The Issue What is the amount owed by D. L. Scotto and Company, Inc., d/b/a Tuxedo Fruit Company, to Thomas E. Davis, Inc., for Valencia oranges purchased in January, April, and May 2013?
Findings Of Fact A "dealer in agricultural products" is defined as a person, partnership, corporation, or other business entity, "engaged within this state in the business of purchasing, receiving, or soliciting agricultural products from the producer . . . for resale or processing for sale " § 604.15(2), Fla. Stat. (2013).1/ Respondent is licensed as a dealer in agricultural products. Petitioner is a "producer" for purposes of sections through 604.34, Florida Statutes. See § 604.15(9), Fla. Stat. (defining "producer" as "any producer of agricultural products produced in the state"). Contract #077 On January 25, 2013, Petitioner and Respondent entered into citrus fruit contract #077 wherein Respondent, for the price of $9.50 per box, agreed to purchase 5,000 boxes of Valencia oranges from Petitioner's Cock Pen grove. Petitioner delivered, and Respondent accepted, 2,925 boxes of the promised oranges. To date, Respondent has only paid Petitioner for 1,962 ($9.50 x 1,962 = $18,639) boxes of oranges from the Cock Pen grove. Contract #078 On January 25, 2013, Petitioner and Respondent entered into a second citrus fruit contract (#078) wherein Respondent, for the price of $9.50 per box, agreed to purchase 4,500 boxes of Valencia oranges from Petitioner's Patrick grove. Petitioner delivered, and Respondent accepted, 2,988 boxes of the promised oranges. To date, Respondent has only paid Petitioner for 792 ($9.50 x 792 = $7,524) boxes of oranges from the Patrick grove. Contract #M012 On April 25, 2013, Petitioner and Respondent entered into a third citrus fruit contract (#M012) wherein Respondent, for the price of $11.00 per box, agreed to purchase 1,200 boxes of Valencia oranges from Petitioner's Johnson grove and 1,500 boxes of Valencia oranges from Petitioner's Allegato grove. Petitioner delivered, and Respondent accepted, 1,161 boxes of the promised oranges from the Johnson grove and 1,296 boxes of oranges from the Allegato grove. To date, Respondent has not paid Petitioner for the oranges received from the Johnson and Allegato groves. Contract #M013 On May 2, 2013, Petitioner and Respondent entered into a fourth citrus fruit contract (#M013) wherein Respondent, for the price of $11.00 per box, agreed to purchase 1,500 boxes of Valencia oranges from Petitioner's Tommy Ann grove. Petitioner delivered, and Respondent accepted, 1,674 boxes of the promised oranges from the Tommy Ann grove. To date, Respondent has not paid Petitioner for the oranges received from the Tommy Ann grove. Respondent's defense Each of the citrus fruit contracts at issue provides that the oranges "must be merchantable for fresh usage at the time of harvest and delivery." Respondent claims that significant quantities of the oranges that were received from Petitioner were not merchantable for fresh usage at the time of harvest and delivery. In reviewing the documentary evidence presented by both parties, it is evident that Petitioner's oranges were harvested and delivered to Respondent during the months of January through May 2013. From this period forward to the date of the final hearing held herein, Respondent never informed Petitioner that there was an issue with the merchantability of the oranges. Instead, whenever Petitioner contacted Respondent about the status of payment for the oranges, Respondent repeatedly assured Petitioner that payment was forthcoming. Respondent's testimony regarding the alleged compromised merchantability of the oranges that he received from Petitioner is not credible.
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 finding that D. L. Scotto and Company, Inc., d/b/a Tuxedo Fruit Company, is indebted to Thomas E. Davis, Inc., in the amount of $75,501.50 (includes filing fee) for the balance due for the oranges it purchased from Petitioner on January 25, April 25, and May 2, 2013. DONE AND ENTERED this 17th day of April, 2014, in Tallahassee, Leon County, Florida. S LINZIE F. BOGAN 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 17th day of April, 2014.
The Issue The issue is whether Respondent, Golden Gem Growers, Inc. (Golden Gem), owes Petitioner the money alleged in the Amended Complaint based on two written contracts between Petitioner and Golden Gem.
Findings Of Fact During the citrus growing season of 2000-2001, Golden Gem was a citrus fruit dealer defined in Subsection 601.03(8) and was licensed and bonded in accordance with Chapter 601. Golden Gem operated a packinghouse in Alturas, Florida, and regularly purchased citrus fruit for sale in the fresh fruit market. Fidelity & Deposit Company of Maryland (Fidelity) is the surety on the fruit dealer's bond issued to Golden Gem for the 2000-2001 season. On September 14, 2000, Petitioner and Golden Gem entered into Contract No. AS-7199. The contract provided, in relevant part, that Petitioner was to deliver Valencia oranges and other citrus fruit to Golden Gem and that Golden Gem was to handle, pack, ship, sell, and market the fresh fruit provided by Petitioner. On May 9, 2001, Petitioner and Golden Gem entered into Contract No. AS-7208. The contract provided, in relevant part, that Petitioner was to deliver Valencia oranges to Golden Gem and that Golden Gem was to handle, pack, ship, sell, and market the fresh fruit provided by Petitioner. Contracts AS-7199 and AS-7208 require Golden Gem to detail and account for all the Valencia oranges delivered by Petitioner and packed by Golden Gem. Each contract provides for attorney's fees to the prevailing party. Petitioner delivered 115,740 boxes of Valencia oranges to Golden Gem and Golden Gem processed all 115,740 boxes. Golden Gem packed the oranges into 182,650 cartons but accounted to Petitioner for only 159,731 cartons. Golden Gem collected $1,172,715.40 for 159,731 cartons of Petitioner's Valencia oranges. Golden Gem was entitled to deduct expenses for packing, shipping, and handling in the total amount of $630,475.10. Golden Gem owed a net payment to Petitioner of $542,240.30. Golden Gem paid $518,284.82 to Petitioner. The balance owed for the fruit accounted for by Golden Gem is $23,955.48. Golden Gem owes Petitioner an additional $85,757.36 for the proceeds of an additional 22,919 cartons of Valencia oranges for which Golden Gem has not accounted to Petitioner. The amount due is net after adjusting the gross price for handling charges that Golden Gem is entitled to under the terms of the contracts. Golden Gem owes Petitioner a total amount of $109,712.84 for Valencia oranges that Petitioner delivered to Golden Gem in the 2000-2001 shipping season. Petitioner is the prevailing party. Petitioner incurred reasonable attorney's fees of $10,570.00 and costs of $398.24.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order adopting the findings and conclusions in this Recommended Order and requiring Respondents to pay Petitioner the sum of $109,712.84. DONE AND ENTERED this 25th day of October, 2002, in Tallahassee, Leon County, Florida. 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 25th day of October, 2002. COPIES FURNISHED: Kathy Alves Fidelity & Deposit Company of Maryland Post Office Box 87 Baltimore, Maryland 21203 Golden Gem Growers, Inc. Post Office Drawer 9 Umatilla, Florida 32784 Maggie Evans, Esquire 131 Waterman Avenue Mount Dora, Florida 32757 Brenda D. Hyatt, Bureau Chief Department of Agriculture and Consumer Services 500 Third Street, Northwest Post Office Box 1072 Winter Haven, Florida 33882-1072 Brandon J. Rafool, Esquire Post Office Box 7286 Winter Haven, Florida 33883-7286 Honorable Charles H. Bronson Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Brenda D. Hyatt Bureau of License and Bond Department of Agriculture 407 South Calhoun Street Mayo Building, Mail Stop 38 Tallahassee, Florida 32399-0800
The Issue Whether the Respondent Carlyn R. Kulick, d/b/a Carlyn's, failed to pay amounts owing to the Petitioner for the shipment of citrus fruit, as set forth in the Complaint dated April 30, 2001, and, if so, the amount the Petitioner is entitled to recover.
Findings Of Fact At all times material to this proceeding, Spyke's Grove and Carlyn's were "citrus fruit dealers" licensed by the Department. As part of its business, Carlyn's sells to its retail customers "gift fruit" consisting of oranges and grapefruit for shipment to third persons identified by the customers. Carlyn R. Kulick is the owner of Carlyn's and acted on its behalf with respect to the transactions that are the subject of this proceeding. Spyke's Grove is in the business of packaging and shipping "gift fruit" consisting of oranges and grapefruit pursuant to orders placed by other citrus fruit dealers. Barbara Spiece is the president of Spyke's Grove and acted on its behalf with respect to the transactions that are the subject of this proceeding. In November and December 1999, Spyke's Grove received a number of orders for "gift fruit" from Carlyn's. Most of the orders were for single shipments of fruit. One order was for six monthly shipments of fruit. This was the first year Carlyn's had done business with Spyke's Grove, and Carlyn's and Spyke's Grove did not execute a written contract governing their business relationship. On the night of Sunday, December 12, 1999, the Spyke's Grove's packinghouse was destroyed by fire, and its offices were substantially damaged. The fire could not have happened at a worse time because it was at the peak of the holiday fruit- shipping season. Spyke's Grove was able to move into temporary offices and to obtain the use of another packinghouse very quickly. It had telephone service at approximately noon on Tuesday, December 14, 1999, and it began shipping "gift fruit" packages on Friday, December 17, 1999, to fill the orders it had received. Carlyn R. Kulick, the owner of Carlyn's, learned of the fire at Spyke's Grove and attempted to contact the Spyke's Grove offices for an update on the orders Carlyn's had placed for shipment during the holidays. Mr. Kulick was unable to contact anyone at Spyke's Grove for three or four days after the fire, and he was worried that his customers' orders for "gift fruit" would not be shipped on time. Mr. Kulick called another packinghouse and placed orders duplicating some of the orders Carlyn's had placed with Spyke's Grove. Meanwhile, Spyke's Grove was giving priority to its smaller wholesale customers such as Carlyn's, and it shipped all of the orders it had received from Carlyn's. Carlyn's did not cancel its orders with Spyke's Grove or otherwise notify Spyke's Grove that it should not ship the fruit; Mr. Kulick assumed that Spyke's Grove would contact him if it intended to ship the fruit ordered by Carlyn's. Spyke's Grove sent numerous invoices and statements of account to Carlyn's Regarding the gift fruit at issue here. According to the statement of account dated June 1, 2001, as of that date Carlyn's owed Spyke's Grove $1,069.78 for the gift fruit at issue here. Most of the invoices to Carlyn's that were submitted by Spyke's Grove contain the following: "Terms: Net 14 days prompt payment is expected and appreciated. A 1½% monthly service charge (A.P.R. 18% per annum) may be charged on all past due accounts. . . ." Relying on this language, Spyke's Grove also seeks to recover a monthly service charge for each month that Carlyn's account was past due. Carlyn's does not dispute Spyke's Grove's claim that $1,069.78 worth of "gift fruit" was shipped by Spyke's Grove pursuant to orders Carlyn's placed in November and December 1999. Carlyn's' basic position is that it need not pay Spyke's Grove for the fruit because Spyke's Grove did not notify it after the December 12, 1999, fire that it would ship the orders and because Carlyn's had to make sure that its customers' orders were filled. The uncontroverted evidence establishes that Carlyn's was, at the times material to this proceeding, a Florida- licensed and bonded citrus fruit dealer; that, in November and December 1999, Carlyn's submitted orders to Spyke's Grove for the shipment of "gift fruit" consisting of oranges and grapefruit; that Spyke's Grove shipped all of the "gift fruit" ordered by Carlyn's in November and December 1999; that the price of the "gift fruit" shipped by Spyke's Grove pursuant to Carlyn's' orders totaled $1,069.78; and that Spyke's Grove timely filed its complaint alleging that Carlyn's failed to promptly pay its indebtedness to Spyke's Grove for citrus products shipped pursuant to orders placed by Carlyn's. Spyke's Grove is, therefore, entitled to payment of the principal amount of $1,069.78, plus pre-judgment interest. Based on the date of the last invoice which contained a charge for any of the gift fruit at issue here, the prehearing interest would run from May 1, 2000.
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 ordering Carlyn R. Kulick, d/b/a Carlyn's, to pay $1,069.78 to Spyke's Grove, Inc., d/b/a Fresh Fruit Express, Emerald Estate, Nature's Classic, together with pre-judgment interest calculated at the rate specified in Section 55.03, Florida Statutes, on the amounts owing. DONE AND ENTERED this 1st day of November, 2001, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 1st day of November, 2001. COPIES FURNISHED: Carlyn R. Kulick, Owner Carlyn's 1601 Fifth Avenue, North St. Petersburg, Florida 33713 Barbara Spiece, President Spyke's Grove, Inc. 7250 Griffin Road Davie, Florida 33314 Western Surety Company Post Office Box 5077 Sioux Falls, South Dakota 57117 Honorable Charles H. Bronson Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Brenda D. Hyatt, Bureau Chief Bureau of License and Bond Department of Agriculture and Consumer Services 541 East Tennessee Street India Building Tallahassee, Florida 32308
The Issue The issue in this case is whether Respondent owes Petitioner money on a citrus contract and, if so, how much.
Findings Of Fact Petitioner owns citrus groves in Wauchula and one is near Zolfo Springs. Due to its proximity to a homesite, the latter grove is called the homeplace grove. Respondent operates a citrus packinghouse and a small retail outlet for citrus. On October 7, 1994, Petitioner and Respondent entered into a contract under which Petitioner agreed to sell to Respondent naval oranges at the price of $6 per box on the tree. Petitioner insisted on the contract and supplied the form. The contract states that the fruit "will be picked by Dec. 20, 1994." This is handwritten in the blank space for quantity of fruit. Elsewhere the contract provides a space for a completion date for picking, but this space is left blank. The contract adds: "However, notwithstanding the foregoing provision, Buyer, at its sole discretion[,] shall determine the dates and times for accomplishing the picking, loading, or hauling of said fruit." The contract notes that there are an estimated 3000 boxes at the Wauchula grove and an estimated 500 boxes at the homeplace grove. The contract states: Buyer shall only be required hereunder to accept delivery of the estimated quantity of fruit set forth herein; however, Buyer may, at its sole option, elect to accept delivery of all fruit grown or being grown at the grove locations described above at the prices specified herein. After signing the contract, the price of navel oranges dropped considerably. Also, Respondent had been relying on a third party to purchase much of the fruit from him, but the third party did not do so. Through December 9, 1994, Respondent took delivery on 1662 boxes of navel oranges. Petitioner picked the first 820 boxes, for which Respondent paid an additional, agreed-upon $2 per box. Respondent picked the remainder of the 1662 boxes, for which Respondent paid $11,612, pursuant to the contract. Petitioner became increasingly concerned with Respondent's slow progress. They agreed to reduce the price to $5 per box for 60 boxes picked on December 13, 1994, and then $4 per box for 360 boxes picked after the December 20 picking date stated in the contract. Pursuant to their new agreement, Respondent paid $300 for the 60 boxes picked on December 13, 1994, and $1440 for the remaining 360 boxes picked between December 27, 1994, and January 11, 1995. Believing that Respondent was obligated to take the entire output from the two groves, which proved to be a total of 4232 boxes, Petitioner's principal concluded that Respondent could not meet its contractual obligations. Without notice to Respondent, Petitioner agreed with Mt. Dora Growers Cooperative to pick the remaining fruit. The growers coop picked 920 boxes on January 11, 1995, 900 boxes on January 12, 1995, and 330 boxes on January 16, 1995. For a total of 2150 boxes, the growers coop paid Petitioner $498.84, or $0.23 per box. Petitioner had better luck with the homeplace oranges. By contract dated January 24, 1995, again without notice to Respondent, Petitioner sold 500 boxes of navel oranges to Keith Watson, Inc. for $2 per box. Respondent took delivery of 1220 boxes in October, 122 boxes in November, 320 boxes through December 9, 380 boxes at reduced prices for the rest of December, and 40 boxes in the first 11 days of January. This declining trend suggests problems. However, this fact alone does not prove an anticipatory breach by Respondent. Nothing in the record establishes Respondent's intent to repudiate the contract. There was still time for Respondent or, more likely, a third party to pick the remaining boxes for which Respondent was liable (1418). The growers coop removed 1820 boxes in two days. Also, the price and urgency of the growers coop sale are undermined by the sale two weeks later of 500 boxes at $2 per box.
Recommendation It is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order dismissing the complaint. ENTERED on July 7, 1995, in Tallahassee, Florida. ROBERT E. MEALE 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 on July 7, 1995. COPIES FURNISHED: W. Ralph Durrance, Jr. P.O. Box 5647 Lakeland, FL 33807-5647 Gary Whidden Whidden Citrus & Packinghouse, Inc. 396 Country Road 630A Frostproof, FL 33843 Florida Farm Bureau General Insurance Company P.O. Box 147030 Gainesville, FL 32614-7030 Hon. Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Richard Tritschler, General Counsel Department of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Brenda Hyatt, Chief Bureau of Licensing and Bond Department of Agriculture 508 Mayo Building Tallahassee, FL 32399-0800
The Issue Whether Respondent, C & J Fruit and Melons, Inc. (C & J Fruit), a citrus fruit dealer and registered packer, owes Petitioner, John Stephens, Inc., a citrus dealer, a sum of money for grapefruit and oranges sold and delivered to C & J Fruit's citrus fruit-packing house for processing.
Findings Of Fact Petitioner, John Stephens, Inc., is a Florida-licensed citrus fruit dealer operating within the Department of Agriculture and Consumer Services' regulatory jurisdiction. Respondent, C & J Fruit & Melons, Inc., was a Florida- licensed citrus fruit dealer and operated a registered packing house in Frostproof, Florida, during the 2001-2002 citrus shipping season. Respondent, Auto Owners Insurance, was the surety for C & J Fruit's citrus fruit dealer's license in the amount of $14,000.00, for the 2001-2002 season. At the beginning of the 2001-2002 season, Petitioner and C & J Fruit entered into a verbal contract under which Petitioner agreed to contract with various grove owners and grove harvesters in the Polk County, Florida, area. The understanding was that Petitioner would obtain various varieties of grapefruit, oranges, and tangerines from the growers and harvesters and deliver the fruit to C & J Fruit's packing house. Petitioner was responsible for payment to the grove owners and harvesters. C & J Fruit would process the fruit, supply the citrus fruit to retail and wholesale suppliers, and account and pay for the fruit received from Petitioner. Petitioner and C & J Fruit had conducted business in this fashion for many years prior to this season. On October 23, 2001, C & J Fruit sought protection from creditors under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court, Middle District of Florida, Tampa Division, Case No. 01-19821-8W1. Following the filing of bankruptcy, no other supplier would provide C & J Fruit with citrus fruit. With Petitioner's consent, C & J Fruit filed an emergency motion to authorize a secured interest to Petitioner, if it would continue to supply C & J Fruit's packing house with fruit. The bankruptcy court granted the motion, and in November 2001, Petitioner began supplying C & J Fruit's packing house with fresh citrus fruit. The preponderance of evidence proves that Petitioner delivered to C & J Fruit's packing house during November 2001 pursuant to the contract: 540 boxes of grapefruit at $3.00 per box for a total of $1,620.00; 3,044 boxes of oranges at $4.00 per box for a total of $12,176.00; 330 boxes of tangerines at $3.50 per box for a total of $1,155.00; and 1,953 boxes of navel oranges at $2.00 per box for a total of $3,906.00. C & J Fruit was billed for this amount. Accordingly, C & J Fruit was obligated to pay Petitioner the total sum of $18,857.00 for the fruit. When payment was not received in a timely matter, shipment of citrus fruit to the packing house was discontinued. Petitioner performed all of its duties under the contract, and C & J Fruit failed to pay or account for the citrus fruit delivered to its packing house under the terms of the contract. C & J Fruit is, therefore, indebted to Petitioner in the amount of $18,857.00
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered requiring Respondent, C & J Fruit and Melons, Inc., to pay to Petitioner, John Stephens, Inc., the sum of $18,857.00. DONE AND ENTERED this 29th day of December, 2004, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of December, 2004. COPIES FURNISHED: Brenda D. Hyatt, Bureau Chief Bureau of License and Bond Department of Agriculture and Consumer Services 407 South Calhoun Street, Mail Station 38 Tallahassee, Florida 32399-0800 Honorable Charles H. Bronson Commissioner of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Clemon Browne, President C & J Fruit & Melons, Inc. Post Office Box 130 Lake Hamilton, Florida 33851-0130 John A. Stephens John Stephens, Inc. Post Office Box 1098 Fort Meade, Florida 33841 Jason Lowe, Esquire GrayRobinson, P.A. Post Office Box 3 Lakeland, Florida 33802
The Issue The issue in DOAH Case No. 02-3648RE is whether Emergency Rules 20ER02-01, 20ER02-02, and 20ER02-03 constitute an invalid exercise of delegated legislative authority. The issue in DOAH Case No. 02-4607RP is whether Proposed Rules 20-15.001, 20- 15.002, and 20-15.003, Florida Administrative Code, constitute an invalid exercise of delegated legislative authority.
Findings Of Fact Based on the stipulated facts, and the entire record in this proceeding, the following findings of fact are made: The Florida Citrus Commission was established in 1935 to organize and promote the growing and sale of various citrus products, fresh and processed, in the State of Florida. The purpose of the Citrus Commission is today reflected in Section 601.02, Florida Statutes. The powers of the Florida Citrus Commission ("the Commission") and the Department, are set forth in full in Section 601.10, Florida Statutes. The powers of the Department include the power to tax and raise other revenue to achieve the purposes of the Department. In particular, Section 601.10(1) and (2), Florida Statutes, state: The Department of Citrus shall have and shall exercise such general and specific powers as are delegated to it by this chapter and other statutes of the state, which powers shall include, but shall not be confined to, the following: To adopt and, from time to time, alter, rescind, modify, or amend all proper and necessary rules, regulations, and orders for the exercise of its powers and the performance of its duties under this chapter and other statutes of the state, which rules and regulations shall have the force and effect of law when not inconsistent therewith. To act as the general supervisory authority over the administration and enforcement of this chapter and to exercise such other powers and perform such other duties as may be imposed upon it by other laws of the state. The Department is authorized to set standards by Section 601.11, Florida Statutes, as follows: The Department of Citrus shall have full and plenary power to, and may, establish state grades and minimum maturity and quality standards not inconsistent with existing laws for citrus fruits and food products thereof containing 20 percent or more citrus or citrus juice, whether canned or concentrated, or otherwise processed, including standards for frozen concentrate for manufacturing purposes, and for containers therefor, and shall prescribe rules or regulations governing the marking, branding, labeling, tagging, or stamping of citrus fruit, or products thereof whether canned or concentrated, or otherwise processed, and upon containers therefor for the purpose of showing the name and address of the person marketing such citrus fruit or products thereof whether canned or concentrated or otherwise processed; the grade, quality, variety, type, or size of citrus fruit, the grade, quality, variety, type, and amount of the products thereof whether canned or concentrated or otherwise processed, and the quality, type, size, dimensions, and shape of containers therefor, and to regulate or prohibit the use of containers which have been previously used for the sale, transportation, or shipment of citrus fruit or the products thereof whether canned or concentrated or otherwise processed, or any other commodity; provided, however, that the use of secondhand containers for sale and delivery of citrus fruit for retail consumption within the state shall not be prohibited; provided, however, that no standard, regulation, rule, or order under this section which is repugnant to any requirement made mandatory under federal law or regulations shall apply to citrus fruit, or the products thereof, whether canned or concentrated or otherwise processed, or to containers therefor, which are being shipped from this state in interstate commerce. All citrus fruit and the products thereof whether canned or concentrated or otherwise processed sold, or offered for sale, or offered for shipment within or without the state shall be graded and marked as required by this section and the regulations, rules, and orders adopted and made under authority of this section, which regulations, rules, and orders shall, when not inconsistent with state or federal law, have the force and effect of law. The Department is authorized to conduct citrus research by Section 601.13, Florida Statutes. To help pay for these duties of the Department, the Legislature first enacted the "box tax" in 1949. The box tax is now codified as Section 601.15(3), Florida Statutes. Section 601.15(3)(a), Florida Statutes, provides in relevant part: There is hereby levied and imposed upon each standard-packed box of citrus fruit grown and placed into the primary channel of trade in this state an excise tax at annual rates for each citrus season as determined from the tables in this paragraph and based upon the previous season's actual statewide production as reported in the United States Department of Agriculture Citrus Crop Production Forecast as of June 1. Section 601.15(3)(a), Florida Statutes, goes on to set forth specific rates for fresh grapefruit, processed grapefruit, fresh oranges, processed oranges, and fresh or processed tangerines and citrus hybrids. Section 601.15(1), Florida Statutes, sets forth the Department's authority to administer the box tax, as follows: The administration of this section shall be vested in the Department of Citrus, which shall prescribe suitable and reasonable rules and regulations for the enforcement hereof, and the Department of Citrus shall administer the taxes levied and imposed hereby. All funds collected under this section and the interest accrued on such funds are consideration for a social contract between the state and the citrus growers of the state whereby the state must hold such funds in trust and inviolate and use them only for the purposes prescribed in this chapter. The Department of Citrus shall have power to cause its duly authorized agent or representative to enter upon the premises of any handler of citrus fruits and to examine or cause to be examined any books, papers, records, or memoranda bearing on the amount of taxes payable and to secure other information directly or indirectly concerned in the enforcement hereof. Any person who is required to pay the taxes levied and imposed and who by any practice or evasion makes it difficult to enforce the provisions hereof by inspection, or any person who, after demand by the Department of Citrus or any agent or representative designated by it for that purpose, refuses to allow full inspection of the premises or any part thereof or any books, records, documents, or other instruments in any manner relating to the liability of the taxpayer for the tax imposed or hinders or in anywise delays or prevents such inspection, is guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. The box tax was challenged in 1936 and the Florida Supreme Court issued an opinion in 1937 upholding the validity of the box tax. C.V. Floyd Fruit Company v. Florida Citrus Commission, 128 Fla. 565, 175 So. 248 (1937). In 1970, the Legislature enacted the "equalization tax," codified as Section 601.155, Florida Statutes. The statute mirrored Section 601.15, Florida Statutes, but added certain processors who were mixing foreign citrus products with Florida products. The purpose of the equalization tax was to have all Florida processors of citrus products help pay for the costs of the Department, rather than have the burden fall entirely on the Florida growers subject to the box tax. Section 601.155, Florida Statutes, provides, in relevant part: The first person who exercises in this state the privilege of processing, reprocessing, blending, or mixing processed orange products or processed grapefruit products or the privilege of packaging or repackaging processed orange products or processed grapefruit products into retail or institutional size containers or, except as provided in subsection (9) or except if a tax is levied and collected on the exercise of one of the foregoing privileges, the first person having title to or possession of any processed orange product or any processed grapefruit product who exercises the privilege in this state of storing such product or removing any portion of such product from the original container in which it arrived in this state for purposes other than official inspection or direct consumption by the consumer and not for resale shall be assessed and shall pay an excise tax upon the exercise of such privilege at the rate described in subsection (2). Upon the exercise of any privilege described in subsection (1), the excise tax levied by this section shall be at the same rate per box of oranges or grapefruit utilized in the initial production of the processed citrus products so handled as that imposed, at the time of exercise of the taxable privilege, by s. 601.15 per box of oranges. In order to administer the tax, the Legislature provided the following relevant provisions in Section 601.155, Florida Statutes: Every person liable for the excise tax imposed by this section shall keep a complete and accurate record of the receipt, storage, handling, exercise of any taxable privilege under this section, and shipment of all products subject to the tax imposed by this section. Such record shall be preserved for a period of 1 year and shall be offered for inspection upon oral or written request by the Department of Citrus or its duly authorized agent. Every person liable for the excise tax imposed by this section shall, at such times and in such manner as the Department of Citrus may by rule require, file with the Department of Citrus a return, certified as true and correct, on forms to be prescribed and furnished by the Department of Citrus, stating, in addition to other information reasonably required by the Department of Citrus, the number of units of processed orange or grapefruit products subject to this section upon which any taxable privilege under this section was exercised during the period of time covered by the return. Full payment of excise taxes due for the period reported shall accompany each return. All taxes levied and imposed by this section shall be due and payable within 61 days after the first of the taxable privileges is exercised in this state. Periodic payment of the excise taxes imposed by this section by the person first exercising the taxable privileges and liable for such payment shall be permitted only in accordance with Department of Citrus rules, and the payment thereof shall be guaranteed by the posting of an appropriate certificate of deposit, approved surety bond, or cash deposit in an amount and manner as prescribed by the Department of Citrus. * * * (11) This section shall be liberally construed to effectuate the purposes set forth and as additional and supplemental powers vested in the Department of Citrus under the police power of this state. In March 2000, certain citrus businesses challenged Section 601.155(5), Florida Statutes, as being unconstitutional. At the time of the suit, Section 601.155(5), Florida Statutes, read as follows: All products subject to the taxable privileges under this section, which products are produced in whole or in part from citrus fruit grown within the United States, are exempt from the tax imposed by this section to the extent that the products are derived from oranges or grapefruit grown within the United States. In the case of products made in part from citrus fruit grown within the United States, it shall be the burden of the persons liable for the excise tax to show the Department of Citrus, through competent evidence, proof of that part which is not subject to a taxable privilege. The citrus businesses claimed the exemption in Section 601.155(5) rendered the tax unconstitutionally discriminatory, in that processors who imported juice from foreign countries to be blended with Florida juice were subject to the equalization tax, whereas processors who imported juice from places such as California, Arizona and Texas enjoyed an exemption from the tax. The case, Tampa Juice Service, Inc., et al. v. Department of Citrus, Case No. GCG-00-3718 (Consolidated), was brought in the Tenth Judicial Circuit Court, in and for Polk County. Judge Dennis P. Maloney of that court continues to preside over that case. In a partial final declaratory judgment effective March 15, 2002, Judge Maloney found Section 601.155, Florida Statutes, unconstitutional because it violated the Commerce Clause of the United States Constitution due to its discriminatory effect in favor of non-Florida United States juice. In an order dated April 15, 2002, Judge Maloney severed the exemption in Section 601.155(5), Florida Statutes, from the remainder of the statute. The court's decision necessitated the formulation of a remedy for the injured plaintiffs. While the parties were briefing the issue before the court, the Florida Legislature met and passed Chapter 2002-26, Laws of Florida, which amended Section 601.155, Florida Statutes, to read as follows: Products made in whole or in part from citrus fruit on which an equivalent tax is levied pursuant to s. 601.15 are exempt from the tax imposed by this section. In the case of products made in part from citrus fruit exempt from the tax imposed by this section, it shall be the burden of the persons liable for the excise tax to show the Department of Citrus, through competent evidence, proof of that part which is not subject to a taxable privilege. Chapter 2002-26, Laws of Florida, was given an effective date of July 1, 2002. By order dated August 8, 2002, Judge Maloney set forth his decision as to the remedy for the plaintiffs injured by the discriminatory effect of Section 601.155(5), Florida Statutes. Judge Maloney expressly relied on the rationale set forth in Division of Alcoholic Beverages and Tobacco v. McKesson Corporation, 574 So. 2d 114 (Fla. 1991)("McKesson II"). In its initial McKesson decision, Division of Alcoholic Beverages and Tobacco v. McKesson Corporation, 524 So. 2d 1000 (Fla. 1988), the Florida Supreme Court affirmed a summary judgment ruling that Florida's alcoholic beverage tax scheme, which gave tax preferences and exemptions to certain alcoholic beverages made from Florida crops, unconstitutionally discriminated against interstate commerce. The Florida Supreme Court also affirmed that portion of the summary judgment giving the ruling prospective effect, thus denying the plaintiff a refund of taxes paid pursuant to the unconstitutional scheme. The decision was appealed to the United States Supreme Court. In McKesson Corporation v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18 (1990), the United States Supreme Court reversed the Florida Supreme Court's decision as to the prospective effect of its decision. The United States Supreme Court held that: The question before us is whether prospective relief, by itself, exhausts the requirements of federal law. The answer is no: If a State places a taxpayer under duress promptly to pay a tax when due and relegates him to a postpayment refund action in which he can challenge the tax's legality, the Due Process Clause of the Fourteenth Amendment obligates the State to provide meaningful backward-looking relief to rectify any unconstitutional deprivation. 496 U.S. at 31 (footnotes omitted). The United States Supreme Court set forth the following options by which the state could meet its obligation to provide "meaningful backward-looking relief:" [T]he State may cure the invalidity of the Liquor Tax by refunding to petitioner the difference between the tax it paid and the tax it would have been assessed were it extended the same rate reductions that its competitors actually received. . . . Alternatively, to the extent consistent with other constitutional restrictions, the State may assess and collect back taxes from petitioner's competitors who benefited from the rate reductions during the contested tax period, calibrating the retroactive assessment to create in hindsight a nondiscriminatory scheme. . . . Finally, a combination of a partial refund to petitioner and a partial retroactive assessment of tax increases on favored competitors, so long as the resultant tax actually assessed during the contested tax period reflects a scheme that does not discriminate against interstate commerce, would render petitioner's resultant deprivation lawful and therefore satisfy the Due Process Clause's requirement of a fully adequate postdeprivation procedure. 496 U.S. at 40-41 (citations and footnotes omitted). The United States Supreme Court expressly provided that the state has the option of choosing the form of relief it will grant. In keeping with the United States Supreme Court opinion, the Florida Supreme Court granted the Division of Alcoholic Beverages and Tobacco (the "Division") leave to advise the Court as to the form of relief the state wished to provide. The Division proposed to retroactively assess and collect taxes from those of McKesson's competitors who had benefited from the discriminatory tax scheme. McKesson contended that a refund of the taxes it had paid was the only clear and certain remedy, because retroactive taxation of its competitors would violate their due process rights. McKesson II, 574 So. 2d at 115. The Florida Supreme Court remanded the case to the trial court for further proceedings on McKesson's refund claim, with the following instructions: While McKesson may not necessarily be entitled to a refund, it is entitled to a "clear and certain remedy," as outlined in the Supreme Court's opinion. Because nonparties, such as amici, will be directly affected by the retroactive tax scheme proposed by the state, all affected by the proposed emergency rule must be given notice and an opportunity to intervene in this action. Therefore, on remand, the trial court not only must determine whether the state's proposal meets "the minimum federal requirements" outlined in the Supreme Court's opinion, it also must determine whether the proposal comports with federal and state protections afforded those against whom the proposed tax will be assessed. We emphasize that the state has the option of choosing the manner in which it will reformulate the alcoholic beverage tax during the contested period so that the resultant tax actually assessed during that period reflects a scheme which does not discriminate against interstate commerce. Therefore, if the trial court should rule that the state's proposal to retroactively assess and collect taxes from McKesson's competitors does not meet constitutional muster and such ruling is upheld on appeal, the state may offer an alternative remedy for the trial court's review. However, any such proposal likewise must satisfy the standards set forth by the Supreme Court as well as be consistent with other constitutional restrictions. 574 So. 2d at 116. In the instant case, Judge Maloney assessed the options prescribed by the series of McKesson cases and concluded that the only fair remedy was to assess and collect back assessments from those who benefited from the unconstitutional equalization tax exemption. His August 8, 2002 order directed the Department to "take appropriate steps, consistent with existing law, to assess and collect the Equalization tax from those entities which [benefited] from the unconstitutional exemption." On September 18, 2002, the Department promulgated the Emergency Rules at issue in DOAH Case No. 02-3648RE. The Emergency Rules were filed with the Department of State on September 24, 2002, and took effect on that date. They were published in the October 4, 2002 issue of the Florida Administrative Weekly (vol. 28, no. 40, pp. 4271-4272). The full text of the Emergency Rules is: EQUALIZATION TAX ON NON-FLORIDA UNITED STATES JUICE 20ER02-1 Intent. The Court in Tampa Juice Service, et al v. Florida Department of Citrus in Consolidated Case Number GCG-003718 (Circuit Court in and for Polk County, Florida) severed the exemption contained in Section 601.155(5), Florida Statutes, that provided an exemption for persons who exercised one of the enumerated Equalization Tax privileges on non-Florida, United States juice. The Court had previously determined that the stricken provisions operated in a manner that violated the Commerce Clause of the United States Constitution. On August 8, 2002, the Court ordered that the Florida Department of Citrus "take appropriate steps, consistent with existing law, to assess and collect the Equalization tax from those entities which [benefited] from the unconstitutional exemption." It is the Florida Department of Citrus' intent by promulgating the following remedial Rule 20ER02-01 and Chapter 20-15, F.A.C., to implement a non-discriminatory tax scheme, which does not impose a significant tax burden that is so harsh and oppressive as to transgress constitutional limitations. These rules shall be applicable to those previously favored persons who received favorable tax treatment under the statutory sections cited above. Specific Authority 601.02, 601.10, 601.15, 601.155 FS. Law Implemented 601.02, 601.10, 601.15, 601.155 FS. History-- New 9-24-02. 20ER02-2 Definitions. "Previously favored persons" shall be defined as any person who exercised an enumerated Equalization Tax privilege as defined by Section 601.155, Florida Statutes, but who was exempt from payment of the Equalization Tax due to the exemption for non-Florida, United States juice set forth in the statutory provision, which was ultimately determined to be unconstitutional and severed from Section 601.155(5), Florida Statutes. The "tax period" during which the severed provisions of Section 601.155(5), Florida Statutes, were in effect shall be defined as commencing on October 6, 1997, and ending on March 14, 2002. "Tax liability" shall be defined as the total amount of taxes due to the Florida Department of Citrus during the "tax period," at the following rates per box for each respective fiscal year: Fiscal Year Processed Rate Orange Grapefruit 1997-1998 .175 .30 1998-1999 .17 .30 1999-2000 .18 .325 2000-2001 .175 .30 2001-2002 .165 .18 Specific Authority 601.02, 601.10, 601.15, 601.155 FS. Law Implemented 601.02, 601.10, 601.15, 601.155 FS. History-- New 9-24-02. 20ER02-3 Collection. The Florida Department of Citrus shall calculate the tax liability for each person or entity that exercised an enumerated Equalization Tax privilege outlined in section 601.155, Florida Statutes, upon non-Florida, United States juice based upon inspection records maintained by Florida Department of Agriculture and Consumer Services and the United States Department of Agriculture. Additionally, the Florida Department of Citrus will provide notice of the calculation to the previously favored persons by certified mail. The notice of the calculation shall contain a statement including the following categories: (a) Tax liability; (b) Gallons; Brix; Type of product; (e) Total solids; (f) Conversion rate; (g) Total boxes; (h) Delineation of non-Florida, United States juice. (2)(a) Contained within the notice will be the various legal options available to those who previously enjoyed the exemption, set forth in proposed Rule 20- 15.003(2), F.A.C. (b) Persons who previously enjoyed the exemption may petition to intervene in the case of Tampa Juice Service, Inc., et al, Consolidated Case No. GCG-003718, presently pending before the Circuit Court of the Tenth Judicial Circuit in and for Polk County. A hearing to consider arguments made by any intervenor, the Plaintiffs and the Florida Department of Citrus is currently scheduled to be heard by the Honorable Dennis Maloney on November 12, 2002, in Bartow, Florida. (3) The Florida Department of Citrus will not oppose the timely intervention of persons who previously enjoyed the subject exemption that wish to present a claim to the Court in the Tampa Juice Service, Inc., et al v. Florida Department of Citrus. However, the Florida Department of Citrus does not waive any argument regarding the validity of the calculation of the tax liability or that imposition of this tax is constitutional. Specific Authority 601.02, 601.10, 601.15, 601.155 FS. Law Implemented 601.02, 601.10, 601.15, 601.155 FS. History-- New 9-24-02. The Department's "Specific Reasons for Finding an Immediate Danger to the Public Health, Safety or Welfare" were set forth as follows: On March 18, 2002, the Court in the Tenth Judicial Circuit, State of Florida, in and for Polk County, entered a Partial Final Declaratory Judgment in the case of Tampa Juice Service, Inc., et al v. Florida Department of Citrus, Consolidated Case Number GCG-003718. In this order the Court ruled that the exemption in Section 601.155, F.S., for non-Florida, United States juice was unconstitutional. On or about April 15, 2002, the Court severed the exemption for non-Florida, United States juice from section 601.155(5), F.S. On August 8, 2002, the Court held that the Florida Department of Citrus was required to cure the invalidity of the equalization taxing scheme. To cure this invalidity, the Florida Department of Citrus promulgates Rule 20ER02-1, F.A.C., which will serve to implement the Court's order for a nondiscriminatory tax scheme and provide due process protections for the previously favored taxpayers. These rules are being promulgated on an emergency basis to meet time constraints associated with litigation and to establish guidelines which protect the public's and state's interest for the orderly and efficient collection and payment of the tax liability. Without these guidelines, the welfare of the citizens and the state would be adversely affected because of the immediate and widespread impact of the failure of previously favored persons to properly remit the tax. The Department's "Reason for Concluding that the Procedure is Fair Under the Circumstances" was set forth as follows: Promulgation of these guidelines using the emergency rule procedures is the only available mechanism which adequately protects the public interests under the circumstances which require collection and payment of the tax liability. This procedure is fair to the public and to the previously favored persons. It permits promulgation of the necessary guidelines within a time frame which allows the industry to be adequately informed of their duties, responsibilities and rights with respect to the tax liability. In the November 15, 2002 issue of the Florida Administrative Weekly (vol. 28, no. 46, pp. 4996-4998), the Department published the Proposed Rules at issue in DOAH Case No. 02-4607RP. The text of Proposed Rule 20-15.001, Florida Administrative Code, is identical to that of Emergency Rule 20ER02-1, set forth above. The text of Proposed Rule 20-15.002, Florida Administrative Code, is identical to that of Emergency Rule 20ER02-2, set forth above. The text of Proposed Rule 20- 15.003(1)&(3), Florida Administrative Code, is identical to that of Emergency Rule 20ER02-3(1)&(3), set forth above. The text of Proposed Rule 15.003(2), Florida Administrative Code, varies from the text of Emergency Rule 20ER02-3(2), and reads as follows: 20-15.003 Collection. Subsequent to adoption of this rule, the Florida Department of Citrus will provide to the previously favored persons by certified mail a Notice of Tax Liability which shall contain a demand for payment consistent with the above-referenced itemized statement. The Department will deem late payment of Equalization Taxes owed by previously favored persons to constitute good cause, and shall waive the 5 percent penalty authorized by Section 601.155(10), F.S., as compliance with either of the following is established by Department [sic]: Lump sum payment of the tax liability remitted with the filing of Department of Citrus Form 4R (incorporated by reference in Rule 20-100.004, F.A.C.) for the relevant years and then-applicable tax rate(s) per subsection 20-15.002(3), F.A.C., within 61 days of receiving Notice of Tax Liability; or Equal installment payments remitted with the filing of Department of Citrus Form 4R (incorporated by reference in Rule 20-100.004, F.A.C.) for the relevant years and then-applicable tax rate(s) per subsection subsection [sic] 20-15.002(3), F.A.C., over a 60-month period, the first payment being due within 61 days of receiving Notice of Tax Liability pursuant to subsection 20-15.003(2), F.A.C.; or The Good Cause provisions of 601.155(10), F.S., shall not apply to persons who do not comply with paragraph 20- 15.003(2)(a), F.A.C., or paragraph 20- 15.003(2)(b), F.A.C. Failure to pay the taxes or penalties due under 601.155, F.S. and Chapter 20-15, F.A.C., shall constitute grounds for revocation or suspension of a previously favored person's citrus fruit dealer's license pursuant to 601.56(4), F.S., 601.64(6), F.S., 601.64(7), F.S., and/or 601.67(1), F.S. Peace River is a Florida corporation and licensed citrus fruit dealer regulated by Chapter 601, Florida Statutes. As such, Peace River is subject to the rules of the Department. Peace River buys, sells, and manufactures bulk citrus juices. By correspondence dated October 2, 2002, Peace River was notified by the Department that Peace River would be liable for payment of $86,242.41 in Equalization taxes for the tax period of October 6, 1997 through March 14, 2002 (the "tax period"), pursuant to the terms of the Emergency Rules. Fresh Juice is a Florida corporation and licensed citrus fruit dealer regulated by Chapter 601, Florida Statutes. As such, Fresh Juice is subject to the rules of the Department. Fresh Juice buys, sells, and manufactures citrus juices. By correspondence dated October 2, 2002, Fresh Juice was notified by the Department that Fresh Juice would be liable for payment of $45,052.19 in Equalization taxes for the tax period, pursuant to the terms of the Emergency Rules. Sun Orchard is a Florida corporation and licensed citrus fruit dealer regulated by Chapter 601, Florida Statutes. As such, Sun Orchard is subject to the rules of the Department. Sun Orchard buys, sells, and manufactures citrus juices. By correspondence dated October 2, 2002, Sun Orchard was notified by the Department that Sun Orchard would be liable for payment of $45,052.19 in Equalization taxes for the tax period, pursuant to the terms of the Emergency Rules. During the tax period, Peace River, Fresh Juice, and Sun Orchard imported, stored and blended non-Florida, United States citrus juices. Neither Peace River, Fresh Juice, nor Sun Orchard is a party to the lawsuit styled Tampa Juice Service, Inc., et al. v. Department of Citrus, Case No. GCG-00-3718 (Consolidated). Peace River, Fresh Juice, and Sun Orchard contend that they relied on the tax exemption in making business decisions and had no notice that their activities regarding non-Florida, United States juice would be taxable upon the court's striking of the exemption in Section 601.155(5), Florida Statutes. Accordingly, Peace River, Fresh Juice, and Sun Orchard contend that, during the tax period, they had no opportunity to conform their conduct to avoid the tax or position themselves to claim a refund allowed by Section 601.155, Florida Statutes. Peace River, Fresh Juice, and Sun Orchard contend that they have not been obligated by Chapter 601, Florida Statutes, to keep specific records on their use of non-Florida United States citrus juices for the tax period, but admit they keep business records required by law, which may include some business records related to non-Florida United States juice during the tax period. Peace River, Fresh Juice, and Sun Orchard shipped products made with non-Florida, United States juice during the tax period without payment of the Equalization Tax.
The Issue The issue in this case is whether proposed Florida Administrative Code Rule 64-4.002 (the “Proposed Rule”) is an invalid exercise of the legislative authority delegated to the Department of Health (the “Department”).
Findings Of Fact In order to better contextualize the facts presented at final hearing and discussed below, the following excerpts from the Proposed Rule and the underlying statutory provision are provided: Section 381.986, Florida Statutes (8) Medical Marijuana Treatment Centers.- (a) The department shall license medical marijuana treatment centers to ensure reasonable statewide accessibility and availability as necessary for qualified patients registered in the medical marijuana use registry and who are issued a physician certification under this section. * * * The department shall license as medical marijuana treatment centers 10 applicants that meet the requirements of this section, under the following parameters: [Previously denied applicants meeting certain requirements not relevant to the instant action.] [One applicant from a specific class pursuant to a federal lawsuit.] As soon as practicable, but not later than October 3, 2017, the Department shall license applicants that meet the requirements of this section in sufficient numbers to result in 10 total licenses issued under this subparagraph, while accounting for the number of licenses issued under sub-subparagraphs a. and b. For up to two of the licenses issued under subparagraph 2., the department shall give preference to applicants thatdemonstrate in their applications that they own one or more facilities that are, or were, used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses and will use or convert the facility or facilities for the processing of marijuana. (Emphasis added). Florida Administrative Code Rule 64-4.002 (Proposed) (1)(f) For applicants seeking preference for registration as a medical marijuana treatment center pursuant to ss. 381.986(8)(a)3., F.S., the applicant must provide evidence that: The property at issue currently is or was previously used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses. In order to demonstrate the property meets this criteria, the applicant may provide documentation that the applicant currently holds or has held a registration certificate pursuant to section 601.40, F.S. A letter from the Department of Citrus certifying that the property currently is or was previously used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses will be accepted as sufficient evidence. The applicant as an individual holds, in his or her name, or the applicant as an entity holds, in the legal name of the entity, the deed to property meeting the criteria set forth in subparagraph 1. above; and A brief explanation of how the property will be used for purposes of growing, processing, or dispensing medical marijuana if the applicant is selected for registration. * * * Subject matter experts will substantively and comparatively review, evaluate, and score applications using [the Scorecard incorporated by reference]. * * * (a)7.(b) Scores for each section of the application will be combined to create an applicant’s total score. The department will generate a final ranking of the applicants in order of highest to lowest scores . . . . (c) In accordance with ss. 391.986(8)(a)3., F.S., the two highest scoring applicants that own one or more facilities that are, or were, used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses and will use or convert the facility or facilities for the processing of medical marijuana will receive an additional35 points to their respective total score. Licenses will be awarded, subject to availability as set forth in ss. 381.986(8)(a)2. and 381.986(8)(a)4., F.S., based on the highest total score in the following manner: The highest scoring applicant that is a recognized member of the Pigford or [the Black Farmers Discrimination Litigation] will receive a license. The remaining highest scoring applicants, after the addition of the preference points for applicants pursuant to paragraph (7)(c) above, will receive licenses up to the statutory cap set forth in ss. 381.986(8)(a)2., F.S. The remaining highest scoring applications, after removing any preference points received under paragraph (7)(c), will receive licenses up to the statutory cap . . . . (Emphasis added). The Department is an agency of the State of Florida charged with administering and enforcing laws related to the general health of the people of the state. § 381.0011(2), Fla. Stat. As part of this duty, the Department is charged with implementing the Compassionate Medical Cannabis Act of 2014. See § 381.986, Fla. Stat. Favero is a Florida corporation in good standing since its incorporation in 1974, primarily engaged in the business of growing orchids. Favero aspires to file an application for licensure as a medical marijuana treatment center (“MMTC”). Following the passage of Senate Bill 8A by the 2017 Florida Legislature, which substantially rewrote section 318.986, Florida Statutes, Favero decided to seek the citrus preference described in section 381.986(3)(a)3. (hereinafter referred to as the “Preference Statute”). To that end, Favero purchased a citrus processing business in Safety Harbor, Florida, for approximately $775,000, including the business’s real property and all facilities located thereon. The purchase took place prior to publication of the Proposed Rule. The purchase of the Safety Harbor property reduced Favero’s financial liquidity but, presumably, not its net worth as the value of the property would replace the cash expenditure made for the purchase. It is Favero’s intent to convert the citrus processing facility located on the property into a medical marijuana processing facility if Favero receives the requisite license as a MMTC. Favero contends, as stated in the following paragraphs of its Petition Challenging the Invalidity of Proposed Rule 64-4.002: The Proposed Rule grants a preference to an applicant who owns “property” that was once used for citrus processing. The statute, however, clearly grants the preference only to applicants who “own one or more facilities that are, or were, used for the canning, concentrating, or otherwise processing ” By using the broader word “property” rather than “facility,” the Department is granting the citrus preference to a broader group of applicants than the statute permits, such as owners of packinghouses and other properties that fail to meet the definition of “processor” or were not used for “canning” or “concentrating.” The statute is clear and unambiguous. The use of the word “property” rather than the statutory term “facilities” renders the rule invalid because the use of that term exceeds the Department’s rulemaking authority, enlarges and modifies and contravenes the requirements of Section 381.986(8)(a)3., is vague, fails to establish adequate standards for agency decisions, vests unbridled discretion in the agency and is arbitrary and capricious. See § 120.52(8)., Fla. Stat. * * * The Proposed Rule allows for a preference to only some applicants that own a citrus processing facility. Under the scoring system, applicants demonstrating that they own a citrus processing facility may receive an additional 35 points. However, the Proposed Rule does not guarantee that any applicant owning a citrus processing facility will actually receive those points or get a license. The Proposed Rule merely grants an additional 35 points to two applicants. The Department of Citrus has indicated that more than a dozen companies will qualify for the citrus preference. Under the Proposed Rule, most of those applicants would receive no additional points despite qualifying for the statutory preference. Additionally, the Proposed Rule provides no assurance that any applicant qualifying for the citrus preference will actually receive a license. The Form adopted by the Proposed Rule allows Department evaluators to award a maximum of 1,150 points in several categories. The additional 35 points available under the Proposed Rule amount to an addition of just a 3% bonus. If those extra 35 points are not enough to exceed the scores of other applicants, then no citrus-preference qualifying applicant will receive a license. Favero contends that reduction of its liquid assets could have a negative impact on its overall financial condition when considered by the Department as it reviews Favero’s MMTC application. Favero is concerned that this negative impact may not be completely offset by the citrus preference it is seeking. Mecca is a Florida corporation located at 7965 Lantana Road, Lantana, Florida. It has existed since November 15, 1973, has operated in Florida since the early 1970s, and began citrus farming on approximately 2,000 acres in 1983. Mecca has been and is currently licensed as a citrus dealer and a regulated citrus processing plant and citrus packinghouse. The “processing” done by Mecca does not involve canning or concentrating citrus. Mecca “processes” citrus in its “fresh fruit form” (discussed more fully below). Mecca intends to convert its property and facilities for the purpose of growing, processing or dispensing medical marijuana if its application for an MMTC license is approved. Mecca contends the citrus preference in the Proposed Rule needs further clarification. Mecca also asserts the evaluation and scoring system with respect to the citrus preference constitutes an invalid exercise of the Department’s delegated legislative authority. The Scoring System The MMTC application has 16 separate sections. An applicant may be awarded up to 50 points on some sections, up to 100 points on other sections. The total number of points any application might receive is 1150, presuming a perfect score on each section. Each of the individual sections, whether for 50 or 100 points, is graded in accordance with an evaluation rubric. The rubric contains five categories of scores which are used by reviewers, allowing for a range of points in each section. The five categories each have a range depending on whether the section allows 50 or 100 points. The rubric directs that a category 5 response could be awarded between 40 and 50 points in the 50-point sections, or between 80 and 100 points in a 100-point section. A category 4 response could get between 30 and 39 points (or 60 to 79 points); a category 3 could award 20 to 29 points (or 40 to 59 points); a category 2 could be worth 10 to 19 points (or 20 to 39 points); and a category 1 might award 0 to 9 points (or 0 to 19 points). Thus, an applicant may be awarded points anywhere within the range in each category for each section of the application. By way of example, category 5 under the rubric (wherein a reviewer may give an application 40 to 50 or 80 to 100 points) directs the reviewer as follows: Applicant addressed all items. When necessary, each item has multiple, specific examples of experience and knowledge. Experience and knowledge are connected to specific, identifiable people in the application. Plans are clear, detailed, well documented, and thorough. All charts, photographs, maps, sketches, and other supplemental information are clear and legible. When necessary, applicant provides full documentation for representations of future performance. Responses related to financial reflect robust financial resources and clear lines of authority within the organizations. By comparison, under Category 3, which could award 20 to 29 or 40 to 59 points, the rubric directs the reviewer to consider: Either: Applicant responded to all items. Applicant responds to items addressing experience and knowledge, though answers tend to lack specificity. Plans are provided, but are lacking in clarity, documentation, or thoroughness. When necessary, some supplemental information is provided. Responses related to financials do not reflect robust financial resources, but do not raise doubts of applicant’s financial viability, or the organization has unclear lines of authority, or; Most responses are sufficient to be considered Category 4 or 5 Responses, but applicant fails to address some items. Favero asserts that allowing a reviewer to award points from an allowable range gives unbridled discretion to the Department. The argument misses the point that the ranges in each category direct the reviewer on how to score, while allowing some leeway in determining which applications are slightly better or worse than their competitors. Depending on the strength or weakness of one applicant’s response vis-à-vis another applicant, it is reasonable to assign more or fewer points in a comparative review. The rubric is quite descriptive and allows for a nuanced review of responses by the Department reviewers. The Preference The Preference Statute asserts a preference “for up to two of the licenses issued,” i.e., past tense. There are no licenses “issued” during the application review process, so the preference is actually assigned before licensure. The Preference Statute is somewhat confusing in this regard. The Proposed Rule attempts to reconcile this discrepancy by assigning preference points as a part of the application review process, while still approving the most qualified applicants. That approach is reasonable and has merit; it allows the preference to be assigned but does not attempt to insert it into the actual licensure process. The Proposed Rule assigns the preference points at the end of the review, i.e., after an application receives its “total score.” Thus, an applicant could conceivably be awarded 1185 points on the 0 to 1150 point scale. Regardless of how the points are assigned, Favero contends that the 35 preference points are too insignificant as compared to a possible (perfect) score of 1150 during application review. That number of points (35) would be only about three percent of a perfect score. The lower the average scores of all applications, however, the more the 35 points might come into play. If all applicants received an average score of 575 total points, the preference points would be twice as important as compared to perfect 1150 scores. The assignment of the preference points only after totaling the scores is a legitimate and acceptable method. Taking the 16 sections of the application separately, 35 points assigned in any one section could be quite significant. In fact, the Department arrived at the 35 points by taking the average number of possible points per section, i.e., 72, and assigning approximately half of that amount to reach the 35- point preference. The preference points are not just an arbitrary number assigned by the Department. Favero also objects that the Proposed Rule only assigns the 35 preference points to the two highest scoring, eligible applicants, i.e., those who will convert a citrus facility to process medical marijuana. If those two eligible applicants were more than 35 points below other, non-eligible applicants’ scores, assignment of the preference points would not result in the approval of any eligible applicants. The plain language in the Preference Statute and the Proposed Rule allows for a preference of “up to two” applicants. There is, therefore, no mandate that any applicants must receive the preference. While the Legislature can be presumed to have wanted preference points to be awarded (else why would the Preference Statute exist?), the language of the statute merely limits the number of entities which could get such a preference. The Department, interpreting a statute it is charged with implementing, interprets section 381.986(8)(a)3. to mean the issuance of available licenses to as many as two entities which are eligible for the preference. The Proposed Rule allows the Department to assess an applicant’s entitlement to the preference, to assign the preference, and to meet its statutory obligation. Property versus Facility The Legislature clearly intended to give a preference to applicants who “own . . . facilities that are, or were, used for canning, concentrating, or otherwise processing of citrus . . . and will use or convert the . . . facilities for the processing of medical marijuana.” The Legislature failed, however, to provide guidance by way of definitions. While the Legislature chose the words “facility or facilities” in the Preference Statute, the Department complicated the issue by using the word “property” for the most part, but also using the words “facility” and “facilities” at times. Favero contends that a property is much broader in scope than a facility, and the Department therefore exceeded its delegated legislative authority. The Department argues that facilities used to process citrus must be located on some property, obviously. But, facilities located on a property might be leased, so that the fee simple owner of the property is different from the leaseholder of that facility. Thus, if an applicant for a medical marijuana treatment center license wants to avail itself of the preference, it would need to own the facility. Whether that means the applicant must own the property on which the facility is located is not clear in the Preference Statute or in the Proposed Rule. The Department argues that the way to show ownership of a facility is by way of a deed to the property on which the facility is located. In fact, Favero will use a warranty deed to prove ownership of the facilities it purchased in order to obtain the preference. But if Favero purchased land on which citrus had been grown but not processed, i.e., if there had been no facilities on the land to can, concentrate or otherwise process the fruit, except in fresh fruit form, the preference would not apply. And if an applicant obtained a leasehold interest in a facility, it would not be able to “show ownership” by way of a deed to the property. The Preference Statute requires the applicant to convert the facility in order to gain the preference. It is unclear how a piece of unimproved property can be “converted” to another use; land is land. This begs the question of whether growing citrus on a piece of property, and then removing all the citrus trees in order to grow medical marijuana, is a “conversion” of a facility as contemplated by the Legislature. Neither the Preference Statute nor the Proposed Rule contain any definitional assistance to answer that question. An important question to be answered is whether the growing of citrus constitutes “processing” as alluded to by the Legislature. The Preference Statute provides no definition of the word. The Citrus Code (chapter 601, Florida Statutes) also does not define “processing,” but does describe a “processor” of citrus as: ‘[A]ny person engaged within this state in the business of canning, concentrating, or otherwise processing citrus fruit for market other than for shipment in fresh fruit form.” § 601.03(32), Fla. Stat. (Emphasis added). Processing must therefore mean something other than merely growing citrus and packing it up for shipment. That being the case, a property where citrus is grown that is “converted” to a property growing marijuana would not afford an applicant a preference. There must be some “facility” that is or has been used to process citrus, i.e., doing something more with the raw product, in order to constitute “processing.” Therefore, a “packinghouse,” i.e., “[a]ny building, structure, or place where citrus fruit is packed or otherwise prepared for market or shipment in fresh fruit form,” would not be engaged in “processing” citrus. See § 601.03(29), Fla. Stat. Mecca, which owns property where citrus was grown, picked, graded, sorted, polished, cleaned and packaged for transfer “in fresh fruit form,” would not be a processor, either. Mecca owns a packinghouse only, not a processing facility as that term seems to be used by the Legislature. Its operations were not part of the “canning, concentrating, or otherwise processing citrus fruit other than for shipment in fresh fruit form.”
The Issue The issue for determination is whether Department of Citrus Rules 20-1.009 and 20-1.010, Florida Administrative Code, are invalid exercises of delegated legislative authority, as alleged by Petitioners.
Findings Of Fact John Stephens, Inc., Petitioner, was at all times material hereto a Florida corporation duly licensed as a citrus fruit dealer in the State of Florida. J. A. Stephens, Inc., was a Florida corporation, and held a valid fruit dealer’s license in the State of Florida. At all times material to this proceeding, Petitioner, John A. Stephens, served as an officer and director of J. A. Stephens, Inc. John A. Stephens is not an officer, director or shareholder of John Stephens, Inc. John A. Stephens, Jr. is the president and sole director of John Stephens, Inc. and is not an officer, director nor shareholder of J. A. Stephens, Inc. On or about September 26, 1996, Petitioners, John Stephens, Inc., and John A. Stephens, applied to the Florida Department of Agriculture and Consumer Services to register John A. Stephens as an agent of John Stephens, Inc., pursuant to Section 601.601, Florida Statutes. The application form furnished by the Department of Agriculture and Consumer Services indicates that the licensed dealer seeking registration of an agent agrees to “... accept full responsibility for all his activities....” (Petitioners’ Exhibit 1) By letter dated December 26, 1996, Petitioners were advised by the Department of Agriculture and Consumer Services that their application for registration of John A. Stephens as an agent of John Stephens, Inc., had been denied on the basis of Rule 20-1.010, Florida Administrative Code. As indicated in the notice, that rule provides, in part, that an application for registration of a dealer’s agent can be disapproved if a proposed registrant has a “...record, either as an individual, co- partnership, corporation, association or other business unit, showing unsatisfied debts or orders issued by the Commissioner of Agriculture with respect to prior dealings in citrus fruit.” (Petitioners’ Exhibit 1.) Specifically, the Department of Agriculture and Consumer Services advised Petitioners that “...Mr. Stephens has not satisfied orders issued by the Commissioner of Agriculture with respect to prior dealings in citrus fruit...,” listing as the final orders in question Petitioners’ Exhibits 3 through 14. Between April 30, 1991, and September 30, 1992, the State of Florida, Department of Agriculture and Consumer Services entered a total of 12 final administrative orders in which it found that J. A. Stephens, Inc., was indebted to claimants for various sums arising from prior dealings in citrus fruit. (Petitioners’ Exhibits 3 through 14.) At the time of the action of the Department of Agriculture and Consumer Services denying Petitioners’ application, there remained amounts due and unpaid on each of the orders entered by the Department against J. A. Stephens, Inc. Petitioner, John A. Stephens was not named as a party respondent in any of the 12 proceedings culminating in final orders against J. A. Stephens, Inc., which formed the basis for the denial by the Department of the application for registration as a citrus dealer’s agent. (Petitioners’ Exhibits 2, and 3 through 14.) In denying a Motion for Relief for Final Order in the only Department of Agriculture and Consumer Services proceeding in which a claimant sought to join Mr. Stephens individually as a party, the Department found that: The complaint filed by Claimant named J. A. Stephens, Inc. as the respondent. Because the complaint was against J. A. Stephens, Inc., it was served on J. A. Stephens, Inc. J. A. Stephens, an individual, was never subjected to the jurisdiction of the Agency with regard to this matter. J. A. Stephens, an individual, was not afforded an opportunity to defend against the allegations of the complaint. There was no discussion at the hearing about whether J. A. Stephens, Inc. was or was not the proper respondent. There was no allegation at the hearing that J. A. Stephens, an individual, was the proper respondent. The Claimant has failed to express any legal basis for grant of his motion and this Agency could find no such basis. This Agency has no personal jurisdiction over J. A. Stephens, an individual, with regard to this matter and therefore cannot enter an order with respect to him. Further, even if such an order were to be entered, it would be of no force or effect because of the lack of personal jurisdiction. (Petitioners’ Exhibit 4, pg. 2.) The rules that are the subject of this proceeding had their inception in 1964, when the Florida Citrus Commission considered and adopted rules governing the registration of agents acting on behalf of licensed citrus dealers. These rules, which appear in the text of the minutes of the Commission as Regulation 105-1.05, are almost verbatim the same rules now found in Chapter 20-1, Florida Administrative Code. (Respondent’s Exhibits 1 and 2.) As reflected in the minutes of the Florida Citrus Commission, the rules were adopted to help protect the grower and shipper or processor in matters involving the normal movement of citrus fruit in all channels of distribution. The regulation was recommended by the Fresh Citrus Shippers Association and was endorsed by a resolution of the Florida Sheriffs Association. In presenting the Sheriffs’ resolution to the Commission, Sheriff Leslie Bessenger of the Florida Citrus Mutual Fruit Protection Division cited the results of a seven-month investigation that found 71 out of 200 registered agents with criminal records. Those two hundred agents represented only nine dealers. (Respondent’s exhibit 1, June 19, 1964, meeting.) Minutes of Commission meetings after rule adoption thoroughly explain the efforts to require accountability and curb abuse of the dealer- agent relationship. The rules, as they appear today in the Florida Administrative Code, have not been revised since July 1, 1975.
Findings Of Fact Based on the factual stipulations and the deposition testimony of Mr. Alfred Poucher, I hereby make the following findings of fact: During the 1982-1983 citrus fruit season Congen delivered various varieties of citrus fruit to Blue Prize. Congen is a grower as well as a processor, and the fruit which was delivered to Blue Prize was owned by Congen. During the 1982-1983 citrus season Blue Prize operated a fresh fruit packing house. The citrus fruit referred to in the preceding paragraph was delivered pursuant to an oral contract negotiated between Jack Neitzke on behalf of Congen and Alfred Poucher on behalf of Blue Prize. Neitzke served as general manager of Congen. Poucher served as president of Blue Prize. The contract provided that Congen would deliver citrus fruit to Blue Prize on an account sales basis and that Blue Prize would pay for the fruit in the following manner: For Novas delivered to Blue Prize by Congen and Packed by Blue Prize, Blue Prize agreed to pay an amount at least equal to the net return to Congen from its sale of Novas to A. S. Herlong during the same citrus season. Congen's sales to Herlong netted Congen $8.026 per packed box. For White Grapefruit delivered to Blue Prize by Congen, Blue Prize agreed to pay Congen the average net per box return Congen received during the same citrus season for White Grapefruit Congen sold for processing, inclusive of any applicable picking, roadside, and hauling charges incurred by Congen, for all field boxes delivered. The average return per box was $1.5475. For Temples, Hamlins, and Valencias delivered to Blue Prize by Congen, Blue Prize agreed to pay Congen for all field boxes delivered an amount at least equal to the average amount returned per box on the Citrus Belle processing plant seasonal pool. The Citrus Belle pool returned $.96 per pound of solids for early and mid-season fruit which includes Temples and Hamlins. The average pounds of solids per box for Temples was 6.1052, and the average pounds of solids per box for Hamlins was 5.4. The pool returned $1.10 per pound of solids for Valencias, and the average pounds of solids per box for Valencias was 6.0137. Congen agreed to give Blue Prize credit for all eliminations (fruit which could not be packed by Blue Prize as fresh fruit) which were either returned to Congen or which were sent to a processing plant and for which the proceeds from the processing plant were ultimately paid to Congen. The elimination credit was to be calculated according to the same formulae used by Congen to charge Blue Prize for the fruit. The Valencia eliminations totaled 4,038.63 pounds of solids. The Temple and Hamlin eliminations totaled 1,119.52 pounds of solids. The total elimination credit due Blue Prize was $5,517.23. During the 1982-1983 citrus season Congen delivered 5,920 field boxes of Novas, 920 field boxes of Temples, 1,380 field boxes of white Grapefruit, 120 field boxes of Hamlins, and 1,748 field boxes of Valencias to Blue Prize. 5,589 boxes of Novas, 682 boxes of Temples, 101 boxes of Hanlins, and 1,330 boxes of Valencias were packed. According to these figures and the agreed upon prices to be paid, Blue Prize owed Congen $44,857.31 for Novas which were packed, $5,462.769 for Temples which were delivered, $2,135.55 for white Grapefruit which were delivered, $622.080 for Hamlins which were delivered, and $11,597.753 for Valencias which were delivered. These amounts total $64,675.45. Blue Prize paid Congen $30,000 for the fruit delivered by Congen during the 1982-1983 citrus fruit season, and after giving Blue Prize credit for this amount and also giving Blue Prize credit for the eliminations and harvesting and trucking charges, the amount Blue Prize owes Congen is $25,278,86.
Recommendation Based on all of the foregoing, it is recommended that the Department of Agriculture and Consumer Services enter a Final Order concluding the Blue Prize Packers, Inc., is indebted to Congen Properties, Inc., in the total amount of $25,278.86, and ordering that the full amount of the debt be paid within 30 days from the date of the Final Order. DONE and ORDERED this 15th day of March, 1985, at Tallahassee, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of March, 1985. COPIES FURNISHED: H. Richard Bates, Esquire Anderson & Rush 322 East Central Blvd. P.O. Box 2288 Orlando, Florida 32802 M. David Alexander, III, Esquire Post Office Box 2376 Bartow, Florida 33830 Robert A. Chastain, Esquire General Counsel Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32301 McDonald Insurance Agency, Inc. Post Office Box 940 Winter Haven, Florida 33880 Blue Prize Packers, Inc. 1200 Highway 27, North Winter Haven, Florida 33880 Congen Properties, Inc. Post Office Box 847 Labelle, Florida 33935 Honorable Doyle A. Conner Commissioner of Agriculture The Capitol Tallahassee, Florida 32301
