99-005306 Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco, vs. Gold Coast Eagle Distributing, Ltd., D/B/A Gold Coast Eagle Distributing, Ltd. Status: Closed Recommended Order on Thursday, June 15, 2000.

Summary: It does not violate the Tie House Evil Act for a licensed distributor of alcoholic beverages to exchange a filled keg for a filled keg of at least equal value and owned by a licensed vendor.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF ALCOHOLIC )

BEVERAGES AND TOBACCO, )

)

Petitioner, )

)

vs. ) Case No. 99-5306

)

GOLD COAST EAGLE )

DISTRIBUTING, LTD., )

)

Respondent. )

______________________________)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division of

Administrative Hearings, conducted the final hearing in Sarasota,

Florida, on April 24, 2000.

APPEARANCES

For Petitioner: Ralf Michels

Assistant General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-2202

For Respondent: John Saputo, President

Qualified Representative

Gold Coast Eagle Distributing, Ltd.

2150 47th Street

Sarasota, Florida 34234

STATEMENT OF THE ISSUE

The issue is whether Respondent, as a licensed distributor of

alcoholic beverages, is guilty of violating the Tied House Evil Act

by distributing alcoholic beverages without charge to a licensed

dealer, in violation of Section 561.42(1) and (2), Florida

Statutes, and, if so, what penalty should be imposed.

PRELIMINARY STATEMENT

By Administrative Action dated September 13, 1999, Petitioner

alleged that Respondent, as a licensed distributor of alcoholic

beverages, unlawfully provided financial aid or assistance to a

licensed vendor.

At the hearing, Petitioner called two witnesses and offered

into evidence two exhibits. Respondent called three witnesses and

offered into evidence one exhibit. All exhibits were admitted.

The court reporter filed the Transcript on May 11, 2000.

FINDINGS OF FACT

1. Respondent is a licensed distributor of alcoholic

beverages. A bar known as "Wills," located at 5748 Swift Road in

Sarasota is a licensed vendor of alcoholic beverages, pursuant to a

series 2COP license.

2. Respondent distributes Anheuser-Busch products. One of

its main competitors is the distributor of Miller Beer products.

3. For an unidentified period of time prior to June 2, 1999,

Wills tapped only Anheuser-Busch products for retail sale as draft

beer. However, the Miller distributor persuaded Wills to switch

one of its two taps from Amber Bock, an Anheuser-Busch product, to

Ice House, a Miller Beer product, when the Amber Bock keg ran dry.

Pursuant to their agreement, Miller Beer delivered one keg of Ice

House for tapping.

4. Wills was to be the site of a promotion of June 5, 1999.

In anticipation of the promotion, a representative of Anheuser-

Busch visited Wills after June 2, but before June 5, to see if

Wills required any additional Anheuser-Busch product. The

Anheuser-Busch representative saw the untapped Ice House keg and

learned that Wills intended to switch one of its taps to the Miller

Beer product.

5. The Anheuser-Busch representative convinced Wills not to

make the switch. The question then arose what should be done with

the Ice House keg. Fearing that the Miller Beer distributor would

be slow to credit Wills for a refund, Respondent chose instead to

take the Ice House keg in payment for the new Bud Light keg that

the Anheuser-Busch representative delivered to Wills without delay.

6. Although Respondent failed to invoice the transaction,

there is no dispute that the wholesale prices of the Ice House and

Bud Light products, together with the kegs, are substantially

identical.

CONCLUSIONS OF LAW

7. The Division of Administrative Hearings has jurisdiction

over the subject matter. Section 120.57(1), Florida Statutes.

(All references to Sections are to Florida Statutes. All

references to Rules are to the Florida Administrative Code.)

8. Also known as the "Tied House Evil Act," Section 561.42

requires:

(1) No licensed manufacturer or distributor of

any of the beverages herein referred to shall

have any financial interest, directly or

indirectly, in the establishment or business of

any vendor licensed under the Beverage Law; nor

shall such licensed manufacturer or distributor

assist any vendor by any gifts or loans of

money or property of any description or by the

giving of any rebates of any kind whatsoever.

No licensed vendor shall accept, directly or

indirectly, any gift or loan of money or

property of any description or any rebates from

any such licensed manufacturer or distributor;

provided, however, that this does not apply to

any bottles, barrels, or other containers

necessary for the legitimate transportation of

such beverages or to advertising materials and

does not apply to the extension of credit, for

liquors sold, made strictly in compliance with

the provisions of this section.

(2) Credit for the sale of liquors may be

extended to any vendor up to, but not

including, the 10th day after the calendar week

within which such sale was made.

* * *

(7) The extension or receiving of credits in

violation of this section shall be considered

as an arrangement for financial assistance and

shall constitute a violation of the Beverage

Law and any maneuver, shift, or device of any

kind by which credit is extended contrary to

the provisions of this section shall be

considered a violation of the Beverage Law.

9. In its proposed recommended order, but not its

Administrative Action, Petitioner cites Rule 61A-4.045 which

requires the use of invoices in all licensed transactions. It is

unnecessary to determine whether Respondent violated this rule

because Petitioner did not timely raise this issue as a basis for

imposing discipline. At the hearing, the Administrative Law Judge

ruled that evidence of the lack of an invoice was inadmissible to

establish a separate, unpleaded violation of the law, but was

admissible solely for the purpose of trying to show a violation of

the cited statute.

10. Among other objectives, the Tied House Evil Act is

intended to foster competition by preventing predatory trade

practices. However, the credit transactions described by the

statute do not describe the transaction in this case, in which

Respondent charged Wills a keg of Ice House for a keg of Bud Light.

11. Nothing in the cited statute prohibits a licensed

manufacturer or distributor paying a licensed vendor for an

alcoholic beverage product--even one manufactured and distributed

by a competitor-- with property, rather than cash. To avoid the

subsidization of the vendor, the law prohibits the manufacturer or

distributor from transferring to the vendor property whose fair

market value exceeds the value of the alcoholic beverage product

transferred to the manufacturer or distributor. Even if the

property transferred to the vendor is an alcoholic beverage

product, the cited statute is not violated as long as the value of

the alcoholic beverage purchased by the manufacturer or distributor

from the vendor is not less than the value of the alcoholic

beverage transferred to the vendor. As noted above, Respondent

paid Wills for the Ice House keg with a Bud Light keg, and the

evidence fails to establish that the value of the Bud Light keg

exceeded the value of the Ice House keg.

RECOMMENDATION

It is

RECOMMENDED that the Division of Alcoholic Beverages and

Tobacco enter a final order dismissing the Administrative Action.

DONE AND ENTERED this 15th day of June, 2000, in Tallahassee,

Leon County, Florida.

___________________________________

ROBERT E. MEALE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 15th day of June, 2000.

COPIES FURNISHED:

Joseph Martelli, Director

Alcoholic Beverages and Tobacco

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-2202

Ralf Michels, Assistant General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-2202

John Saputo, President

Qualified Representative

Gold Coast Eagle Distributing, Ltd.

2150 47th Street

Sarasota, Florida 34234

Barbara D. Auger, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-2202

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15

days from the date of this recommended order. Any exceptions to

this recommended order must be filed with the agency that will

issue the final order in this case.