The Issue The issue for determination is whether Respondent discriminated against Petitioner on the basis of her disabilities, in violation of Sections 509.092 and 760.08, Florida Statutes (2004), by refusing to grant Petitioner access to the front of a designated parade viewing area.
Findings Of Fact Petitioner is a minor female and is an individual with disabilities. Petitioner has recognized impairments that substantially limit one or more major life activities. Petitioner is diagnosed with cerebral palsy and is legally blind. Petitioner has a visual acuity of 20/200 in the right eye, 20/160 in the left eye, and 20/160 in both eyes. Petitioner visited Disney's Magic Kingdom (Kingdom) in Orlando, Florida, with her family on February 21, 2005. The visit occurred at a time identified in the record as President's Day Weekend. That weekend is one of the most heavily attended times of the year at the Kingdom. Petitioner and her family attended the SpectroMagical Parade (parade) at 9:00 p.m. The parade travels a route through the streets of the Kingdom. The parade route is approximately one mile in length, thereby providing two miles of front viewing area on both sides of the streets that form the parade route. The entire parade route is accessible and has comparable lines of sight over the entire route. From sometime in the 1970s, Respondent has voluntarily maintained three designated parade viewing areas along the parade route for use by guests with disabilities. The viewing areas are intended to enhance the ability of disabled individuals to view and enjoy the parade. Respondent has also maintained a full-time department known as the Services for Customers with Disabilities (services department). The services department is devoted exclusively to assisting guests with disabilities and training designated employees in how to properly assist guests with disabilities. The services department has voluntarily implemented a number of other services to ensure that guests with disabilities will enjoy their experience at the Kingdom. Among other things, the services department has produced a Guidebook for Guests with Disabilities (Guidebook), developed accessible rides and handheld captioning devices, implemented a Guest Assistance Card program, and printed Guidemaps for its theme parks. Respondent makes Guidebooks available in all of its theme parks and provides Guidebooks to guests free of charge. The Guidebook summarizes service offerings to provide assistance to guests with disabilities. The Guidebook also sets forth policies and procedures pertaining to a number of accessibility related issues. For example, the Guidebook covers policies and procedures for service animals, describes various types of access for disabled individuals, identifies rides that have wheelchair space, provides directions to accessible entrances, describes services for the hearing impaired, and describes the policy and procedure concerning access and use of designated parade viewing areas. The Guidebook expressly provides that parade viewing areas designated for guests with disabilities are filled on a "first come, first served" basis. This policy is consistent with policies and procedures concerning viewing areas for all guests, irrespective of whether they are disabled. The Guidebook expressly provides that employees permit disabled guests to occupy designated parade viewing areas with non-disabled companions and family members and will not separate disabled guests from their companions or family members. Up to five people may accompany guests with disabilities into the viewing areas. The policy does not limit access to parade viewing areas to disabled individuals who use wheelchairs. Employees will not displace any non-disabled family member or companion in order to add a disabled guest to the viewing area (non-displacement policy). Respondent uniformly implements the non-displacement policy for rides, theaters, attractions, and shows. Due to limited space in the designated parade viewing areas, the Respondent advises guests to arrive well in advance of the parade time. Respondent also posts policies and procedures relating to designated parade viewing areas on Respondent's internet web site. The information is also available from designated employees. Respondent trains these employees in the proper etiquette for assisting guests with disabilities in accordance with Respondent's policies and procedures. Respondent also disseminates Guidemaps of its theme parks to assist guests with disabilities. Guidemaps, among other things, identify the location of the designated parade viewing areas for guests with disabilities and show the parade route. Respondent has also developed and implemented a Guest Assistance Card program. Guest Assistance Cards contain certain types of assistance requested by guests with disabilities. The type of assistance requested is placed on the face of the Guest Assistance Card thereby avoiding the need for guests to explain the same request at every attraction, show, or ride. The assistance requested varies from guest to guest depending on their disability. The services department provides a Guest Assistance Card to any guest with a disability who requests a card. Respondent does not independently verify the disability of any guest who requests a Guest Assistance Card. Respondent does not limit the amount of Guest Assistance Cards issued and may issue hundreds or thousands of cards in a day. One form of assistance is available seating in the "front row of ride vehicles or theaters, where applicable." This assistance permits a guest with a hearing or visual disability to sit in the front of a theater or ride to enhance his or her experience. When requested, this form of assistance is placed on the Guest Assistance Card. A Guest Assistance Card does not guarantee that space will be available in a guest viewing area, that the guest will have immediate access to the area, or that front row seating will be available at every event. The Guest Assistance Card permits front row seating when available and only at those activities or facilities listed on the card. This policy is clearly printed on each Guest Assistance Card, along with the non-displacement policy. Assistance in the form of front row seating is limited to ride vehicles and theaters. Ride vehicles are moving conveyances that are boarded and ridden in, such as roller coasters. Theaters are facilities with fixed seating where a show is presented. Fixed seating is a designated area where seats or chairs are affixed to the ground and are therefore stationary and immobile. Parade viewing areas for individuals with disabilities are neither ride vehicles nor theaters. Parade viewing areas do not provide fixed seating but are designated areas on sidewalks along the parade route. Assistance in the form of front row seating does not apply to parade viewing areas along streets or sidewalks. Even if the viewing areas were theaters or rides, the non-displacement policy applies to rides and theaters. Respondent issued a Guest Assistance Card to Petitioner in an area identified in the record as EPCOT. Petitioner requested assistance in the form of front row seating, and the card authorized front row assistance. Petitioner arrived at a designated viewing area in an area of the Kingdom identified as Liberty Square approximately 20 minutes prior to the start of the parade. Petitioner requested access to the front of the viewing area. However, the front of the viewing space was already filled by guests in wheelchairs. The appropriate employee directed Petitioner and her family to a second designated parade viewing area located at an area of the Kingdom identified in the record as the hub. By the time Petitioner arrived at the second parade viewing area, the front of the viewing area was full with guests in wheelchairs and their companions and family members. Respondent did not displace other guests with disabilities and did not displace their family members or their companions so that Petitioner and her family would have access to the front of the viewing area. Although there was room in the second viewing area for Petitioner and her sister, there was not room for Petitioner's other family members. There was no room for Petitioner and her sister in the front of the parade viewing area.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order finding that Respondent did not discriminate against Petitioner on the basis of a disability or handicap. DONE AND ENTERED this 2nd day of May, 2006, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 May, 2006. COPIES FURNISHED: Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Carol Pacula Walt Disney World Company 1375 Buena Vista Drive Orlando, Florida 32830 Kimberly M. Chicvak c/o Michael Chicvak 23 Twin Oaks Drive Kings Park, New York 11754 Brian C. Blair, Esquire Greenberg Traurig, P.A. 450 South Orange Avenue, Suite 650 Orlando, Florida 32801 Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
The Issue The issue for determination in this cause is whether petitioner is entitled to a refund in the amount of $6,306.32 paid into the state treasury as sales tax. More specifically, the issue is whether the registration or participation fee charged by petitioner to its members at the 1975 summer national bridge tournament is taxable as an "admission" under Florida Statutes 212.02(16) and 212.04.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The petitioner, the American Contract Bridge League, Inc., is a nonprofit corporation incorporated under the laws of New York in 1938. Its membership is approximately 200,000, representing areas all over the North American continent. Its purposes include educational, cultural and charitable pursuits. Among other things, petitioner annually sponsors three national tournaments in various areas of the United States. In August of 1975, petitioner held its summer national tournament at the Americana Hotel in Bal Harbour, Dade County, Florida. Over 1,000 tables for approximately 5,500 members were in operation for the nine-day event. Many of these 5,500 members played in two or more events. In order to participate in each event, the member was required to pay a registration fee ranging from $3.00 to $4.50. No sales tax was included by petitioner in its registration fee. While spectators at the tournament were permitted, it was not intended as a spectator event. No special provision was made for the seating of spectators, whose number rarely exceeded one hundred and who were composed primarily of relatives or friends of the actual players or participants. No admission charges were made to spectators. On previous occasions, petitioner has held bridge events in Florida. On no such occasion has the State of Florida attempted to assess the sales tax on petitioner's registration or participation fees. No other state in which petitioner has held its tournaments has assessed petitioner for sales or other taxes on this fee. The respondent Department of Revenue informed petitioner that the registration fees collected at the 1975 summer national tournament constituted a taxable event, subject to the Florida sales tax, and petitioner, under protest, forwarded a check in the amount of $6,306.32. Thereafter, petitioner applied for a refund pursuant to the provisions of F.S. 215.26. The Comptroller denied the refund application.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that petitioner's request for a refund in the amount of $6,306.32 be denied. Respectfully submitted and entered this 21st day of March, 1977, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of March, 1977. COPIES FURNISHED: Comptroller Gerald Lewis The Capitol Tallahassee, Florida 32304 Patricia Turner, Esquire Assistant Attorney General Department of Legal Affairs The Bloxham Building Tallahassee, Florida 32304 Paul J. Levine, Esquire 2100 First Federal Building One Southeast 3rd Avenue Miami, Florida 33131
The Issue Pursuant to chapter 287, Florida Statutes, and section 255.25, Florida Statutes,1/ the Department of Management Services (DMS) released an Invitation to Negotiate for a contract to provide tenant broker and real estate consulting services to the State of Florida under Invitation to Negotiate No. DMS-12/13-007 (ITN). After evaluating the replies, negotiating with five vendors, and holding public meetings, DMS posted a notice of intent to award a contract to CBRE, Inc. (CBRE) and Vertical Integration, Inc. (Vertical). At issue in this proceeding is whether DMS’s intended decision to award a contract for tenant broker and real estate consulting services to CBRE and Vertical is contrary to DMS’s governing statutes, its rules or policies, or the ITN’s specifications, or was otherwise clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Based on the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Background5/ DMS released Invitation to Negotiate No. DMS-12/13-007 on March 18, 2013, and released a revised version of the ITN on May 14, 2013, for the selection of a company to provide tenant broker and real estate consulting services to the State of Florida. Thirteen vendors responded to the ITN. The replies were evaluated by five people: Bryan Bradner, Deputy Director of REDM of DMS; Beth Sparkman, Bureau Chief of Leasing of DMS; Rosalyn (“Roz”) Ingram, Chief of Procurement, Land and Leasing of the Department of Corrections; Clark Rogers, Purchasing and Facilities Manager of the Department of Revenue; and Janice Ellison, Section Lead in the Land Asset Management Section of the Department of Environmental Protection. Five vendors advanced to the negotiation stage: Cushman (score of 87), JLL (score of 87), CBRE (score of 87), Vertical (score of 89), and DTZ (score of 86). DTZ is not a party to this proceeding. The negotiation team consisted of Beth Sparkman, Bryan Bradner, and Roz Ingram. Janice Ellison participated as a subject matter expert. DMS held a first round of negotiations and then held a public meeting on July 16, 2013. DMS held a second round of negotiations and then held a second public meeting on August 1, 2013. A recording of this meeting is not available, but minutes were taken. Also on August 1, 2013, DMS posted Addendum 8, the Request for Best and Final Offers. This Addendum contained the notice that “Failure to file a protest within the time prescribed in section 120.57(3) . . . shall constitute a waiver of proceedings under chapter 120 of the Florida Statutes.” The vendors each submitted a BAFO. DMS held a final public meeting on August 14, 2013, at which the negotiation team discussed the recommendation of award. All three members of the negotiation team recommended Vertical as one of the two vendors to receive the award. For the second company, two of the three negotiation team members recommended CBRE and one negotiation team member recommended JLL. DMS prepared a memorandum, dated August 14, 2013, describing the negotiation team’s recommendation of award. The memorandum comprises the following sections: Introduction; The Services; Procurement Process (subsections for Evaluations and Negotiations); Best value (subsections for Selection Criteria, Technical Analysis, Price Analysis, and Negotiation Team’s Recommendation); and Conclusion. Attached to the memorandum as Attachment A was a memorandum dated April 30, 2013, appointing the evaluation and negotiation committees, and attached as Attachment B was a spreadsheet comparing the vendors’ BAFOs. DMS posted the Notice of Intent to Award to CBRE and Vertical on August 16, 2013. Cushman and JLL timely filed notices of intent to protest the Intent to Award. On August 29, 2013, JLL timely filed a formal protest to the Intent to Award. On August 30, 2013, Cushman timely filed a formal protest to the Intent to Award. An opportunity to resolve the protests was held on September 9, 2013, and an impasse was eventually reached. On October 10, 2013, DMS forwarded the formal protest petitions to DOAH. An Order consolidating JLL’s protest and Cushman’s protest was entered on October 15, 2013. Scope of Real Estate Services in the ITN Prior to the statutory authority of DMS to procure real estate brokerage services, agencies used their own staff to negotiate private property leases. Section 255.25(h), Florida Statutes, arose out of the legislature’s desire for trained real estate professionals to assist the State of Florida with its private leasing needs. The statutorily mandated use of tenant brokers by agencies has saved the state an estimated $46 million dollars. The primary purpose of the ITN was to re-procure the expiring tenant broker contracts to assist state agencies in private sector leasing transactions. Once under contract, the selected vendors compete with each other for the opportunity to act on behalf of individual agencies as their tenant broker, but there is no guarantee particular vendors will get any business. The core of the services sought in the ITN was lease transactions. The ITN also sought to provide a contract vehicle to allow vendors to provide real estate consulting services, including strategies for long and short-term leases, space planning, and space management as part of the negotiation for private leases. As part of providing real estate consulting services, vendors would also perform independent market analyses (IMAs) and broker opinions of value (BOVs) or broker price opinions (BPOs). In almost all instances, this would be provided at no charge as part of the other work performed for a commissionable transaction under the resulting contract. However, the resulting contract was designed to allow agencies to ask for an IMA or BOV to be performed independently from a commissionable transaction. In addition to the primary leasing transactions, the contract would also allow state agencies to use the vendors for other services such as the acquisition and disposition of land and/or buildings. These services would be performed according to a Scope of Work prepared by the individual agency, with compensation at either the hourly rates (set as ceiling rates in the ITN), set fees for the service/project, or at the percentage commission rate negotiated between the vendor and the individual agency. However, these services were ancillary to the main purpose of the contract, which was private leasing. In Florida, most state agencies are not authorized to hold title to land. However, the Department of Environmental Protection (DEP) serves as staff for the Board of Trustees of the Internal Improvement Trust Fund (“Board”), which holds title to land owned by the State of Florida. In that capacity, DEP buys and sells land and other properties on behalf of the Board. DEP recently began using the current DMS tenant broker contract for acquisitions and dispositions. The process was cumbersome under the current contract, so DEP asked to participate in the ITN in order to make the contract more suitable for their purposes. The ITN was revised to include DEP’s proposed changes, and DMS had Ms. Ellison serve first as an evaluator and later as a subject matter expert. At hearing, Ms. Ellison testified that she was able to participate fully, that her input was taken seriously, and that the proposed contract adequately addressed DEP’s concerns. While DEP anticipated that under the proposed contract it would use more BOVs than it had previously, there was no guarantee that DEP would use the proposed contract. DEP is not obligated to use the contract and maintains the ability to procure its own tenant brokers. Additionally, administration and leadership changes may cause a switch of using in-house agency employees instead of tenant brokers to perform real estate acquisition and disposition services. Specifics of the ITN The ITN directed vendors to submit a reply with the following sections: a cover letter; completed attachments; pass/fail requirements; Reply Evaluation Criteria; and a price sheet. The Reply Evaluation Criteria included Part A (Qualifications) and Part B (Business Plan). Qualifications were worth 40 points, the Business Plan was worth 50 points, and the proposed pricing was worth 10 points. For the Business Plan, the ITN requested a detailed narrative description of how the vendors planned to meet DMS’s needs as set forth in section 3.01, Scope of Work. The ITN requested that vendors describe and identify the current and planned resources and employees to be assigned to the project and how the resources would be deployed. Section 3.01, Scope of Work, states that the primary objective of the ITN is to “identify brokers to assist and represent the Department and other state agencies in private sector leasing transactions.” The ITN states that the contractor will provide state agencies and other eligible users with real estate transaction and management services, which include “document creation and management, lease negotiation and renegotiation, facility planning, construction oversight, and lease closeout, agency real estate business strategies, pricing models related to relocation services, project management services, acquisition services, and strategic consulting.” Id. The ITN also specifies: Other real estate consulting services such as property acquisitions, dispositions, general property consulting, property analysis and promotions, property marketing, property negotiation, competitive bidding or property, property auctions and direct sales or those identified in the reply or negotiation process and made part of the Contract (e.g., financial services, facilities management services, lease v. buy analyses). The ITN lists the following duties the contractor will perform: Act as the state’s tenant broker, to competitively solicit, negotiate and develop private sector lease agreements; Monitor landlord build-out on behalf of state agencies; Provide space management services, using required space utilization standards; Provide tenant representation services for state agencies and other eligible users during the term of a lease; Identify and evaluate as directed strategic opportunities for reducing occupancy costs through consolidation, relocation, reconfiguration, capital investment, selling and/or the building or acquisition of space; Assist with property acquisitions, dispositions, general property consulting, property analysis and promotions, property marketing, property negotiation, competitive bidding property, property auctions and direct sales; and Provide requested related real estate consulting services. The ITN set the commission percentage for new leases at 4 percent for years 1-10 and 2 percent for each year over 10 years; 2 percent for lease renewals, extensions, or modifications; and 2 percent for warehouse or storage space leases. Id. For “other services,” the ITN states: With respect to all other services (e.g., space management services, general real estate consulting services, property acquisitions, dispositions, general property consulting, property analysis and promotions, property marketing, property negotiation, competitive bidding or property, property auctions and direct sales), compensation will be as outlined in an agency prepared Scope of Work and will be quoted based on hourly rates (set as ceiling rates in this ITN), set fees for the service/project or by percentage commission rate as offered and negotiated by the broker and the using agency. The ITN also required that vendors specify the number of credit hours to be given annually to DMS. Each vendor gives a certain number of credit hours at the start of each year under the contract. The state earns additional credit hours as the vendors perform transactions. DMS manages the pool of accumulated credit hours and gives them to individual agencies to use on a case-by-case basis as payment for individual projects. These credit hours are commonly allocated to pay for IMAs and BOVs that are not part of commissionable transactions. With the exception of one legislatively mandated project, DMS has never exhausted its pool of credit hours. The ITN further specified that IMAs and BOVs must be offered at no cost when performed as part of a commissionable transaction. Historically, most IMAs and BOVs are performed as part of a commissionable transaction. They have only been performed separately from a commissionable transaction a handful of times under the current contract, and many of these were still provided at no cost through the allocation of free credit hours available to the agencies. Therefore, most IMAs and BOVs to be performed under the proposed contract will likely be at no cost. The ITN states that points to be awarded under the price criterion will be awarded based on the number of annual credit hours offered and the commission rate paid per transaction per hour of commission received. The ITN further provides that DMS will evaluate and rank replies in order to establish a competitive range of replies reasonably susceptible to award, and then the team will proceed to negotiations. Regarding negotiations, the ITN states: The focus of the negotiations will be on achieving the solution that provides the best value to the state based upon the selection criteria and the requirements of this solicitation. The selection criteria include, but are not limited to, the Respondent’s demonstrated ability to effectively provide the services, technical proposal and price. The Department reserves the right to utilize subject matter experts, subject matter advisors and multi-agency or legislative advisors to assist the negotiation team with finalizing the section criteria. The negotiation process will also include negotiation of the terms and conditions of the Contract. The ITN also states: At the conclusion of negotiations, the Department will issue a written request for best and final offer(s) (BAFOs) to one or more of the Respondents with which the negotiation team has conducted negotiations. At a minimum, based upon the negotiation process, the BAFOs must contain: A revised Statement of Work; All negotiated terms and conditions to be included in Contract; and A final cost offer. The Respondent’s BAFO will be delivered to the negotiation team for review. Thereafter, the negotiation team will meet in a public meeting to determine which offer constitutes the best value to the state based upon the selection criteria. The Department does not anticipate reopening negotiations after receiving BAFOs, but reserves the right to do so if it believes doing so will be in the best interests of the State. The ITN and draft contract permit subcontractors to perform under the contract and provide an avenue for a contractor to add subcontractors by submitting a written request to DMS’s contract manager with particular information. Best and Final Offers After the conclusion of negotiations, the negotiation team requested each vendor to submit a BAFO, to be filled out in accordance with the RBAFO format. The RBAFO noted that each vendor would get a set percentage commission for leasing transactions, but asked vendors to submit their prices for IMAs, BOVs, and BPOs performed outside a commissionable transaction and to submit the number of annual credit hours vendors would give DMS at the start of the new contract. In an effort to increase potential savings to the state, DMS lowered the percentage rates of the commissions for lease transactions in the RBAFO below the rates initially set in the ITN. By selecting only two vendors instead of three, the additional potential volume for each vendor on the contract could support the lower commission rates being requested of tenant brokers. The state would ultimately save money due to the impact of the reduced commissions on the overall economic structure of each lease. Beth Sparkman, Bureau Chief of Leasing of DMS, expounded on the rationale for reducing the number of vendors under the new contract to two: The Court: To me, it’s counterintuitive that having fewer vendors would result in more favorable pricing for the state of Florida; and yet you said that was the anticipated result of reducing the number of vendors from three to two – The Witness: Correct. The Court: -- for the new contract. I’m unclear. Tell me the basis for the team’s anticipation that having fewer vendors would result in better pricing. The Witness: When the original ITN was released, it had the same percentages in there that are under the current contract. And I’ll talk, for context, new leases, which right now is at 4 percent. So the discussion was – and 4 percent is typical of the industry. That’s typical for what the industry pays across the board. So the desire was to reduce the commission, to reduce those commission amounts to drive that percentage down. So we went out with the first BAFO that had a range that said for leases that cost between zero – and I can’t remember – zero and a half million, what would your percentage be? Thinking that when we had a tiered arrangement, those percentages would come down. They really didn’t. So when we sat down as a team and discussed: Well, why didn’t they – and you know, because typical is 4 percent. So we came back and said: Well, if we reduce the percentage on new leases to 3.25 but restrict the reward to two vendors, each vendor has the potential to make as much money as they would have made at 4 percent, but the savings would be rolled back into the state. Each of the five vendors invited to negotiate submitted a BAFO, agreeing as part of their submissions to comply with the terms and conditions of the draft of the proposed contract and agreeing to the lowered set percentage commission rates in the RBAFO. The RBAFO listed selection criteria by which the vendors would be chosen, to further refine the broad criteria listed in the ITN. The RBAFO listed the following nine items as selection criteria: performance measures (if necessary), sliding scale/cap, IMA set fee, broker’s opinion of value, balance of line (can be quoted per hour or lump sum), contract concerns, credit hours (both annual and per deal hour), hourly rates, and vendor experience and capability. CBRE’s BAFO submission followed the format indicated in the RBAFO, but CBRE included an additional section giving its proposed commission rates for acquisitions and dispositions of land. These rates were also submitted by other vendors at other parts of the procurement process, but CBRE was the only vendor to include such rates as part of its BAFO submission. DMS considered this addition a minor irregularity that it waived. In its BAFO submission, Cushman offered a three-tiered approach to its pricing for IMAs and BOVs. For the first tier, Cushman offered to perform IMAs and BOVs for free as part of a commissionable transaction. This is redundant, as the ITN required all vendors to perform IMAs and BOVs at no cost when part of a commissionable transaction. For the second tier, Cushman offered to perform IMAs and BOVs at no cost when the user agency has previously hired Cushman on tenant representative work. Ms. Sparkman testified that this provision was unclear, as Cushman did not define the scope of this provision or what amount of work qualified the agency for free services. For the third tier, Cushman offered to perform IMAs and BOVs for $240 when not part of a commissionable transaction for an agency with which it had never done business. Best Value Determination The five BAFOs were sent to the negotiation team for review on August 8, 2013, and on August 14, 2013, the team met in a public meeting to discuss the BAFOs, consider the selection criteria, discuss the team’s award recommendation, and draft a written award recommendation memorandum. During the August 14, 2013, meeting the team determined that CBRE and Vertical represented the best value to the state, by a majority vote for CBRE and by a unanimous vote for Vertical. Ms. Sparkman stated at the meeting that, from her perspective, CBRE and Vertical represented a better value than the other vendors because they were more forward thinking in their long term business strategies for managing Florida’s portfolio. Also at this meeting, Ms. Sparkman noted that CBRE’s prices for IMAs and BOVs were somewhat high but that she would attempt to convince CBRE to lower its prices during the contract execution phase. This was part of an attempt to equalize costs to ensure user agencies selected vendors based on individual needs rather than cost. However, CBRE represented the best value to the state regardless of whether its pricing changed. At hearing, Ms. Sparkman testified that if CBRE had refused to lower its pricing, DMS would still have signed a contract with them based on the pricing submitted in its BAFO. Ms. Sparkman also stated at the public meeting that if she were unable to come to contract with both CBRE and Vertical, she would arrange for another public meeting to select a third vendor with whom to proceed to the contract execution phase. This statement did not refer to DMS selecting a third vendor to replace CBRE should CBRE refuse to lower its price, but rather reflected the possibility that during the contract execution phase, DMS and either one of the vendors could potentially be unable to sign a contract because the vendor was unwilling to execute the written terms and conditions. The “contract negotiations” referenced during the public meeting are the remaining processes to be worked out during the contract execution phase and are distinct and separate from the negotiation phase. At hearing, Ms. Sparkman testified that in the past, vendors have refused to sign a contract because their legal counsel was unwilling to sign off on what the business representatives agreed to. Thus, if either CBRE or Vertical refused to sign the contract altogether, DMS would potentially have selected a third-place vendor in order to have a second vendor on the contract, according to Ms. Sparkman. International experience weighed in favor of CBRE and Vertical, according to team member comments made at the public meeting. Although the phrase “international experience” was not specifically listed in the selection criteria of the ITN or RBAFO, many vendors highlighted their international experience as part of the general category of vendor experience. Vendor experience and capability is specified in both the ITN and RBAFO as part of the selection criteria. Ms. Sparkman testified that international experience is indicative of high quality general vendor experience because international real estate market trends change more rapidly than domestic market trends. None of the negotiation team members recommended Cushman for a contract award, and in fact, Cushman's name was not even discussed at the award meeting. The Award Memorandum Also during the August 14, 2013, public meeting the negotiation team prepared a memorandum setting forth the negotiation team’s best value recommendation of CBRE and Vertical, and many of its reasons for the recommendation. There was no requirement that the memorandum list every single reason that went into the decision. For example, the memorandum did not state that the team found CBRE and Vertical’s focus on long term strategies more impressive than Cushman’s focus on past performance under the current contract. The award memorandum included a “Selection Criteria” section which simply repeated the nine selection criteria that had been previously identified in the RBAFO. The memorandum then went on to include a section labeled “B. Technical Analysis” that stated: Analysis of pricing is provided in section C below. As to the remaining selection criteria items, the Team identified the following key elements for the service to be provided: Long term strategies Key performance indicators Management of the portfolio Top ranked vendors had comprehensive business plans Pricing on the BOV and IMAs. The selection criteria provided above were used by the Team to make its best value recommendation. Ms. Sparkman testified that while the choice of wording may have been imprecise, the items listed in the Technical Analysis section were simply elaborations of the selection criteria in the ITN and RBAFO, and not new criteria. The first four are subsumed within vendor experience and capability, and the fifth was specifically listed in the RBAFO. Indeed, Cushman’s Senior Managing Director testified at hearing that Cushman had addressed the first four items in their presentation to DMS during the negotiation phase to demonstrate why Cushman should be chosen for the contract. The memorandum failed to note that CBRE had included non-solicited information in its BAFO regarding proposed rates for the acquisition and disposition of land. However, the negotiation team considered CBRE’s inclusion of these proposed rates a minor irregularity that could be waived in accordance with the ITN and addressed in the contract execution phase, since those rates were for ancillary services, and there was no guaranteed work to be done for DEP under that fee structure. The memorandum included a chart, identified as Attachment B, that compared the proposed number of credit hours and some of the pricing for IMAs and BOVs submitted by the vendors in their BAFOs. The chart listed Cushman’s price for IMAs and BOVs as $240 and failed to include all the information regarding the three-tiered approach to IMAs and BOVs Cushman listed in its BAFO. However, Ms. Sparkman testified that the chart was meant to be a side-by-side basic summary that compared similar information, not an exhaustive listing. The Cushman Protest Negotiations After Award of the Contract Cushman alleges that DMS’s selection of CBRE violates the ITN specifications because DMS selected CBRE with the intent of conducting further negotiations regarding price, which provided CBRE with an unfair advantage. Cushman further argues that the procedure of awarding to one vendor and then possibly adding another vendor if contract negotiations fail violates Florida’s statutes and the ITN. Amended Pet. ¶¶ 23, 28 & 31. Section 2.14 of the ITN specifically reserved DMS's right to reopen negotiations after receipt of BAFOs if it believed such was in the best interests of the state. Specifically, section 2.14 A. provides: The highest ranked Respondent(s) will be invited to negotiate a Contract. Respondents are cautioned to propose their best possible offers in their initial Reply as failing to do so may result in not being selected to proceed to negotiations. If necessary, the Department will request revisions to the approach submitted by the top-rated Respondent(s) until it is satisfied that the contract model will serve the state’s needs and is determined to provide the best value to the state. The statements made by Ms. Sparkman at the August 14, 2013, public meeting and in the award memorandum, that DMS would attempt to reduce CBRE's prices for ancillary services during the contract execution process were not contrary to the ITN or unfair to the other vendors. Both Ms. Sparkman and Mr. Bradner, the two negotiation team members who voted to award to CBRE, testified that they recommended CBRE as providing the best value even considering its arguably higher prices for ancillary services. Ms. Sparkman further confirmed that even if CBRE refused to lower its prices during the contract execution phase, DMS would still sign the contract, as CBRE's proposal would still represent the best value to the state. The anticipated efforts to obtain lower prices from CBRE were simply an attempt to obtain an even better best value for the state. Ms. Sparkman also testified that section 2.14 F. allowed continued negotiations, even though it was silent as to timeframe. Paragraph F states: In submitting a Reply a Respondent agrees to be bound to the terms of Section 5 – General Contract Conditions (PUR 1000) and Section 4 – Special Contract Conditions. Respondents should assume those terms will apply to the final contract, but the Department reserves the right to negotiate different terms and related price adjustments if the Department determines that it provides the best value to the state. Ms. Sparkman also cited section 2.14 I. as authority for reopening negotiations following receipt of the BAFO’s. That section provides: The Department does not anticipate reopening negotiations after receiving the BAFOs, but reserves the right to do so if it believes doing so will be in the best interests of the state. Ms. Sparkman’s statement that if DMS failed, for any reason, to successfully contract with either of the two vendors selected, it would consider pulling in another vendor, is not inconsistent with the clear language of the ITN. Selection Criteria Cushman alleges that DMS used criteria to determine the awards that were not listed in the ITN or the RBAFO. Amended Pet. ¶ 25. Section 2.14 E of the ITN established broad selection criteria, stating: The focus of the negotiations will be on achieving the solution that provides the best value to the state based upon the selection criteria and the requirements of this solicitation. The selection criteria include, but are not limited to, the Respondent's demonstrated ability to effectively provide the services, technical proposal and price. The Department reserves the right to utilize subject matter experts, subject matter advisors and multi-agency or legislative advisors to assist the negotiation team with finalizing the selection criteria. The negotiation process will also include negotiation of the terms and conditions of the Contract. (emphasis added). Following the negotiations, and with the assistance of its subject matter expert, the negotiation team provided in the RBAFO additional clarity as to the selection criteria, and identified the "Basis of Award/Selection Criteria" as follows: Performance Measures (if necessary) Sliding scale/cap IMA set fee Broker's opinion of value Balance of line (can be quoted per hour or lump sum) Contract concerns Credit hours (both annual and per deal hour) Hourly rates Vendor experience and capability The foregoing selection criteria, as well as the selection criteria stated initially in the ITN, make clear that pricing was only one of the criteria upon which the award was to be made. Indeed, Cushman's representative, Larry Richey, acknowledged during his testimony that criteria such as "Performance Measures," "Contract Concerns," and "Vendor Experience and Capability" did not refer to pricing, but rather to the expected quality of the vendor's performance if awarded the contract. As the principal draftsman of the ITN and DMS's lead negotiator, Ms. Sparkman explained that the RBAFO's statement of the selection criteria was intended to provide greater detail to the broad selection criteria identified in the ITN, and was used by the negotiation team in making its best value determination. Ms. Sparkman further testified that the best value determination resulted from the negotiation team's lengthy and extensive evaluation of the vendors' initial written replies to the ITN, review of the vendors' qualifications and comprehensive business plans, participation in approximately two and a half hours of oral presentations by each vendor (including a question and answer session with regard to the proposed implementation and management of the contracts), and a review of the vendors' BAFOs. Applying the selection criteria contained in the ITN and the RBAFO, the negotiation team selected Vertical for several reasons, including its performance indicators, employees with ADA certification, computer programs and employee training not offered by other vendors, its presence in Florida, and the strength of its business plan and presentation. Similarly, the negotiation team selected CBRE for an award based on the strength of its ITN Reply, its broad look at long-term strategies, its key performance indicators, the experience and knowledge of its staff, the comprehensiveness of its proposal and business plan, size of its firm, and creative ideas such as use of a scorecard in transactions. Ms. Sparkman observed that both Vertical and CBRE specifically identified the CBRE staff who would manage the state's business and daily transactions, while it was not clear from Cushman's ITN reply and related submissions who would actually be working on the account. Cushman likewise did not discuss out-of-state leases and how such leases were going to be handled, which was a significant concern because DMS considered out-of-state leases to be particularly complex. Ms. Sparkman also noted that with respect to the vendors' business plans, both Vertical and CBRE focused primarily on strategic realignment and plans for the future, whereas Cushman discussed their current transactions at length, but did not demonstrate forward thinking to the negotiation team. Cushman's reply to the ITN also included various discrepancies noted at the final hearing. While Cushman's ITN reply identifies a Tallahassee office, Cushman does not in fact have a Tallahassee office, but instead listed its subcontractor’s office.6/ Additionally, two of the business references presented in Cushman's ITN Reply appear not in fact to be for Cushman, but instead for its subcontractor, Daniel Wagnon, as Cushman's name was clearly typed in above Mr. Wagnon's name after the references were written. Finally, Cushman failed to provide in its ITN Reply the required subcontractor disclosure information for at least one of its "Project Management Partners," Ajax Construction. Based on all of the above, DMS's decision to award contracts to Vertical and CBRE as providing the best value to the state was not arbitrary, capricious, clearly erroneous, or contrary to competition. Simply stated, and as the negotiation team determined, the submissions by Vertical and CBRE were more comprehensive and reasonably found to offer better value to the state than Cushman's submission. Indeed the negotiation team did not even mention Cushman as a potential contract awardee, but instead identified only Vertical, CBRE and JLL in their deliberations as to best value. Cushman's argument that DMS award memorandum improperly relies on the following as "key elements" related to services does not alter this analysis: Long term strategies Key performance indicators Management of the portfolio Top ranked vendors had comprehensive business plans Pricing on the BOV and IMAs. While Ms. Sparkman acknowledged that the choice of language in the memorandum could have been better, it is clear that the foregoing are indeed "elements" of the selection criteria stated in the ITN and RBAFO, as the first four elements plainly relate to the vendors' ability to effectively provide the services, their technical proposal, performance measures, and vendor experience and capability, while the last element relates to the pricing portion of the criteria. Cushman also argues that the award memorandum failed to inform the final decision-maker that Cushman offered IMAs and BOVs at no charge when Cushman was engaged in a commissionable transaction or was performing other work for an agency under the contract. As a result, Cushman asserts, the Deputy Secretary was provided with inaccurate information relating to price. Cushman's argument that the award process was flawed because the pricing chart attached to the award memorandum did not accurately reflect Cushman's proposed pricing is without merit. As Ms. Sparkman testified, the chart was prepared by the negotiation team to provide for the decision-maker an apples-to- apples broad summary comparison of the vendor's proposed pricing for the proposed ancillary services. The chart was not intended to identify all variations or conditions for potential different pricing as proposed by Cushman.7/ Best Value Determination Cushman contends that the negotiation team’s decision to award a contract to CBRE did not result in the best value to the state. Amended Pet. ¶¶ 26, 28 & 29. Cushman further argues that DMS did not meaningfully consider differences in proposed pricing. The failure to consider price for potential ancillary services, Cushman argues, was contrary to competition as it gave an unfair advantage to CBRE whose prices were higher than Cushman’s prices in all but one category. Although pricing for the potential ancillary services was relevant, the ITN's initial scoring criteria made clear that DMS was primarily focused on evaluating the experience and capability of the vendors to provide the proposed services. For this reason, the ITN's initial scoring criteria awarded 90 percent of the points based upon the qualifications and business plan of the vendors, and only 10 percent of the points based on the pricing for potential ancillary services. The negotiation team members testified that this same focus on qualifications and the vendors' business plan continued during the negotiation phase and award decision, although without reliance on the mathematical scoring process utilized during the initial evaluation phase. Nothing in the ITN specifications altered this focus, and the negotiations were directed to gaining a greater understanding of the vendors' proposed services, the qualifications and bios of individuals who would actually do the work, vendors' approach to the work and parameters the vendors would use to evaluate their performance. Pricing remained of relatively minor significance primarily because the RBAFO established a uniform lease commission rate for all vendors, effectively removing pricing as a means to differentiate between the vendors. As a result, vendors were required to quote pricing only for certain potential ancillary services, including IMAs and BOVs, and the number of free credit hours to be provided to the state. Pricing for these potential ancillary services was not considered particularly important, since historically these services were seldom used, and the ITN required all vendors to provide IMAs and BOVs free of charge when related to a commissionable transaction (thereby greatly reducing the impact of any "free" IMA or BOV services). For these reasons, the negotiation team considered the potential ancillary services and pricing for these services not to be significant in the award decision and only incidental to the core purpose and mission of the intended contract, to wit, leasing and leasing commissions. As a result, the negotiation team referred to these potential ancillary services as "balance of line" items which were nominal and added little value to the contract. Notwithstanding Cushman's argument that it should have been awarded the contract because it offered the lowest pricing for these ancillary services, its prices were not in fact the lowest offered by the vendors. Indeed JLL offered to provide all IMA and BOV services (with no preconditions) at no cost. Cushman's pricing for the ancillary services also was not materially different than CBRE's pricing. CBRE's consulting services rates are comparable, if not lower, than Cushman's rates, and the difference between Cushman's and CBRE's proposed charges for IMAs and BOVs is only a few hundred dollars. When considered in terms of the anticipated number of times the ancillary services will be requested (rarely, based on the prior contract), the total "extra" amount to be spent for CBRE's services would be at most a few thousand dollars. The negotiation team reasonably considered this to be insignificant in comparison to the multimillion dollar leasing work which was the core purpose of the intended contract.8/ Because pricing for the potential ancillary services was of lesser significance to DMS's award decision, Cushman's position that DMS should have awarded Cushman a contract based upon its pricing for ancillary services is not consistent with the ITN and does not render DMS's intended awards to Vertical and CBRE arbitrary, capricious, clearly erroneous or contrary to competition. To the contrary, DMS articulated a rational, reasonable and logical explanation for the award. CBRE’s Proposal Non-Responsive to ITN and RBAFO? Cushman alleges that CBRE’s BAFO was not responsive to the ITN and the RBAFO because CBRE included a set rate for acquisitions and dispositions in its proposal. Amended Pet. 30. Since CBRE's BAFO materially deviated from the ITN's specifications, CBRE’s proposal should have been deemed non- responsive and therefore rejected, Cushman argues. The ITN originally requested pricing related only to credit hours as the ITN set the rates for leases. The ITN stated that “other services” would be determined on a case-by- case basis as negotiated by the agencies. However, as part of the ITN process, DMS discussed with the vendors the potential for them to assist the state in the sale and acquisition of property, and what commission rates might be charged for this work. For this reason, CBRE included proposed commission rates for acquisition and disposition services in its BAFO. DMS considered the inclusion of potential rates for acquisitions and dispositions to be a minor irregularity which did not render CBRE's BAFO non-responsive. This determination is consistent with the terms of the ITN, which at section 2.14(g) states "[t]he Department reserves the right to waive minor irregularities in replies." The form PUR 1001 incorporated by reference into the ITN likewise reserves to DMS the right to waive minor irregularities and states: 16. Minor Irregularities/Right to Reject. The Buyer reserves the right to accept or reject any and all bids, or separable portions thereof, and to waive any minor irregularity, technicality, or omission if the Buyer determines that doing so will serve the state's best interests. The Buyer may reject any response not submitted in the manner specified by the solicitation documents. Consistent with the above-cited provisions, the negotiation team noted at its August 14, 2013, meeting that CBRE's inclusion of the proposed rates was not material, and that during the contract execution process, DMS would either exclude the proposed rates from the contract, or possibly include such as a cap for these services. Both of these alternatives were available to DMS given CBRE's commitment to follow the terms of the draft contract, which specifically stated that fees for acquisitions and dispositions would be negotiated on a case-by-case basis. Finally, CBRE's inclusion of proposed commission rates for acquisitions and dispositions did not give CBRE an advantage over the other vendors, or impair the competition, because Cushman and JLL also submitted, as part of their ITN responses, proposed commission rates for the acquisition and disposition of property. Do the ITN Specifications Violate Section 255.25? Cushman's final argument is that the ITN specifications, and the proposed contract, violate section 255.25(3)(h)5., Florida Statutes, which states that "[a]ll terms relating to the compensation of the real estate consultant or tenant broker shall be specified in the term contract and may not be supplemented or modified by the state agency using the contract." Cushman's argument has two components. First, Cushman argues that the specifications included at Tab 5, page 13 of the ITN violate the statute by providing: "With respect to all other [ancillary] services, . . . , compensation shall be as outlined in an agency prepared Scope of Work and will be quoted based on an hourly rate (set as ceiling rates in this ITN), set fees for the service/project or by a percentage commission rate as offered and negotiated by the using agency.” Cushman also argues that the language in the award memorandum stating that the BOV rates are "caps" and "may be negotiated down by agencies prior to individual transactions," violates the statute. This latter reference to "caps" correlates to the "ceiling rates" stated in the above quoted ITN specification. Section 120.57(3)(b), Florida Statutes, requires vendors to file a protest to an ITN’s terms, conditions, or specifications within 72 hours of the release of the ITN or amendment; failure to protest constitutes a waiver of such arguments. DMS included this language with the release of the ITN and each amendment, so Cushman was on notice of its protest rights. Cushman's challenge to the ITN specifications as violating section 255.25 is untimely and has been waived. Having been fully informed of this specification since May 14, 2013, when the revised ITN was published, Cushman could not wait until the ITN process was completed some four months later, and then argue that the ITN specifications do not comply with section 255.25 and must be changed. Such argument plainly constitutes a specifications challenge, and such a challenge is now time-barred. Even were Cushman’s challenge not time-barred, it would still fail. Section 255.25 requires only that "[a]ll terms relating to the compensation of the real estate consultant or tenant broker shall be specified in the term contract," and not that all terms identifying the compensation be specified. The challenged ITN specification, actually added via Addendum 2 at the request of DEP and its subject matter expert, does specify the approved methods by which the state could compensate the vendor, which DMS determined would best be determined on a case-by-case basis. By stating the approved methods which can be used by the state agencies, the ITN specifications and term contract did specify the terms "relating to" the compensation of the vendor, i.e., an hourly rate (set as ceiling rates in the ITN), set fees for the service/project, or a percentage commission rate. DMS established these terms because the exact compensation would best be determined by the state agency on a case-by-case basis in a Statement of Work utilizing one of the specified compensation methods.9/
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That a final order be entered denying the petition of Cushman & Wakefield of Florida, Inc., and affirming the Notice of Intent to Award to CBRE, Inc., and Vertical Integration, Inc. DONE AND ENTERED this 24th day of January, 2014, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS 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 24th day of January, 2014.
The Issue The issue for determination at final hearing was whether Respondent discriminated against Petitioner based on his handicap (HIV-Positive) in violation of the Florida Human Rights Act.
Findings Of Fact Louis Cianciola (Petitioner) had been employed with United Artists Theatre Circuit, Inc., d/b/a United Artists (Respondent) in various capacities for approximately eight years, beginning in February 1984 in New York. Over the eight years, Petitioner had worked in every position from ticket-taker to theater manager. In 1985, Petitioner assisted in the opening of a theater as the assistant manager and later became a theater manager in that same year. Petitioner remained in New York, working as a theater manager, until 1990 when he relocated to Florida in Respondent's South Florida District. Prior to moving to Florida, Petitioner worked at several of Respondent's theaters at his request or his superiors, transferring whenever and wherever he was needed. In his transfers from theater to theater, no job application was required; a telephone call would suffice. Either he would telephone the division manager or general manager, or vice versa, and the move would be worked out over the telephone. When Petitioner wanted to move to Florida, the procedure for moving did not vary. He telephoned the division manager who telephoned a supervisor in Florida. Petitioner wanted to move to Florida because he was working very long hours as a theater manager in New York and he believed that, if he moved to one of Respondent's theaters in Florida, he would work shorter hours. After relocating to Florida in 1990, Petitioner continued as a theater manager and was transferred from theater to theater, as needed. Around May 1991, Petitioner discovered that he was HIV-Positive, and on separate occasions, informed Respondent's general manager for the southeast region, Christopher Potash, and its district manager for south Florida, Antonio Maldonado, of his illness. 1/ Not being well informed about his illness, Petitioner was fearful that he would become immediately ill; and consequently, he informed Potash and Maldonado immediately so they could be prepared. When Petitioner was in New York, he had met Potash in 1985, but Potash was not a general manager at that time. On a working basis, Petitioner saw Potash at least quarterly when Potash inspected the theaters. He also interacted with Potash at least weekly on a social basis. As to Maldonado, Petitioner met him in 1991 when Maldonado came to Florida and interacted with him on a working basis at least once monthly at theater managers' meetings and talking with him every Monday to obtain movie schedules. When Petitioner told Potash and Maldonado about his illness, neither Potash nor Maldonado related this knowledge to each other or to anyone else, including staff. However, Petitioner also told his assistant manager. As district manager of South Florida, Maldonado hired and supervised the theater managers. He considered Petitioner to be a very good theater manager and had had no problems with him. He had no reason to believe that Petitioner would not continue to be an exemplary employee. However, in or about January or February 1992, Petitioner's sparkling performance began to decline. The outward appearance of the theater managed by Petitioner began to deteriorate. Also, because his illness was causing him not to feel well, Petitioner began to request more and more leave time to cover his arriving late or leaving early. In spite of Petitioner's actions, both Potash and Maldonado continued their support of Petitioner in an effort to accomodate his needs. In or around July 1992, a little over a year after Petitioner informed Potash and Maldonado of his illness, a shortage in funds (approximately $800) for Petitioner's theater was discovered. Petitioner admitted using the money to purchase medicine for his illness. Maldonado discussed the shortage and Petitioner's HIV status with Potash. It was decided that the matter would be dealt with by Maldonado counseling Petitioner. In July 1992, the stress of the job and the long hours of work (from 50 to 60 hours a week) had gotten the better of Petitioner. Even though he was experiencing problems, Petitioner did not request assistance from Maldonado. However, his illness dictated that he slow down. Finally, around mid-July, Petitioner decided that he could not continue his duties and responsibilities as a theater manger. Here, the parties differ as to whether Petitioner terminated his employment as contended by Respondent or whether he took a leave of absence as contended by Petitioner. Petitioner testified that he informed Potash that he wanted to return to New York and work there and that Potash told him to take two weeks vacation and he (Potash) would see what he could do to get him a position in New York. Maldonado testified that Petitioner told him that he was leaving Respondent's employment and that the assistant theater manager would be taking over his duties and responsibilities. Both Potash and Maldonado deny that Petitioner was on a leave of absence. In support of its contention, Respondent completed a personnel action form showing Petitioner's termination date as of July 30, 1992. The testimony of Potash and Maldonado is determined to be credible and, therefore, Petitioner is found to have terminated his employment with Respondent. In September 1992, Petitioner returned to the south Florida area. He contacted Potash and requested Potash to assist him in again obtaining employment with Respondent. Potash told him that he would help and that he foresaw no problem. Petitioner also contacted Maldonado who informed Petitioner that no theater manager positions were then available, but also agreed to help him. The hiring practice of Respondent was that the general manager hires the district manager, the district manager hires the theater manager, and the theater manager hires people to work in the theaters. Theater manager and assistant theater manager positions are full-time; all others subordinate to assistant theater manager are part-time. Consistent with this practice, the general manager does not question who the district manager hires as theater manager and the district manager does not question who the theater manager hires as subordinate staff; neither does one instruct or direct the other who to hire. Additionally, Respondent promotes from within first. Petitioner knew of this practice and was a participant prior to leaving Florida, and this practice was still followed when he returned to Florida. Also, related to filling positions prior to Petitioner leaving for New York, when help was needed in a theater at which Petitioner worked, a help wanted sign was posted at the particular theater and the vacancy was spread by word-of-mouth. However, for the last year that Petitioner was employed with Respondent, theater manager positions were posted on the employee's board. As a hybrid to Respondent's usual hiring practice, when Petitioner was in New York, Potash had heard about an auditor's position and contacted Petitioner to inform him of the position. Potash agreed to forward Petitioner's resume to the appropriate person and speak favorable about him, which he (Potash) did. But, Petitioner did not get the position. This isolated instance is not found to be contrary to Respondent's practice, since Potash did not instruct or direct anyone to hire Petitioner. Because Petitioner expected Potash and Maldonado to find a position for him in Florida, he did not complete any employment applications with Respondent for any position or personally contact any of the theater managers regarding available positions. At first Petitioner talked to Maldonado and Potash about getting a theater manager position, but later included any and all positions in the theater business at or below the theater manager position. Finally, toward the end of October 1992, Potash informed Petitioner about a ticket-taker position. Petitioner indicated that he wanted the position. However, the theater manager did not hire Petitioner. Maldonado contacted approximately six of his theater managers, and all of them refused to hire or consider Petitioner for employment. At least one theater manager informed Maldonado that Petitioner would not be hired because that manager believed that Petitioner knew too much about the theater business and would be out to get that manager's job. Maldonado informed Petitioner that none of the theater managers that he contacted would hire him and what that one manager had related to him. Petitioner did not indicate that he believed the one manager was discriminating against him. Since he did not interfere with the hiring by theater managers, Maldonado would not interfere in Petitioner's situation or any situation in which a theater manager would not hire Petitioner. 2/ In Respondent's south Florida district, there were 14 theater managers. During the time period that Petitioner was seeking a position with Respondent, there were no vacant theater manager positions. However, three transfers occurred: one theater manager transferred to replace Petitioner when he left in July 1992; in September 1992 another theater manager transferred from a theater destroyed by Hurricane Andrew; and in July 1992 an assistant manager was promoted to manager and replaced the theater manager who replaced Petitioner. As was the case with other positions with Respondent, Petitioner did not complete an employment application for any theater manager positions.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order DISMISSING the Petition for Relief filed herein. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 21st day of July 1994. ERROL H. POWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of July 1994.
The Issue The issues are whether Respondent, Hollywood Construction of Northwest Florida, LLC (Hollywood Construction), failed to secure workers’ compensation insurance as required by chapter 440, Florida Statutes (2014); and if so, what penalty should be imposed.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following Findings of Fact are made: The Department is the state agency responsible for enforcing the requirement in chapter 440, that employers in Florida secure workers’ compensation coverage for their employees. An employer can satisfy that requirement by purchasing a workers’ compensation insurance policy or by leasing employees through an employee leasing company with a workers’ compensation insurance policy. With regard to the latter, the employer pays the employee leasing company, and the employee leasing company then compensates the leased employees for their labor. Donald Hurst is employed as a workers’ compensation investigator for the Department. He works out of a district office in Pensacola, Florida, and his territory covers Bay, Gulf, Franklin, and Liberty Counties. Hollywood Construction is a construction business with its principal office in Panama City, Florida. On approximately August 6, 2014, Mr. Hurst received a phone call from Barry Hutchinson, who claimed to be an injured employee of Hollywood Construction. That phone call prompted Mr. Hurst to access a website managed by the Florida Department of State, Division of Corporations, where he learned of Hollywood Construction’s address and that R. Gage Golden was responsible for the business operations. Mr. Hurst also accessed the Coverage and Compliance Automated System (CCAS), which is a Department-maintained database that records whether a particular employer has workers’ compensation coverage. CCAS indicated that Hollywood Construction had workers’ compensation coverage through an employee leasing company in lieu of procuring its own workers’ compensation insurance policy. Because Mr. Hutchinson alleged that he was a Hollywood Construction employee who had no workers’ compensation coverage, Mr. Hurst decided that further investigation was warranted and visited the job site where Mr. Hutchinson stated he had been working. The purpose of this visit was to verify whether any workers at the job site had coverage. After finding no one at the reported job site, Mr. Hurst served Hollywood Construction with a Request for Production of Business Records on August 14, 2014, seeking various types of business records that would reveal whether Hollywood Construction had been directly paying employees or subcontractors between May 6, 2014, and August 6, 2014. The business records produced by Hollywood Construction indicated that Hollywood Construction had made direct payments to Mr. Hutchinson. Accordingly, and because Hollywood Construction had no workers’ compensation coverage outside its employee leasing arrangement, Mr. Hurst concluded that Hollywood Construction had failed to procure all necessary workers’ compensation coverage. Next, Mr. Hurst hand-delivered to Hollywood Construction on September 3, 2014, a document entitled “Request for Production of Business Records for Penalty Assessment Calculation.” The aforementioned document sought additional records pertaining to the period from August 7, 2012, through August 6, 2014 (i.e., the audit period), that would enable the Department to ascertain how much money Hollywood Construction had paid directly to employees and/or subcontractors. The requested records corresponded to the two-year period established by section 440.107(7)(d) for penalty calculations. After reviewing those records, the Department concluded that multiple individuals were receiving direct payments from Hollywood Construction, rather than from Hollywood Construction’s employee leasing company. As a result, Mr. Hurst personally served on January 22, 2015, an Order of Penalty Assessment requiring Hollywood Construction to pay a penalty of $100,326.46. At some point thereafter, Hollywood Construction produced additional records to the Department, and the Department issued a 2nd Amended Order of Penalty Assessment on May 11, 2015, imposing a penalty of $89,886.28. Ultimately, the Department issued a 3rd Amended Order of Penalty Assessment on September 21, 2015, requiring Hollywood Construction to pay a penalty of $21,853.80. The $21,853.80 penalty sought by the Department is based on Hollywood Construction’s payroll during the audit period and the premium Hollywood Construction would have paid if it had obtained all of the necessary workers’ compensation coverage during the audit period. In order to calculate Hollywood Construction’s payroll during the audit period and the resulting premium, the Department relied on information provided by Hollywood Construction to ascertain the nature of its employees’ work and assigned each employee a classification code from the Scopes® Manual, which has been adopted by the Department through Florida Administrative Code Rule 69L-6.021. Classification codes pertain to various occupations or types of work, and each one has an approved manual rate used by insurance companies to assist in the calculation of workers’ compensation insurance premiums. An approved manual rate corresponds to the risk associated with a particular occupation or type of work. Therefore, the manual rate corresponding to a roofer will be higher than the manual rate corresponding to secretarial work. The Department’s review also indicated that some of the payments at issue were non-wage expenses. For example, Hollywood Construction was reimbursing individuals for procuring items such as building materials and gasoline. Payments intended to reimburse employees for procuring such items are non-wage expenses that do not count towards an employer’s workers’ compensation obligation because those payments are not payroll. However, the Department was of the opinion that Hollywood Construction’s records were insufficiently detailed to enable the Department to ascertain whether all the payments at issue were wages or non-wage payments. Accordingly, and pursuant to rule 69L-6.035(1)(i), the Department presumed that 80 percent of the payments at issue were payroll that would count toward calculating a business’ workers’ compensation premium. Using the approved manual rates and the wages paid during the audit period (adjusted as described immediately above), the Department determined the individual insurance premiums Hollywood Construction would have paid for the employees in question if Hollywood Construction had procured workers’ compensation coverage during the audit period. Then, and as required by section 440.107(d)(1), the Department multiplied each individual premium by two in order to calculate the penalty associated with each employee, and those individual amounts totaled $21,853.80. R. Gage Golden (Hollywood Construction’s representative/owner) credibly testified during the final hearing that none of the payments used to calculate the $21,853.80 penalty were wages. Instead, those payments were non-wage expenses that should not influence Hollywood Construction’s workers’ compensation obligation. Furthermore, Mr. Golden argued that there is insufficient guidance in the relevant statutes and rules as to how business records must be maintained. The undersigned finds (as a matter of ultimate fact) that the Department failed to carry its burden of proving that $21,853.80 is the appropriate penalty and/or that the Department utilized the correct methodology in calculating that penalty. Hollywood Construction’s records sufficiently demonstrate that certain categories of payments were expenses, and a review of Hollywood Construction’s business records in Exhibit 10 indicates that the Department erroneously deemed certain payments to be wages rather than expenses. Specifically, Hollywood Construction’s Transaction Listing on pages 89 through 92 of the Department’s exhibits indicates that James Franklin (a Hollywood Construction employee) received eight payments between January 3, 2013, and May 2, 2013, totaling $1,239.00. If $1,239.00 is reduced by 20%, then the resulting figure is $991.20, and the Department’s penalty calculation worksheet alleges that James Franklin received $991.20 worth of payments directly from Hollywood Construction between January 1, 2013, and June 30, 2013. However, Hollywood Construction’s General Ledger on pages 176 and 177 of the Department’s exhibits indicates that the payments made to Mr. Franklin between January 3, 2013, and May 2, 2013, were travel reimbursements rather than wages. Because travel reimbursements are not payroll, the aforementioned payments should not have been used in calculating Hollywood Construction’s penalty. Further review of Hollywood Construction’s business records suggests that other payments identified in the General Ledger as expenses may have been treated as wages for purposes of calculating the $21,853.80 penalty. For example, the General Ledger notes that several payments were made to Hollywood Construction employees and characterizes those payments as “Purchases/Materials” (pages 137 through 140 of the Department’s exhibits); Employee Travel Reimbursement (pages 140 through 143 and 176 through 181 of the Department’s exhibits); “Sales/Estimating Exp” (pages 146, 147, 182 and 183 of the Department’s exhibits); “Auto/Truck” (pages 149, 150, and 189 of the Department’s exhibits); “Purchases/Job Costs” (pages 168 through 176 of the Department’s exhibits); and “Maintenance/Repairs” (page 185 of the Department’s exhibits). To whatever extent that the Department’s proposed penalty of $21,853.80 includes any payments identified by Hollywood Construction’s General Ledger as “Purchases/Materials,” Employee Travel Reimbursement, “Sales/Estimating Exp,” “Auto/Truck,” “Purchases/Job Costs,” or “Maintenance/Repairs,” those payments must be excluded from the penalty calculation. The undersigned also finds (as a matter of ultimate fact) that there is no evidence that Mr. Golden or anyone associated with Hollywood Construction intentionally understated Hollywood Construction’s payroll so as to lessen its workers’ compensation obligation. Furthermore, the Department has not alleged that the business records provided by Hollywood Construction are inaccurate or untrustworthy.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, recalculate the proposed penalty by excluding payments listed in Hollywood Construction’s General Ledger as “Purchases/Materials,” Employee Travel Reimbursement, “Sales/Estimating Exp,” “Auto/Truck,” “Purchases/Job Costs,” or “Maintenance/Repairs.” If the recalculated penalty is greater than $0.00, then it is further RECOMMENDED that the Department enter a final order finding that Hollywood Construction of Northwest Florida, LLC, failed to secure the payment of workers’ compensation insurance coverage at certain times between August 7, 2012, and August 6, 2014, in violation of section 440.107. DONE AND ENTERED this 3rd day of December, 2015, in Tallahassee, Leon County, Florida. S G. W. CHISENHALL 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 3rd day of December, 2015. COPIES FURNISHED: R. Gage Golden Hollywood Construction of Northwest Florida, LLC 3003 State Avenue Panama City, Florida 32405 Trevor S. Suter, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 (eServed) Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
Findings Of Fact Culmer Place Tenants Association and Allapattah Tenant Association are not-for-profit corporations chartered by the State of Florida (Exhibits 1 and 2). Allapattah has received IRS tax-exempt status as a publicly supported corporation. Culmer Place has applied for such status but has not as yet received the IRS designation. Both Culmer Place and Allapattah are tenant associations at Housing and Urban Development (HUD) projects in Miami, Florida. These HUD projects are low- income residences sponsored and managed by HUD. The principal source of funds for each Petitioner is HUD. The Associations submit a budget to HUD and receive funds semiannually. Culmer Place received $453 from HUD in 1980 and Allapattah received a slightly less amount. The Associations sponsor activities in their projects principally oriented towards children. These projects, which have been presented by both Petitioners, are the Easter project, family picnic on July 4, Christmas project, community movies, and trips to the circus or other attractions. In addition, one or both Associations have sponsored dances and held rummage sales. Allapattah is currently proposing the establishment of a softball team if funds can be obtained. The Easter project consists of purchasing candy and eggs, getting volunteers to dye the eggs and putting these treats in bags which are given to the children who participate. At Culmer they have an Easter egg hunt but lack of space for hiding the eggs requires the bag approach at Allapattah. The Christmas project is similar to the Easter project in that the Petitioners use the money provided by HUD to purchase candy, fruits and stockings which are taken around and given to the children who live in the project. At the family picnic on July 4, barbeque is provided, as is other food and drinks. It appears that the Associations primarily provide "refreshments" at the projects they sponsor. No picnic was held in 1981 because funds were not available. Other activities sponsored by the Associations include cleanup campaigns at which the young people are assembled to pick up trash and generally "clean up" around the projects. The Associations provide refreshments for the workers and HUD provides the funds to pay these youngsters for their cleanup work. The money for the refreshments is budgeted by the Associations and provided by HUD. The summer lunch program is carried out at these projects with the food for the participants provided by the City, County, or HUD. The volunteers who supervise the serving of the food and activities that accompany this project are members of the Associations and are paid by HUD for the three hours they are so engaged each day. Movies are occasionally shown at the projects. The film is usually rented and the residents are invited by "flyer" to attend. Sometimes cartoons are obtained to show to the children. Occasionally, free tickets to the circus or to some local attraction are obtained by the Associations who arrange the transportation for the children and supervisors to participate in these field trips. These-projects and activities are provided free to the participants and participation is not limited to children, or others, who live in the Petitioner organizations. "Flyers" advertising these projects are prepared and delivered to the residents, placed on the bulletin boards at the housing project office, and some flyers are distributed outside the housing projects by putting them on poles, in stores (that permit) and in washerettes.
