of July, 2002, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 2nd day of July, 2002. 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 Jan Hall-Szugye 3834 Panther Creek Road Clyde, North Carolina 28721 Ellen M. Leibovitch Adorno & Yoss, P.A. 700 South Federal Highway, Suite 200 Boca Raton, Florida 33432
The Issue Whether Respondent Department of Revenue’s (Department) January 27, 2020, Notice of Proposed Assessment to Petitioner B Century 21, Inc. (B Century 21) is incorrect.
Findings Of Fact Parties The Department is the state agency responsible for administering Florida’s sales and use tax laws, pursuant to chapter 212, Florida Statutes. B Century 21 is a Florida S-Corporation that operates two liquor stores (Al’s Liquor and Arlington Liquor), as well as a bar (Overtime Sports Bar), in Jacksonville, Florida. Mr. Altheeb is the sole owner of B Century 21 and testified that he is solely responsible for the operation of it, including the two liquor stores and bar. With respect to the operation of B Century 21, Mr. Altheeb testified, “I do all the paperwork, all the books, all the taxes. I do all the orders.” Matters Deemed Admitted and Conclusively Established2 B Century 21 received correspondence from the Department, dated August 20, 2019. That correspondence, from Ms. Pitre, stated, in part, “I will be conducting an examination of your books and records as authorized under Section 213.34, Florida Statutes.” B Century 21 received the Department’s form DR840, Notice of Intent to Audit Books and Records, dated August 20, 2019, including the Sales and Use Tax Information Checklist. The form DR-840 indicated that the Department intended to audit B Century 21 for a tax compliance audit for the period of July 1, 2016, through June 30, 2019. The Sales and Use Tax Information Checklist listed a number of categories of documents the Department intended to review as part of this audit. B Century 21 (through its accountant, power of attorney, and qualified representative, Mr. Isaac) received the Department’s October 30, 2019, correspondence, which referenced the “Audit Scope and Audit Commencement,” and an attached Records Request list. B Century 21 (through Mr. Isaac) received an email, dated October 30, 2019, from Ms. Pitre. That email references an attached Audit Commencement Letter. B Century 21 (through Mr. Isaac) received an email, dated November 12, 2019, from Ms. Pitre, which inquired of “the status of the records requested during the meeting with you and Mr. Altheeb on October 29, 2019.” B Century 21 (through Mr. Isaac) received the Department’s Notice of Intent to Make Audit Changes, form DR-1215, dated December 16, 2019. The form DR-1215 reflects a total amount of tax of $170,232.93, a penalty of $42,558.24, and interest through December 16, 2019, of $25,461.86, for a total deficiency of $238,253.04. The form DR-1215 also reflects that if B Century 2 See Order Granting Motion Declaring Matters Admitted and Setting Discovery Deadline. Fla. R. Civ. P. 1.370(b). 21 did not agree with these audit changes, or only agreed with a portion, that it had until January 15, 2020, to request a conference or submit a written request for an extension. Further, the form DR-1215 attached a Notice of Taxpayer Rights, which included additional detail on the options available to B Century 21. B Century 21 (through Mr. Isaac) received correspondence from Ms. Pitre, dated December 16, 2019, which stated that as of the date of the correspondence, the Department had not received the information previously requested on October 13, 2019, which it needed to complete the audit. The correspondence stated that B Century 21 had 30 days to review the audit changes, provided contact information to B Century 21 if it wished to discuss the findings in the form DR-1215, and noted that if the Department did not hear from B Century 21 within 30 days, it would send the audit file to the Department’s headquarters in Tallahassee, Florida. B Century 21 (through Mr. Isaac) received the Department’s Notice of Proposed Assessment, form DR-831, dated January 27, 2020. The form DR- 831 reflects a total amount of tax of $170,232.93, a penalty of $42,558.24, and interest through January 27, 2020, of $27,224.82, for a total deficiency of $240,016.00. For the time period between August 20, 2019, and January 7, 2021, B Century 21 did not provide the Department with: (a) any sales records; (b) any purchase records; or (c) any federal tax returns. For the time period between August 20, 2019, and January 7, 2021, B Century 21 did not provide any records to the Department for examination in conducting the audit. Additional Facts In 2011, for the purpose of enforcing the collection of sales tax on retail sales, the Florida Legislature enacted section 212.133, Florida Statutes, which requires every wholesale seller (wholesaler) of alcoholic beverage and tobacco products (ABT) to annually file information reports of its product sales to any retailer in Florida. See § 212.133(1)(a) and (b), Fla. Stat. Once a year, ABT wholesalers report to the State of Florida their name, beverage license or tobacco permit number, along with each Florida retailer with which they do business, the Florida retailer’s name, retailer’s beverage license or tobacco permit number, retailer’s address, the general items sold, and sales per month. See § 212.133(3), Fla. Stat. The information collected captures the 12-month period between July 1 and June 30, and is due annually, on July 1, for the preceding 12-month period. Id. ABT wholesalers file these reports electronically through the Department’s efiling website and secure file transfer protocol established through the Department’s efiling provider. § 212.133(2)(a), Fla. Stat. Ms. Baker explained this statutory process further: [W]e annually, every year in the month of May, my unit reaches out to the Florida Department of Business and Professional Regulations. We compel them to give us a list of all of the active wholesalers who were licensed to sell to retailers in the state of Florida for the prior fiscal year. Once we receive that list, we then mail a notification to all those wholesalers and state the statute and the requirements and give them a user name and a password that will allow them to then log into that portal and submit their retail—their wholesale—or their wholesale sales to retailers in the state of Florida for the prior fiscal year. Those reports are due on July 1st of each year, but they are not considered late until September 30th of that year. So that gives the wholesaler population a couple of months to compile all of their sales for the prior year, fill out their reports and submit them to the Florida Department of Revenue by the end of September. Additionally, each month, and for each retail location, B Century 21 reports gross monthly sales to the Department, and remits sales tax, utilizing the Department’s form DR-15. Ms. Baker further described the process the Department utilizes in identifying an “audit lead,” utilizing the data that ABT wholesales provide: Specifically for ABT, we have a very, actually, kind of simple comparison that we do. . . . [A]s a taxpayer, as a retailer in the state of Florida, you may purchase from multiple wholesalers. So, part of our job is we compile all of the purchases that each beverage license or tobacco license has purchased, and once we compile all the purchases for the fiscal year, then to say, you know, what were the purchases for the fiscal year versus what were the reported sales for the fiscal year. And, again, a pretty simple comparison we really look to see, did you purchase, or . . . did you report enough sales to cover the amount of purchases that we know you made as a – as a retailer. And if the sales amount does not exceed the purchase amount, then we’ll create a lead on it. The Department’s efiling provider exports the ABT wholesalers’ information to SunVisn, the Department’s database. The Department’s analysts review the ABT wholesalers’ reported data, and taxpayer information, to identify audit leads. The Department then assigns these audit leads to its service centers to conduct an audit. A tax audit period is 36 months. In conducting ABT audits, the Department has 24 months of reported data (i.e., the first 24 months of the audit period) for review. This is because the timing of section 212.133(3) requires ABT wholesalers to report annually on July 1, for the preceding 12- month period of July 1 through June 30. For the ABT reporting data examination period of July 1, 2016, through June 30, 2018 (a period of 24 months), B Century 21’s gross sales for its two liquor stores was as follows: Liquor Store Reported Gross Sales Al’s Liquor $1,051,128.56 Arlington Liquor $902,195.49 For the same 24-month time period of July 1, 2016, to June 30, 2018, B Century 21’s wholesalers reported the following ABT inventory purchases to the State, as required under section 212.133: Liquor Store ABT Inventory Purchases Al’s Liquor $1,250,055.79 Arlington Liquor $1,174,877.98 As the ABT wholesalers’ reported ABT inventory purchases by B Century 21’s retail outlets were higher than B Century 21’s reported sales, the Department issued an audit lead, which led to the audit that is at issue in this proceeding. The Audit For the 36-month audit period of July 1, 2016, through June 30, 2019 (audit period), B Century 21’s reported gross sales for each of its locations was: Location Reported Gross Sales Al’s Liquor $1,557,569.74 Arlington Liquor $1,434,551.65 Overtime Sports Bar $968,476.08 On August 20, 2019, Ms. Pitre mailed to B Century 21 (and received by Mr. Altheeb), a Notice of Intent to Audit Books and Records for the audit period. Included with the Notice of Intent to Audit Books and Records was correspondence informing B Century 21 of the audit and requesting records. On August 26, 2019, Ms. Pitre received a telephone call from Mr. Altheeb. Ms. Pitre’s case activity notes for this call state: Received a call from Baligh Altheeb and he said he will be hiring Brett Isaac as his POA [power of attorney]. I informed him to complete the POA form and to give it to Mr. Isaac for signature and send to me. He knows about ABT Data assessments and asked that I note on the case activity that he contacted me regarding the audit. He was worried that his liquor license will be suspended if he does not respond right away. I informed him that once I receive the POA, I will contact Mr. Isaac and discuss the audit. On October 18, 2019, the Department received B Century 21’s executed power of attorney (POA) form naming Mr. Isaac as its POA for the audit. The executed POA form reflects that the Department’s notices and written communications should be sent solely to Mr. Isaac, and not B Century 21. The executed POA form further reflects that “[r]eceipt by either the representative or the taxpayer will be considered receipt by both.” On October 29, 2019, Ms. Pitre met with Mr. Altheeb and Mr. Isaac at Mr. Isaac’s office, for a pre-audit interview. Ms. Pitre’s case activity notes for this meeting state: Met with the taxpayer contact person, POA Brett Isaac and owner Baligh Thaleeb [sic], at the POA’s location to conduct the pre-audit interview. Discussed the scope of the audit, records needed to conduct the audit, availability of electronic records, business organization, nature of the business, internal controls, and the time line of the audit. Discussed sampling for purchases and POA signed sampling agreement. Made appointment to review records on November 12, 2019. Toured one of the location [sic] to observe business operations, Overtime Sports Bar. On October 30, 2019, Ms. Pitre emailed Mr. Isaac a copy of the Notice of Intent to Audit Books and Records, which included a “Sales and Use Tax Information Checklist,” which requested specific taxpayer records. After receiving no response from Mr. Isaac, Ms. Pitre, on November 12, 2019, emailed Mr. Isaac concerning “the status of the records requested during the meeting with you and Mr. Altheeb on October 29, 2019.” Section 212.12(5)(b) provides that when a taxpayer fails to provide records “so that no audit or examination has been made of the books and records of” the taxpayer: [I]t shall be the duty of the department to make an assessment from an estimate based upon the best information then available to it for the taxable period of retail sales of such dealer … or of the sales or cost price of all services the sale or use of which is taxable under this chapter, together with interest, plus penalty, if such have accrued, as the case may be. Then the department shall proceed to collect such taxes, interest, and penalty on the basis of such assessment which shall be considered prima facie correct, and the burden to show the contrary shall rest upon the [taxpayer]. Section 212.12(6)(b) further provides: [I]f a dealer does not have adequate records of his or her retail sales or purchases, the department may, upon the basis of a test or sampling of the dealer’s available records or other information relating to the sales or purchases made by such dealer for a representative period, determine the proportion that taxable retail sales bear to total retail sales or the proportion that taxable purchases bear to total purchases. Mr. Collier testified that, in the absence of adequate records, the Department “estimates using best available information, and for this industry … ABT sales are a higher percentage of their taxable sales.” Because B Century 21 did not provide adequate records to Ms. Pitre, she estimated the total taxable sales for the audit period. For each liquor store that B Century 21 operated, she multiplied its total ABT purchases by average markups to calculate total ABT sales. To derive these average markups, Mr. Collier explained that the Department receives data from wholesalers, and then: [W]e take that purchase information, apply average markup to the different ABT product categories, which include cigarettes, other tobacco, beer, wine, and liquor; and then that gets us to total ABT sales number. And then we derive what we call a percentage of ABT sales, percentage of that number represents. And in this particular model, 95.66 percent represents what we believe in a liquor store industry, that this type of business, that 95.66 percent of their sales are ABT products. We derive the markups, and the percentage of ABT sales from a number of liquor store audits that the Department had performed on liquor stores that provided records. The Department utilized markup data from other ABT audits. The Department applied the following markups to these ABT categories: 6.5 percent for cigarettes; 47.5 percent for other tobacco products; 17.33 percent for beer; 29.84 percent for wine; and 24.5 percent for liquor. Applying the Department’s markup for liquor stores to the wholesalers’ reported ABT data and percentage of taxable sales, Ms. Pitre estimated taxable sales for the ABT reporting data examination period and calculated the under-reported sales error ratio as follows: Location Estimated Taxable Sales Error Ratio Al’s Liquor $1,597.544.01 1.519837 Arlington Liquor $1,516,259.34 1.680633 The Department then divided B Century 21’s estimated taxable sales for the examination period, for each liquor store, by its self-reported tax sales in its DR-15s to arrive at the under-reported rate. The Department then multiplied the under-reported rate by the reported taxable monthly sales in the DR-15s to arrive at the estimated taxable sales for the 36-month audit period. The result of this calculation was: Location Estimated Taxable Sales Al’s Liquor $2,367,252.11 Arlington Liquor $2,410,954.82 The Department then multiplied the estimated taxable sales by an effective estimated tax rate which, after giving credit for B Century 21’s remitted sales tax, resulted in tax due for the Al’s Liquor and Arlington Liquor for the audit period, as follows: Location Sales Tax Owed Al’s Liquor $58,367.01 Arlington Liquor $70,068.44 For Overtime Sports Bar, the Department could not use ABT wholesalers’ data to estimate an assessment because the Department does not have audit data averages for bars and lounges. The Department used the “Tax Due Method” in estimating under-reported taxes and calculating under- reported taxable sales. Mr. Collier explained: The Department does not have average markup and percentage of sales for a bar. Though, you know, obviously, we all know that a bar, their main product that they sell and in most cases is ABT products. So, therefore, typically, an auditor would need to get information about that specific location. Bars can vary so much in their type of business that they do, they can be like nightclubs, or they can be like bar and grill that serves a lot of food. So there’s a lot of variances there for that particular type of industry, so we haven’t really come up with average markups, average percentage of sales for bars, per se. It’s a case-by- case situation, and in this case, the auditor decided that the fair, reasonable way to estimate the bar location would be to just average the error ratios that were derived from the Al’s Liquor and the other liquor store location and apply it to the taxable sales reported for the bar. And I think that’s a very fair and reasonable estimate based on what we all know in a bar situation; their markups are significantly higher. And of course, there can be plenty of other non-ABT taxable sales occurring in a bar setting, such as prepared food, you know, just your regular cokes and drinks. So it’s certainly a fair way to estimate in this particular audit and I believe only benefits the taxpayer. The undersigned credits the Department’s methodology for estimating an assessment for Overtime Sports Bar. Further, Mr. Altheeb testified that Overtime Sports Bar operates as both a sports bar and a liquor/package store, and stated: Most of it—it’s a liquor store. I don’t know if you know the area, it’s a liquor store on the Westside. So most of it—the sport bar doesn’t really do too much business in the Westside, mostly the liquor stores. People coming in and buy package, you know, buy bottles and leave. So, most of the business is the drive-through window. The Department’s decision to average the error ratios for the other two liquor stores to derive the additional tax due average for Overtime Sports Bar is reasonable, particularly in light of Mr. Altheeb’s testimony that Overtime Sports Bar operates primarily as a liquor (package) store. The Department calculated the additional tax due average error ratio for Overtime Sports Bar by averaging the error ratios of Al’s Liquor and Arlington Liquor, and then multiplied it by B Century 21’s reported gross sales to arrive at the additional tax due for Overtime Sports Bar of $41,797.49. Ms. Pitre testified that she determined that, for the audit period, B Century 21 owed additional sales tax of $170,232.93. In addition, the Department imposed a penalty and accrued interest. On December 16, 2019, Ms. Pitre sent correspondence, the preliminary assessment, and a copy of the audit work papers to B Century 21 (through Mr. Isaac), informing B Century 21 that it had 30 days to contact the Department’s tax audit supervisor to request an audit conference or submit a written request for an extension. After receiving no response from B Century 21, Ms. Pitre forwarded the audit workpapers to the Department’s headquarters in Tallahassee, Florida, to process the Notice of Proposed Assessment. B Century 21’s Position As mentioned previously, and after initially meeting with the Department, B Century 21 failed to provide requested financial records or respond to any of the numerous letters and notices received from the Department, despite being given adequate opportunity to do so. And, after filing its Amended Petition, it failed to timely respond to discovery requests from the Department which, inter alia, resulted in numerous matters being conclusively established. Mr. Isaac served as the POA for B Century 21 during the audit, and also appeared in this proceeding as a qualified representative. However, Mr. Isaac did not appear at the final hearing, did not testify as a witness at the final hearing, and does not appear to have done anything for B Century 21 in this proceeding, other than filing the Petition and Amended Petition. After Mr. Heekin appeared in this matter, and well after the time to respond to discovery, B Century 21 provided 127 pages of documents to the Department. These documents consist of: 18 pages of summaries of daily sales that Mr. Altheeb prepared for the hearing; 41 pages of sales and use tax returns from B Century 21 locations, covering 25 months (DR-15s); 2 pages of Harbortouch’s 2016 1099K, reporting credit card sales; 43 pages of unsigned federal tax returns from 2016, 2017, and 2018, prepared by Mr. Isaac; and 17 pages of B Century 21’s untimely responses to the Department’s discovery requests. Florida Administrative Code Rule 12-3.0012(3) defines “adequate records” to include: (3) “Adequate records” means books, accounts, and other records sufficient to permit a reliable determination of a tax deficiency or overpayment. Incomplete records can be determined to be inadequate. To be sufficient to make a reliable determination, adequate records, including supporting documentation, must be: Accurate, that is, the records must be free from material error; Inclusive, that is, the records must capture transactions that are needed to determine a tax deficiency or overpayment; Authentic, that is, the records must be worthy of acceptance as based on fact; and Systematic, that is, the records must organize transactions in an orderly manner. The nature of the taxpayer’s business, the nature of the industry, materiality, third-party confirmations and other corroborating evidence such as related supporting documentation, and the audit methods that are suitable for use in the audit, will be used to establish that the taxpayer has adequate records. The undersigned finds that the summaries of daily sales are not adequate records because Mr. Altheeb prepared them for use at the final hearing, rather than in the regular course of business. The undersigned finds that the DR-15s provided by Mr. Altheeb, covering 25 months, are not adequate records because they are incomplete and are not inclusive. The audit period encompassed 36 months, for B Century 21’s three retail locations; however, Mr. Altheeb only provided 25 months of DR-15s. The 2016, 2017, and 2018 federal tax returns that B Century 21 provided are not adequate records because they are not authentic. Mr. Altheeb was unable to verify if these tax returns were correct, and they were unsigned. B Century 21 did not provide any evidence that it had filed any of these federal tax returns with the Internal Revenue Service. Ms. Pitre reviewed the 127 pages of documents that B Century 21 provided and testified that the summaries of daily sales did not provide the “source documents” for verification. The unsigned federal tax returns reflect that B Century 21 reported a cost-of-goods-sold (COGS) of $518,606.00 for 2016; $1,246,839.00 for 2017; and $796,968.00 for 2018. Additionally, the unsigned federal tax returns reflect that B Century 21 reported a beginning inventory (BI) for 2016 of $95,847.00, and a year-end inventory (EI) for 2016 of $200,556.00, EI for 2017 of $280,235.00, and EI for 2018 of $295,628.00. When comparing the unsigned federal tax returns with the ABT wholesalers’ data, the federal tax returns reflect, for 2016, total inventory purchases of $623,315.00 (which is derived from $518,606.00 (COGS) + $200,556.00 (EI) - $95,847.00 (BI)). However, the ABT wholesalers’ data for 2016 reflects that B Century 21’s ABT purchases were $1,174,997.34 – a discrepancy of more than $500,000.00. For 2017, the federal tax returns reflect total inventory purchases of $1,326,518.00 (which is derived from $1,246,839.00 (COGS) + $280,235.00 (EI) for 2017 - $200,556.00 (EI) for 2016). However, the ABT wholesalers’ data for 2016 reflects that B Century 21’s ABT purchases were $1,422,854.79 – a discrepancy of over $96,000.00. And for 2018, the unsigned federal tax returns reflect total inventory purchases of $812,361.00 (which is derived from $796,968.00 (COGS) + $295,628.00 (EI) for 2018 - $280,235.00 (BI) for 2017). However, the ABT wholesalers’ data for 2018 reflects that B Century 21’s ABT purchases were $1,335,814.00 – a discrepancy of over $500,000.00. Mr. Altheeb testified that Arlington Liquor and Overtime Sports Bar opened in 2016 – after B Century 21 began ownership and operation of Al’s Liquor. He stated that he did not purchase inventory for the openings of the newer locations, but instead transferred excess inventory from Al’s Liquor, which resulted in lower total inventory purchases for 2016. Mr. Altheeb also testified that B Century 21’s three locations experienced spoiled inventory. However, B Century 21 should include spoiled inventory in COGS reported in its federal tax returns, and further, B Century 21 provided no additional evidence of the cost of spoilage for the audit period. The undersigned finds that the ABT wholesalers’ data for 2016 through 2018 reflects similar amounts for inventory purchases between 2016 through 2018. The undersigned credits the Department’s reliance on the ABT wholesalers’ data, which reflect fairly consistent purchases for each year. The undersigned does not find the unsigned federal tax returns that B Century 21 provided to be persuasive evidence that the Department’s assessment was incorrect. Mr. Altheeb testified that he believed Mr. Isaac, who B Century 21 designated as POA for the audit, and who appears as a qualified representative in this proceeding, was actively handling the audit. Mr. Altheeb stated that the audit, and the final hearing, “kind of came out of nowhere” and that once he learned of it, he retained Mr. Heekin and provided “everything” to him. However, it is conclusively established that the Department provided correspondence and notice to B Century 21 through its designated POA, and that B Century 21 failed to respond to record requests in a timely manner. Mr. Isaac neither testified nor appeared at the final hearing to corroborate Mr. Altheeb’s claims that Mr. Isaac did not keep Mr. Altheeb or B Century 21 apprised of the status of the audit, including the failure to provide requested records or to communicate with the Department. B Century 21 also attempted to challenge the Department’s use of markup data from other ABT audits, in an attempt to argue that the markups were inflated and not representative of B Century 21’s markups. However, and as previously found, B Century 21’s failure to timely provide records—or respond in any meaningful way to the audit—undermines this attempt. The undersigned credits the Department’s methodology in using the best information available to it for the audit period in calculating the assessment. Although it became apparent during the final hearing that Mr. Altheeb did not treat the audit of B Century 21 with appropriate seriousness, and deflected blame to Mr. Isaac, and that his approach resulted in a legally appropriate and sustainable audit and assessment based on the Department’s best information available, the undersigned does not find that B Century 21, Mr. Isaac, or Mr. Heekin knew that the allegations of the Amended Petition were not supported by the material facts necessary to establish the claim or defense, or would not be supported by the application of then-existing law to those material facts. The undersigned finds that the Department made its assessment based on the best information then available, and is thus prima facie correct, pursuant to section 212.12(5)(b). The undersigned further finds that B Century 21 did not prove, by a preponderance of the evidence, that the Department’s assessment is incorrect, pursuant to section 212.12(5)(b).
Conclusions For Petitioner: Robert Andrew Heekin, Esquire The Law Office of Rob Heekin, Jr., P.A. 2223 Atlantic Boulevard Jacksonville, Florida 32207 For Respondent: Randi Ellen Dincher, Esquire Franklin David Sandrea-Rivero, Esquire Office of the Attorney General Revenue Litigation Bureau Plaza Level 1, The Capitol Tallahassee, Florida 32399
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, the undersigned hereby RECOMMENDS that the Department enter a final order sustaining the January 27, 2020, Notice of Proposed Assessment to B Century 21, Inc. DONE AND ENTERED this 21st day of October, 2021, in Tallahassee, Leon County, Florida. S ROBERT J. TELFER III Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of October, 2021. COPIES FURNISHED: Mark S. Hamilton, General Counsel Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Randi Ellen Dincher, Esquire Office of the Attorney General Revenue Litigation Bureau Plaza Level 1, The Capitol Tallahassee, Florida 32399 Robert Andrew Heekin, Esquire The Law Office of Rob Heekin, Jr., P.A. 2223 Atlantic Boulevard Jacksonville, Florida 32207 Franklin David Sandrea-Rivero, Esquire Office of the Attorney General Plaza Level 1, The Capitol Tallahassee, Florida 32399 Brett J. Isaac 2151 University Boulevard South Jacksonville, Florida 32216 James A Zingale, Executive Director Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668
The Issue The issue for consideration in this matter is whether Petitioner, Classie Sales, Inc. (Classie), is entitled to be compensated for produce sold and delivered to Respondent, Tolar Farms (Tolar), and if so, in what amount.
Findings Of Fact On June 30, 1990, Roger Harloff, on behalf of Roger Harloff Farms, and John A. Tipton, Secretary of Classie Sales, Incorporated, a sales agent founded by Harloff, entered into a written agreement whereby Classie would serve as sales agent for all sales of produce grown by or on Roger Harloff Farms. Between October 17, 1995 and December 9, 1995, Classie, on behalf of Roger Harloff Farms, sold watermelons with a total net sales price of $170,839.27 and tomatoes with a total net value of $1,720.00 to Tolar Farms. These sales were not direct sales to Tolar but transactions wherein Tolar was to sell the produce to whomever would buy it at an agreed price and would withhold its 3/4 per pound commission from the sales price, remitting the balance to Classie. Trucks arranged for by Tolar picked the produce up at the growing field and at the time of pickup, Classie issued to Tolar a packet jacket for each load sold. As the loads were sold Tolar would issue a ticket for that load which bore the shipping date, the lot number, the farmer, the transporting trailer's tag, the truck broker, the truck driver, and the weight of the product. Sometime later, when the produce was sold, Tolar issued an invoice bearing Classie Sales' logo, reflecting Tolar as the buyer and showing the lot number which corresponded to the load ticket, the shipping date, a description of the produce, the quantity, the unit price for that load, and the extended price from which was deducted Tolar's commission and an unspecified assessment. These documents were then forwarded to Classie. The terms of the sale between Tolar and Classie, on behalf of Harloff, were loose. The invoice documents reflected a net due 21 days after invoice date. The first delivery in issue here was made on October 17, 1995, and 21 days after that is November 7, 1995. The amount reflected by the deliveries made after that date is $27,509.72. Respondent, Preferred, claims that since Classie continued to make deliveries to Tolar's drivers after it was not paid within 21 days after the first shipment, it failed to mitigate its damages and should not be paid for any deliveries made after November 7, 1995. Classie was not paid for any of the instant invoices by Tolar, but Classie did not become concerned about Tolar's failure to make timely payment until January 1996. Tolar's payment and pricing practices were no different during this time than in years past. Typically, Tolar would start out quickly notifying Classie of the sales. As the number of shipments grew, however, the time for notification grew longer. It must be noted that less than two months transpired from the date of the first shipment in issue to the last.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Agriculture enter a Final Order in this matter directing Tony and Robert Tolar, d/b/a Tolar Farms, to pay Classie Sales, Inc., the sum of $172,559.27. In the event this sum is not paid by Tolar, the Department should apply the bond posted by Preferred National Insurance Company in the amount of $75,000.00. DONE and ENTERED this 15th day of July, 1996, 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 15th day of July, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 96-1776A To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. 1. - 13. Accepted and incorporated herein. Accepted and incorporated herein as the testimony of the witness. Not a Finding of Fact but a comment on the issues. Accepted and incorporated herein. Respondent Preferred's Proposed Findings of Fact. Preferred accepted all of Classie's Proposed Findings of Fact but suggested an amendment to Number 14. The suggested amendment was made a part of the Findings of Fact made by the Hearing Officer. Respondent Tolar's Proposed Findings of Fact: Tolar consented and agreed to all Petitioner's Proposed Findings of Fact except for Number 9. The substance of Tolar's objection to Classie's Number 9, relating to a provision for a commission, has been made a part of the Findings of Fact of the Hearing Officer. COPIES FURNISHED: Hywel Leonard, Esquire Carlton Fields Post Office Box 3239 Tampa, Florida 33601-3239 Scott R. Teach, Esquire Meuers and Associates, P.A. 2590 Golden Gate Parkway, Suite 109 Naples, Florida 34106 David A. Higley, Esquire Higley and Barfield, P.A. The Maitland Forum 2600 Lake Lucien Drive, Suite 237 Maitland, Florida 32751-7234 Honorable Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, Florida 32399-0810 Richard Tritschler General Counsel Department of Agriculture The Capitol, PL-10 Tallahassee, Florida 32399-0810 Brenda Hyatt, Chief Bureau of Licensing and Bond Department of Agriculture 508 Mayo Building Tallahassee, Florida 32399-0800
The Issue The issue is whether Rule 5J-10.001, Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority, pursuant to Section 120.52(8), Florida Statutes.
Findings Of Fact Pursuant to Sections 559.801(2) and 559.813(2), Florida Statutes, Respondent has exclusive administrative jurisdiction over the Sale of Business Opportunities Act, Chapter 559, Part VIII, Florida Statutes, and shares judicial enforcement over the Act with the Florida Department of Legal Affairs and the applicable office of the state attorney. (Unless stated otherwise, all references to "Sections" shall be to Florida Statutes, all references to the "Act" shall be to the Sale of Business Opportunities Act, and all references to "Rules" shall be to the Florida Administrative Code.) The Act governs the sale or lease of certain business opportunities in Florida. Sections 559.803 and 559.804 respectively require sellers of covered business opportunities to provide timely disclosures to prospective purchasers and to file annual disclosure statements with Respondent prior to advertising or offering covered business opportunities for sale. More relevant to this case, Section 559.801 sets forth the definitions that establish the coverage of the Act: 559.801 Definitions.--For the purpose of ss. 559.80-559.815, the term: (1)(a) "Business opportunity" means the sale or lease of any products, equipment, supplies, or services which are sold or leased to a purchaser to enable the purchaser to start a business for which the purchaser is required to pay an initial fee or sum of money which exceeds $500 to the seller, and in which the seller represents: That the seller or person or entity affiliated with or referred by the seller will provide locations or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases, currency or card operated equipment, or other similar devices or currency-operated amusement machines or devices on premises neither owned nor leased by the purchaser or seller; That the seller will purchase any or all products made, produced, fabricated, grown, bred, or modified by the purchaser using in whole or in part the supplies, services, or chattels sold to the purchaser; That the seller guarantees that the purchaser will derive income from the business opportunity which exceeds the price paid or rent charged for the business opportunity or that the seller will refund all or part of the price paid or rent charged for the business opportunity, or will repurchase any of the products, equipment, supplies, or chattels supplied by the seller, if the purchaser is unsatisfied with the business opportunity; or That the seller will provide a sales program or marketing program that will enable the purchaser to derive income from the business opportunity, except that this paragraph does not apply to the sale of a sales program or marketing program made in conjunction with the licensing of a trademark or service mark that is registered under the laws of any state or of the United States if the seller requires use of the trademark or service mark in the sales agreement. For the purpose of subparagraph 1., the term "assist the purchaser in finding locations" means, but is not limited to, supplying the purchaser with names of locator companies, contracting with the purchaser to provide assistance or supply names, or collecting a fee on behalf of or for a locator company. "Business opportunity" does not include: The sale of ongoing businesses when the owner of those businesses sells and intends to sell only those business opportunities so long as those business opportunities to be sold are no more than five in number; The not-for-profit sale of sales demonstration equipment, materials, or samples for a price that does not exceed $500 or any sales training course offered by the seller the cost of which does not exceed $500; or The sale or lease of laundry and drycleaning equipment. "Department" means the Department of Agriculture and Consumer Services. "Purchaser" includes a lessee. "Seller" includes a lessor. An important question in this case is the extent to which the Act addresses affiliates of a seller. In fact, the Act does so only once. In describing the various disclosure requirements imposed upon a "seller," Section 559.803 mentions an affiliate in Section 559.803(1), which requires the disclosure of "the name of any parent or affiliated company that will engage in business transactions with the purchasers or who takes responsibility for statements made by the seller." In describing the annual filings, Section 559.805 does not mention "affiliates." Nor do the main enforcement provisions of the Act mention "affiliates." Section 559.809 prohibits 14 specified acts by "sellers". Section 559.813(2)(a) specifies five violations by "a seller or any of the seller's principal officers or agents" that may result in the penalties set forth in Section 559.813(2)(b). In connection with the sale or lease of business opportunities, Respondent has adopted three rules at Chapter 5J-10, Florida Administrative Code. Petitioners have challenged, in its entirety, Rule 5J-10.001, which supplies several definitions. Rule 5J-10.001 states: 5J-10.001 Definitions. The definitions contained in Section 559.801, Florida Statutes, and the following apply: “Initial Fee or sum of money,” as used in Section 559.801(1)(a), F.S., shall include the total funds paid by the purchaser to the seller, including all monies paid for deposits, down payments, prepaid rents, equipment costs, materials, samples, products, training, services or inventory purchases. “Material change” shall include any fact, circumstance, or set of conditions which has a substantial likelihood of influencing a purchaser or a reasonable prospective purchaser in the making of a significant decision relating to a named business opportunity or which has any significant financial impact on a purchaser or prospective purchaser. “Sales program or marketing program” means: A written or oral procedure or plan provided by the seller to a purchaser of a business opportunity concerning products, equipment, supplies, services or training that the seller represents will be provided on how to sell or market the product or service; or Where the seller provides to the purchaser the following devices, techniques, training or materials which will assist the purchaser in deriving income from the business opportunity: Sales or display equipment or merchandising devices; Specific sales or marketing techniques; or Sales, marketing or advertising materials which are intended for use by the purchaser to influence a consumer to purchase a product or service. “Seller” includes any person who has an ownership interest of 10% or greater in an entity which sells or leases business opportunities. Specific Authority 570.07(23) FS. Law Implemented 559.801, 559.803, 559.805 FS. History–New 11-15-94, Amended 6-4-95. Respondent adopted Rule 5J-10.001 effective November 15, 1994, and amended it effective June 4, 1995. The specific authority cited for the rule, Section 570.07(23), provides only that Respondent "shall have and exercise the following functions, powers, and duties: To adopt rules pursuant to ss. 120.536(1) and 120.54 to implement provisions of law conferring duties upon it." However, in 1997, the Legislature adopted Section 559.813(8), which broadens Respondent's rulemaking authority under the Act by providing: "The department has the authority to adopt rules pursuant to chapter 120 to implement this part." In defining "seller" in Rule 5J-10.001(4), Respondent relied on the Federal Trade Commission (FTC) regulations at 16 Code of Federal Regulation (CFR) Part 436 (collectively, the "Franchise Rule"). In particular, Respondent relied on 16 CFR 436.2, explaining in a response to an interrogatory that Rule 5J-10.001(4) "was intended to clarify the identity of persons sufficiently affiliated with the sale of a business opportunity by virtue of their share ownership (16 C.F.R. 436.2) upon whom a duty should be imposed to make the required statutory disclosures in the sale of a business opportunity." In 16 CFR Sections 436.2(a)(1)(i) and (ii), the FTC identifies two types of franchises covered under the FTC Act: the package and product franchise and the business opportunity. As the name implies, the business opportunity described in 16 CFR Section 436.2(a)(1)(ii) bears the closer resemblance to the Act. Under 16 CFR Section 436.2(a), both types of franchises require an arrangement and, more importantly, "any continuing commercial relationship." For the business opportunity, 16 CFR Section 436.2(a)(1)(ii)(A) requires that a franchisee offer, sell, or distribute to a person other than the franchisor goods or services that are supplied by the franchisor, supplied by a third person with whom the franchisor requires the franchisee to do business, or supplied by an affiliate of the franchisor with whom the franchisee is advised by the franchisor to do business. In addition, for the business opportunity, 16 CFR Section 436.2(a)(1)(ii)(B) requires that the franchisor secure for the franchisee retail outlets or accounts, locations or sites for product sales displays (such as vending machines or rack displays), or the services of a person to secure these retail outlets, accounts, locations or sites. Also, 16 CFR Section 436.2(i) defines an "affiliated person" as a person that "directly or indirectly controls, or is controlled by, or is under common control with, a franchisor"; that "directly or indirectly owns, controls, or holds with power to vote, 10 percent or more of the outstanding voting securities of a franchisor"; or that "has, in common with a franchisor, one or more partners, officers, directors, trustees, branch managers, or other persons occupying similar status or performing similar functions." However, the definitions in 16 CFR Section 436.2 apply only to terms "used in this part," and 16 CFR Part 436 does not cover enforcement and liability issues--only disclosures and definitions, including coverage definitions. In fact, the sole purpose of the affiliate definition in 16 CFR Section 436.2 is to explain the disclosure requirements set forth in 16 CFR Sections 436.1(a)(7) (total funds required to be paid to franchisor or its affiliates), 436.1(a)(8) (recurring funds required to be paid to franchisor or its affiliates), 436.1(a)(9) (names of affiliates with which franchisee is required or advised to do business), 436.1(a)(11) (basis for calculating actual revenue to be received by franchisor or its affiliates), 436.1(a)(12) (financing conditions offered by franchisor or its affiliates), and 436.1(a)(14) (extent to which franchisee--or, if a corporate, franchisee's affiliates--to participate directly in the franchised operation). Nowhere in the Franchise Rule does the affiliate definition broaden the scope of the persons liable for violations of the federal law. On July 26, 2002, Respondent filed an Administrative Complaint against Petitioners and three allegedly related corporations and transmitted the matter to the Division of Administrative Hearings (DOAH) for a formal hearing. This proceeding was designated DOAH Case No. 02-3374. At the same time, Respondent imposed an Immediate Final Cease and Desist Order ordering that Petitioners and three allegedly related corporations discontinue the sale of business opportunities in Florida. (The First District Court of Appeal later stayed the enforcement of this order.) On October 11, 2002, Respondent served an Amended Administrative Complaint. The undersigned Administrative Law Judge completed the hearing in DOAH Case No. 02-3374 on November 25, 2002. As of the date of this final order, the parties have not yet filed their proposed recommended orders. In the Administrative Complaint, Amended Administrative Complaint, and Immediate Final Cease and Desist Order, Respondent relies on Rules 5J-10.001(3) and (4), but not Rules 5J-10.001(1) and (2). With respect to Rule 5J-10.001(3) ("Sales or Marketing Program Rule"), Respondent alleges that the business opportunities are covered by the Act because of the presence of a "sales program or marketing program." With respect to Rule 5J-10.001(4) ("Seller Rule"), Respondent alleges that Petitioners are liable as owners of one or more named corporations that are "sellers" who have violated the Act. With respect to Rules 5J-10.001(1) and (2), respectively, the regulatory definitions of an "initial fee or sum of money" or "material change" play no significant role in DOAH Case No. 02-3374. For this reason, Petitioners are not substantially affected by these rules, and the Conclusions of Law below determine that Petitioners lack standing to challenge Rules 5J-10.001(1) and (2), which are not further discussed in this final order.
Recommendation Based on the foregoing findings of fact and conclusions of law I hereby recommend that the Petitioner's challenge to the Department's determination of sales taxes due herein pursuant to Chapter 212, Florida Statutes, be denied and that the revised assessment notices be upheld as issued. RECOMMENDED this 17th day of January, 1978, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Cecil Davis, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 Robert F. Nunez, Esquire Post Office Box 12726 St. Petersburg, Florida 33733 Mercer Farrington, Esquire Post Office Box 1548 Tallahassee, Florida 32302
The Issue The issues in this case concern the question of whether Computer Resources, Inc., offered a responsive bid to the invitation from the State of Florida, Department of General Services, and the related question of whether it is entitled to the award of a contract for the provision of items 1 through 9 within the bid apparatus. In determining these issues, the testimony at hearing of Jerry Wensloff and Danielle Stark, witnesses for Computer Resources, Inc., has been considered. The testimony of George Banks and Bill Fox, called by the State of Florida, Department of General Services, has also been considered. Finally, the testimony of Mark Smith and Kent Coykendall, witnesses for Verbatim Corporation, has been considered. Joint Exhibits Nos. 1 through 9, Exhibit No. 1 of the State of Florida, Department of General Services, Verbatim Corporation's Exhibits Nos. 1 through 5 and Computer Resources, Inc.'s, Exhibits Nos. 1 through 4 have been examined. SUMMARY OF THE ARGUMENTS The State of Florida, Department of General Services urges the rejection of the Computer Resources, Inc., bid based upon its belief that the bid was unresponsive due to the fact that technical literature provided by that bidder was for different products than those described as being products offered in response to the bid invitation. Further, the Department believes that the bid was unresponsive because at the time the bid response was made, the products that were being offered by Computer Resources, Inc., were not current models. These alleged failures on the part of Computer Resources, Inc., in the perception of the State of Florida, Department of General Services, constitute material defects or departures from the bid requirements. Computer Resources, Inc., argues that its bid is responsive in terms of technical information provided and asserts that the products offered in response to the bid were current models. Verbatim Corporation has the same concerns expressed by the Department on the topic of the acceptability of Computer Resources, Inc.'s, bid and also asserts that testing done on some of the products which Computer Resources, Inc., would intend to offer pursuant to contract reveals that those products do not meet the bid specifications. Consequently, Verbatim wishes to have the contract for items 1 through 9 awarded to it as the lowest responsive bidder.
Findings Of Fact The State of Florida, Department of General Services ("DGS"), offered for bid its project number 407-250-440-B. This bid involved the purchase of single-sided and double-sided computer diskettes. Among those companies who responded to this invitation to bid were Computer Resources, Inc., ("CRI") and Verbatim Corporation ("Verbatim"). Having examined the bid responses in the subject project, DGS rejected the CRI bid as not responsive. The bid opening occurred on August 1, 1986. Given that CRI had been the low bidder by dollar amount, the rejection of its bid caused the Department to declare its intention to award the contract to Verbatim, the next lowest bidder. When confronted with the declaration of alleged unresponsiveness, CRI offered a timely challenge to that declaration by DGS. By way of relief, CRI requested an informal Section 120.57(2), Florida Statutes, hearing to resolve the dispute. Verbatim was not made aware of this proceeding to resolve the case by an informal hearing until that hearing had been convened by a hearing officer within DGS and conducted. Subsequently, upon the reconvening of the informal proceeding, it was determined that disputed facts existed between the parties and the case was referred to the Division of Administrative Hearings for conduct of a formal hearing in accordance with Section 120.57(1), Florida Statutes. That hearing before the Division of Administrative Hearings was held on June 19, 1987. More particularly, when DGS put the subject bid out by mailing on June 24, 1986, the invitation to bid sought responses for 33 different types of computer diskettes which would be made available for purchase by state agencies in Florida and others entitled or required to participate in the State of Florida's purchasing system administered by DGS. The total annual dollar volume of the contract approximated $800,000. Items 1 through 9, which are the items in contest in this dispute, represent the majority of the contract. CRI had initially protested the declaration of this alleged unresponsiveness on all items, 1 through 33. It subsequently withdrew its protest on items 10 through 33, leaving for consideration items 1 through 9. The invitation to bid specified two sizes of computer diskettes: 5 1/2 inch and 8 inch. Of the remaining items at issue, 1 through 9, an award could be made for all nine items or each of those nine items separately. Twenty-three vendors submitted bids in response to the invitation. Following bid opening on August 1, 1986, and its evaluation, DGS issued the bid tabulation on September 16, 1986. Fourteen bids were found responsive, Verbatim among them. The CRI bid was rejected based upon the Department's concerns that CRI had not provided published specifications for the products that it offered in response to the bid invitation. DGS also rejected the bid because it did not believe that CRI was offering a current model as called for in the bid document. The specific nature of those concerns is discussed in succeeding paragraphs. A substantial requirement within the bid specifications related to the necessity for the diskettes sought for purchase to attain a clipping level of at least 60 per cent. Basically, the clipping level is a measure of the diskettes ability to retain the electronic/magnetic signal originally fed to it. It corresponds to the amount of signal remaining on the diskettes following the initial signal transmittal. This is important because the higher percentage of retention represents better longevity in storage of data applied to the diskettes. In order to identify the retention capacity of the diskette, the diskettes are tested during the manufacturing process to determine their clipping level. DGS had raised the previous requirements which it had for clipping level of diskettes, from 40 per cent to 60 per cent, given the wide range of users who would be utilizing the diskettes and the fact that some of those users were less discriminating in their care of the diskettes and because the higher capacity in clipping level was seen as promoting a greater protection of data storage. The invitation to bid further described technical specifications which mandated that the diskettes provided under contract would achieve a 60 per cent "clipping level" for missing pulse and a 20 per cent "clipping level" for extra pulse. In particular, at paragraph 3.1.8 of the invitation to bid, it was specified that "Diskettes must be individually tested and certified to assure 60 per cent or more of the original clipping signal strength remaining on each bit recorded for retrieval. A copy of the manufacturer's published specifications shall be included in the bid." On the seventh page of the specifications, paragraph 3.1.9(A) set forth that the missing pulse should have no permanent errors on all tracks at 60 per cent clipping level. The invitation to bid contained a special condition which mandated that the bid responses be accompanied by technical literature on the products bid. This special condition stated: Technical literature is a requirement of this bid to accommodate an evaluation to assure that products offered meet or exceed the specifications attached hereto. Failure to provide such data with the bid may result in rejection of the bid. There is also set forth in the general conditions at paragraph 4e, entitled "Conditions and Packaging," as follows: It is understood and agreed that any item offered or shipped as a result of this bid shall be new (current model at the time of this bid). All containers shall be suitable for storage and shipment and all prices shall include standard commercial packaging. The requirement that the bidders submit technical literature to assist in evaluation of the products in their compatibility with bid specifications was critical, made the more so in that DGS was not in a position to test the clipping level. Nor was the end user in a position to determine the clipping level of the product bid. Should the diskettes fail to meet the 60 per cent clipping level, there would ensue a potential problem of the loss of data and the need to reenter that lost data into the system, assuming that there was some other source from which the data could be recaptured. These concerns prompted the requirement of paragraph 3.1.7 in the bid document which mandated that the diskettes must be 100 per cent individually certified or verified to be error free. In summary, the only assurance that DGS and its prospective users have that the diskettes are as billed, is the ability to examine the published specifications of the companies' bids and ascertain whether they are in accordance with bid specifications and upon the promise by the bidders in their responses that current products are being offered. Within its bid response, CRI, in its price sheet for items 1 through 9, describes the brand name of the products bid as being CRI brand. The identifying numbers for the products bid in these items utilized eight digits, the last three digits as to each item being constituted of the numbers 333. By contrast, the product specifications contained within the bid response of CRI in the lead sheet identified the product as CRI Opus and within the product specifications description found on sheets two through four identified the products as Opus brand. In both the lead sheet and sheets describing the particulars of the products it is indicated that these diskettes were manufactured by Computer Resources, Inc., Compared to the numbering system found in the pricing sheets, the first five digits were similar in the product specifications to those found in the pricing sheets; however, the product specification information did not include the suffix numbers, or final three numbers, 333. Given the circumstances set forth in the price listing and the product specifications as offered in CRI's bid response and the explanation of those materials presented at hearing, it is concluded that CRI intended to provide CRI brand products if awarded the contract for items 1 through 9. Nonetheless, in its product specification sheets the Opus brand product was being described. What had transpired, according to the CRI representative who submitted the product specification sheets, was that CRI brand product information was not available for submission with the bid materials tendered by CRI and as a consequence, this individual took product information pertaining to Opus brand products which described a 50 per cent clipping level for missing pulse and changed that 50 per cent to 60 per cent in an attempt to comply with the requirement for 60 per cent clipping level. An Opus brand product at 50 per cent clipping level was not acceptable. In effect, CRI tailored the product specification sheet pertaining to the Opus brand products in an effort to meet the particular requirements of the subject bid invitation. According to its witness, the product specifications or technical data that CRI intended to offer with its bid response was found in Joint Exhibit No. 5, admitted into evidence. It shows a 60 per cent clipping level. Per the employee for CRI involved in the preparation of the bid response in discussion, this is the set of materials that he wished to offer, thereby avoiding the necessity to white out the 50 per cent clipping level and substitute a 60 per cent clipping level. Interestingly, the Joint Exhibit No. 5 is the same as what was submitted with the exception that on the lead sheet of the Joint Exhibit No. 5 there are found the initials OEM, meaning original equipment manufacturer. OEM products which CRI was manufacturing at the relevant time were for the benefit of purchasers who used their own brand names, not the Opus brand name. The impact of the Joint Exhibit No. 5 does not change the difficulty that DGS would have in trying to ascertain whether Opus products or CRI products were being offered in response to the bid. Joint Exhibit No. 5 continues to give the impression that Opus is the brand which is being described, and not CRI. Moreover, given the facts that were adduced at hearing, there is a serious question about whether technical literature existed which showed Opus products at a 60 per cent clipping level, as opposed to a 50 per cent clipping level. Notwithstanding Computer Resources, Inc.'s, protestations to the contrary, while CRI and Opus are names that are associated with Computer Resources, Inc., the manufacturer, the brand names CRI and Opus are separate marketing lines and not synonymous. CRI is a brand name which Computer Resources, Inc., has selected in marketing its products for government purposes, such as under consideration here, and Opus is a brand name employed in the basic marketing of Computer Resources, Inc., products for sale other than in a setting such as found in this dispute. The problems with the CRI bid were made the more bewildering for DGS when review of the submission of Florida Ribbon and Carbon Office Products, another bidder in this project, revealed that it was offering a product manufactured by Computer Resources, Inc., known as Unicopy, which in the details of the product specifications were similar to the offering by CRI and set out a 50 per cent clipping level, which was found to be unacceptable. The Florida Ribbon and Carbon Office Products bid submission carried the same five-digit numbering code in identifying the Unicopy products in describing its product specifications that was found in the CRI product specifications for its Opus brand products. That bid response by Florida Ribbon and Carbon Office Products also attached certain sales information pertaining to Opus brand diskettes. Testimony pointed out that CRI was manufacturing diskettes with 50 per cent clipping level to be sold by Florida Ribbon and Carbon Office Products under the Unicopy brand. DGS, in the face of this information pertaining to Florida Ribbon and Carbon Office Products, was uncertain about the true capacity of the product offered by CRI. Was it 50 per cent or 60 per cent? The bid submission by CRI, in its compatibility sheets related to cross referencing with equipment of other manufacturers, listed Opus as the brand, not CRI. This enhanced the confusion about which products were being offered: Opus or CRI? None of the numbers employed in the system of identification for Computer Resources, Inc., pertaining to the diskettes which are at issue identify the clipping level of the product. The first five digits used in its number identification system describe the basic nature of the diskettes and the use of the suffix or latter three numbers describe packaging or routing information. Consequently, when DGS or its users refer to these numbers, they cannot ascertain what clipping level is found within the diskettes. The bid submission made by CRI did not explain the differing marketing ideas in the use of the CRI or Opus brands, nor did it explain how the numbering system works and whether there was any compatibility between a CRI product and an Opus product. An examination of the facts leads to the conclusion that Computer Resources, Inc., was not selling a product under the CRI brand name on August 1, 1986, bid opening day, which met the 60 per cent clipping level for missing pulse, such that technical specifications or product specifications for CRI brand could have been supplied with Computer Resources, Inc.'s, bid response. Petitioner's Exhibit No. 1 admitted into evidence, correspondence of December 26, 1985, from Jerry E. Wensloff to Tab of Nashville, says that Computer Resources, Inc., was dealing with a 60 per cent clipping level for system houses, software houses, etc. who ask for a 60 per cent clipping level in products which they ordered from Computer Resources, Inc., This does not equate to the manufacture of products under the CRI brand name which carried with them technical specifications describing a 60 per cent clipping level. The provision of the 60 per cent clipping level for these various purchasers was under what the letter describes as Computer Resources, Inc.'s, operation for supplying OEM, or original equipment manufacture. At the time of the correspondence, as stated in that correspondence, approximately 50 per cent of Computer Resources, Inc.'s, business as a manufacturer was OEM accounts wherein some demand of 60 per cent clipping level had been made by purchasers. On August 1, 1986, in the warehouse associated with the manufacturing plant for the type of diskette in question here, Computer Resources, Inc., was holding in inventory products under the Opus brand name. It had no stocks under the CRI brand name. Subsequently, Computer Resources, Inc., gained contracts with two state governments and began to make available diskettes under the CRI brand name. The standard packaging product which Computer Resources, Inc., was manufacturing on August 1, 1986, using the Opus brand name was at a 50 per cent clipping level. A sixty per cent clipping level product under the Opus brand was provided upon request. The Unicopy brand name associated with Florida Ribbon and Carbon Office Products was at a 50 per cent clipping level on August 1, 1986, in accordance with the arrangement between Computer Resources, Inc., and Florida Ribbon and Carbon Office Products. On August 1, 1986, the company known as Ashton Tate had an ongoing arrangement with Computer Resources, Inc., for the manufacture of diskettes with 60 per cent clipping level, which Computer Resources, Inc., described as an OEM account. Computer Resources, Inc., did not have other routine OEM accounts at that time or at the point of final hearing in this case. On August 1, 1986, the time when the bids were opened, the process which Computer Resources, Inc., employed for distinguishing differences in the diskettes in terms of clipping level response was through certification. Once the diskettes' performance was graded, the diskettes were placed in bins with a move ticket. In essence, this was a sorting process by clipping level following the manufacture of the diskettes. In August 1986, the manufacturing plant which produces the diskettes which are marketed by Computer Resources, Inc., did runs of diskettes at 60 per cent clipping level about ten days out of the month. Leftover products following the manufacture of 60 per cent clipping level for Ashton Tate would be used to fill other accounts that made specific request for that clipping level, but the leftover diskettes were not being separately marketed as a 60 per cent clipping level product. CRI had shipped sample diskettes to DGS on August 22, 1986, to demonstrate the nature of its products' appearance to the state. Further request was made by the state for sample products on March 19, 1987, and on March 24, 1987, those products were shipped to DGS. In the March 1987 shipment, the products that were shipped were label led as CRI products and carried with them a five digit model number corresponding to five digit model numbers provided in Computer Resources, Inc., product specifications submitted with the bid response. In addition to the boxes containing the diskettes, the diskettes themselves bore this product numbering system. The boxes and contents did not carry the suffix or last three digits found in the pricing sheet which had been submitted with the bid response of Computer Resources, Inc. On the other hand, a packing list did carry eight digit numbers, with the last three numbers being 353, a suffix which was different from that found in the pricing list of the bid submission by CRI. The suffix change was designed to distinguish the packaging of the CRI product. DGS had been concerned that Computer Resources, Inc., in submission of its CRI brand name, could not meet the 15-day delivery requirement which DGS had for shipment of the products at issue. In both the August 1986 and March 1987 shipments of CRI diskettes, the 15-day threshold was met. While CRI has shown the ability to ship a small amount of products under the CRI label on those two occasions, on August 1, 1986, at the place and time where the bid was opened, Computer Resources, Inc., was not making available any significant amount of 60 per cent clipping level products as called for by the items 1 through 9, either as a CRI brand or an Opus brand. It was stocking Opus products in the 50 per cent clipping level and its principal 60 per cent clipping level account was with Ashton Tate, which merchandise was already spoken for. Any other arrangement for provision of 60 per cent clipping level products was on an "as needed" basis. Verbatim obtained part of the sample diskettes which had been sent to DGS in March 1987. It obtained ten double-sided, double-density diskettes and twenty Single-sided, double-density diskettes. These diskettes had been specifically tested by Computer Resources, Inc., before sending them to the State of Florida and shown to perform, according to this testing, at a 75 per cent clipping level. Testing done by Verbatim in Sunnyvale, California, and Charlotte, North Carolina, revealed a number of failures below the 60 per cent clipping level. The California tests showed four out of ten failures for double-sided diskettes and one out of twenty failures for single-sided diskettes, whereas the North Carolina experience was three of ten of the double- sided diskettes failed and one of twenty single-sided diskettes failed. The equipment utilized by Computer Resources, Inc., for testing prior to shipment and the equipment in testing conducted by Verbatim was different. In addition, handling of the diskettes can adversely affect the performance of the diskettes in terms of signal retention. Conversely, at times testing can enhance that performance. On balance, given the adversarial posture of the private litigants in this cause, no conclusion is reached on the true capacity of the diskettes which were tested by Computer Resources, Inc., and Verbatim. The experiences in testing do point out the efficacy of the requirement that DGS be provided a clear statement of the technical information concerning the products bid by Computer Resources, Inc. In summary, Computer Resources, Inc., did not submit technical information and specifications associated with the brand of product that it intended to offer if the contract was awarded to it. Indeed, the technical information which it would have submitted had it had the time to prepare it was for a product brand different than the brand it had bid on this project. That is to say, the specifications offered at the time the bid was submitted were for Opus products and the specifications which it desired to offer at the time that the bids were submitted were also for Opus products, not CRI. Furthermore, there is some question on whether legitimate specifications existed pertaining to Opus products with a 60 per cent clipping level on August 1, 1986, the date of bid opening. In this circumstance, it is not appropriate that DGS allow the substitution of specifications as envisioned by the Joint Exhibit No. 5 pertaining to the Opus products or any other substitution of specifications. Taking into account the facial appearance of the bid response of Computer Resources, Inc., and the evidence which was presented at the final hearing which attempted to describe the significance of those materials, with particular emphasis on the confusion about brand names, model numbers, the inability to differentiate clipping levels by reference to product numbers provided by Computer Resources, Inc., and the confusion created for DGS as a consequence, the technical information provided by Computer Resources, Inc., is found to be inadequate. Likewise, Computer Resources, Inc., did not have a current model at the time the bids were opened on August 1, 1986, under the brand name CRI, the brand which it chose to operate under for the purpose of this bide which could be provided to DGS. It had the capacity to produce that quality of diskette and was producing it as what it described as OEM for the benefit of Ashton Tate and a few other smaller accounts. This, however, could not be considered a current model of CRI brand. Finally, the fact that the declaration of disqualification of the Computer Resources, Inc., bid causes additional expense to the State is not sufficient reason to declare the Computer Resources, Inc., bid responsive. Such an outcome runs contrary to the weight of the evidence and would be inappropriate.
