08-000497
Big Pig, Inc. vs.
Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco
Status: Closed
Recommended Order on Thursday, July 3, 2008.
Recommended Order on Thursday, July 3, 2008.
1STATE OF FLORIDA
4DIVISION OF ADMINISTRATIVE HEARINGS
8LATINO GRANDE, INC., )
12)
13Petitioner, )
15)
16vs. ) Case No. 08-0495
21)
22DEPARTMENT OF BUSINESS AND )
27PROFESSIONAL REGULATION, )
30DIVISION OF ALCOHOLIC BEVERAGES )
35AND TOBACCO, )
38)
39Respondent. )
41)
42BIG PIG, INC., )
46)
47Petitioner, )
49)
50vs. ) Case Nos. 08-0496
55) 08-0497
57DEPARTMENT OF BUSINESS AND ) 08-0498
63PROFESSIONAL REGULATION, )
66DIVISION OF ALCOHOLIC BEVERAGES )
71AND TOBACCO, )
74)
75Respondent. )
77)
78RECOMMENDED ORDER
80Administrative Law Judge (ALJ) Daniel Manry conducted the
88final hearing of these cases for the Division of Administrative
98Hearings (DOAH) on April 3, 2008, in Orlando, Florida.
107APPEARANCES
108For Petitioner: Jed Burman, Esquire
113Infantino and Burman
116Post Office Drawer 30
120Winter Park, Florida 32790
124For Respondent: Joshua B. Moye, Esquire
130Department of Business and
134Professional Regulation
1361940 North Monroe Street, Suite 42
142Tallahassee, Florida 32399-2202
145STATEMENT OF THE ISSUE
149The issue is whether Respondent should exclude four entries
158in quota drawings for alcohol beverage licenses (license quota
167drawings) pursuant to Subsection 561.19(2)(d), Florida Statutes
174(2007), 1 and Florida Administrative Code Rules 61A-1.006(8) and
18361A-5.0105(8). 2
185PRELIMINARY STATEMENT
187By letters dated November 1, 2007, Respondent proposes to
196reject four applications for entries into license quota
204drawings. The petitioners timely requested an administrative
211hearing to challenge each of the four proposed rejections, and
221Respondent referred the matter to DOAH to conduct the hearing.
231DOAH consolidated the proceedings pursuant to the joint request
240of the parties.
243At the hearing, the petitioners and Respondent each
251presented the testimony of one witness. The petitioners and
260Respondent submitted, respectively, nine and six exhibits for
268admission into evidence. Respondent submitted one impeachment
275exhibit. The identity of the witnesses and exhibits and any
285attendant rulings are reported in the one-volume Transcript of
294the hearing filed with DOAH on April 28, 2008.
303At the conclusion of the hearing, the ALJ granted the
313parties' joint request to file their proposed recommended orders
322(PROs) 30 days after the Transcript would be filed with DOAH.
333The parties timely filed their respective PROs on May 27, 2008.
344FINDINGS OF FACT
3471. Respondent is the agency responsible for regulating
355alcoholic beverage licenses (beverage licenses) in the state.
363Each year, on or after October 1, 2000, Subsection 561.20(1)
373authorizes Respondent to issue an additional beverage license
381for each population increase of 7,500 persons in each county in
393the state.
3952. Applicants typically outnumber available beverage
401licenses. A beverage license that becomes available by reason
410of a population increase is a so-called "full liquor license."
420A full liquor license entitles the licensee to sell alcoholic
430beverages on the premises and as a package store. Full liquor
441licenses are highly valued in the industry.
4483. When applicants outnumber available beverage licenses,
455Subsection 561.19(2) authorizes Respondent to advertise the
462availability of a beverage license and to conduct a license
472quota drawing. The statute requires the drawing to be public
482and to be a "double random selection drawing." The statute
492requires that the "double random selection drawing" shall:
500[A]llow each applicant whose application is
506complete and does not disclose on its face
514any matter rendering the applicant
519ineligible an equal opportunity of obtaining
525an available license. After all
530applications are filed with the director,
536the director shall then determine by random
543selection drawing the order in which each
550applicant's name shall be matched with a
557number selected by random drawing, and the
564number shall determine the order in which
571the applicant will be considered for a
578license. . . .
582§ 561.19(2)(a).
5844. A license quota drawing determines only the order in
594which Respondent will consider applications for a beverage
602license. An applicant selected in the drawing does not
611automatically receive a beverage license. The qualifications of
619a selected applicant must be vetted in the same manner as any
631other applicant before the selected applicant can obtain a
640beverage license.
6425. In 2007, Respondent scheduled a license quota drawing
651for beverage licenses that became available by reason of
660population increases in Lake, Orange, and Polk Counties. The
669precise date of the drawing in each county is not clear in the
682record.
6836. On October 1, 2007, Mr. Sam C. Meiner, Esquire, filed
694separate entries for the quota license drawings in Lake, Orange,
704and Polk Counties. Respondent accepted Mr. Meiner's three
712entries.
7137. Petitioner, Latino Grande, Inc. (Latino), submitted an
721entry for the drawing in Orange County. Petitioner, Big Pig,
731Inc. (Big Pig), submitted separate applications for the drawings
740in Orange, Polk, and Lake Counties.
7468. By letter dated November 7, 2007, entitled "Notice of
756Disapproval," Respondent rejected the entry from Latino. The
764ground stated in the Notice of Disapproval is "[B]ecause you
774have filed more than one application" for Orange County.
7839. In three separate Notices of Disapproval, each of which
793is dated November 7, 2007, Respondent rejected the entries from
803Big Pig for the drawings in Lake, Orange, and Polk Counties.
814The ground stated in each Notice of Disapproval is "[B]ecause
824you have filed more than one application" in each county.
83410. Latino and Big Pig each filed a petition for an
845administrative hearing, pursuant to Subsection 120.57(1), to
852challenge each of the four Notices of Disapproval. Latino's
861request for hearing became DOAH Case No. 08-0495. Big Pig's
871request for hearing in the drawings for Orange, Polk, and Lake
882Counties became DOAH Case Nos. 08-0496, 08-0497, and 08-0498,
891respectively. Pursuant to the parties' joint request, DOAH
899consolidated the four cases into DOAH Case No. 08-0495.
90811. Latino and Big Pig are closely held Florida
917corporations. Mr. Meiner is the sole shareholder, director, and
926officer of each corporation. 3
93112. Subsection 561.19(2)(d) prohibits Respondent from
937considering "more than one application from any one person,
946firm, or corporation" 4 in a drawing for one county. Chapter 561
958does not define "more than one application from the same person,
969firm, or corporation" and does not define the term "person."
97913. Some insight into the meaning of the term "person" can
990be gleaned from Florida Administrative Code Rule 61A-1.006(8).
998The term "person" shall not mean a
1005corporation that owns part or all of the
1013stock of an applicant corporation or
1019licensed corporation; however, it does
1024include officers, directors, and
1028shareholders of each shareholder
1032corporation.
103314. The definition of a "person" in Rule 61A-1.006(8) does
1043not reach the facts in this case. This case does not involve a
1056shareholder corporation. Latino is not a shareholder of Big
1065Pig, and Big Pig is not a shareholder of Latino. Nor does this
1078case involve an officer, director, or shareholder in a
1087shareholder corporation. Mr. Meiner is not an officer,
1095director, or shareholder of a corporation that is a shareholder
1105of either Latino or Big Pig. 5
111215. Latino, Big Pig, and Mr. Meiner are each a person
1123within the meaning of Subsection 1.01(3). Latino and Big Pig
1133are corporations, and Mr. Meiner is an individual.
114116. Latino, Big Pig, and Mr. Meiner comprise a "group or
1152combination" that is a "person" defined in Subsection 1.01(3).
1161Mr. Meiner owns all of the stock of each corporation, and the
1173three persons form a "group" or "combination" that is
1182statutorily defined as a "person" in Subsection 1.01(3).
119017. Respondent is statutorily prohibited from accepting
1197more than one application from any one person. Respondent
1206correctly accepted the application of Mr. Meiner and correctly
1215rejected the applications of the other members of the "group" or
"1226combination" defined as one "person" in Subsection 1.01(3).
123418. Apart from Subsection 1.01(3), Respondent correctly
1241applied Florida Administrative Code Rule 61A-5.0105(8) to reject
1249the applications from Latino and Big Pig. Florida
1257Administrative Code Rule 61A-5.0105(8) provides:
1262For the purposes of this section, "more than
1270one applicant" shall mean that an applicant
1277may have a direct or indirect interest in
1285only one application in each county or city
1293for which a license is available, but may
1301file separate entry forms for licenses in
1308different counties or cities for an
1314opportunity to obtain an available
1319license. [6]
132119. Neither Florida Administrative Code Rule 61A-5.0105
1328nor Chapter 561 defines the phrase "direct or indirect
1337interest." Neither party explicated any reasons in the record
1346that require agency expertise to define a "direct or indirect
1356interest." The issue of whether Mr. Meiner's 100 percent stock
1366ownership of Latino and Big Pig is a "direct or indirect
1377interest" in the corporate applications is an issue of fact to
1388be determined by the fact-finder. The fact-finder finds that
1397complete ownership and control of an applicant corporation is a
1407direct or indirect interest within the meaning of Respondent's
1416adopted rule.
141820. Mr. Meiner has a "direct or indirect interest" in the
1429application submitted by Latino for the license quota drawing in
1439Orange County. Mr. Meiner owns all of the stock of the
1450applicant corporation. Respondent correctly rejected the
1456application of Latino, in which Mr. Meiner has a direct or
1467indirect interest, as more than one application from Mr. Meiner.
147721. Mr. Meiner has a "direct or indirect interest" in the
1488applications submitted by Big Pig for the license quota drawings
1498in Lake, Polk, and Orange Counties. Mr. Meiner owns all of the
1510stock of the applicant corporation. Respondent correctly
1517rejected the applications of Big Pig, in which Mr. Meiner has a
1529direct or indirect interest, as more than one application from
1539Mr. Meiner.
154122. Latino and Big Pig assert two final arguments, each of
1552which involves mixed issues of fact and law. During the
1562hearing, counsel for Latino and Big Pig referred to the two
1573arguments as rule challenges, but counsel did not file a
1583separate rule-challenge petition pursuant to Subsection 120.56
1590(a 120.56 proceeding), and Respondent has not objected to the
1600consideration of the rule challenges in this proceeding, which
1609is conducted pursuant to Subsection 120.57(1) (a 120.57
1617proceeding). 7 The complete arguments concerning the two rule
1626challenges appear in pages 10 through 12 of the PRO filed by
1638Latino and Big Pig. The first argument, in substance,
1647challenges as an unadopted rule an agency statement in a printed
1658provision on the back of each entry form from Latino and Big
1670Pig. The substance of the second argument challenges an adopted
1680rule in Florida Administrative Code Rule 61A-5.0105(8). The
1688factual aspects of the two arguments are addressed in the
1698remaining findings.
170023. The alleged unadopted rule is stated in a provision
1710common to each entry form submitted by Latino and Big Pig. In
1722relevant part, the provision states:
1727The name of each individual entrant,
1733corporate officer, directly interested
1737person, etc. is required to be entered in
1745Part B [labeled "List All Interested
1751Persons"]. A person "interested" in the
1758license or licensed business includes, but
1764is not limited to, a person who agrees to do
1774any of the following: enter into any
1781financial arrangement through joint funds,
1786investing funds, cosigning or guaranteeing a
1792note or lease, or any action that creates
1800funds for a transaction or the ability of
1808the business to operate [hereinafter,
"1813financial interest"]. This may include
1819Spouse, Officer(s), Director(s),
1822Stockholder(s), Chief Executive, Limited and
1827General Partners(s), Corporation(s), or any
1832other entity connected with the business
1838. . . .
184224. It is undisputed that neither Mr. Meiner, Latino nor
1852Big Pig has any financial interest in the other except
1862Mr. Meiner's 100 percent stock ownership of each corporation. 8
1872However, a "financial interest" is not the factual ground
1881alleged in the Notices of Denial issued to Latino and Big Pig.
1893Rather, the Notices of Denial state that the ground for denial
1904is "[B]ecause you have filed more than one (1) application for
1915the above referenced county." The pertinent provision common to
1924the back of each entry form is not a stated ground for rejecting
1937the entries of Latino and Big Pig, the challenge to that
1948provision is not material to this proceeding, and the challenge
1958is deemed to be moot because it does not affect the substantial
1970interests of Latino and Big Pig in this proceeding.
197925. Latino and Big Pig challenge an adopted rule in
1989Florida Administrative Code Rule 61A-5.0105(8) (the challenged
1996rule). The substance of the challenge may be fairly summarized
2006as alleging that legislative changes in 2000 deprive the
2015challenged rule of any statutory authority and that the
2024challenged rule conflicts with the terms of the current statute.
203426. Latino and Big Pig begin their collective argument
2043with former Subsection 561.01(14), Florida Statutes (1981).
2050That statute defined the terms "licensee," "applicant" or
"2058person" to mean:
2061[A]n individual, corporation, firm,
2065partnership . . . or any such entity having
2074a financial interest , directly or
2079indirectly, in another such entity.
2084(Emphasis supplied)
208627. Latino and Big Pig acknowledge that the decision in
2096Peterson v. Department of Business Regulation , 451 So. 2d 983
2106(Fla. 1st DCA 1984), supports Respondent's proposed rejection of
2115the applications of Latino and Big Pig. In relevant part, the
2126court construed Subsections 561.19(2) and 561.01(14), Florida
2133Statutes (1981), by reading the two statutes together and
2142holding that it was improper to include in a drawing pool
2153separate applications of persons who, directly or indirectly,
2161are financially interested in other applications. Peterson , 451
2169So. 2d at 985.
217328. Latino and Big Pig argue that legislative authority
2182for the challenged rule has been repealed. The adopted rule was
2193last amended in 1998, and Subsection 561.01(14), Florida
2201Statutes (2000), deleted any definition of the terms "applicant"
2210or "person," deleted any reference to a "financial interest,"
2219and deleted any reference to a "direct or indirect interest."
2229The statute now reads:
"2233Licensee" means a legal or business entity,
2240person, or persons that hold a license
2247issued by the division and meet the
2254qualifications set forth in s. 561.15.
226029. Petitioner's rule challenge is rejected for two
2268factual reasons. First, the legislative changes in 2000 do not
2278affect either the law implemented in the challenged rule or the
2289specific authority for the challenged rule. Second, the facts
2298at issue in Peterson are different from those at issue in this
2310proceeding.
231130. The challenged rule implements Section 561.19 pursuant
2319to the specific authority in Section 561.11. Although the
2328decision in Peterson relied on Subsection 561.01(14), Florida
2336Statutes (1981), to guide the court's interpretation of
2344Subsection 561.19(2), the changes in Subsection 561.01(14),
2351Florida Statutes (2000), affected neither the law implemented in
2360the challenged rule nor the specific authority for the rule.
237031. Deletion of the definition of a "person" from
2379Subsection 561.01(14) leaves only the general definition of a
"2388person" in Subsection 1.01(3). Reliance in the challenged rule
2397on a "direct or indirect interest" in an application is
2407consistent with the statutory definition in Subsection 1.01(3)
2415of a "person" to include a "group" or "combination."
242432. The decision in Peterson did not resolve the issue of
2435whether a 100 percent shareholder and his wholly-owned
2443corporation are the same person within the meaning of Subsection
2453561.19(2)(d). Rather, Peterson dealt with the factual issue of
2462whether certain individuals, each of whom was clearly a person,
2472had a financial interest in the applications of other
2481individuals.
2482CONCLUSIONS OF LAW
248533. DOAH has jurisdiction over the parties and the subject
2495jurisdiction of DOAH to resolve the rule challenges in this
2505proceeding is discussed later in this Recommended Order.
251334. The burden of proof varies with the matter at issue in
2525this proceeding. Latino and Big Pig have the initial burden of
2536proving by a preponderance of the evidence that their separate
2546applications were accurate and complete when submitted and were
2555submitted in a timely manner. See M.H. and A.H. v. Department
2566of Children and Family Services , 977 So. 2d 755, 759 (Fla. 2d
2578DCA 2008)(applicant for license has initial burden of
2586demonstrating fitness to be licensed)( citing Osborne Stern & Co.
2596v. Department of Banking and Finance , 647 So. 2d 245, 248 (Fla.
26081st DCA 1994)( Osborne Stern I ), approved in part and quashed in
2621part by 670 So. 2d 932 (Fla. 1996) ( Osborne Stern II ).
263435. Latino and Big Pig satisfied their burden of proof
2644concerning their entries into the relevant drawings. It is
2653undisputed that the relevant applications were accurate and
2661complete when submitted and were submitted in a timely manner.
267136. Respondent has the burden of proving the specific
2680facts alleged in the Notices of Denial as the grounds for
2691rejecting the entries of Latino and Big Pig. Respondent must
2701show by a preponderance of the evidence that the applications
2711from Latino and Big Pig constitute more than one application
2721from the same person, firm, or corporation.
272837. Respondent asserts the affirmative of factual
2735allegations that the applications from Latino and Big Pig
2744represent more than one application from the same person and
2754that Mr. Meiner has a direct or indirect interest in Latino and
2766Big Pig. The party asserting the affirmative of the issue
2776generally bears the burden of proof. Florida Department of
2785Transportation v. J.W.C. Company, Inc. , 396 So. 2d 778 (Fla. 1st
2796DCA 1981); Balino v. Department of Heath and Rehabilitation
2805Services , 348 So. 2d 349 (Fla. 1st DCA 1977). Cf. M.H. ,
2816977 So. 2d at 760-761 (applicant does not have the burden of
2828disproving a charge of specific misconduct)( citing Osborne Stern
2837II , 670 So. 2d at 934; Mayes v. Department of Children & Family
2850Services , 801 So. 2d 980 (Fla. 1st DCA 2001). 9
286038. Respondent satisfied its burden of proof. For reasons
2869stated in the Findings of Fact and not repeated here, Respondent
2880showed by a preponderance of the evidence that Mr. Meiner has a
2892direct or indirect interest in Latino and Big Pig, within in the
2904meaning of Florida Administrative Code Rule 61A-5.0105(8), and
2912that the applications from Latino and Big Pig constitute more
2922than one application from Mr. Meiner. Respondent correctly
2930rejected the applications from Latino and Big Pig as
2939applications prohibited by Subsection 561.19(2)(d).
294439. The remaining conclusions address arguments by Latino
2952and Big Pig that, in substance, challenge an alleged unadopted
2962rule and an adopted rule in Florida Administrative Code Rule
297261A-5.0105(8). The issue of whether DOAH has jurisdiction to
2981resolve the disputes requires a separate legal analysis for each
2991argument.
299240. DOAH has jurisdiction in a 120.57 proceeding to
3001resolve the dispute pertaining to an alleged unadopted rule.
3010Agency action that determines the substantial interests of
3018Latino and Big Pig and that is based on an unadopted rule is
3031subject to de novo review in this proceeding. § 120.57(1)(e).
3041Assuming arguendo that the challenged provision on the back of
3051the entry forms submitted by Latino and Big Pig is an unadopted
3063rule, the proposed agency action that affects the substantial
3072interests of Latino and Big Pig is not based on the challenged
3084provision, and the challenged provision is not subject to de
3094novo review in this proceeding. 10
310041. The remaining jurisdictional issue is whether DOAH has
3109jurisdiction to resolve the challenges of Latino and Big Pig to
3120an adopted rule. The ALJ concludes that DOAH does have
3130jurisdiction to resolve this aspect of the dispute between the
3140parties.
314142. The legal analysis of the remaining jurisdictional
3149issue begins with Subsection 120.56(1)(e). In relevant part,
3157the statute provides that, "Failure to proceed under this
3166section shall not constitute failure to exhaust administrative
3174remedies." The quoted statutory language means that the power
3183of direct review in Article V, Subsection 4(b)(2), Florida
3192Constitution (2007), 11 allows a reviewing court to consider a
3202challenge to an adopted rule for the first time on appeal even
3214though the rule was not challenged in the lower tribunal.
3224[I]t is open to a reviewing court to
3232adjudicate an administrative rule at odds
3238with the statute it purports to implement,
3245even when there has been no administrative
3252rule challenge proceeding below. See State
3258ex rel. Dep't of Gen. Servs. v. Willis , 344
3267So. 2d 580, 592 (Fla. 1st DCA 1977)
3275("[P]rovisions [now codified at section
3281120.56(1)(e)] are addressed . . . to
3288district courts of appeal, which might
3294otherwise rebuff rule challenges by
3299petitions to 120.57 proceedings because
3304petitioner did not 'exhaust' the rule
3310challenge remedies of 120.54
3314and .56"). . . .
3320Clemons v. State Risk Management Trust Fund , 870 So. 2d 881, 884
3332(Fla. 1st DCA 2004)(Benton, J., concurring).
333843. The decision in Willis does not limit the meaning of
3349the relevant statutory language now codified in Subsection
3357120.56(1)(e) to the power of direct review. The court also
3367interpreted the statutory language to avoid any appearance of
3376requiring a duplicative 120.56 proceeding if a substantially
3384affected party presents his or her rule challenge with other
3394grievances in a 120.57 proceeding.
3399The legislative purpose is simply to avoid
3406any appearance of requiring a substantially
3412affected party to initiate duplicative
3417120.54 or .56 proceedings if his rule
3424challenge is regularly presented with other
3430grievances under 120.57. . . .
3436State ex rel. Department of General Services v. Willis ,
3445344 So. 2d 580, 591-592 (Fla. 1st DCA 1977).
345444. A rule challenge that is regularly presented with
3463other grievances under 120.57 in the lower tribunal would not
3473require a reviewing court to consider the rule challenge for the
3484first time on appeal pursuant to the power of direct review.
3495The rule challenge would have been presented initially with
3504other grievances in a 120.57 proceeding.
351045. Rather than interpreting the absence of a 120.56
3519proceeding to mean issue preclusion in a 120.57 proceeding, the
3529decision in Willis construed the relevant statutory language now
3538codified in Subsection 120.56(1)(e) as enhancing the remedies
3546available to a substantially affected party. The court
3554interpreted legislative policy as allowing a substantially
3561affected party to challenge a rule in a 120.56 proceeding, a
3572120.57 proceeding, both proceedings, or for the first time on
3582appeal pursuant to the power of direct review. The court
3592specifically acknowledged that the purpose of a 120.57
3600proceeding is not limited to an adjudicatory proceeding but is
3610legislatively intended to be mechanism for challenging agency
3618policy, which may be stated as an adopted rule, an unadopted
3629rule, or nonrule policy.
3633There is yet a question whether traditional
3640judicial deference to administrative
3644remedies is lessened by certain language in
3651subsections 120.54 and 120.56. Those
3656sections authorize proceedings for the
3661invalidation of agency rules, be they
3667regularly adopted or merely proposed, which
3673invalidly exercise delegated legislative
3677authority. [Citations omitted] Subsections
3681120.54 . . . and [120].56 . . . provide that
"3692failure to proceed under [those sections]
3698shall not constitute failure to exhaust
3704administrative remedies." If the quoted
3709provisions are to be construed as qualifying
3716the exclusivity of the entire [Chapter 120,
3723Administrative Procedure] Act or its most
3729fundamental remedies, they surprisingly tend
3734to dissolve the judiciary's self imposed
3740restriction on intervention by extraordinary
3745writ even as the Act makes such intervention
3753less necessary and desirable.
3757The double entry of those provisions in the
3765rulemaking and rule-challenge sections and
3770their conspicuous omission elsewhere make
3775clear that the Act intends no general
3782cession of concurrent jurisdiction to the
3788courts. There is no comparable language in
3795120.57, the core section which both provides
3802the mechanism for rule challenges and is the
3810Act's wider point of entry for those with
3818more varied or general complaints concerning
3824agency action: those against whom the agency
3831has instituted adjudicatory proceedings,
3835those whose impending injury is not wholly
3842and precisely traceable to a rule invalidly
3849exercising delegated legislative authority,
3853those whose substantial interests are
3858threatened by several agency causes or
3864simply by agency action which is proceeding
3871arbitrarily, imperiously, or obliviously.
3875We are accustomed to think that the
3882principal use of hearings is to develop
3889records for "adjudicatory" or "quasi-
3894judicial" decisions. [Citations omitted]
3898That was the limited role of administrative
3905hearings in years past, when the "universe
3912of administrative law was hierarchical, with
3918the judiciary at its apex." [Footnote
3924omitted] Current understanding of the
3929administrative process . . . recognizes that
3936a hearing independently serves the public
3942interest by providing a forum to expose,
3949inform and challenge agency policy and
3955discretion. Section 120.57 is central to
3961the Act's purpose. . . .
3967An understanding of 120.57's centrality
3972makes clear that the [statutory language]--
"3978Failure to proceed under [120.56] shall not
3985exhaust administrative remedies"--enhances
3989remedies available under the Act rather than
3996encourage circuit court intrusion into the
4002administrative process. The quoted
4006provisions are addressed not to circuit
4012courts but to district courts of appeal,
4019which might otherwise rebuff rule challenges
4025by petitions to review 120.57 proceedings
4031because petitioner did not "exhaust" the
4037rule challenge remedies of 120.54 and .56.
4044[Citations omitted] The legislative purpose
4049is simply to avoid any appearance of
4056requiring a substantially affected party to
4062initiate duplicative 120.54 or .56
4067proceedings if his rule challenge is
4073regularly presented with other grievances
4078under 120.57, resulting in final agency
4084action and a petition for judicial review. [12]
4092(Emphasis supplied)
4094Willis , 344 So. 2d at 591-592.
410046. The foregoing interpretation of the decision in Willis
4109is consistent with several legislatively intended purposes for
4117the APA. 13 In relevant part, the APA creates a point of entry for
4131a person to challenge proposed agency action that affects his or
4142her substantial interests. The APA also creates a mechanism for
4152intra-branch dispute resolution within the executive branch of
4160government. 14 Finally, the APA creates a mechanism to check
4170dispute-resolution in the executive branch that goes beyond the
4179powers, functions, and duties legislatively delegated in the
4187terms of the statute implemented. 15
419347. Dispute-resolution that goes beyond the statute
4200implemented exercises legislative power within the executive
4207branch in a manner that is repugnant to the separation of powers
4219act. Art. II, § 3, Fla. Const. The separation of powers act
4231encompasses two prohibitions. No branch of government may
4239encroach upon the powers of another, and no branch may delegate
4250its power to another. Chiles v. Children A, B, C, D, E, and F ,
4264589 So. 2d 260, 264-266 (Fla. 1991).
427148. Mandatory enforcement of an adopted rule that goes
4280beyond the statute implemented (an illicit adopted rule) in a
4290120.57 proceeding, for the sole reason that a substantially
4299affected party did not file a duplicative 120.56 proceeding,
4308would deny the executive branch an opportunity to formulate a
4318dispute-resolution without exercising legislative power and
4324without the need for an inter-branch judicial review. Mandatory
4333enforcement of an illicit adopted rule would require executive
4342exercise of legislative power in a statutory mechanism
4350legislatively intended to check executive exercise of
4357legislative power. It is axiomatic that a statutory mechanism
4366for dispute-resolution within the executive estate is powerless
4374to circumvent the separation of powers act.
438149. Rulemaking requirements are not intended as a
4389substitute for, or modification of, the separation of powers act
4399in a dispute-resolution within the executive estate. Statutory
4407rulemaking is authorized in furtherance of, not in opposition to
4417legislative policy. Willette v. Airproducts and Bassett and
4425Department of Labor and Employment Security, Division of
4433Workers' Compensation , 700 So. 2d 397, 399 (Fla. 1st DCA 1997).
4444Accord One Beacon Insurance v. Agency for Health Care
4453Administration , 958 So. 2d 1127, 1129 (Fla. 1st DCA 2007);
4463Zimmerman v. Florida Windstorm Underwriting Association , 873 So.
44712d 411, 415 (Fla. 1st DCA 2004); Broward Children's Center, Inc.
4482v. Hall , 859 So. 2d 623, 627 (Fla. 1st DCA 2003); Department of
4495Children and Family Services v. L.G. , 801 So. 2d 1047, 1053
4506(Fla. 1st DCA 2001).
451050. The concurring opinion in Clemons observed, in
4518relevant part, that an ALJ "presiding in [a 120.57 proceeding]
4528will deem controlling [an adopted rule] never challenged [in a
4538120.56 proceeding]." Clemons , 870 So. 2d at 884 (Benton, J.,
4548concurring)(Emphasis supplied). Similarly, the decision in
4554Willette held, in relevant part, that "a presumptively valid
4563adopted rule must give way in judicial proceedings to any
4573contradictory statute that applies." Willette , 700 So. 2d at
4582399 (Emphasis supplied).
458551. The emphasized language in Clemons and Willette is not
4595inconsistent with the ALJ's interpretation of the decision in
4604Willis , 344 So. 2d at 591-592 (construing legislative intent as
4614avoiding any requirement for filing a duplicative 120.56
4622proceeding if the rule challenge of a substantially affected
4631party is presented in a 120.57 proceeding). First, neither the
4641concurring opinion in Clemons nor the decision in Willette
4650considered the application of the separation of powers act to a
4661rule challenge in a 120.57 proceeding. Second, the term "will,"
4671as it is used in Clemons , is not synonymous with "must." The
4683term "will" also means likelihood, willingness, intention,
4690probability, expectation, and customary or habitual action.
4697American Heritage Dictionary of the English Language , at 1968
4706(Houghton Mifflin Company 4th ed. 2000). Mandatory enforcement
4714of an illicit adopted rule in a 120.57 proceeding, in the
4725absence of judicial review, would require executive exercise of
4734legislative power in a statutory mechanism that is legislatively
4743intended to check executive exercise of legislative power. Such
4752an interpretation is best left to the courts in an inter-branch
4763judicial review.
476552. Rulemaking requirements are legislatively intended to
4772create transparency by closing the gap between what an agency
4782and a member of the staff knows about the agency's law and
4794policy and what a regulated party can know. McDonald v.
4804Department of Banking and Finance , 346 So. 2d 569, 580 (Fla. 1st
4816DCA 1977). A principal goal of the APA is the abolition of
"4828unwritten rules" by which agency employees can act with
4837unrestrained discretion to adopt, change, and enforce
4844legislative policy. Straughn v. O'Riordan , 338 So. 2d 832, 834
4854n.3 (Fla. 1976). 16
485853. Having recognized the jurisdiction of DOAH to resolve
4867the dispute based on an argument challenging an adopted rule,
4877the Recommended Order turns to the burden of proof. By analogy
4888to Subsection 120.56(4)(b), the ALJ concludes that the burden of
4898proof is on Latino and Big Pig to prove that the challenged rule
4911in Florida Administrative Code Rule 61A-5.0105(8) goes beyond
4919the statute implemented.
492254. Latino and Big Pig rely on Subsection 561.01(14),
4931Florida Statutes (2000), which deleted the definition of the
4940term "person" as well as any reference to a financial interest
4951and any reference to a direct or indirect interest. Latino and
4962Big Pig argue that references in the challenged rule to a
"4973direct or indirect interest" lack statutory authority after the
4982legislative changes in 2000. However, the adopted rule does not
4992implement Subsection 561.01, and that statute is not specific
5001authority for the rule. The legislative changes in 2000 may
5011have eliminated statutory language on which courts previously
5019relied to interpret Subsection 561.19(2), but the statute
5027implemented in the adopted rule is unaffected by the legislative
5037changes.
503855. Prior to 2000, the specific definition of a "person"
5048in Subsection 561.01(14) controlled the general definition in
5056Subsection 1.01(3). See , e.g. , Zorc v. City of Vero Beach ,
5066722 So. 2d 891, 899 (Fla. 4th DCA 1998)(specific statute
5076covering a particular subject controls a statute covering the
5085same subject in more general terms). Beginning in 2000, and in
5096this proceeding, Chapter 561 contains no specific definition
5104of the term "person." The more general definition in
5113Subsection 1.01(3) is now the controlling definition.
512056. In construing the definition of a "person" in
5129Subsection 1.01(3), the singular includes the plural, and vice
5138versa , whenever the context permits. § 1.01(1); PNR, Inc. v.
5148Beacon Property Management, Inc. , 842 So. 2d 773, 775 (Fla.
51582003); Canida v. Canida , 751 So. 2d 647, 649 (Fla. 3d DCA 1999).
5171The 100 percent ownership interest of two corporate applicants
5180by one individual applicant is a factual context that permits
5190Respondent's definition of Latino, Big Pig, and Mr. Meiner to be
5201the same "person," "group" or "combination" within the meaning
5210of Subsection 1.01. The 100 percent ownership of two corporate
5220applicants by the same individual applicant is also a "direct or
5231indirect interest" within the meaning of the challenged rule.
524057. The remedies available in a 120.56 proceeding and a
5250120.57 proceeding are distinct, and, as previously discussed,
5258the election of those remedies is legislatively left to a
5268substantially affected party. The statutory purpose for filing
5276a 120.56 proceeding is to "seek an administrative determination
5285of the invalidity of a rule." § 120.56(1). In contrast, the
5296purpose of initiating a 120.57 proceeding is to challenge
5305proposed agency action. If the proposed agency action were
5314based on an illicit adopted rule, the recommended order of the
5325presiding ALJ would not need to "invalidate" the adopted rule
5335because that is not the purpose of a 120.57 proceeding. The
5346recommended order would merely conform any ambiguity in the
5355adopted rule to the statute implemented to preserve the validity
5365of the rule, thereby avoiding the need to invalidate the rule.
5376Even a literal conflict between an adopted rule and a statute
5387can be conformed to the statute as though a court were
5398construing the statutory term "and" to mean "or" in order to
5409preserve the constitutional validity of the statute. 17
5417RECOMMENDATION
5418Based upon the foregoing Findings of Fact and Conclusions
5427of Law, it is
5431RECOMMENDED that Respondent enter a final order excluding
5439the entries of Latino and Big Pig and finding the adopted rule
5451to be a valid exercise of delegated legislative authority.
5460DONE AND ENTERED this 3rd day of July, 2008, in
5470Tallahassee, Leon County, Florida.
5474S
5475DANIEL MANRY
5477Administrative Law Judge
5480Division of Administrative Hearings
5484The DeSoto Building
54871230 Apalachee Parkway
5490Tallahassee, Florida 32399-3060
5493(850) 488-9675 SUNCOM 278-9675
5497Fax Filing (850) 921-6847
5501www.doah.state.fl.us
5502Filed with the Clerk of the
5508Division of Administrative Hearings
5512this 3rd day of July, 2008.
5518ENDNOTES
55191/ References to subsections, sections, and chapters are to
5528Florida Statutes (2007).
55312/ References to rules are to rules promulgated in the Florida
5542Administrative Code in effect in 2007, unless otherwise stated.
55513/ Mr. Meiner incorporated Latino on December 21, 2006, and he
5562incorporated Big Pig on December 22, 1994.
55694/ Subsection 561.19(2)(d), in its entirety, provides:
5576The director shall not include more than one
5584application from any one person, firm, or
5591corporation in the random selection process,
5597nor may she or he consider more than one
5606application for any one person, firm, or
5613corporation when there are fewer
5618applications than available licenses.
5622Counsel for the parties stipulated during a post-hearing
5630telephone conference with the undersigned that the statute is
5639properly construed to prohibit more than one application from
5648any one person, firm, or corporation when, as in this case, the
5660number of applications exceeds the number of available licenses.
5669The random selection process referred to in the statute is used
5680only when applications exceed available licenses.
56865/ Stock attribution rules in the federal tax law would make
5697Latino and Big Pig constructive owners of each other because
5707Mr. Meiner owns 50 percent or more of each corporation. In
5718If 50 percent or more . . . of the stock in
5730a corporation is owned, directly or
5736indirectly, by . . . any person, such
5744corporation shall be considered as owning
5750the stock owned by . . . such person.
5759Neither party cited any legal authority for applying the stock
5769attribution rules for constructive ownership under federal tax
5777law in this proceeding. The undersigned expressly avoids the
5786use of stock attribution rules to determine whether Latino, Big
5796Pig, and Mr. Meiner are one person. If stock attribution rules
5807were used to find that Latino and Big Pig were shareholder
5818corporations of each other, neither would be a person under
5828Florida Administrative Code Rule 61A-1.006(8). It is unclear
5836whether a finding that Latino and Big Pig are not persons would
5848preclude either corporation from filing an application for entry
5857into a license quota drawing. Neither Chapter 561 nor Florida
5867Administrative Code Rule 61A-1.006 defines the terms "person"
5875and "applicant." Both the statute and the rule tend to use the
5887terms "applicant" and "person" synonymously but without
5894explanation. An inference that the two terms are synonyms may
5904support a finding that the stock attribution rules would
5913preclude Latino and Big Pig from being defined as a person and
5925would preclude both from submitting an application for entry
5934into a license quota drawing.
59396/ The undersigned interprets the reference in Florida
5947Administrative Code Rule 61A-5.0105(8) to "this section" to be a
5957reference to "Section" 561.09(2)(d). The reference in the rule
5966to "this section" is followed by a reference to "more than one
5978applicant." The latter reference does not appear elsewhere in
5987the rule. Although Subsection 561.09(2) uses the phrase "more
5996than one application," rather than the reference in the rule to
"6007more than one applicant," the reference in the rule is the
6018agency's attempt to explain relevant statutory phrases.
60257/ Latino and Big Pig may not have filed a separate 120.56
6037proceeding because Subsection 561.19(4), which is the specific
6045statutory authority for challenging a proposed exclusion of
6053entries from a license quota drawing, limits administrative
6061remedies to those authorized in Subsections 120.569 and
6069120.57(1). Counsel for the parties may have construed
6077Subsection 561.19(4) to preclude a challenge in a separate
6086120.56 proceeding. If that were the case, such an
6095interpretation would have been consistent with the general rule
6104of statutory construction that a specific statute covering a
6113particular subject controls a statute covering the same subject
6122in more general terms. Zorc v. City of Vero Beach , 722 So. 2d
6135891, 899 (Fla. 4th DCA 1998). In addition, the factual issues
6146inherent in the two rule challenges suggest that such a
6156statutory construction by the parties would have been consistent
6165with Subsection 120.569(1)(providing, in relevant part, that
6172Subsection 120.57(1) applies whenever a proceeding involves a
6180disputed issue of material fact). However, the ALJ expressly
6189refrains from a determination of whether Subsection 561.19(4)
6197should be construed literally to preclude a separate 120.56
6206proceeding.
62078/ The principal business purpose of Latino is the development
6217of a chain of Latin food restaurants. Latino is not, and has
6229never been, engaged in the active conduct of a trade or
6240business. The sole assets of Latino are limited to assets
6250identified in the record as restaurant equipment.
6257The principal business purpose of Big Pig is to earn revenue as
6269a license holder for a restaurant named Bubbalou's Bodacious
6278Bar-B-Que in Central Florida and as a management company for
6288various other restaurants in central Florida. Big Pig has been,
6298and is, engaged in the conduct of a trade or business and
6310maintains its principal place of business at 1302 Orange Avenue,
6320Winter Park, Florida 32789. Big Pig generates funds through one
6330or more licensing agreements with other restaurants.
6337Mr. Meiner is the only employee of Big Pig.
63469/ The grounds for proposed rejection do not allege a specific
6357act of misconduct. By analogy, however, the grounds for
6366proposed rejection do allege specific facts. Respondent alleges
6374that the entries from Latino and Big Pig are more than one
6386application from Mr. Meiner and that Latino, Big Pig, and
6396Mr. Meiner have a direct or indirect interest in each other
6407within the meaning of Florida Administrative Code Rule 61A-
64165.0105(8).
641710/ If the undersigned were to reach the merits of the first
6429rule challenge, the burden of proof would be on Respondent.
6439Compare § 120.57(1)(e)2. (the agency must demonstrate an
6447unadopted rule is within delegated legislative authority) with
6455in the petition challenging an unadopted rule and limiting the
6465agency's burden to a showing that rulemaking is not feasible and
6476practicable).
647711/ References to the Florida Constitution are to Florida
6486Constitution (2007), unless otherwise stated.
649112/ If a substantially affected party's rule challenge involves
6500a disputed issue of material fact, he or she would be required
6512to assert the rule challenge in a 120.57 proceeding. See
6522applies whenever the proceeding involves a disputed issue of
6531material fact). A substantially affected party "may" also file
6540a 120.56 proceeding if the party elects to pursue the additional
6551remedies available in that statute. See § 120.56(1)(a)(any
6559substantially affected person "may" file a 120.56 proceeding to
6568determine the invalidity of a rule).
657413/ Patricia Dore, Access to Florida to Florida Administrative
6583Proceedings , 13 FLA.ST.U.L.REV., 965, 967, 970, 1017 (winter
65911986).
659214/ In a 120.57 proceeding, for example, an independent
6601executive agency, DOAH, assigns an ALJ to conduct a hearing and
6612recommend final agency action in a dispute between a sister
6622executive agency and a substantially affected party. The sister
6631agency issues a final order that is final agency action. In a
6643120.56 proceeding, the ALJ issues a final order that is final
6654agency action. Both the final order in a 120.57 proceeding and
6665the final order in a 120.56 proceeding are subject to an inter-
6677branch review by the judicial branch of government. All agency
6687action, on appropriate challenge, matures into an agency order
6696impressed with the characteristics of Subsection 120.57(1).
6703McDonald v. Department of Banking and Finance , 346 So. 569, 577
6714(Fla. 1st DCA 1977).
671815/ Subsection 120.52(8)(introductory paragraph).
672216/ Rulemaking disposes of proof and debate of agency policy in
6733a 120.57 proceeding. McDonald , 346 So. 2d at 583. The
6743jurisdictional analysis in this Recommended Order is limited to
6752the argument of Latino and Big Pig that the challenged rule goes
6764beyond the statute that exists after the legislative changes in
67742000. The analysis does not reach proof and debate of agency
6785policy on other grounds. Statutory rulemaking requirements are
6793powerless to displace the separation of powers act in a 120.57
6804proceeding.
680517/ A recommended order invalidating an adopted rule would
6814present several perplexing issues under the remand provisions in
6823Subsection 120.68(7). Remand is mandatory when agency action
6831conflicts with a statute or constitutional provision and when
6840agency action conflicts with an adopted rule. Compare §§
6849120.68(7)(e)4. (remand if agency action conflicts with a
6857statutory or constitutional provision) and 120.68(7)(e)2.
6863(remand for agency action that conflicts with an adopted rule).
6873If an adopted rule were to conflict with a statute and the
6885presiding ALJ were unable to conform the rule to the statute,
6896the ALJ would be required to recommend agency action that
6906conforms to the statute implemented even though the recommended
6915agency action would deviate from the illicit adopted rule.
6924Similarly, the final order of the agency would necessarily
6933deviate from the illicit adopted rule and conform to the
6943statute. Differences in the statutory remedies available in a
6952120.56 proceeding and a 120.57 proceeding would also make a
6962recommended order invalidating an adopted rule problematic.
6969Unlike a final order invalidating an adopted rule in a 120.56
6980proceeding, a recommended order invalidating a rule in a 120.57
6990proceeding would not require the agency to publish a notice of
7001invalidity. The recommended order would be subject to
7009modification in the final order of the agency, would be limited
7020to the parties and facts of record, and would not preclude the
7032agency from relying on the rule in other cases, except to the
7044extent the doctrine of stare decisis may preclude reliance on
7054the rule in cases involving similar facts and law. See Gessler
7065v. Department of Business and Professional Regulation , 627 So.
70742d 501, 504 (Fla. 4th DCA 1993)(agency is bound by
7084administrative stare decisis to follow its final orders in like
7094cases involving similar facts). A determination of invalidity
7102in a 120.56 proceeding is a final order which an agency does not
7115have statutory authority to modify, and the final order is
7125binding on the agency in other administrative hearings. The
7134final orders in a 120.56 proceeding and a 120.57 proceeding are
7145subject to inter-branch judicial review. However, the problems
7153associated with a recommended order invalidating an adopted rule
7162would be similar to those attendant to a recommended order
7172invalidating an unadopted rule pursuant to Subsection
7179120.57(1)(e).
7180COPIES FURNISHED :
7183Jed Berman, Esquire
7186Infantino and Berman
7189Post Office Drawer 30
7193Winter Park, Florida 32790
7197Joshua B. Moye, Esquire
7201Department of Business and
7205Professional Regulation
72071940 North Monroe Street, Suite 42
7213Tallahassee, Florida 32399-2202
7216Ned Luczynski, General Counsel
7220Department of Business and
7224Professional Regulation
7226Northwood Centre
72281940 North Monroe Street
7232Tallahassee, Florida 32399-0792
7235Cynthia Hill, Director
7238Division of Alcoholic Beverages
7242and Tobacco
7244Department of Business and
7248Professional Regulation
7250Northwood Centre
72521940 North Monroe Street
7256Tallahassee, Florida 32399-0792
7259NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
7265All parties have the right to submit written exceptions within
727515 days from the date of this Recommended Order. Any exceptions
7286to this Recommended Order should be filed with the agency that
7297will issue the Final Order in this case.
- Date
- Proceedings
- PDF:
- Date: 07/03/2008
- Proceedings: Recommended Order cover letter identifying the hearing record referred to the Agency.
- Date: 04/28/2008
- Proceedings: Transcript filed.
- Date: 04/03/2008
- Proceedings: CASE STATUS: Hearing Held.
- PDF:
- Date: 03/28/2008
- Proceedings: Amended Notice of Hearing (hearing set for April 3, 2008; 9:30 a.m.; Orlando, FL; amended as to hearing room).
- PDF:
- Date: 02/13/2008
- Proceedings: Notice of Hearing (hearing set for April 3, 2008; 9:30 a.m.; Orlando, FL).
Case Information
- Judge:
- DANIEL MANRY
- Date Filed:
- 01/25/2008
- Date Assignment:
- 02/06/2008
- Last Docket Entry:
- 09/02/2008
- Location:
- Orlando, Florida
- District:
- Middle
- Agency:
- ADOPTED IN TOTO
Counsels
-
Jed Berman, Esquire
Address of Record -
Joshua B. Moye, Esquire
Address of Record