The Issue The issue in this case is whether Petitioner, Target Corporation ("Target"), is entitled to a consumption-on-premises alcoholic beverage license for its store at 1200 Linton Boulevard Delray Beach, Florida ("Target Delray").
Findings Of Fact The undersigned makes the following Findings of Fact based on the evidence presented, the reasonable inferences from the evidence, and the record as a whole. The Division is the state agency responsible for supervising the conduct, management and operation of the manufacturing, packaging, distribution and sale within the state of all alcoholic beverages. It is also responsible to enforce the provisions of the Beverage Laws, chapters 561 through 568, Florida Statutes. Target is a national retailer with more than 1800 locations in the United States, including approximately 126 locations in the state of Florida. Target's primary business is selling a variety of consumer goods and merchandise including electronics, groceries, health and beauty products, apparel, toys, sporting goods, and more. Target owns and operates a retail store located at 1200 Linton Boulevard, Delray Beach, Palm Beach County, Florida, designated as Target Store T-0642. Target Delray has an existing beer-and-wine package store license ("2APS license"), beverage license No. 6013421, issued by the Division which is in "Current, Active" status. Target Delray also has an existing, but inactive, beer-wine-and-liquor package store license ("3PS license"), beverage license No. 6011410, issued by the Division which is in "Inactive, Automatic Waiver" status. The Application As noted, on October 10, 2019, Target submitted an application for a consumption-on-premises license ("4COP license") at Target Delray (the "Application"). Pet. Ex. 1. Prior to the Application, Target had never applied for a consumption- on-premises license in Florida. All of Target's locations in Florida are licensed by the Division as package stores for off-premises consumption of beer and wine, including three separate liquor stores that are walled off from the nearby main stores, and have separate entrances. First 14-Day Letter Upon reviewing the Application, a Division employee notified Target by email that the Application sketch appeared to show the entire retail store. Pet. Ex. 2. The Division employee inquired whether Target instead meant to license a separate liquor store with a separate entrance from the main store. In addition, she informed Target that a new license could not be issued to the entire store because the 2APS license already existed at Target Delray. Id. Before Target responded, the Division sent Target a formal letter giving Target 14 days to submit a new sketch in support of its Application (the "First 14-Day Letter"). Pet. Ex. 3. It also stated that the Application was incomplete because Target "failed to provide a complete sketch" of the premises sought to be licensed and that the "sketch submitted shows a license number, 6013421, at the licensed location." Id. Shortly thereafter, Target responded with a request to cancel its 2APS license at Target Delray when a permanent consumption-on-premises license was issued. Pet. Ex. 4. In addition, Target clarified that "[t]he licensed premises diagram is correct[;] it will be the department store and not a side liquor store." The Division employee then explained to Target that a consumption- on-premises license of this type "can't be in a grocery/retail store." Pet. Ex. 5. Target responded that the Division has "routinely issued" this type of license to various establishments "that sell food to the public for consumption on the premises along with other retail items … ." Draft Second 14-Day Letter On or about October 29, 2019, the Division drafted, but did not send, a second letter to Target identifying deficiencies in the Application sketch (the "Second 14-Day Letter"). It read, "[t]he submitted application is considered incomplete and/or unverifiable, as applicant has failed to provide a complete and detailed sketch of the premises sought to be licensed. Specifically, please identify counters, sales areas (including points of sale), bar locations, and other relevant areas associated with the sale of alcoholic beverages for consumption on or off the premises." Id. It requested a response within 14 days. The Division, however, never sent this Second 14-Day Letter to Target. The Inspections On November 8, 2019, as part of its normal practice in cases of this nature, a Division representative physically inspected the premises of Target Delray for purposes of evaluating the Application. During the inspection, Target Delray's assistant manager (or "Executive Team Lead") Scott Hoffman ("Hoffman") explained to the Division's inspector how Target Delray currently sells beer and wine. Hoffman did not know, however, how Target Delray would be selling liquor under the 4COP license it applied for.1 As a result, the assistant manager was not able to properly identify counters, sales areas (including points of sale), bar locations, and other relevant areas associated with Target's Application for a consumption-on- premises license. While inspecting Target Delray, the Division inspector took a variety of pictures of merchandise offered for sale throughout the store. The inspector also compared the Application sketch to the proposed licensed premises of the store. Division policy permits an inspector to make a sketch when appropriate. As a result, the Division inspector created a "clarification sketch" of Target Delray by marking and labeling on Target's Application sketch indicating the "current beer and wine sales area," the "wine and beer storage area," and the "Starbucks coffee shop" as well as other areas. The Division reviewed and considered the inspector's "clarification sketch" as part of the application process for Target. In his inspection report, the Division inspector concluded that the premises matched the Application sketch and "was clarified at inspection." Significantly, however, the inspector determined that non-authorized merchandise was being sold throughout the Target store. Pet. Ex. 8. He wrote that he "observed 100+ items being offered for sale that do not comply with [Florida Statutes, section] 565.045." Id. 1 Curiously, there was no persuasive evidence that Target's headquarters ever communicated with Target Delray about the 4COP license application prior to submitting it or prior to the inspection. The inspector gave Target Delray 14 days to comply with the statute, at which time a re-inspection would be conducted. The same Division inspector conducted the re-inspection of Target Delray on November 22, 2019. His second inspection report reached the same conclusion regarding the extensive merchandise for sale. Pet. Ex. 13. As a result of the same noncompliance, he advised Target Delray that it did not meet the requirements for a consumption-on-premises license. Id. Target Delray's assistant manager signed for both inspection reports. The Notice of Intent to Deny License On or about December 20, 2019, the Division issued its Denial Notice regarding the Target Delray Application. Pet. Ex. 18. The Denial Notice outlined two reasons for the Division's intent to deny the Application: REASON [1]: The submitted application is considered incomplete and/or unverifiable, as applicant has failed to provide a complete and detailed sketch of the premises sought to be licensed. Specifically, the application did not identify counters, sales areas (including points of sale), bar locations, and other relevant areas associated with the sale of alcoholic beverages for consumption on or off the premises, nor could the manager of the proposed licensed premises identify such areas upon inspection. Therefore, the Division of Alcoholic Beverages and Tobacco was unable to fully investigate this application in accordance with Florida law, and the application is being recommended for denial. Pet. Ex. 18 (citing sections 561.01(11), 561.18 and 562.06, Florida Statutes). REASON [2]: The proposed licensed premises fails to meet the statutory regulations for consumption on the premises. Specifically, there shall not be sold at such places of business anything other than the beverages permitted, home bar and party supplies and equipment (including but not limited to glassware and party-type foods), cigarettes, and what is customarily sold in a restaurant. The location identified as the licensed premises offers a substantial, yet indeterminate, amount of items for sale that fall outside of the scope of the statute, including, but not limited to, the items listed in the Exhibit B to this notice. Pet. Ex. 18 (citing section 565.045, Florida Statutes). Exhibit B to the Denial Notice listed more than 150 items for sale at the Target Delray store which the Division determined to be unauthorized merchandise for a place of business seeking such a license. Pet. Ex. 18. These items were found in various departments and locations throughout the store and included, among other things: men's and women's clothing; automotive products; holiday items; furniture; household products; sporting goods; games and toys; tools; pharmaceutical items; health and beauty products; pet care products; electronics; and others. Id. Submitted Sketch & Clarification Sketch The sketch submitted by Target with its Application did not fully and adequately portray the current premises for licensing purposes. More specifically, Target Delray renovated and converted its Target Café into a Starbucks Café prior to the Application, but nevertheless submitted an outdated sketch showing the old Target Café. Likewise, the sketch submitted did not include the newer Starbucks Café. Pet. Exs. 37 and 38. In short, Target did not send the Division an updated and accurate sketch adequately identifying the current Starbucks Café. As submitted, the Application sketch also did not include any clear labeling or legible words to identify certain areas on the sketch. Pet. Ex. 1. Target's representative acknowledged this fact. For example, there were no sales or storage areas labeled or identified on the sketch. The only seats on the sketch were located in the renovated café area, but they were not labeled as such. The "bar" or "counter" on the sketch--which was also not labeled—is located where the Target Café used to be, but Target stated that the café's bar or counter was not capable of selling or serving alcoholic beverages. As a result, Target's Application sketch did not adequately identify counters, sales areas (including points of sale), bar locations, and other relevant areas that would be associated with the sale of alcoholic beverages. The lack of labels or proper identification to explain the layout of these relevant areas was the crux of the Division's reason for concluding that the sketch was insufficient. Explanatory labels and notations on the sketch were needed for the Division to properly investigate the application and understand how the applicant would comply with the applicable provisions of the Beverage Laws. Similarly, Target Delray's assistant manager for general merchandise, who worked on the premises of Target Delray on a day-to-day basis, had difficulty identifying or explaining areas of the store on the Application sketch. Although the Division inspector created a "clarification sketch" based on information he received during his inspection, the inspector was unable to indicate on the sketch how or where Target Delray would be selling liquor for consumption on or off the premises under the 4COP license for which it applied. Pet. Ex. 9. Regardless, this was ultimately the responsibility of the applicant--Target. Thus, neither the original Application sketch nor the inspector's "clarification sketch" adequately included the necessary information regarding Target Delray's proposed sale of beer, wine, or liquor under a consumption-on-premises license. The Inventory at Target Delray During these proceedings, Target did not dispute its broad inventory of consumer merchandise for sale. Similarly, Target conceded that all the items identified on Exhibit B of the Denial Notice were being sold in the Target Delray store, including windshield wipers, toilet seats, bicycles, batteries, screw drivers, shampoo, dog food, laptop computers, and more. Pet. Ex. 18. Adding to this, Target offered into evidence a lengthy and broad list of consumer merchandise sold at the Target Delray store. Pet. Ex. 43. Although the exact inventory of a Target store is subject to frequent changes, Target Delray regularly sells a comprehensive collection of consumer goods including, but not limited to, men's and women's clothing, automotive products, holiday items, furniture, household products, sporting goods, games, toys, tools, pharmaceutical items, health and beauty items, pet care items, electronics, books, magazines, and flags. Other items on Target Delray's inventory list include infant formula, dish detergent, napkins, frozen meat, barstools, lamp shades, candles, pillows, fireworks, and more. Pet. Ex. 43. These retail and grocery items at Target Delray are found throughout the store's premises. Resp. Ex. 16 at 11:5-15. Alcoholic beverages being currently sold are not found throughout the store's premises, but are limited to the grocery items section. Customers purchase all of the retail merchandise and grocery items at the same points of sale ("cash registers") where alcoholic beverages under a 4COP license would be purchased as well.2 2 There was no evidence offered to suggest that alcoholic beverages under a 4COP license would be purchased or paid for at any location other than the normal cash register used to check out other items of general merchandise. Target Delray's Food Service and Food Permit Target Delray sells a limited menu of ready-to eat food and non- alcoholic beverages from its Starbucks Café which operates from within its store, for consumption on the premises. As a result, Target Delray holds restaurant licenses from the City of Delray Beach ("City") and from Palm Beach County. Pet. Exs. 139 and 140. Target's representatives refer to the Starbucks Café as a "restaurant" within the larger Target Delray store. Resp. Exs. 9 and 10. In fact, according to Target, the only seats, tables, and counters associated with the regular sale and consumption of food or beverages are located within the Starbucks Café. Resp. Ex. 16 at 26:25-27:4. The City restaurant license identifies the restaurant size as 51-100 persons. The reasonable inference from this fact is that the City restaurant license does not encompass the entire premises of the Target Delray store, but is limited to the Starbucks Café area. Pet. Ex. 140. Despite allowing the operation of the Starbucks Café in a small portion of the store, Target Delray is not licensed by the Florida Division of Hotels and Restaurants. Instead, Target Delray has an annual food permit issued by the Florida Department of Agriculture and Consumer Services. Pet. Exs. 39 and 45. This permit identifies the Target Delray store as a "food establishment." Id. More particularly, Target Delray is classified by the Department of Agriculture and Consumer Services as a "minor food outlet with significant food service and/or packaged ice." Purpose of the 4COP License for Target Delray Despite operating the Starbucks Café as a restaurant within its store, Target Delray offered no persuasive evidence to prove that Target submitted its Application for a consumption-on-premises license so that it could sell alcoholic beverages for consumption on the premises. Rather, it was undisputed that Target sought a consumption-on- premises license with the intent, and for the purpose of, selling alcoholic beverages in sealed containers for consumption off the licensed premises. The more persuasive evidence, and a reasonable inference from the undisputed evidence, indicated that Target Delray intended to operate in a manner that would allow its customers to purchase liquor from various aisles of its main store or grocery areas, instead of purchasing it from a separate walled-off liquor store. When presented with this plan, the City expressed reservations about whether the Target Delray location is appropriate for a consumption-on- premises license, and deferred to the Division on the matter. More specifically, the City expressed that the city zoning district did not permit the sale of alcohol. It made "no determination" whether the location of the current floorplan was appropriate for a 4COP license. There was also no persuasive evidence presented to conclude that Target Delray would be selling alcoholic beverages by the drink from the Starbucks Café. In sum, the more credible and persuasive evidence indicated that Target Delray did not intend to allow consumption of alcoholic beverages on the premises if the 4COP license were to be approved. Rather, Target filed the Application and sought the 4COP license to operate a place of business where alcoholic beverages are sold in sealed containers for consumption off the premises. Non-Party Locations During discovery, Target identified 12 businesses in Florida that have been issued a consumption-on-premises license. It argues that these businesses "sell all of the same type [of] items sold at [Target's] proposed licensed location." The locations listed below, according to discovery responses from Target, represent a variety of establishments issued consumption-on-premises licenses by the Division. Id. Antonio's--Maitland, FL (BEV5800226) (Pet. Ex. 22) Biltmore Hotel--Coral Gables, FL (BEV2308001) (Pet. Ex. 90.) Buster's Beer and Bait--Panama City Beach, FL (BEV1303131) (Pet. Ex. 92.) CMX Cinemas Fallschase--Tallahassee, FL (BEV4704195) (Pet. Ex. 93.) Daytona Int'l Speedway--Daytona Beach, FL (BEV7402959) (Pet. Ex. 88.) Neiman Marcus--Coral Gables, FL (BEV2300131) (Pet. Ex. 99.) Nordstrom--Coral Gables, FL (BEV2329106) (Pet. Ex. 98) PGA National Resort--Palm Beach Gardens, FL (BEV6014275) (Pet. Ex. 91.) Ritz Carlton--Miami Beach, FL (BEV2326201) (Pet. Ex. 120.) Sophie's at Saks Fifth Avenue--Sarasota, FL (BEV6801712) (Pet. Ex. 95.) Slater's Goods & Provisions--Babcock Ranch, FL (BEV1801399) (Pet. Ex. 89.) xii. Trump National Doral--Miami, FL (BEV2331496) (Pet. Ex. 22) For three of these locations--Antonio's, Ritz Carlton, and Trump National Doral--Target offered no evidence at the hearing to prove or show that these licensees sell items similar to Target Delray. At the hearing, Target offered evidence; however, regarding three additional locations the Division has licensed for consumption on the premises which, according to Target, sell consumer merchandise similar to Target Delray: World Golf Village--St. Augustine, FL (BEV6501333) (Pet. Exs. 71 and 97.) Total Wine--Gainesville, FL (BEV1100722) (Pet. Exs. 71 and 96.) ABC Liquors--Gainesville, FL (BEV1100212) (Pet. Exs. 71 and 86.) Thus, as a part of the evidence, there were 12 licensed locations to which Target Delray likens itself and its inventory, for purposes of licensure (the "Non-Party Locations"). Target contends that Target Delray is similar to these Non-Party Locations because these licensees offer food and beverages for consumption on the premises while selling numerous items at retail. The thrust of Target's argument is that because these similar Non-Party Locations received 4COP licenses, it must receive the 4COP license as well. Target Delray also argued that it is being singled out because it is considered a "big store." Testimony of John Harris In support of its allegation of inconsistent treatment, when compared to other licensees, Target offered the testimony of John Harris ("Harris"). Harris is a former Director of the Division. He now does work for the law firm representing Target in this action. In his current position, Harris helps clients apply for liquor licenses. He assisted Target with the preparation of this Application. Harris also assisted the firm's representation of Target in its lobbying efforts to change package store restrictions. In 1994, when he was Division Director, Harris was heavily involved in drafting and adopting the Restaurant Rule (the "Rule"). The Rule states that "items customarily sold in a restaurant shall only include" ready-to-eat food and beverages. Pet. Ex. 55. (Emphasis added). Harris testified that he never intended for the Rule to be exclusive, despite the meaning of the restrictive words chosen. In addition, Harris now believes there is no limit to what is customarily sold in a restaurant. Harris created the list of Non-Party Locations with help from counsel representing Walmart and Target. His list included business locations he suspected were not in compliance with the Rule due to the items they sold. Harris then traveled the State of Florida to visit and inspect the Non-Party Locations in preparation for his testimony. As evidence, Harris took pictures and prepared a chart of the items he observed for sale at the Non-Party Locations. Pet. Ex. 71 and 85. Hotels and Resorts Visited Among the Non-Party Locations visited by Harris, the PGA National Resort in Palm Beach Gardens had a gift shop, beauty shop, woman's clothing store, golf pro shop, and a spa located in or near the resort's lobby area. These shops sold cosmetics, pharmaceuticals, men's and women's clothing, shoes, jewelry, handbags, and more. Pet. Ex. 71. Harris concluded that these shops, in addition to the spa and tennis shop, were within the licensed premises because they were included in the application sketches and shared the same address as the licensed premises. Pet. Ex. 113. He did not know, however, whether these shops were leased or controlled by a different person or entity than the liquor licensee. Harris did not observe alcoholic beverages being sold within the spa or any of the shops. In fact, he did not know where alcoholic beverages were sold, but he assumed such beverages were sold at the resort's restaurants. Harris also visited the Biltmore Hotel in Coral Gables and took photos of the resort's gift shops, spa, tennis shop, and golf pro shop. Pet. Ex. 74. He did not observe alcoholic beverages being sold in any of these areas. Alcoholic beverages were sold in a separate café or restaurant for consumption on the premises. The various gift shops at the Biltmore were accessible through the lobby or common hallway. These shops sold a variety of clothing, toys, health and beauty products, and more. Pet. Ex. 71. Harris did not know whether the gift shops were separately leased, or by whom. Harris also visited the World Golf Village resort near St. Augustine, Florida which had a separate gift shop, restaurant, and bar area. He did not observe any alcoholic beverages being sold. Department Stores Visited Harris testified that a Saks Fifth Avenue ("Saks") store in Sarasota has a consumption-on-premises license. Pet. Ex. 95. The Saks department store sells men's and women's clothing, accessories, handbags, jewelry, watches, coats, sweaters, scarves, shoes, and more. Pet. Ex. 71. However, the liquor license belongs to Fifth Dining Sarasota, LLC, doing business as Sophie's at Saks Fifth Avenue. Pet. Ex. 95. Harris acknowledged that a restaurant entrance with the name "Sophie's" separated the department store from the restaurant. Pet. Ex. 82. During his visit, alcoholic drinks were only being sold from the Sophie's restaurant and bar adjacent to the department store. There was no indication of retail items being purchased where the alcoholic beverages were sold. In addition, the food service plan application sketch for Fifth Sarasota Dining, LLC, only included the restaurant and bar area, not the department store. Based on his experience alone, and without any other supporting details, Harris concluded that the restaurant and department store are both within the licensed premises. This conclusion by him was not persuasive. Harris did not know whether the department store and the restaurant were under the dominion and control of the liquor licensee, Fifth Dining Services, LLC. Pet. Ex. 95; Resp. Exs. 14 and 15. In fact, he stated that the department store may be under the dominion and control of Saks Fifth Avenue, LLC. He also visited a Neiman Marcus location, which holds a consumption- on-premises license and sells a variety of retail items in its department store. He surmised that alcoholic beverages may be sold from an adjacent restaurant that was closed for renovation when he visited. However, Harris did not observe any alcoholic beverages being sold or consumed. Based solely on the existence of a liquor license issued at the same address as the department store, Harris concluded that both the closed restaurant and the department store were within the same licensed premises. This conclusion was not persuasive or supported by credible evidence. Harris did not know whether the restaurant in the Neiman Marcus store is leased or controlled by the same entity that controls the department store. In addition, the application sketch for the licensee at this Neiman Marcus did not include the department store; it only included the restaurant as the designated licensed premises. Pet. Exs. 109 and 110. Like the Saks Fifth Avenue and Neiman Marcus locations, a Nordstrom department store he visited holds a consumption-on-premises license. It sells alcoholic beverages from a restaurant on the periphery of the store. Pet. Exs. 80 and 98. The Nordstrom department store sells retail items of a quality similar to these two other department stores. Pet. Ex. 71. Harris did not observe any alcoholic beverages being sold or consumed within the Nordstrom department store itself, nor did he observe any customer purchase retail items from the restaurant area. Nevertheless, based on his experience, Harris concluded that the restaurant and department store at Nordstrom are both within the licensed premises. Pet. Ex. 111. Again, this conclusion by him was not sufficiently established by the evidence. As with the other locations, he did not know whether the restaurant and department store at Nordstrom were leased, operated, or controlled by the same entity. Grocery and Liquor Stores Visited Buster's Beer and Bait is a small liquor store and bar in Panama City Beach that has a consumption-on-premises license and sells alcoholic drinks for consumption on the premises. It also sells sealed beverages for consumption off the premises. Pet. Exs. 75 and 92. According to Harris, in addition to alcoholic beverages, Buster's sells cigars, assorted fishing gear, and frozen fish bait from the same area. Pet. Exs. 71 and 75. Slater's Goods & Provisions is a general store in Babcock Ranch with a consumption-on-premises license. Pet. Ex. 89. According to Harris, it sells groceries, wine, liquor, household items, and more--all from the same area. Pet. Ex. 71. There is also a café and an ice cream shop inside. Pet. Ex. 83. Harris concluded that these areas were within the same licensed premises because of the similar address and interconnectedness of the store.3 Harris also visited two liquor stores in Gainesville, Florida that hold consumption-on-premises licenses--ABC Liquors and Total Wine. Pet. Exs. 84 and 86. At these locations, Harris did not observe any sales of open alcoholic beverages being consumed on the premises, but he also did not attempt to consume a beverage on the premises. In addition to alcoholic beverages, he also observed cigars for sale at ABC Liquors. Target Delray does not sell cigars. Movie Theater Visited Harris visited a CMX Movie Theater in Tallahassee, Florida with a consumption-on-premises liquor license. Pet. Ex. 93. Alcoholic beverages were being sold for on-premises consumption from a bar area separate from the theater viewing areas. At a separate counter, movie tickets were being sold. Pet. Ex. 76. Target Delray does not sell movie tickets. 3 Both Slater's and Buster's are much smaller in floor area size than Target Delray and offered a more limited inventory of consumer items. Daytona International Speedway Harris also visited the well-known Daytona International Speedway racetrack complex which holds a consumption-on-premises liquor license. Pet. Ex. 88. The Daytona International Speedway also sells golf bags, tires, fenders, key chains, clothing, chairs, flagpoles, and race experience tickets. The retail items are sold from a gift shop that connects to a grill where draft beer is sold for consumption on the premises. Pet. Ex. 78. Harris did not know if the grill had separate cash registers from the gift shop. Race tickets are sold from a separate ticket counter. Harris concluded that all of these items are sold within the licensed premises, which he understood to include the whole raceway and concourse grounds based on the application sketches. Significantly however, he did not know if the gift shop is leased or controlled by the same entity that holds the liquor license. Walmart and Costco The Division recently denied license applications from a Walmart and a Costco store for the same consumption-on-premises license sought by Target Delray. The Division relied on the same statute--section 565.045, Florida Statutes--in denying those applications based on the wide variety of consumer items Walmart and Costco sell at retail. Pet. Ex. 149; Pet. Exs. 40 and 44. Walmart and Costco are more similar to Target in terms of the wide variety of consumer merchandise sold, than any of the Non-Party Locations visited by Harris.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco enter a final order denying the application by Target Corporation at issue in this proceeding. Jurisdiction is and shall be retained for the limited purpose of determining entitlement to attorney's fees and costs related to several discovery disputes and the amount, upon proper application and proof. DONE AND ENTERED this 27th day of August, 2020, in Tallahassee, Leon County, Florida. S ROBERT L. KILBRIDE 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 27th day of August, 2020. COPIES FURNISHED: D. Ty Jackson, Esquire George T. Levesque, Esquire Ashley Hoffman Lukis, Esquire Jason L. Unger, Esquire GrayRobinson, P.A. 301 South Bronough Street, Suite 600 Post Office Box 11189 Tallahassee, Florida 32301 (eServed) Ross Marshman, Esquire Megan Kachur, Esquire John J. Knowles, Deputy Chief Attorney Department of Business and Professional Regulation 2601 Blair Stone Road Tallahassee, Florida 32399-2202 (eServed) Halsey Beshears, Secretary Department of Business and Professional Regulation 2601 Blair Stone Road Tallahassee, Florida 32399-2202 (eServed) General Counsel Office of the General Counsel Department of Business and Professional Regulation 2601 Blair Stone Road Tallahassee, Florida 32399-2202 Sterling Whisenhunt, Director Division of Alcoholic Beverages and Tobacco Department of Business and Professional Regulation 2601 Blair Stone Road Tallahassee, Florida 32399-2202 (eServed)
The Issue The issue is whether Respondent properly awarded a contract for automated payment options to E-Commerce Group, a non-party.
Findings Of Fact Respondent is a local governmental body, corporate and politic, organized pursuant to Chapter 2001-324, Laws of Florida. Respondent is responsible for providing certain water, wastewater, and sanitation services in Escambia County, Florida. Petitioner is a Florida for-profit corporation. It is organized and authorized to do business under Florida Law. Currently, Respondent offers its utility customers several different types of payment options, including the following: (a) over-the-counter payments; (b) drive-in payment; (c) mail-in payments; (d) automatic bank drafts; and (e) in-person payments. In May 2002, Respondent released Request for Proposal (RFP) 2002-36. Through the RFP, Respondent was seeking the lowest and most responsible proposal for automated payment options for Respondent's utility customers. According to the RFP, the vendors needed to be capable of providing Internet and telephone payment options so that Respondent's customers could use their credit cards to pay their utility bills. The RFP stated that the sealed bids would be opened on June 27, 2002. Section 1, the administrative section of the RFP, provides the following information regarding Respondent's operations as of September 30, 2001: (a) Respondent served 85,000 water customers; (b) Respondent served 55,800 sewage collection and treatment system customers; (c) Respondent served 59,900 solid waste customers; (d) Respondent generates approximately $64,000,000 in revenue per year; and Respondent's average residential bill is $60. Section 2 of the RFP discusses Respondent's current management information system. This section states that Respondent needed to "know about and understand all the costs and changes necessary to implement the solution proposed." Section 3 of the RFP requests information about the vendor. This section includes a vendor questionnaire and request for information about the vendor's prior customers. Section 4 of the RFP sets forth the project requirements. Of particular note is the following reference to a convenience fee in Section 4.1: Convenience Fee Since the convenience fee is the method the vendor will [use to] generate compensation for this service, ECUA requires the rate (fixed or sliding) to be fixed for the duration of the contract. You may propose a sliding scale for lowering or raising the fee based upon use of the solution once a preliminary period has expired (the preliminary period to be set in vendor's contract). Section 4.3 of the RFP sets forth the project considerations. A cost-effective and timely solution is listed as one of six considerations. Section 5 of the RFP sets forth the requirements for vendor responses. Section 5.3 includes the following evaluation criteria: These criteria are to be utilized in the evaluation of qualifications for development of the shortlist of those vendors to be considered by interviews and/or potential negotiations. Individual criteria may in all probability be assigned varying weights at the ECUA's discretion to reflect relative importance. Vendors are required to address each evaluation criteria in the order listed and to be specific in presenting their qualifications. (Emphasis added) Experience/qualifications of Vendor. Vendors (sic) proposed staff, experience with contracts for services similar in scope. Capabilities, features, etc. of the proposed services and the degree to which the proposed services meet the needs of the ECUA. References of only similar contracts. The Vendor must have a demonstrative history of professional, reliable and dependable service. Demonstrated quality assurance procedures and schedule to insure a timely, effective and professional provision of services. Costs. Section 5.4 of the RFP discusses the process for scoring responses. It provides as follows in relevant part: Selection Procedure Selection shall be made of two or more vendors deemed to be fully qualified and best suited among those submitting proposals. The selection will be made on the basis of the factors involved in the Request for Proposal, including price if so stated in the Request for Proposal. Selected vendors will then conduct a presentation to the selection committee. After all presentations are made the selection committee will select the vendor which, in its opinion has made the best proposal and make a recommendation to ECUA's Board. ECUA's Board will award a contract to that vendor. Should the ECUA determine that only one vendor is fully qualified or that one vendor is clearly more highly qualified than the others under consideration, the presentation phase may be skipped. (Emphasis added) * * * Basis for Award Information and/or factors gathered during the interviews and any reference checks, in addition to the evaluation criteria stated in the RFP, and any other information or factors deemed relevant by the ECUA, shall be utilized in the final award. Section 6 of the RFP sets forth the functional requirements. This section is not at issue here. Section 7 of the RFP is entitled "Cost Summary." Section 7.1 includes the proposal form, which states as follows in relevant part: ITEM A - Customer Convenience Fee: ITEM B - Set Up Cost: ITEM C - Other (explain): The RFP does not have a section for definitions. It does not define the term "cost" other than as set forth above. The following four vendors submitted timely proposals to Respondent: (a) E-Commerce Group; (b) Petitioner; (c) Link2Gov Corp.; and (d) BillMatrix. The proposals were as follows: Vendor Name Customer Convenience Fee Setup Cost Other E-Commerce Group $2.95* for $1-$500 pymt. None N/A Optional E Bills fee $.35 per bill** Petitioner $2.50* per I/O, IVR & Web Trans. $3,750 Development hourly rate-- $75** $125 per unit swipe device Link2Gov Corp. $2.49 Internet/$2.89 IVR None $95.00 hosting fee per month BillMatrix $3.95 Per Credit Card Trans. None N/A E-Commerce Group: *If average payment more than $60, or if American Express payments to be accepted in addition to other major credit card associations, the convenience fee would be higher; no costs to ECUA for software use. **No other costs for using software, but if ECUA would like billing services, the fee per bill presented would be $0.35. Petitioner: *Will request review of convenience fee if average payment is more than $60 for three consecutive months. **To be charged only upon request from ECUA for specialized development tasks or if implementation requirements exceed est. setup costs, but only upon negotiation between parties. The proposals were initially reviewed by Respondent's finance department. In reviewing them, the director of finance recognized that the number of users of the automated payment option was unknown. However, Respondent's experience with other alternate payment options had generated very limited customer participation. Therefore, the director of finance concluded that it would be best if Respondent did not absorb a high set-up cost for a service that might have very limited use. Additionally, the director of finance believed it was in Respondent's best interest if the customers electing to use the automated payment option bore the fees and costs associated with those services, rather than having all ratepayers absorb this expense regardless of whether they were using it. Accordingly, the director of finance decided to recommend that Respondent select E-Commerce Group's proposal, as it was the lowest bid with no cost to Respondent. The director of finance's recommendation was presented to Respondent's finance advisory committee on July 16, 2002. The finance advisory committee is composed of members who are not Respondent's employees. After receiving the director of finance's recommendation, the committee members discussed which of the proposals were best for Respondent. Respondent's finance advisory committee decided to recommend that Respondent "select E-Commerce Group, the lowest bidder when considering there is no set-up cost to ECUA, as the vendor to provide these automated payment solutions, and enter into a one-year contract with an optional one-year extension." On July 25, 2002, Respondent considered the finance advisory committee's recommendation. During the meeting, Respondent's director of finance stated that approximately 13,000 people per year used credit card payment services to pay the Escambia County tax collector. There is no evidence that the director of finance had sufficient additional information to calculate the percent of the tax collector's customers that used credit cards. One of Petitioner's employees, John Parkin, also spoke at Respondent's July 25, 2002, meeting. He confirmed the number of people that pay the Escambia County tax collector using a credit card payment option provided pursuant to a contract between the tax collector and Petitioner. However, Mr. Parkin did not provide Respondent with any information about the percentage of taxpayers who availed themselves of this service. He provided no information to show how bills paid to Respondent and the tax collector were similar or dissimilar. During the meeting, Mr. Parkin stated that Petitioner would waive its $3,750 set-up costs. He did not otherwise attempt to explain how Petitioner's set-up costs could be amortized or recaptured over the first year of operation. Respondent did not allow Petitioner to amend its proposal to eliminate the $3,750 set-up costs. Instead, Respondent accepted the finance advisory committee's recommendation, awarding the contract to E-Commerce Group. Petitioner filed a timely protest. The finance advisory committee considered the protest in an informal hearing. During this proceeding, Petitioner had an opportunity to demonstrate why it should have been considered the lowest bidder. Respondent considered Petitioner's protest on October 24, 2002, in a regularly scheduled meeting. During the meeting, Respondent voted to refer the case to the Division of Administrative Hearings. Respondent acted within the requirements of the RFP when it determined that E-Commerce Group was the lowest responsible bidder primarily because there was no cost to Respondent to start the program. Respondent's RFP clearly indicated that set-up costs would be considered as one of the evaluation criteria. The RFP did not require Petitioner to designate any part of its proposed costs as set-up costs. Petitioner's set-up cost amortized over the estimated first year's transactions is approximately $2.63 per transaction. Additionally, it would take Respondent approximately 108 days (and over 8,000 transactions) to recapture the set-up costs by passing them along to the ratepayers. However, the RFP did not require Respondent to recalculate Petitioner's proposed costs using projected customer usage to amortize or recapture Petitioner's set-up costs before making a decision. In fact, Petitioner's proposal on its face did not indicate that Petitioner intended for Respondent to make such recalculations.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent enter a final order awarding the contract to E-Commerce Group. DONE AND ENTERED this 17th day of December, 2002, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD 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 17th day of December, 2002. COPIES FURNISHED: Archibald Hovanesian, Jr., Esquire 21 East Garden Street, Suite 201 Pensacola, Florida 32501 Bradley S. Odom, Esquire Stephen G. West, Esquire Kievet, Kelly & Odom 15 West Main Street Pensacola, Florida 32501 Linda Iverson, Board Secretary Escambia County Utilities Authority Post Office Box 15311 Pensacola, Florida 32514
The Issue Whether the application to relocate the Honda dealership owned by Bengal Motor Company, Ltd., d/b/a Miami Honda should be granted.
Findings Of Fact Bengal Motor Company, Ltd., d/b/a Miami Honda (Miami Honda) submitted its application to relocate its Honda dealership pursuant to Section 320.642, Florida Statutes. The requested relocation is from 3100 Northwest 36th Avenue, Miami, Florida, to a location that is 1350 feet west of the corner of Northwest 57th Avenue and Northwest 167th Street, Miami Lakes, Florida. The existing location is in the vicinity of the Miami International Airport. The proposed location is on the Palmetto Expressway. Miami Honda purchased the real estate for the proposed location without assistance from American Honda and has entered into an agreement with American Honda to relocate to that location if its relocation application is granted. Hollywood Imports, Ltd., Inc., d/b/a Hollywood Honda (Hollywood Honda) timely protested the relocation with the Department of Highway Safety and Motor Vehicles pursuant to the provisions of Section 320.642, Florida Statutes. The parties agree that the relocation is subject to protest and that Hollywood Honda has standing to bring this protest as it is within 12.5 straight line miles of the proposed location. See, Section 320.642(3)(b)1., Florida Statutes. American Honda has decided to relocate Miami Honda to the Miami Lakes area instead of adding a new dealer in Miami Lakes. Section 320.642, Florida Statutes, sets forth the criteria for relocation if a protest is filed. Section 320.642(2)(a), Florida Statutes, provides as follows: (2)(a) An application for a motor vehicle dealer license in any community or territory shall be denied when: A timely protest is filed by a presently franchised motor vehicle dealer with standing to protest as defined by subsection (3); and The licensee fails to show that the existing franchised dealer or dealers who reg- ister new motor vehicle retail sales or retail leases of the same line-make in the community or territory of the proposed dealership are not providing adequate representation of such line-make motor vehicles in such community or territory. The burden of proof in establish- ing inadequate representation shall be on the licensee. Section 320.642(2)(b), Florida Statutes, sets forth factors 1/ which may be considered in determining the adequate representation issue, as follows: (2)(b) In determining whether the existing franchised motor vehicle dealer or dealers are providing adequate representation in the comm- unity or territory for the line-make, the de- partment may consider evidence which may in- clude, but is not limited to: The impact of the establishment of the proposed or relocated dealer on the consumers, public interest, existing dealers, and the licensee; provided, however, that financial impact may only be considered with respect to the protesting dealer or dealers. The size and permanency of investment reasonably made and reasonable obligations incurred by the existing dealer or dealers to perform their obligations under the dealer agreement. The reasonably expected market penetra- tion of the line-make motor vehicle for the community or territory involved, after con- sideration of all factors which may affect said penetration, including, but not limited to, demographic factors such as age, income, education, size class preference, product popularity, retail lease transactions, or other factors affecting sales to consumers of the community or territory. Any actions of the licensee in denying its existing dealer or dealers of the same line-make the opportunity for reasonable growth, market expansion, or relocation, in- cluding the availability of line-make vehicles in keeping with the reasonable expectations of the licensee in providing an adequate number of dealers in the community or territory. Any attempts by the licensee to coerce the existing dealer or dealers into consenting to additional or relocated franchises of the same line-make in the community or territory. Distance, travel time, traffic patterns, and accessibility between the existing dealer or dealers of the same line-make and the loca- tion of the proposed additional or relocated dealer. Whether benefits to consumers will likely occur from the establishment or relo- cation of the dealership which the protesting dealer or dealers prove cannot be obtained by other geographic or demographic changes or expected changes in the community or territory. Whether the protesting dealer or dealers are in substantial compliance with their dealer agreement. Whether there is adequate interbrand and intrabrand competition with respect to said line-make in the community or territory and adequately convenient consumer care for the motor vehicles of the line-make including the adequacy of sales and service facilities. Whether the establishment or relocation of the proposed dealership appears to be warr- anted and justified based on economic and mark- eting conditions pertinent to dealers compet- ing in the community or territory, including anticipated future changes. The volume of registrations and service business transacted by the existing dealer or dealers of the same line-make in the relevant community or territory of the proposed dealership. THE COMMUNITY OR TERRITORY The area that constitutes the "community or territory" (community/territory) as that term is used in Section 320.642, Florida Statutes, is all of Dade and Broward Counties. This area is somewhat unique from a marketing standpoint because it is restricted on the West by the Everglades and on the East by the Atlantic Ocean. These geographic barriers create a concentration of population in a North/South corridor. This area will be referred to as the "Miami Metro", the term used by American Honda. There are presently nine Honda dealers in the Miami Metro. There are five Honda dealers in Dade County and four Honda dealers in Broward County. In comparison, there are five Toyota dealers in Dade County and five Toyota dealers in Broward County. An additional "open point", where a Honda dealer will be added at some undetermined time, has been identified for Plantation, Florida, which is in Broward County. This area has a significant amount of shortfall of Honda sales (compared to sales in other areas of the market area) that indicates that a new dealership would be justified. The relocation to Miami Lakes is not designed to recapture the lost opportunity that presently exists in Broward County. That lost opportunity is a separate problem. Honda considers Toyota and Nissan to be its primary competitors. Honda attempts to have a Honda dealer facing each Toyota dealer. Toyota outsells Honda at a greater percentage in Broward County than it does in Dade County. This discrepancy can be explained, in part, by the fact that Broward County is the home of Southeast Toyota, which is the distributor of Toyotas in the Southeastern United States, and by the fact that until the open point that American Honda has identified for Plantation is filled, Honda has one less dealer in Broward than does Toyota. Although American Honda has identified an open point in Plantation, Florida, and has included that open point in its marketing planning the additional dealership for Plantation is not being pursued by American Honda at this time. It is likely that the addition of a dealership would be subject to protest by existing dealers. It is not likely that a new dealership will exist in Plantation in the next five years. Expert witnesses for both Miami Honda and Hollywood Honda agree that Largo Honda, located in Key Largo, Monroe County, Florida, should be excluded from the Miami Metro. 2/ Data collected from new car registrations 3/ includes the name of the dealer selling the new vehicle and the street address of the purchaser. Retail registration data is analyzed to provide information as to each dealer's market area. The information produced by this analysis, referred to as cross- sale data, is used to determine whether the Miami Metro is one homogeneous, interconnected market or whether it consists of separate identifiable markets. In performing this analysis, each of the existing eight dealers and the proposed location is assigned a primary marketing area, referred to as a PMA. A PMA consists of census tracts 4/ within the Miami Metro and represents the geographical area in which an existing dealer or a proposed dealer would reasonably be expected to have a competitive advantage over competing same-line (Honda) dealers by virtue of its proximity to the customers within the PMA. The PMAs developed by the experts in this proceeding were based upon the exact proposed location of Miami Honda, rather than the existing location or any other hypothetical location. This methodology was reasonable and appropriate. The cross-sale data reflecting shopping patterns of Honda buyers in the Miami Metro demonstrates that customers residing in Dade County primarily purchase from Dade County dealers and that customers residing in Broward County primarily purchase from Broward County dealers. The exception to this is Hollywood Honda, which sells extensively to customers throughout the Miami Metro, including customers in Dade County. REASONABLY EXPECTED MARKET PENETRATION Market penetration is the traditional standard used to measure the performance of a dealer network in a given geographical area, such as a community/territory or a PMA. Market penetration is the percentage of all vehicles registered in a particular area that a particular brand achieves. Market penetration for any area is computed by analyzing all brand-line registrations in the area, without regard to the location of the selling dealer. To determine whether a particular PMA is being adequately represented, it is first necessary to select a standard against which the PMA will be measured. There was a dispute between the expert witnesses in this proceeding as to the appropriate standard against which to measure the PMA for the proposed relocation. The expert for Hollywood Honda used Honda's market penetration for Honda's Southeast Zone, consisting of six states, to determine what should be Honda's reasonably expected market penetration in the Miami Metro. The rationale that supports the use of this standard is not persuasive because of the unique nature of the Miami Metro and because there are many areas in the Southeast Zone within which Honda is not being adequately represented. The use of Dr. Matthews' standard will produce a mediocre target that does not accurately represent Honda's market potential in this unique area. Honda's expert analyzed sales within what he termed the "Balance of Dade" to determine Honda's reasonably expected market penetration in the Miami Metro. The Balance of Dade standard analyzed Honda's market penetration in Dade County with the exception of the PMA identified for the proposed relocation. The PMA for the proposed relocation was excluded from the analysis because it would be inappropriate to compare the area in question to itself. The Broward County portion of the Miami Metro was excluded because it was determined that American Honda is not adequately represented in many areas of Broward County. To develop a reasonable standard, the areas of comparison must be areas in which American Honda is adequately represented by its dealer network. There was extensive testimony by American Honda's expert as to the reasons this standard was used. Mr. Anderson, American Honda's expert, opined that the Balance of Dade standard produced a reasonable and appropriate standard by which to measure Honda's reasonable expected market penetration in this local market area. There was also extensive testimony by Hollywood Honda's expert as to why this standard should not be used. Dr. Matthews, Hollywood Honda's expert, believed that the use of the Balance of Dade standard produced an inappropriately high expectation of what should be Honda's reasonably expected market penetration. Dr. Matthews viewed sales in Dade County to be unreasonably high because of the sales into the market areas by Largo Honda and because of the number of new Honda vehicles sold into Dade County by Honda dealers in Broward County. This conflicting testimony is resolved by finding that the standard selected by American Honda's expert for determining reasonably expected marketing penetration, the so-called Balance of Dade standard, is a reasonable and appropriate standard to determine Honda's reasonably expected market penetration in this local market. By measuring and analyzing each car segment in which American Honda competes in the Balance of Dade, American Honda's expert determined that with a dealer operating at the site of the proposed relocation, its reasonably expected market penetration for the Miami Lakes PMA would be 20 percent of the retail segments in which Honda competes. 5/ ACTUAL PERFORMANCE COMPARED WITH EXPECTED PERFORMANCE Honda market penetration in the Miami Lakes PMA has consistently been below expected levels in 1992, 1993, 1994, and the first half of 1995. Comparing actual penetration with the reasonably expected penetration of 20 percent demonstrates that Honda market penetration in the Miami Lakes PMA has been between 87.2 percent and 90.1 percent effective. The additional new car sales that would have been required to bring the Miami PMA up to its reasonably expected market penetration level were 263 units in 1993, 149 in 1994, and 168 for the first half of 1995. American Honda established that it is not receiving adequate representation in the Miami Lakes PMA. ECONOMIC AND MARKETING CONDITIONS Since 1980, there has been a significant decline in the number of households in the area of Dade County near the airport where Miami Honda is presently located, and a significant increase in the number of households in the Miami Lakes area. Miami Lakes represents a densely populated area which presently has no Honda dealer to serve it. All other densely populated areas of the Miami Metro, with the exception of the Plantation area, have an existing Honda dealer. Demographic factors, such as household income, reflect that the Miami Lakes area is much more affluent than the area surrounding the present Miami Honda location. Current and projected demographic data indicate that Honda's inadequate representation in the Miami Lakes PMA is the result of substantial and continuing growth. The growth pattern in the Miami Lakes area is also typical of the growth pattern for the Hollywood Honda PMA. These growth patterns are expected to continue through the year 2000 so that the opportunities for car sales for Hollywood Honda as well as a dealer in Miami Lakes would be expected to increase as this growth continues. Miami Honda's current facility is located in an industrial area that is blocked on the west from further development by the airport. In the vicinity, there are trailer parks and other low income housing, a cemetery, and a truck depot. Also in the area is a highly industrialized area of the Miami River, where cargo vessels are anchored, and the former headquarters of Eastern Airlines and Pan American Airlines, both of which are empty or partially empty. The present location is not as well suited as the Miami Lakes area for the sale of new automobiles. There are Nissan, Mitsubishi, and Hyundai dealerships in the area where Miami Honda is currently located. These lines are also represented in the Miami Lakes area. Miami Honda is one of the top Honda dealers in the Miami Metro and usually one of the top twenty dealers in the United States. Miami Honda is profitable at its current location, having made a profit of $2.9 million in 1994. The existing sales and service facilities of Miami Honda meet Honda's established guide for minimum facilities requirements. However, these existing facilities are outdated and inefficient. These facilities need to be replaced for Miami Honda to remain competitive. The existing location does not justify the construction of a new facility. It takes approximately 28 minutes to drive from the current Miami Honda location to the Hollywood Honda location. It takes approximately 22 minutes to drive from the proposed Miami Honda location to the Hollywood Honda location. Miami Honda's proposed location is part of an auto row, with the other lines being Toyota, Lincoln/Mercury, Ford, Nissan, Pontiac, GMC, Mitsubishi, Chevrolet, Chrysler Plymouth, Jeep Eagle, and Hyundai. This auto row did not exist ten years ago. Hollywood Honda is located on a similar auto row, with virtually the same lines being represented. Without a representative on the Miami Lakes auto row, American Honda is at a competitive disadvantage in the Miami Lakes area to those competing lines with dealers on the Miami Lakes auto row. The present location of Miami Honda is too close to that of Brickell Honda. The population and household trends of the PMA occupied by Brickell Honda and the PMA presently occupied by Miami Honda shows declining sales opportunity for the two dealers and suggests the need for a relocation of one of the two dealers. Honda has established that it is currently under-represented in the Miami Lakes PMA and that the likely cause of the current under-representation is the absence of a Honda dealer in this PMA. Relocating the Miami Honda dealership to Miami Lakes would strengthen the Brickell Honda dealership and the Miami Honda dealership. The relocation would also be in the best interests of the consuming public because it would bring a Honda dealer into the Miami Lakes area. Honda's chances of achieving a reasonable, adequate level of representations are dependent on how well its dealer network keeps pace with expanding sales opportunities. The proposed relocation would maximize customer convenience in the Miami Metro because the distance the purchasers of new cars would have to drive to reach the nearest Honda dealership would be minimized. It is reasonable to expect that Hollywood Honda would lose sales in the Miami Lakes PMA if the relocation is approved because approximately 34 percent of the sales in the Miami Lakes PMA are presently made by Hollywood Honda. It is also reasonable to expect that these lost sales can be offset by Hollywood Honda concentrating on its marketing opportunities closer to its location. The expected marketing penetration in the market within two miles of the Hollywood Honda dealership is 19.3 percent while the actual penetration is 8.6 percent. While Hollywood Honda is one of American Honda's top dealerships, it is missing opportunity for sales in its immediate marketing area. It is reasonable to expect that the proposed relocation will provoke a competitive response by Hollywood Honda that would positively impact Hollywood Honda's sales. Without a competitive response by Hollywood Honda, it is likely that the relocation of Miami Honda would result in the loss of approximately 250 sales a year for Hollywood Honda, for an approximate monetary loss of $500,000. The decision of American Honda to relocate Miami Honda instead of adding a dealer in Miami Lakes provides the existing dealers, including Hollywood Honda, with the opportunity to take advantage of the growing market within the Miami Metro and the lost opportunity for sales that exist, especially in Broward County. Even when the impacts of the proposed relocation would have on Hollywood Honda are considered, it is concluded that approving the proposed relocation of Miami Honda would strengthen the American Honda dealer network in the Miami Metro and would serve the interests of the consuming public.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order that adopts the findings of fact and conclusions of law contained herein. It is further recommended that the final order approve Miami Honda's proposed relocation. DONE AND ENTERED this 6th day of June, 1996, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, 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 6th day of June, 1996.
The Issue The issue in this case is whether or not Petitioner is entitled to a refund of the bond it posted in lieu of confiscation of allegedly mislabelled gasoline products.
Findings Of Fact Petitioner, AGI Service Corporation, owns and operates a Citgo service station located at 1599 West Flagler Street in Miami, Florida. The service station sells regular unleaded, unleaded plus and unleaded premium gasoline to the public. On February 18, 1991, James Carpinelli, the Respondent's inspector, visited the station to conduct an inspection and obtain samples of the gasoline Petitioner was offering for sale to the consuming public from its tanks and related gasoline pumps. Mr. Carpinelli took samples of all three types of gasoline offered for sale by Petitioner. The samples were forwarded to the Respondent's laboratory and were tested to determine whether they met Departmental standards for each type of gasoline. The Petitioner's "premium unleaded" pump indicated the octane or Anti Knock Index of the gasoline was 93. The "regular unleaded" pump indicated that the octane level was 87. The laboratory analysis of the samples revealed that the octane level of the gasoline taken from the "premium unleaded" pump was 87.4. The octane level of the gasoline taken from the "regular unleaded" pump was 93.0. Upon discovering the discrepancy in the octane levels, the Respondent seized the gasoline and immediately allowed the Petitioner to post a bond in the amount of $1,000. Upon the posting of the bond, the product was released back to the possession of the Petitioner and was allowed to be sold after the pumps were relabelled. Petitioner acquired ownership of the service station four days prior to the time of the inspection. At the time they opened the station, the new owners labelled the pumps based upon the information provided to them by the prior owners. The new owners had limited experience in the petroleum business and followed the guidance of the prior owners regarding labelling the pumps. It is clear that the pumps were inadvertently mislabelled based upon the information provided by the prior owners. The new owners sold "premium unleaded" at the price of "regular unleaded" and visa versa. Because more "premium unleaded" was sold at the price for regular, Petitioner lost money as a result of the mislabelling. The Department seeks to assess the full amount of the bond against the Petitioner in this proceeding. Respondent calculated the number of gallons of mislabelled gasoline that was sold based upon a delivery date of February 13, 1991. Those calculations indicate that 2,498 gallons were sold at a price of $1.259 per gallon. However, Respondent's calculations appear to begin at a time prior to Petitioner's ownership of the station. No evidence was presented as to how many gallons were sold while Petitioner owned the station. In addition, it is not clear when the mislabeling was done. Thus, no clear evidence was presented as to how many mislabeled gallons were sold by Petitioner.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Department of Agriculture and Consumer Services enter a Final Order granting the request of the Respondent for a refund of the bond posted and that the Department rescind its assessment in this case. DONE and ENTERED this 4th day of October, 1991, at Tallahassee, Florida. J. STEPHEN MENTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of October, 1991. COPIES FURNISHED: LOUIS PASCALI AND DONATO PASCALI QUALIFIED REPRESENTATIVES AGI SERVICE CORPORATION 1599 WEST FLAGLER STREET MIAMI, FL 33147 JAMES R. KELLY, ESQUIRE DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES ROOM 514, MAYO BUILDING TALLAHASSEE, FL 32399-0800 HONORABLE BOB CRAWFORD COMMISSIONER OF AGRICULTURE DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES THE CAPITOL, PL-10 TALLAHASSEE, FL 32399-0810 RICHARD TRITSCHLER, GENERAL COUNSEL DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES 515 MAYO BUILDING TALLAHASSEE, FL 32399-0800 BRENDA HYATT, CHIEF BUREAU OF LICENSING & BOND DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES 508 MAYO BUILDING TALLAHASSEE, FL 32399-0800
The Issue The issue in this case is whether Respondent violated section 760.08, Florida Statutes, of the Florida Civil Rights Act of 1992 (“FCRA”), by denying Petitioner the full and equal enjoyment of the goods, services, facilities, privileges, advantages, and accommodations of a place of public accommodation on the basis of Petitioner’s handicap.
Findings Of Fact The Parties Petitioner Smith is an adult male who resides in Sunrise, Florida. Respondent 7-Eleven is a Texas corporation, with its headquarters located at 3200 Hackberry Road, Irving, Texas. Respondent owns, operates, and franchises convenience stores in Florida under the trademarked name “7-Eleven.” Procedural Background On or about March 28, 2018, Smith filed a Public Accommodation Complaint of Discrimination with FCHR, alleging that 7-Eleven, Inc., through its agent, violated section 760.80 by denying him full and equal enjoyment of the goods, services, facilities, privileges, advantages, and accommodations of a place of public accommodation on the basis of handicap. After conducting an investigation, FCHR issued a Determination: Reasonable Cause on or about September 19, 2018, finding reasonable cause to believe that an unlawful practice occurred. Smith timely filed a Petition for Relief on October 16, 2018, asserting that 7-Eleven had discriminated against him in a place of public accommodation on the basis of handicap. This charge, as set forth in the Petition for Relief, is the subject of this de novo proceeding. Events Giving Rise to this Proceeding On September 16, 2017, Smith arrived at the Store to purchase gasoline. He was accompanied by Mrs. Smith and his daughter, Rochelle Smith. At that time, the Store was a franchised 7-Eleven convenience store and gas station. HA&A Enterprises, Inc. (“HA&A”), owned by Sumera Shahzadi (“Shahzadi”), was the franchisee. Immediately upon arriving at the Store, Smith went inside to use the restroom, while Mrs. Smith remained outside to pump gas. Smith testified, credibly, that he had a stroke and, as a result, walks slowly with a visible limp. He testified that he sometimes, but not always, uses a cane to assist him in walking. He was not using a cane when he entered the Store on September 16, 2017. Upon entering the Store, Smith discovered that the restroom was locked. Smith asked Shahzada Hussain (“Hussain”), who was working behind the counter, for the restroom key so that he could use the restroom. Hussain told him that the restroom was out of order and did not give him the key. The evidence does not establish that Hussain was aware of any disability or handicap that Smith may have.4/ Because Smith was unable to use the restroom, he was forced to urinate outside, in the front of the Store. Smith had difficulty pulling down his pants, and he urinated on himself. He testified, credibly, that other persons were present at the Store and saw him urinate on himself. Mrs. Smith assisted Smith in pulling up his pants, then went inside the Store and asked Hussain for the key to the restroom. Hussain gave her the key. She went into the restroom and found it to be in working order. She also noticed that no “out of order” sign was posted on the restroom door. Mrs. Smith then took numerous photographs of various documents on the wall of the Store. These documents included: a Broward County Local Business Tax Receipt for the period of October 1, 2016, to September 30, 2017, showing the business name as “7-Eleven #35031” and the business owner as “7-Eleven Inc. & HA&A Enterprises, Inc.”; the 2016 Florida Annual Resale Certificate for Sales Tax issued to 7-Eleven Store #35031, HA&A Enterprises, Inc.; a Florida Department of Environmental Protection Storage Tank Registration Placard, 2015-2016, issued to 7-Eleven, Inc., Store #35031; a National Registry of Food Safety Professionalism certificate issued to Shahzada Hussain; a Florida Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, Temporary License/Permit; a document titled “Notice,” with the name “7-Eleven” handwritten as the business authorized to engage in the money transmission business; a Department of Agriculture and Consumer Services Liquefied Petroleum Gas License issued to 7-Eleven Store #35031; and a ServSafe Certification issued to Sumera Shahzadi. The photographs, along with a written description of each document depicted in the photographs, were admitted into evidence at the final hearing. At that time, Mrs. Smith also photographed the Store’s restroom door, on which signs reading “MEN” and “WOMEN” were hung. Each of these signs depicted a wheelchair symbol, presumably indicating that the restroom was handicapped- accessible. The restroom door did not have a sign posted indicating that it was out of order. Mrs. Smith also photographed Shazhadi and Hussain as they were working behind the counter of the Store. Mrs. Smith referred to Shazhadi and Hussain as “the owners” of the Store in her testimony at the final hearing regarding the September 16, 2017, incident.5/ Shortly after the incident, the police arrived at the Store on an unrelated matter. At the direction of the police officer investigating the unrelated matter, the Smiths did not purchase gasoline at the Store that day, and went to another store to purchase gas. Mrs. Smith testified that she frequently patronized the Store, both before and after the September 16, 2017, incident. As noted above, Smith credibly testified that other persons present at the Store saw him urinate on himself. Smith is a member of the clergy of a local church and, thus, is a well-known person in his neighborhood, where the Store is located. The credible evidence establishes that Smith was extremely embarrassed and humiliated, and experienced emotional distress as a result of having urinated on himself in public view. He testified that this incident so embarrassed him that he may move from the community or from the state. No evidence regarding any quantified or quantifiable injury or damages that Smith may have incurred as a result of the incident was presented. On or about November 14, 2017, the Smiths filed a complaint regarding their September 16, 2017, experience at the Store through 7-Eleven’s complaint hotline. Mrs. Smith testified that in one of the telephone conversations with the 7-Eleven corporate office, they were given an incident claim number. On or about November 19, 2017, Mavis Steffan, the 7-Eleven corporate field consultant for the subgroup of 7-Eleven stores that includes the Store, contacted the Smiths and spoke to them regarding the September 16, 2017, incident at the Store. Mrs. Smith testified that when the Smiths spoke with Steffan on November 19, 2017, she (Steffan) told them that on the date of the incident, the Store was a private franchise, and that on October 23, 2017, the Store “became corporate”——meaning that 7- Eleven, Inc., began operating the Store. Steffan apologized for the incident, invited the Smiths to patronize the Store again, and told them that Smith was free to use the restroom at the Store. Relationship between the Store and 7-Eleven Steffan testified at the final hearing regarding the relationship between the Store and 7-Eleven, as it existed on September 19, 2017. 7-Eleven and HA&A entered into a 7-Eleven, Inc. Florida Individual Store Franchise Agreement (hereafter, “Franchise Agreement” or “Agreement”), effective March 23, 2016, regarding the Store. The Franchise Agreement terminated on October 23, 2017, and, as of that date, 7-Eleven, Inc., began operating the Store.6/ Therefore, the Store was a franchised store on September 19, 2017, the date of the incident. As discussed above, HA&A was the franchisee. Pursuant to the Franchise Agreement, HA&A was an independent contractor. The Agreement provided that the franchisee——here, HA&A——controlled the manner and means of the operation of the franchised store, and exercised complete control over and responsibility for the conduct of its agents and employees, including the day-to-day operations of the franchised store. The Agreement expressly provided that the franchisee’s agents and employees could not be considered or held out to be agents or employees of 7-Eleven, and could not incur any liability in the name of, or on behalf of, 7-Eleven. The Agreement further provided that all employees of the franchised store were solely those of the franchisee, and that no actions taken by the franchisee, its agents, or its employees would be attributable to 7-Eleven. As part of the Franchise Agreement, HA&A also agreed to comply with 7-Eleven’s Operations Manual (“Manual”). Provisions in the Manual stated that the franchisee was solely responsible for setting the policies and procedures to operate his or her store in accordance with the laws of the legal jurisdiction in which the store was located, and that the franchisee was solely responsible for the actions of its employees while on the job. Additionally, training materials provided by 7-Eleven to franchisees for use in training franchisee employees expressly informed those employees that they were not “in any way considered to be an employee, agent[,] or independent contractor of 7-Eleven, Inc.,” and that 7-Eleven did not “assume any liability for providing you these training materials.” Consistent with these provisions, Steffan testified that the franchisee——here, HA&A——was solely responsible for the overall operations of the Store, including supervising, hiring, firing, promoting, and disciplining Store employees. HA&A also was solely responsible for enforcing workplace rules, policies, and procedures for the Store. Based on this evidence, it is determined that HA&A was solely responsible for the actions of its employees and agents, including Hussain’s actions on September 16, 2017, toward Smith. Stated another way, the evidence establishes that 7-Eleven was not responsible for Hussain’s actions in the Store, including his actions on September 16, 2017, toward Smith while he (Smith) was in the Store.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations issue a final order dismissing the Petition for Relief. DONE AND ENTERED this 12th day of March, 2019, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS 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 12th day of March, 2019.
The Issue The issue for determination at final hearing was whether Florida Diesel Truck and Industrial, Inc., has standing to protest the termination of its franchise agreement with Mitsubishi Fuso Truck of America, Inc.
Findings Of Fact William Dowdy is the President and owner of Florida Diesel Truck and Industrial, Inc. (Petitioner). He owns all of the stock and controls the day- to-day operation of the business. Dowdy bought out his family members' interest in the business. Petitioner is primarily engaged in industrial, marine and agricultural parts and service. Dowdy has been working with Petitioner as an administrator for approximately 20 years. He joined Petitioner in 1973 in the accounting office when it was Florida Diesel and Marine Service and was primarily engaged in marine repairs. Dowdy has no actual, hands-on repairing experience with Petitioner of any significance. In 1989, Mitsubishi Fuso Truck of America, Inc. (Intervenor), was searching for new dealerships, so it initiated contact with Dowdy. Intervenor's branch manager had numerous conversations, regarding a truck franchise, with Dowdy. At that time, Petitioner had two locations: one in Riviera Beach and one in Ft. Pierce. The Riviera Beach location was the original facility, the larger of the two locations, and the main office. As a result of the talks, in October 1989, Petitioner applied for a dealership. In December 1989, Petitioner entered into an Interim Sales and Service Agreement (Interim Dealer Agreement) with Intervenor, which was the dealership franchise agreement. The Interim Dealer Agreement was for a one-year period (December 1989 to December 1990) only. In order to become an authorized dealer, Petitioner had to comply with the Interim Dealer Agreement. A term and condition made a part of the Interim Dealer Agreement and incorporated by reference as "Exhibit B" was that Petitioner would "show a growth rate in the areas of net worth, working capital, retail sales, parts sales, service sales, and show a positive trend towards profitability at the end of this interim agreement." Also, a development plan was entered into setting forth, among other things, an annual minimum sales objective of 25 units or vehicles for 1990. Petitioner's interim dealership was located at its Ft. Pierce location. Intervenor provided the trucks, through its credit plan, and Petitioner purchased the parts. As a dealer, Petitioner needed a salesperson but did not have one. Dowdy decided that Petitioner's branch manager in Riviera Beach would double as a salesperson for the dealership in Ft. Pierce. In addition to handling parts and service at the Riviera Beach location, the branch manager was also now a truck and parts salesperson. Needing a full-time salesperson for the dealership, Dowdy continued to search for a salesperson. Sometime within the contract year, Petitioner hired a full-time salesperson. The salesperson had no truck sales experience but did have automobile sales experience and local contacts which Petitioner felt was an asset. However, because his sales were lacking, the salesperson was replaced. Intervenor provided Petitioner with assistance during its year of operation. Intervenor's district sales manager met periodically with Dowdy, visited the dealership frequently, assisted with sales and made contacts with customers and potential customers. In December 1990, at the end of its first year of operation as a dealer, Petitioner received written communication from Intervenor regarding deficiencies, among other things, in the submission of monthly financial statements and the timely payment of accounts. Notwithstanding, in December 1990, Intervenor renewed the Interim Dealer Agreement for a second year from December 1990 to December 1991. Petitioner's profit trend did not indicate to Intervenor that it should offer Petitioner a three-year dealer contract as opposed to a one-year interim dealer contract. During the second contract period, Petitioner continued to have a salesperson problem. Petitioner replaced its salesperson with someone who had truck sales experience. However, the new salesperson was not selling a satisfactory number of trucks, so he was dismissed. Again, Petitioner's branch manager in Riviera Beach became the Ft. Pierce dealership salesperson. Additionally, in the second contractual year, on more than one occasion, Petitioner received written communication from Intervenor regarding submission of monthly financial statements and timely payment of accounts. Finally, in December 1991, Intervenor notified Petitioner by written communication that payment for parts shipment would be thereafter on a C.O.D. basis. In January 1992, Intervenor again renewed the Interim Dealer Agreement for a third year from January 1992 to January 1993. Prior to the renewal, Intervenor discussed increased truck sales with Petitioner and both agreed that increased trucks sales were necessary. A term and condition made a part of the Interim Dealer Agreement and incorporated by reference as "Exhibit B" was that Petitioner agreed to [S]ell a minimum of fifteen (15) units during the term of this contract. [S]ubmit monthly financial statements. [P]ay monthly parts account according to MFTA [Intervenor's] terms. Prior to the third contractual year, Dowdy had been having financial difficulty, due to his purchase of his family members' interest in Petitioner. However, during the third contractual year, the financial difficulties worsened with the absence of a salesperson which lead to disappointing truck sales. In March 1992, Intervenor's credit department denied approval for the shipment of a vehicle to Petitioner's dealership because Petitioner had not submitted to Intervenor the 1991 year-end financial statement and monthly financial statement and had not paid prior interest charges. Additionally, in June 1992, Intervenor notified Petitioner by written communication that its floor plan insurance premium was past due, i.e., Petitioner had not paid the premium on its inventory. Also, in May 1992, because of financial concerns, Petitioner sold its Riviera Beach location. Since Petitioner had no full-time salesperson for its Ft. Pierce location, Petitioner's former branch manager, who had remained with the new Riviera Beach owners, agreed to continue to sell trucks for it. This arrangement continued for approximately two or three months before Petitioner's former branch manager severed his salesperson relationship. Petitioner was without a salesperson. The absence of a salesperson continued to plague Petitioner, which affected its sales and in return, its finances. In or around late August 1992, Intervenor's district sales manager who had been working with Petitioner during each of the yearly contractual periods, initiated the subject of Petitioner resigning its dealership. They engaged in several discussions on the subject of resignation; however, during those discussions, the subject of Intervenor terminating the dealership franchise came up. On or about August 31, 1992, Intervenor's district sales manager prepared a letter of resignation for Dowdy's signature. Even though the resignation letter was dated August 31, 1992, it was not presented to Dowdy for his signature until September 11, 1992, when the manager visited Petitioner in Ft. Pierce. On September 11, 1992, Dowdy reviewed the resignation letter, and after discussing it with the sales manager, he signed the letter and had it witnessed. That same day, Intervenor's district sales manager notified Intervenor's manager of dealer operations, who was located at its home office in New Jersey, of the resignation letter being signed, and when he returned to his office in Orlando, the district sales manager gave the resignation to the Regional Vice-President. Prior to signing the resignation letter, on or about September 3, 1992, Petitioner, with Intervenor's assistance, transferred two of its trucks to another dealer in Broward County. On September 15, 1992, Petitioner, by fax transmission, submitted its tool inventory to Intervenor, and shortly thereafter, Intervenor repurchased the tools from Petitioner. In a letter dated September 14, 1992, Intervenor notified Dowdy that it had accepted his "voluntary resignation" of the dealership, and included a proviso that the effective date of the franchise termination was October 11, 1992, 30 days from the date of resignation. The letter was mailed from Intervenor's home office in New Jersey. The Interim Dealer Agreement provides that any notice to be given under the agreement may be delivered, as it pertains to the case at hand, to the party of the agreement if a sole proprietor, to an officer of the party if a corporation, or may be given by sending the notice by registered mail or tested telex addressed to the principal office of the interim dealer or to Intervenor's principal office. It provides further that notice given as indicated is considered given when delivered or mailed. Intervenor's Dealer Sales and Service Agreement Standard Provisions (Standard Provisions) was incorporated by reference and made a part of the Interim Dealer Agreement. Section X.A. of the Standard Provisions provides that a dealer may terminate the agreement upon 30 days prior written notice to Intervenor. Further, Section X.C. provides that the date of the notice of termination is the date of mailing. Shortly after signing the letter of resignation, individuals wishing to invest in Petitioner's truck dealership contacted Dowdy. After receiving positive assurances from the investors, Dowdy attempted to rescind the resignation. He forwarded a witnessed letter dated September 18, 1992, to Intervenor by fax transmission requesting that his "voluntary resignation be abated." At that time, he had not received Intervenor's letter of September 14, 1992. By certified letter dated October 2, 1992, Intervenor notified the State of Florida, Department of Highway Safety and Motor Vehicles (DHSMV) of Petitioner's "voluntary resignation" of its dealership. In response to Dowdy's letter of September 18, 1992, by letter dated October 9, 1992, Intervenor refused to abate Petitioner's resignation and treated his letter of September 18, 1992, as an application for a new franchise. Intervenor indicated in its response that it was not interested in a new franchise. On October 21, 1992, Dowdy sent a letter by fax transmission to Intervenor's CEO regarding the resignation letter and his (Dowdy's) plan to reorganize the dealership. The CEO contacted Dowdy the same day by telephone and discussed the low and decreasing market for truck sales in the Ft. Pierce area and whether Dowdy had been coerced or forced to sign the letter of resignation. Responding to the inquiry of coercion or being forced, Dowdy responded that he was neither coerced nor forced to sign the letter of resignation. Subsequently, however, in a letter dated October 28, 1992, Dowdy informed Intervenor's CEO, among other things, that Intervenor terminated the dealership and that he was requesting a hearing before the DHSMV for unfair cancellation. By letter dated October 28, 1992, Dowdy requested such a hearing from DHSMV. By letter dated November 9, 1992, Dowdy informed the DHSMV that, among other things, he had signed the "voluntary resignation" prepared by Intervenor, but later changed his mind and requested Intervenor to cancel the "voluntary resignation" on September 18, 1992. By certified letter, dated November 12, 1992, the DHSMV notified Dowdy that its determination was that he lacked standing to protest a termination and that he had 21 days from the service of that letter to request a formal hearing. Dowdy received the DHSMV's letter on November 18, 1992. On December 9, 1992, Dowdy forwarded a letter, bearing the same date, by Federal Express to the DHSMV requesting a formal hearing, which was received by the DHSMV on December 10, 1992.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order denying Florida Diesel Truck and Industrial, Inc.'s, request for an unfair cancellation hearing in that it lacks standing for such a request. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 21st day of March 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 March 1994.
The Issue It must be determined whether the placement of storage tanks, pumps, and appurtenant fueling equipment by Lewis Oil Company, Inc. (Lewis) at convenience stores constituted a license or lease of real property upon which that equipment was placed and, therefore, whether the commissions paid to the convenience stores for pumping and selling the Petitioner's fuel should have been the subject of sales tax, or conversely, whether the placement of the pumping equipment and fuel at the stores was a bailment and a non-taxable transaction.
Findings Of Fact Lewis is a jobber or wholesale distributor of gasoline, diesel fuel, and related petroleum products. As a method of distributing its fuel products, the Petitioner contracts with convenience stores that it will install petroleum fuel storage tanks and dispensing equipment on the convenience store's real property, and will furnish product on consignment to the convenience store, who sells the fuels to its customers. Pursuant to the agreement between Lewis and the convenience stores, the equipment was owned by Lewis but Lewis relinquished exclusive possession and control of it to the convenience stores and their management. Lewis agreed to furnish the gasoline equipment installed at each location, and keep it in good working order. The convenience stores agreed to sell gasoline on its premises supplied exclusively by Lewis and agreed to collect and account for all monies as the result of sales of gasoline. The money associated with the sale of the gasoline was collected by the convenience stores. The amount collected was the entire cost of a gallon of gas to the consumer which would include the motor fuels tax. The convenience stores paid Lewis the full retail price of the sales less the agreed upon commissions and sales taxes. Lewis remitted the motor fuel tax to the State and paid the bills associated with the cost of fuel to the supplier, Chevron Oil Company. The convenience stores were required to account for the monies collected by taking meter readings which were then recorded on forms and remitted to Lewis regularly. Lewis was permitted to inspect the records, pumps and metering equipment for the purpose of verifying the accounting made by the convenience stores to determine whether or not Lewis was receiving an appropriate portion of the gross profit margin as agreed to in the commission agreement itself. The metering equipment is located on the face of the dispenser, and a meter reading can be done by looking at the meter or by pushing a button. On most of the equipment at the convenience stores, it was not necessary to take the meter readings from the actual equipment because the metering equipment was accessed on the inside of the stores on consoles. The convenience stores were responsible for inspecting the underground tanks by "sticking" the tanks with a long stick to reconcile actual tank inventory with meter readings to determine the possible loss of inventory. The convenience stores were responsible for the day to day maintenance of the pumps and islands such as sweeping and cleaning the equipment and inspecting the equipment for proper operations and damage. The convenience stores were responsible for the hiring, firing and management of employees associated with managing the gasoline tanks and pumps. If the tanks needed repairs, the convenience store operator was responsible for notifying Lewis of the necessary repairs, and Lewis would see that the repairs were made and would pay for the repairs. All repairs required the permission and cooperation of the convenience store operator who required that the repairs be coordinated so as not to interfere with store operations. The repairs required the cooperation of the convenience stores. Lewis set the price of the gasoline for the consumer, and the meters were physically changed by the employees at the convenience stores. Lewis agreed not to set the price of the gas at a price that would provide less than 1.5 cents per gallon commission except on consent of the convenience stores. The stores were responsible for advertising materials to display the price set. If for any reason Lewis was unable to supply gas for sale to the convenience store's customers, the stores’ management was free to obtain gas from other petroleum suppliers. It was only required to pay Lewis a 2-cent fee in this eventuality. Lewis did not have the right under the contract with the convenience stores to interfere with the stores’ possession by physically locking up the pumps or removing the tanks from the ground or blocking sales of the fuel. Under the terms of the contract, Lewis did not have the right to remove any of the gasoline. Upon expiration or termination of the agreement, Lewis would re-possess all equipment, inventory and merchandise from the convenience stores, and Lewis was required to return the ground to its original condition. Lewis would reuse the equipment if it still met environmental standards. Lewis carried insurance for property damage, environmental damage and the liability associated with the operation of the petroleum systems, and the convenience stores agreed to indemnify and insure against any losses or liabilities that arose out of their own negligence. The Florida Department of Environmental Protection lists Lewis as the owner of the petroleum tanks and lists the convenience store as the operator on its Petroleum Liability Insurance and Restoration Program forms.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Department enter a Final Order determining that Lewis was not exercising a taxable privilege under Sections 212.103, F.S. DONE and ENTERED this 11th day of June, 1997, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 11th day of June, 1997. COPIES FURNISHED: Jefferson M. Braswell, Esquire Scruggs and Carmichael, P.A. Post Office Box 23109 Gainesville, FL 32602 James F. McAuley, Esquire John Upchurch, Esquire Office of Attorney General The Capitol - Tax Section Tallahassee, FL 32399-1050 Linda Lettera, Esquire Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Larry, Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100
Findings Of Fact Dealer has been engaged in the retail sales of motor vehicles for over fifteen years. In addition to Manufacturer's products, Dealer is franchised to sell GMC products and does so at the same location. Prior to 1967, Hunt Truck Sales was the franchised Jeep dealer in the Pinellas County, Florida, area. The original franchise agreement was with Kaisar Jeep Sales Corporation whose operations were subsequently taken over by Manufacturer. During the year 1967, the franchise was assumed by Dealer based, in part, on the understanding that one W. C. Mosely actively and substantially participate in the ownership and operation of the business. Mosely signed as Vice-President of Dealer corporation on the original franchise agreement dated October 23, 1967. A new dealer advance information and facilities report dated November 1, 1967, reflects that F. R. Hunt, Sr., owned 70 percent of Dealer corporation, Mosely 25 percent and J. R. Johnson 5 percent. A similar report dated February 22, 1971, shows Frank Hunt, Jr., 75 percent, and Mosely 25 percent. In the first report, Mosely is listed as Vice-President and in the second, as President. Frank Hunt, Jr.'s 75 percent consists of stock he controls as executor of his father's, Frank Hunt, Sr.'s, estate. In 1971, Manufacturer purchased all Jeep operations from Kaiser. The name was subsequently changed to Jeep Sales Corporation. On August 3, 1972, Dealer and Manufacturer entered into a new Dealer Franchise Agreement reflecting Mosely as 100 percent owner and President. No written permission for the ostensible change in ownership was obtained either before or after the refranchising took place. In fact, Mosely was not a 100 percent owner, but rather was only 25 percent owner with his stock pledged as security for its purchase price. This inaccuracy was perpetuated in a Refranchising Facilities Report dated November 12, 1974, notwithstanding that in an intracompany correspondence dated September 13, 1974, between A. B. Hamrick and C. H. Jackson, it was recognized that Mosely was not 100 percent owner. Although the memo inaccurately stated that the remaining 75 percent of the stock was "signed over" to Mosely but held by the secretary to Hunt Truck Sales, Inc., until payment, it was recognized that Hunt Truck Sales' connection with Dealer was an asset as a source of considerable management advice and assistance. The franchise agreements in effect between Dealer and Manufacturer at all times pertinent to this case provided inter alia that Manufacturer could effect immediate termination of the agreements by written notice if there were any change in the specified ownership or management of Dealer without prior written approval of Manufacturer. On June 1, 1975, Mosely, at the request of Dealer corporation, resigned his position as President and General Manager because of a decline in business. C. Sherman Wiley was then elected Vice-President, General Manager, and Sales Manager, while Howard F. Brady was elected President. Brady also assumed Mosely's former position as 25 percent owner. These changes were made without prior written approval of Manufacturer. On June 5, 1975, A. B. Hamrick made an in person contact with Dealer on behalf of Manufacturer. In his report dated the same day, Hamrick notes that Mosely is no longer the manager of Dealer's operations. The report further notes that at the last refranchising (some eight months before) it was explained that Dealer was actually owned by Hunt Truck Sales. The report was routed to, and initialled by, Manufacturer's Zone Manager, Zone Operations Manager, Field Sales Manager, Market Representative Manager, Administration Manager and Vehicle Distribution Manager. Throughout the fourteen months preceding the termination notice, Manufacturer not only was fully aware of the ownership/management change but also continued to provide its products to Dealer for retail sale and to otherwise treat Dealer as having full franchise status. On January 12, 1976, Manufacturer offered to extend Dealers franchise term to a ten year period on the recommendation of the zone manager. This written offer was dated over seven months after Manufacturer was made aware of Dealer's change in ownership and management on June 5, 1975. It stated that Manufacturer's intent was to "ensure the stability of our relationship" and that upon acceptance, Manufacturer would "complete the signatures." The extension was accepted by dealer. At the time of acceptance, C. Sherman Wiley, Dealer's vice-president, general manager and sales manager called Mr. Cargill, Manufacturer's district sales manager, who advised Wiley to sign the acceptance and that the necessary refranchising papers would then be forwarded for the inclusion of new ownership and management data. Between the time of the ownership and management change and the time of termination, Dealer had communicated the substance of the change to six agents of Manufacturer. Although a letter from Dealer's "corporate" attorney verifying the change was requested by Manufacturer, the reason for termination was the failure to obtain prior written approval for the change and not the failure to obtain the letter.
The Issue Did Petitioner sustain an on-the-job injury on May 19, 1995, which resulted in Petitioner being disabled and, if so, did Respondent fail to provide Petitioner with reasonable accommodation for that disability?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: Publix Super Markets, Inc. (Publix) is a Florida corporation operating a chain of retail grocery stores throughout the State of Florida. Publix hired Petitioner on June 9, 1973. On March 17, 1994, Petitioner voluntarily transferred to Publix's Orlando Grocery Warehouse in Orlando, Florida. On May 13, 1995, Publix promoted Petitioner to Grocery Supervisor. On March 15, 1995, Petitioner was arrested in connection with a domestic dispute that was highly publicized in the area, and because of this incident, Publix removed Petitioner from his supervisory position on March 24, 1995. Petitioner became a selector in the warehouse, selecting goods to be shipped to the stores. However, because of Petitioner's length of service with Publix, he could have chosen to operate the fork-lift rather than physically select goods. The essential functions of the selector position include pulling product weighing up to 100 pounds at a rate of 250 cases per hour. A selector must be able to bend, stoop, lift, push and pull product cases, and operate a fork-lift. The essential functions of the fork-lift operator position include operating the fork-lift--a hazardous piece of moving equipment. Petitioner did not have any condition which substantially limited any major life activity at anytime prior or at the time he became a selector. Petitioner sustained an on-the-job injury on May 19, 1995, while working as a selector for Publix. However, Petitioner did not report this injury to Publix until May 30, 1995. The back condition caused by this injury is the only impairment which Petitioner contends to be a disability in this case. Petitioner did not request any accommodation from Publix due to his injury on May 19, 1995. On May 19, 1995, Petitioner requested disbursement of his retirement benefits from Publix and notified Publix that his last day of employment would be June 2, 1995. Petitioner called in sick on May 20, 22, 23, and 26-29, 1995, claiming he was unable to work. Petitioner's regular days off were May 24-25 and June 1-2, 1995, and Petitioner did not work at Publix on those days. After his injury on May 19, 1995, Petitioner only worked on May 21 and 30, 1995. Publix accommodated all of Petitioner's requests for time off due to his back condition. Prior to May 30, 1995, Petitioner declined Publix's offer to report the incident as a work-related injury and Publix's offer of treatment under workers' compensation. By letter dated May 24, 1995, Peter Petrone, M.D., North Lakeland Pain and Trauma, advised Mike Lester, Publix's Grocery Department Manager, that Petitioner's injuries prevented Petitioner from performing his job duties. Additionally, Dr. Petrone advised Mr. Lester that Petitioner could return to work on May 30, 1995. The record is unclear as to when or if Mr. Lester received this letter. On May 30, 1995, Petitioner reported that he now believed that the May 19, 1995, injury was work related. In accordance with Publix's established practice, a Notice of Injury Form was filed immediately and an investigation was conducted. Petitioner acknowledged that the injury, although occurring on May 19, 1995, was not reported to Publix until May 30, 1995. Publix offered Petitioner medical treatment, which Petitioner accepted. Petitioner was treated by the physicians at Centra Care on the day the injury was reported, May 30, 1995. Petitioner was placed on restrictions by the physicians at Centra Care which consisted of: no lifting, pushing, or pulling over five pounds; no bending or stooping, and avoid hazardous moving equipment. Petitioner was scheduled for a re- evaluation on June 2, 1995. The restrictions issued by the physicians at Centra Care were given to Mr. Lester on May 30, 1995. Due to these restrictions, Petitioner was unable to perform the essential functions of his selector position on May 30, 1995 through June 2, 1995. Petitioner contends that he may have been able to perform receiver, inventory control, dispatch, clerical, or security positions within the warehouse. However, there was no evidence presented of any receiver, inventory control, dispatch, or clerical positions being available within the warehouse. Since all security positions are contracted to an outside agency by Publix, there are no available security positions within the warehouse. Petitioner did not request a dispatch, receiver, inventory control, clerical, or security position. There were no available positions which met Petitioner's work restrictions within the Orlando warehouse and, since Petitioner was to be re-evaluated by the Centra Care physicians on June 2, 1995, Mr. Lester advised Petitioner that he need not come into work on Wednesday, May 31, 1995. Petitioner's regular days off that week were Thursday and Friday, June 1-2, 1995. There were no positions within the Orlando warehouse which Petitioner could perform the essential functions, with or without reasonable accommodation, on May 30, 1995. On June 2, 1995, Petitioner notified Mr. Lester that he was resigning effective June 2, 1995. Petitioner had not advised Mr. Lester of the outcome of his visit with the physicians at Centra Care on June 2, 1995. Between May 19, 1995 and June 2, 1995, Petitioner could see, read, write, walk, drive, bathe, feed himself, dress himself, grocery shop, and perform odd jobs around the house, including light cleaning and the dishes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order dismissing the Charge of Discrimination which was filed against Respondent Publix by Petitioner Joe Armbrester, III. DONE AND ENTERED this 29th day of December, 1999, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of December, 1999. COPIES FURNISHED: Robert M. Paine, Esquire Post Office Box 3642 Lakeland, Florida 33802 Jennifer M. Monrose, Esquire Ford and Harrison, LLP 101 East Kennedy Boulevard Suite 900 Tampa, Florida 33602 Sharon Moultry, Clerk Florida Commission on Human Relations Building F, Suite 240 325 John Knox Road Tallahassee, Florida 32399-0500 Dana Baird, General Counsel Florida Commission on Human Relation Building F, Suite 240 325 John Knox Road Tallahassee, Florida 32399-0500
The Issue Whether Petitioner is required to pay sales tax on the commission its pays to property owners for the right to place and operate air and vacuum machines at various locations in central Florida.
Findings Of Fact Petitioner owns coin-operated air and vacuum machines, which it places at numerous convenience store and gas station locations throughout central Florida. The State of Florida, Department of Revenue, is an executive agency of the State of Florida, which is statutorily charged with the administration and enforcement of Florida's sales tax laws. The Department conducted an audit of Petitioner following the discovery of information developed during an audit of another company. It was determined that Petitioner had never registered with the Department of Revenue for sales tax collection or payment. During the audit, the Department determined that Petitioner had not paid sales tax on its out-of- state purchases of air and vacuum machines and equipment valued at approximately $303,429.00. These machines were purchased for use in Florida. The Department assessed sales tax on these purchases. The Petitioner conceded that it owed sales tax on these purchases and did not contest that portion of the assessment. It has paid said taxes. The Department assessed sales tax on payments made by the Petitioner to other companies for the right to place its machines at their business. Petitioner places coin-operated air and vacuum machines on premises of the convenience stores and gas stations under a verbal contract at will in which the land owner receives a portion of the gross receipts from the operation of the machines. Petitioner is solely responsible for the installation of the air and vacuum machines, including providing the electrical tie-in at the site of the machine. The air and vacuum machines are mounted on a six hundred pound concrete pad and transported and placed on the convenience store property. The air and vacuum machines are portable, even after placement at a convenience store, and are removed if Petitioner determines that the location is not sufficiently profitable. The air and vacuum machines are purchased by Petitioner and the air and vacuum machines are owned solely by Petitioner during the period that they are located on a convenience store's premises. Petitioner is solely responsible for regular inspection of the air and vacuum machine and is solely responsible for maintenance of the machines. Petitioner is solely responsible for cleaning the air and vacuum machines at all locations. Also, Petitioner is responsible for all repair work to the machines which are provided at no cost to the owner of the convenience store. Petitioner is entitled to ingress and egress from the property at any time to accomplish these repairs. Petitioner is ultimately responsible for refunding any money to the store operator when an air and vacuum machine fails to work properly. Petitioner is solely responsible for all licensing fees and taxes on the air and vacuum machines. Petitioner carries liability insurance coverage on the air and vacuum machines. On or about June 10, 1988, Petitioner entered into a written contact with Carse Oil Company, Inc., which owned convenience stores in the central Florida area, doing business as Ideal Food Stores. This agreement was in effect for a period of three or four years, including some years during the audit period, beginning September 1, 1988. The agreement, entitled "Air/Water Vacuum Commission Agreement" (hereinafter Agreement) is a contract between Petitioner and Carse Oil Company, Inc., by which Petitioner agreed to place an air and vacuum machine on Carse Oil's property. The written Agreement with Carse Oil Company, Inc. provides for the monthly payment to be made on a date certain each month. The Carse Oil Agreement is complete and contains all of the terms of the contract between the parties as to the duties and obligations of each party under the contract. This written Agreement is representative of the course of dealing with other businesses with which Petitioner entered oral agreements during the period of the audit. Like the Agreement, the oral agreements allowed Petitioner to place its machines at its own cost on the property of a convenience store. The Petitioner does not currently have, and has not ever had any agreements in writing with its customers other than the written Agreement with Carse Oil. Under the written and oral agreements, Petitioner was responsible for coming onto the property to repair its machines. Petitioner is also entitled to come onto the property to remove monies from the cash box located in the machine. Only Petitioner's employees held the key to the money box and were entitled to come onto the property any time to access the money box in the machine. None of Petitioner's customers has a key or other access to the money box located in each air and vacuum machine. Petitioner is solely responsible for calculating the commission payment to a convenience store after collecting the money in the machine. Petitioner is solely responsible for deciding whether to remove an air and vacuum machine from a convenience store's premises if it is unprofitable. With the exception of one customer, Petitioner does not pay a separate amount to the convenience store for the electricity that is used in the operation of the air and vacuum machine. Petitioner's agreements with its customers, including the Agreement with Carse Oil Company, provide for the convenience store to receive each month a percentage of the money collected in the previous month for the operation of the air and vacuum machine(s) located on the store's premises. The air and vacuum machines are equipped with a coin counter. Petitioner is solely responsible for periodically collecting the coins that have accumulated in each air and vacuum machine. The percentage that Petitioner pays to the convenience stores under its agreements with them ranges from 25 percent to 50 percent and are negotiated on an individual basis. Petitioner pays a higher percentage to a convenience store where the revenues generated are relatively higher than the revenues generated by machines at other locations. The payment to the location owner is thus based upon the business derived at a particular location. Thus, as part of the business decision of payment for allowing placement of the machine, Petitioner evaluates the value of the location of the machine and payment is guided by the performance at the location. Payment made by Petitioner is directly connected to the acquisition of the right of placement of the machine, and the location owner is not entitled to receive any compensation once a machine is removed from the premises. The location owner has no responsibility for the cost of placing the machine, the costs of maintenance and cleaning the machine during its placement, the cost of repair of the machine during placement or responsibility for payment of insurance coverage of machines during placement. The location owner involvement is limited to authorization of the use of the property for placement of the machine. The compensation or "commissions" are directly tied to payment for the right to place the machine on the premises of a convenience store. The payment which Petitioner characterized as a revenue sharing arrangement, regardless of the title placed on the agreement between the parties, is based upon the right of placement of the machines on the property of another distinct business entity. Petitioner paid out $613,125.00 during the years under audit based upon its written and oral agreements allowing for the placement of its equipment. The Department assessed sales tax on the payments made as "commissions" to the parties where the machines were placed. The Department assessed sales tax due in the amount of $54,994.40, plus penalty in the amount of $16,539.12 and interest in the amount of $15,643.48, for a total due of $87,177.00. On April 15, 1994, Petitioner paid $18,206.61 on this amount leaving a balance due of $68,970.39. Petitioner does not dispute the Department's mathematical calculations of the total sales dollars upon which the tax assessment is based. Petitioner has not paid sales taxes on the monies it remitted to the convenience stores during the audit period. Petitioner did not seek advice from the Department prior to the assessment as to whether sales tax should have been collected on the business transactions assessed by the Department.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Executive Director enter a Final Order denying the Petition contesting the assessment of tax and impose a sales and use tax audit assessment in the amount of $68,970.39, plus interest. DONE and ENTERED this 28th day of June, 1996, in Tallahassee, Florida. DANIEL M. KILBRIDE, 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 28th day of June, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-2131 To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. Petitioner did not submit proposed findings of fact as of the date of this Order. Respondent's Proposed Findings of Fact. Accepted in substance: paragraphs 1-31. COPIES FURNISHED: Gary Shader, Esquire Shader and Wilson 1750 North Maitland Avenue Maitland, Florida 32751 James F. McAuley, Esquire Elizabeth T. Bradshaw, Esquire Office of the Attorney General The Capitol, Tax Section Tallahassee, Florida 32399-1050 Linda Lettera, General Counsel Deparment of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
