08-005478 Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco vs. Liquor Group Florida, Llc, D/B/A Liquor Group Florida, Llc Status: Closed Recommended Order on Thursday, June 4, 2009.

Summary: Respondent violated Subsection 561.29(1)(j), Florida Statutes, by failing to fully produce the requested documents, but did not violate Subsection 461.411(1)(a) or (b), or 561.55(3)(a), Florida Statutes.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF ALCOHOLIC BEVERAGES )

AND TOBACCO, )

)

Petitioner, )

)

vs. ) Case Nos. 08-5478

) 08-5479

LIQUOR GROUP FLORIDA, LLC, d/b/a LIQUOR GROUP FLORIDA, )

LLC, )

)

)

Respondent. )

)

RECOMMENDED ORDER

This cause came on for final hearing before Robert S.

Cohen, Administrative Law Judge with the Division of

Administrative Hearings (DOAH) on February 24, 2009, in

Jacksonville, Florida.

APPEARANCES

For Petitioner: Joshua B. Moye, Esquire

Sarah Christine Naf, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-2202

For Respondent: Christopher John Eiras, pro se

830-13 A1A North, No. 155

Ponte Vedra Beach, Florida 32082

STATEMENT OF THE ISSUES

Whether Respondent committed the acts alleged in the

Administrative Actions dated July 7, 2008, and September 5,

2008, and, if so, what disciplinary action, if any, should be

taken against Respondent.

PRELIMINARY STATEMENT

This matter involves two Administrative Actions filed by

Petitioner, Department of Business and Professional Regulation,

Division of Alcoholic Beverages and Tobacco, against Respondent,

Liquor Group Florida, LLC, d/b/a Liquor Group Florida, LLC. The

first Administrative Action, DBPR Case No. 2008-030862, alleges

that on or about February 18, 2008, Respondent violated

Subsection 561.55(5)(a), Florida Statutes, by failing to

maintain and keep records for a period of three years at the

licensed premises. The second Administrative Action, DBPR Case

No. 2008-049013, alleges that between December 1, 2006, and

November 30, 2007, Respondent violated Subsections 561.411(1)(a)

and (b), within Section 561.29, Florida Statutes, for failing to

meet the qualifications to be a licensed distributor.

Respondent denied the allegations and requested a formal

hearing. Petitioner referred the matter to the Division of

Administrative Hearings on October 31, 2008, for assignment to

an administrative law judge. A final hearing was held in

Jacksonville, Florida, on February 24, 2009. At the hearing,

Petitioner presented the testimony of Captain Elizabeth

Ledbetter, Margaret Perez, Christopher John Eiras, and Michael

Dowling (via telephone), and offered Exhibits 1 through 7, all

of which were admitted into evidence. Christopher John Eiras

testified on behalf of Respondent and offered Exhibits 1 through

9, 18, 20, 22, and 27, all of which were admitted into evidence

except Exhibit 20.

The administrative law judge took official recognition of

the statutes cited above as the basis for the alleged violations

committed by Respondent, as well as Florida Administrative Code

Rules 61A-4.023 and 61A-4.043. A Transcript of the hearing was

ordered, and the parties timely submitted proposed recommended

orders on May 5, 2009 (Respondent), and May 6, 2009

(Petitioner). References to statutes are to Florida Statutes

(2007), unless otherwise noted.

FINDINGS OF FACT

1. At all times material to this matter, Respondent was

licensed under the Florida Beverage Law by the Department of

Business and Professional Regulation, Division of Alcoholic

Beverages and Tobacco.

2. Respondent is subject to the regulatory jurisdiction of

Petitioner, having been issued License Number 26-07803, Series

KLD, by Petitioner. A Series KLD license is one issued by

Petitioner to distribute alcoholic beverages.

3. Petitioner seeks to impose sanctions on Respondent for

violations of Subsection 561.29(1)(a), within Subsection

on February 18, 2008.

4. Petitioner also seeks to impose sanctions on Respondent

for violations of Subsections 561.411(1)(a) and (b), Florida

Statutes, for the period on December 1, 2006, through

November 30, 2007.

5. Christopher John Eiras (Eiras) is the managing director

of Respondent distributing company. Eiras closed on the

purchase of Respondent on August 31, 2007. Although he took

over ownership of Respondent on that date, he had been involved

with helping the company since its inception and had been

directly involved in the creation of the business.

6. Respondent, as a corporate entity and the holder of the

license, is ultimately responsible for the violations alleged in

the Administrative Action, if proven. Moreover, Eiras kept the

records for the audit period at issue in his house and,

therefore, had control over the records requested by Petitioner.

7. Petitioner performed an audit of Respondent for the

time period of December 1, 2006, through November 30, 2007.

8. In the course of the audit, and pursuant to Subsection

561.29(1)(j), Florida Statutes, Petitioner requested that

Respondent produce certain records.

9. Pursuant to Florida Administrative Code Rule 61A-4.023,

"distributors shipping or delivering alcoholic beverages for

consumption outside the confines of the State of Florida must

supply the Division with a copy of the bill of lading, must show

the type of beverages, amount by size container and gallonage of

each type shipped by common carrier or licensees' vehicles and a

certificate from a representative of the appropriate agency of

the jurisdiction into which the alcoholic beverages were shipped

stating the shipment has been reported properly to that agency."

Respondent supplied general documentation from FedEx and UPS

regarding shipments, but Petitioner believes this documentation

falls short of what is required by Florida Administrative Code

Rule 61A-4.023.

10. The records requested by Petitioner are significant

because they form the basis for giving a distributor a deduction

from the payment of excise tax, the tax required to be remitted

to the State of Florida, for out-of-state sales. The

distributor must pay the excise tax on the sale of alcoholic

beverages within Florida.

11. Petitioner had worked closely with Respondent and made

numerous attempts to bring Respondent into compliance through

its records production.

12. Because Eiras was the new owner of Respondent, and

because the former auditor (with 37 years of experience) passed

away during the audit of Respondent, the new auditor, Margaret

Perez, gave Respondent what she termed "an enormous gift" by

settling the audit for liabilities of $829.39 and $45.22, with

the understanding that Respondent would still produce the

requested records.

13. Petitioner issued two letters related to the audit.

The first, dated August 15, 2008, found a liability of $45.22,

and required payment within ten days of receipt of the letter.

No mention was made in the letter of any documents required to

be produced by Respondent. Respondent timely paid the $45.22

liability.

14. The second, dated August 18, 2008, found a liability

of $828.39 and required payment within 10 days of receipt of the

letter. No mention was made in the letter of any documents

required to be produced by Respondent. Respondent timely paid

the $828.39 liability.

15. Petitioner testified that acceptance of the payments

from Respondent did not excuse the production of documents, yet

no official communication was issued by Petitioner requiring

such production following the August letters and payment of the

liabilities set forth in those communications by Respondent.

16. Additionally, pursuant to Subsections 561.411(1)(a)

and (b), Florida Statutes, Respondent is required to own "an

inventory of alcoholic beverages which is equal to at least 10

percent of the distributor's annual case sales to licensed

vendors within this state or to licensed vendors within the malt

beverage distributor's exclusive sales territory; or [a]n

inventory for which the cost of acquisition is not less than

$100,000."

17. The Distributor Qualifications audit showed that

Respondent had zero value for its inventory. Further, although

Respondent claimed inventory for two supplier products, Urban

Brands and Happy Vodka Corporation, both of which are owned by

Eiras, Petitioner has not received proof of payment for these

products from Respondent that satisfies its interpretation of

the requirements of law.

18. Respondent supplied company-generated spreadsheets

which, it argues, are sufficient to comply with Petitioner's

requirements. These spreadsheets specifically list the

inventory as of August 31, 2007, the date of the purchase of

Respondent by Eiras from Gray Solomon, the previous owner. The

inventory is listed by item number, item description, number of

items on hand, average cost per item, percent of total asset,

sales price, retail value, percent of total retail, and owned

inventory. This detailed spreadsheet shows a total owned

inventory of $139,964.24, an asset value of $480,731.15 (most of

which is under bailment for other suppliers), and a total retail

value of $624,140.59 for all product, whether owned or under

bailment.

19. Petitioner expected to receive the source documents or

back-up for the inventory and sales. Respondent provided

canceled checks and invoices at some point that it believed

satisfied this request. Clearly, Respondent was not timely in

its response to Petitioner's document requests. Respondent

supplied documents such as invoices and bills of lading showing

deliveries to Respondent's warehouse in Jacksonville and

shipments to locations both within Florida and out-of-state.

20. A question remains as to whether the back-up material

fully responds to Respondent's requests for production of

documents under Subsection 561.29(1)(j), Florida Statutes, for

the audit period. Petitioner has not accepted the documentation

provided by Respondent as proof of Respondent's compliance with

the audit document request.

21. No complete explanations were offered by Petitioner as

to why it would not accept Respondent's documentation as at

least some evidence of Respondent's intent to comply with

Petitioner's document request. Petitioner offered testimony

that it believed shipments were being made by entities other

than Respondent. The documentation supplied by Respondent,

however, shows numerous shipments and receipts of alcoholic

beverage products in the name of "Liquor Group Florida" or

"Liquor Group Florida, LLC."

CONCLUSIONS OF LAW

22. The Division of Administrative Hearings has

jurisdiction over the subject matter of these proceedings and of

the parties hereto pursuant to Section 120.569 and Subsection

120.57(1), Florida Statutes (2008).

23. The burden of proof is on the party asserting the

affirmative of an issue before an administrative tribunal.

Florida Dept. of Transportation v. J.W.C. Company, Inc. , 396 So.

2d 778 (Fla. 1st DCA 1981).

24. As the party seeking to impose penal sanctions on

Respondent's license, Petitioner bears the burden of proving by

clear and convincing evidence the allegations in the charging

document. Department of Bank. and Fin., Div. of Securities &

Investor Protection v. Osborne Stern and Co. , 670 So. 2d 932,

933 (Fla. 1996); Pic 'N Save Central Fla., Inc. v. Department of

Business and Professional Regulation, Division of Alcoholic

Beverages and Tobacco , 601 So. 2d 245, 249 (Fla. 1st DCA 1992);

and Subsection 120.57(1)(j), Florida Statutes (2008).

25. Clear and convincing evidence "requires more proof

than a 'preponderance of the evidence' but the [sic] less than

'beyond and to the exclusion of a reasonable doubt.'" In re

Graziano , 696 So. 2d 744, 753 (Fla. 1997). It is an

"intermediate standard." Id. For proof to be considered

"'clear and convincing' . . . the evidence must be found to be

credible; the facts to which the witnesses testify must be

distinctly remembered; the testimony must be precise and

explicit; and the witnesses must be lacking in confusion as to

the facts in issue. The evidence must be of such weight that it

produces in the mind of the trier of fact a firm belief or

conviction, without hesitancy, as to the truth of the

allegations sought to be established." In re Davey , 645 So. 2d

398, 404 (Fla. 1994), quoting with approval, Slomowitz v.

Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983).

26. Subsection 561.29(1)(a), Florida Statutes, provides

that:

Violation by the licensee or his or her or

its agents, officers, servants, or

employees, on the licensed premises, or

elsewhere while in the scope of employment,

of any of the laws of this state or of the

United States, or violation of any municipal

or county regulation in regard to the hours

of sale, service, or consumption of

alcoholic beverages or license requirements

of special licenses issued under s. 561.20 ,

or engaging in or permitting disorderly

conduct on the licensed premises, or

permitting another on the licensed premises

to violate any of the laws of this state or

of the United States. A conviction of the

licensee or his or her or its agents,

officers, servants, or employees in any

criminal court of any violation as set forth

in this paragraph shall not be considered in

proceedings before the division for

suspension or revocation of a license except

as permitted by chapter 92 or the rules of

evidence.

27. Subsection 561.29(1)(j), Florida Statutes, allows

Petitioner to suspend or revoke a license for:

Failure of any licensee issued a license

under s. 561.20(1) to maintain records of

all monthly sales and all monthly purchases

of alcoholic beverages and to produce such

records for inspection by any division

employee within 10 days of written request

therefor.

Respondent produced a spreadsheet that showed $139,964.24 of

owned inventory and a far greater amount of inventory that is

available for sale under bailment for other suppliers.

Respondent produced a significant amount of documentation that

Petitioner does not deem sufficient or responsive to its

request, even though the settlement letters required payment of

the tax liability, yet made no mention of any documentation

required as a condition of settlement. Therefore, Petitioner

has failed to show, by clear and convincing evidence that

Respondent has failed to meet the requirements of Subsection

561.29(1)(j), Florida Statutes.

28. Although the audit was settled for the amounts of

$829.39 and $45.22, Petitioner believed it to be with the

understanding that Respondent would still produce the requested

documents. The settlement letters themselves do not support

this contention and, therefore, Petitioner has failed to meet

its burden of proof on the issue of the charge of failure to

provide documents within 10 days of request.

29. Subsection 561.411(1), Florida Statutes, provides

that:

The distributor must maintain warehouse

space which is either owned or leased by the

distributor, or dedicated to the

distributor's use in a public warehouse,

which is sufficient to store at one time:

(a) An inventory of alcoholic beverages

which is equal to at least 10 percent of the

distributor's annual case sales to licensed

vendors within this state or to licensed

vendors within the malt beverage

distributor's exclusive sales territory; or

(b) An inventory for which the cost of

acquisition is not less than $100,000.

30. Respondent's records are not entirely complete on the

issue of its sales of alcoholic beverages during the audit

period. However, the inventory dated August 31, 2007, the date

of closing on the sale and purchase of the business,

demonstrates compliance with the $100,000 inventory requirement

of Subsection 561.411(1)(b), Florida Statutes. Oddly, the

Distributor Qualifications audit showed that Respondent has zero

value for its inventory. If the inventory has zero value, it

neither meets the required minimum 10 percent inventory

threshold nor the minimum $100,000 threshold. However,

Respondent offered solid proof of its inventory being greater

than $100,000, and at least some proof of inventory of at least

10 percent of its sales. The self-generated spreadsheets are

sufficient to prove substantial compliance with Subsection

561.411(1)(b), Florida Statutes. Moreover, Respondent has

supplied evidence, through bills of lading, canceled checks, and

invoices, that demonstrates partial compliance with the

requirements of Subsection 561.411(1)(a), Florida Statutes.

Petitioner has not met its burden of proving, by clear and

convincing evidence, that Respondent has failed to maintain the

required inventory or sales that would qualify it to be licensed

as a distributor in Florida. Respondent, therefore, remains

qualified to hold a distributor's license in Florida.

31. Petitioner has proven, by clear and convincing

evidence, that Respondent has not fully complied with its

requests for document production under Subsection 561.29(1)(j),

Florida Statutes. Accordingly, Respondent has violated this

statutory provision. Since Respondent complied with the

document request to some extent, suspension or revocation of its

license is not an appropriate penalty. Rather, a fine will

serve as an appropriate sanction to remind Respondent of its

statutory obligations under Chapter 561, Florida Statutes.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions

of law, it is

RECOMMENDED that Petitioner enter a final order as follows:

1. Assessing a $500.00 fine against Respondent for

violating Subsection 561.29(1)(j), Florida Statutes;

2. Ordering Respondent to produce all reasonably requested

records for any and all future audits, including, but not

limited to, bills of lading as required by Florida

Administrative Code Rule 61A-4.023, for sales made outside of

Florida;

3. Dismissing the Administrative Action against Respondent

alleging violations of Subsection 561.411(1)(a) or (b), Florida

Statutes; and

4. Dismissing the Administrative Action against Respondent

alleging violations of Subsection 561.55(3)(a), Florida

Statutes.

DONE AND ENTERED this 4th day of June, 2009, in

Tallahassee, Leon County, Florida.

S

ROBERT S. COHEN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 4th day of June, 2009.

COPIES FURNISHED :

Sarah Christine Naf, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 40

Tallahassee, Florida 32399-2202

Joshua B. Moye, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 42

Tallahassee, Florida 32399-2202

Christopher John Eiras

830-13 A1A North, No. 155

Ponte Vedra Beach, Florida 32082

Ned Luczynski, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Jerry Geier, Director

Division of Alcoholic Beverages

and Tobacco

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

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 should be filed with the agency that

will issue the Final Order in this case.