19-004688RP Walmart Inc. And Wal-Mart Stores East, L.P. vs. Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco Status: Closed DOAH Final Order on Tuesday, December 7, 2021.

Summary: Evidence didn't prove proposed rule 61A-3.055 valid. It was arbitrary & capricious & contravened statute. Must show meaning of restaurant to prove what is customarily sold in a restaurant. Assoc. didn't prove standing (Assoc. purpose or injury).

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WALMART INC. AND WAL - MART STORES

EAST, L.P.,

Petitioner,

vs. Case No. 19 - 4688RP

DEPARTMENT OF BUSINESS AND

PROFESSIONAL REGULATION,

DIVISION OF ALCOHOLIC BEVERAGES

AND TOBACCO,

Respondent,

and

ABC FINE W INE AND SPIRITS,

FLORIDA INDEPENDENT SPIRITS

ASSOCIATION, AND PUBLIX

SUPERMARKETS,

Intervenors.

_______________________________/

TARGET CORPORATION,

Petitioner,

vs. Case No. 19 - 4913RP

DEPARTMENT OF BUSINESS AND

PROFESSIONAL REGULATION,

DIVISION OF ALCOHOLIC BEVERAGES

AND TOBACCO,

Respondent.

_______________________________/

FINAL ORDER

Administrative Law Judge John D. C. Newton, II, of the

Division of Administrative Hearings (DOAH) conducted the final

he aring in this cause on October 2 9 , 2019 , in Tallahassee,

Florida.

APPEARANCES

For Petitioner s , Walmart Inc. (Walmart) and Wal - Mart Stores

East, L.P. , (Wal - M art East ) :

David C. Ashburn, Esquire

Greenberg Traurig, P.A.

101 East College Avenue

Tallahassee, Florida 32301 - 7742

For Petitioner , Target C orporation (Target):

William Nicholson Spicola, Esquire

Post Office Box 664

Tallahassee, Florida 32302 - 0664

For Respondent , Department of Business and Professio nal

Regulation, Division of Alcoholic Beverages and Tobacco

(Division) :

Raymond F rederick Treadwell, Esquire

David W. Aring, Esquire

Ross Marshman, Esquire

Department of Business and Professional Regulation

2601 Blairsto ne Road

Tallahassee, Florida 32399 - 2202

For Intervenors , ABC Fine Wine and Spirits (ABC) , Florida

Independent Spirits Association (FISA) , and Publix

Supermarkets (Publix) :

William D. Hall, Esquire

Dean, Mead & Dunbar

Suite 81 5

215 South Monroe Street

Tallahassee, Florida 323 01 - 1852

STATEMENT OF THE ISSUE S

A. Does Petitioner, Target , have standing to challenge

proposed rule 61A - 3.055, Items Customarily Sold in a Restaurant

(proposed rule or proposed restaurant rule), (Case No. 19 -

4913RP) ?

B. Do es Petitioner, Walmart , have standing to challenge the

proposed restaurant rule (Case No. 19 - 4688 RP ) ?

C. D oes Intervenor, ABC , have standing to part icipate in

th e s e challenge s to the proposed rule ?

D. Does Intervenor, FISA , have standing to participate in

th ese challenge s to the proposed rule?

E. Does Intervenor, Publix , have standing to participate in

th e s e challenge s to the proposed rule?

F. Is the proposed r estaurant r ule an invalid exercise of

delegated legislativ e authority as defined in section 120.52(8),

Florida Statutes (201 9 )? 1/

PRELIMINARY STATEMENT

Target , Walmart , and Wal - Mart East challenge the validity of

the Division's proposed restaurant rule under the authority of

section 120.56(1). The propose d rule explicates the Division's

position on what " items cu stomarily sold in a restaurant," as

used in section 565.045, means. Intervenors support the proposed

rule' s validity.

Th e s e challenge s to the proposed rule follow a 2018

challenge to the Division's exis ting rule 61A - 3.055 , which also

implemented section 565.045, Florida Statutes (Walmart I) . The

Final Order in Target Corporation, et al v. Dep't Bus. and Prof.

Reg. , DOAH Case No. 18 - 5116RX declared the existing rule not

valid. An appeal from that Order pends before the First District

Court of Appeal. Dep't Bus. and Prof. Reg. v. Target Corporation

et al , Case No. 1D 18 - 5311 (Fla. 1 st DCA). This case varies

significantly from the challenge to the existing rule. It ha s a

different record. 2/ Different bu rdens of proof and legal

standards also apply. Compare § 120.56( 3 ) ( petitioner has the

burden of proving existing rule invalid ) and § 120.56( 2 ) ( agency

bears the burden of proving proposed rule is not invalid) , Fla.

Stat.

Walmart and Wal - Mart East filed th eir challenge to the

proposed rule on September 5, 2019. Walmart , Wal - Mart East, and

the Division waived the time limits of section 120.56(1)(c) . T he

undersigned set the hearing for October 29, 2019. ABC, Publix,

and FISA were granted leave to intervene , subject to proving

standing in the final hearing.

Target brought a separate challenge to the validity of the

proposed rule in Case No. 19 - 4913RP. It was consolidated with

Case No. 19 - 4688 RP . The undersigned conducted the final hearing

as scheduled.

Cou nsel worked professionally and courteously together to

streamline presentation of evidence and permit witnesses to

testify just once rather than testifying once for one party and

being called back to testify for another party. Consequently,

the convention of identifying witnesses as produced by one party

or another does not fit.

The following witnesses testified : Monesia Brown, Walmart

Director of Public Affairs and Legislation; Christopher Carson ,

Chief of Field Services , Division of Hotels and Restaur ants,

Department of Business and Professional Regulation ; Mat t Colson,

Chief of Bureau of Food Inspection, Division of Food Safety,

Florida Department of Agriculture and Consumer Services;

John J. Harris , former Director of the Division ; Megan Lerch,

Direc tor of Licensing and Real Estate Tax, Target;

Daniel J. McGinn, D eputy Director of the Division; and

Cynthia Ross , Deputy Chief of Sanitat ion and Safety Inspections ,

Division of Hotels and Restaurants, Department of Business and

Professional Regulation . A lso, the exhibits include many

depositions and a hearing transcript.

Joint Exhibits 1 through 41 were admitted. Petitioners'

E xhibit s 42 and 45 through 50 were admitted. Division E xhibits

64 through 76, 78 through 94, and 96 through 106 were admitted.

I ntervenors offered no exhibits.

The court reporter filed the T ranscript on November 25,

2019. The parties timely filed P roposed F inal O rders. They have

been considered in preparation of this Order.

FINDING S OF FACT

Parties

Division

1. The Legislature has charged the Division wi th

administration of Florida ' s Alcoholic Beverage and Tobacco L aws ,

including Chapters 56 2 through 568, Florida Statutes, known

collectively as the " Beverage Law . " 561.01(6), Fla. Stat. This

charge includes licensing and regula tion , as well as enforcement

of the governing laws and rules.

2. Title XXIV of the Florida Statutes governs sale of

alcoholic beverages and tobacco. It includes chapters regulating

beer (chapter 563), wine (chapter 564), and l iquor (chapter 565).

Among other things, these similarly structured chapters impose

license fees, with the amounts determined by the population size

of the county where the business is located. Section 565.02

creates fee categories for " vendors who are permitted to sell any

alcoho lic beverages r egardless of alcoholic content." Section

565.02(1)(b) - (f) establishes the license fees based upon county

population for licenses for places of business where consumption

on premises is permitted. These are referred to as " COP "

licenses. A number preceding COP, such as 4COP, indicates the

county population range and therefore license fee amount for a

particular license holder. Section 565.045 , Florida Statutes,

also permits COP license holders to sell sealed containers of

alcoholic beverag es for consumption off the premises (packaged

goods) .

Walmart

3. Walmart is a multinational corporation . It owns

subsidiaries that own and operate retail stores, warehouse clubs,

and an e - commerce website operated under the " Walmart " brand.

Walmart doe s not own or operate stores. It holds them through

wholly owned subsidiaries. For instance, Walmart is the parent

company of its wholly owned subsidiary Wal - Mart East.

4 . Stores of Walmart subsidiaries ha ve three primary

formats. They are S upercenters, D iscount S tores, and

N eighborhood M arkets.

5 . The record is silent about the nature and degree of day -

to - day control, policy control, and marketing control that

Walmart exercises or has authority to exercise over the

subsidiaries. It is also silent ab out the nature and structure

of the fiscal relationship between Walmart and its wholly owned

subsidiaries.

6. Walmart does not have a license issued by the Division

pursuant to section 565.02(1)(b) - (f). Walmart has not applied

for a license from the Divi sion issued under section

565.02(1)(b) - (f). The record does not prove that Walmart intends

to apply for a COP license.

Wal - Mart East

7 . Wal - Mart East owns and operates " Walmart " branded stores

at approximately 337 Florida locations . They include

appr oximately 231 " Supercenters, " nine " Discount Stores, " and 97

" Neighborhood Markets. " All of these stores sell food items.

Depending on the store category , the items may include baked

goods, deli sandwiches, hot meals, party trays, and to - go food

items , s uch as buckets of fried chicken and pre - made salads. The

areas adjacent to the departments of Wal - M art East that sell food

do not have seats and tables for diners. There are some benches ,

but not tables, scattered around inside the store s .

8. None of the stores holds a license from the Florida

Division of Hotels and Restaurants or the Florida Department of

Health. They hold " retail food store " or " food establishment "

licenses from the Florida Department of A griculture and Consumer

Services.

9. In h is deposition, Tyler Abrehamsen, assistant manager

for Wal - Mart East Store #705 in Mt. Dora ( Store 705) , aptly

described Walmart as "more than just a store." Walmart sells

" anything you can think of from sporting good s to deli to candy."

A S upercenter se lls , among other things, general merchandise ,

golf balls, fishing gear, socks, motor oil, ammunition,

g roceries, deli goods, electronics, home furnishings, groceries,

and hot food . Supercenters may house specialty shops such as

banks, hair and nail salons , restaurants , or vision centers.

Walmart Superc enters offer 142,000 items for sale . Many house

McDonalds or Subway restaurants.

10. Discount Stores are small er than Supercenters. They

sell electronics, clothing , toys, home furnishings, healt h and

be auty aids, hardware , and more. Discount S tores offer about

120,000 items.

11. A N eighborhood M arket is smaller than a Discount Store.

Neighborhood Markets sell fresh produce, meat and dairy products,

bakery and deli items, household supplies, health a nd beauty aids

and pharmacy products . Walmart Neighborhood Markets offer about

29,00 0 items.

12. Store 705 is a Super c enter. The store holds a food

permit issued by the Florida Department of Agriculture and

Consumer Services under Chapter 500 to operate as a retail food

store or food establishment. There are four picnic tables with

seating in a pavilion outside the store. Some benches, but not

tables, are scattered around the store.

1 3 . Store 705 holds a 2APS license permitting beer and wine

package s ales only. Wal - Mart East applied to the Division to

change the license to a COP license. The Division processed the

application and issued Store 705 a temporary license on May 13,

2019 . Two days later the Division advised Store 705 that it

issued the te mporary license erroneously and that the license was

void. Shortly afterwards a Divis i on employee recovered the

license from Store 705. On June 7, 2019, t he Division issued its

Notice of Intent to Deny License, relying in part on section

565.045. 3/ Sect ion 565.045, which the proposed rule implements,

prohibits issuing a COP license to a place of business that sells

items not "customarily sold in a restaurant."

1 4 . The floor plan Store 705 provided with its COP license

application does not delineate an a rea for serving and consuming

alcoholic beverages. When asked about plans to serv e alcohol by

the drink, the Wal - Mart East representative testified, " However,

I ' m not suggesting that in the future at some point we wouldn ' t

be interested in selling drinks by the gla ss at Store 705. " The

witness went on to say, " What I ' m saying today is I don ' t know if

t here are future plans and I don ' t think that we ' re prepared to

say one way or another whether this would be our plan for this

location for eternity. " (TR. Vol. 1, p. 161) Wal - Mart East only

plans to sell alcohol by the container at Store 705 . If issued a

COP license, however, it would be permitted to sell alcohol by

the drink.

1 5 . Lake County Property Appraiser records identify the

land use of Store 705 a s " Warehouse Store. " There is no evidence

about the significance of this, how the categorization is

determined, or what purpose it serves.

16. Several credit card companies categorize Wal - Mart East

stores as " grocery stores " and " supermarkets" or disco unt stores.

There is no evidence about the significance of these

categorizations, their meaning, how the categorization is

determined , or for what purpose the categorizations are applied.

The lack of relevant information about how and why the property

ap praiser and credit card companies determine these

categorizations make them meaningless for any determination of

whether Wal - Mart East stores are restaurants.

1 7 . Wal - Mart East leases space within Store 705 to a

separate entity doing business as Wayback B urgers. Wayback

Burgers has a kitchen, a service counter, a fountain drink

dispenser, and seats and tables for dining. The Division of

Hotels and Restaurants issued the owner of Wayback Burgers, under

the authority of Chapter 509, a license titled " Seati ng Fo o d

Service L icense . " The definitions section of Chapter 509 doe s

not contain a definition for " Seating Food Service. " The license

does not identify the physical area covered by the license ,

although it refers to 22 seats. The Division of Hotel s and

Restaurants inspects only the area identified by signage,

seating, food preparation area, and service area when inspecting

Wayback Burgers. The Division of Hotel s and Restaurants does not

license the rest of Store 705 or any other Wal - Mart East store in

Florida.

18 . The Department of Agriculture and Consumer Services

issued S t ore 705 an Annual Food Permit denominated as for Food

Entity Number: 33995 . The license does not describe the physical

area to which it applies. A January 4, 2019 , document title d

Food Safety Inspection Report for Store 705 lists

" 111/Supermarket " in a field of the report titled Food Entity

Type/Description. The record does not explain the designation.

19. The Department of Agriculture, Bureau of Food

Inspection, Division of F ood Safety , maintains a food inspection

data base of permitted entities. That list identifies Store 705

as a supermar ket.

20. The Department of Agriculture often must decide whether

it should license an establishment serving food or if the

Division of Hotels and Restaurants should issue the license . The

Department regulates food establishments and retail food stores.

It does not have authority over food service establishments.

Sometimes the Department consults with the Division of Hotels and

Restaura nts to determine what a business should be licensed as.

21. When a vendor like McDonald's or Subway is located in a

Walmart store the agriculture d epartment bases its licensing

category decision on ownership . If the store owns the McDonald's

or Subway , the Department w ill license it. If a separate entity

owns and operates the McDonald ' s or Subway , the d epartment looks

to the Division of Hotels and Restaurants to license it.

Target

22 . The parties stipulated that Target is an upscale

discount retailer that provides high quality , on - trend

merchandise at attractive prices in clean, spacious, and guest -

friendly store s . Target owns and operates approximately 126

general merchandise stores in Florida.

23 . Target does not h old a license issued by the Div ision

under section 565.02(1)(b) - (f).

24 . T he Florida Department of Agriculture and Consumer

Services licenses all Target locations in Florida as retail food

stores or food establishments under chapter 500. The licenses

a r e for the entire store , includin g the food service portions

discussed below. No Target s tore holds a license from the

Florida Division of Hotels and Restaurants. The Florida

Department of Health does not license any Target stores as food

service establishments.

25 . Target sells beer and wine by the container in 124 of

its Florida stores. At three store locations, Target sells beer,

wine, and liquor from a separate liquor store with a separate

entrance.

26 . Target operates Starbuck s and Pizza Hut facilities

under licensing agreement s within 118 of its stores . C offee ,

espresso , banana bread, chocolate chip cookies , ham and chees e

croissants, oatmeal, and biscotti are represent at ive examples of

food sold at Target Starbucks . Target Pizza Huts typically sell

c arbonated dri n ks, smoothi es, pretzels, popcorn, hot do gs,

pizzas, chicken wings, and french fries. Some Target stores also

have a Target Café selling limited food and beverage items .

27 . Target stores also sell items such as packaged , pre -

made salads , fruit, and frozen meals . " Super Target " stores have

delis , which sell cooked items like chicken fingers and

rotisserie chicken .

28 . The c afé s , Starbucks, and Pizza Huts occupy separate

areas within the larger Target store s . The y have their own cash

register s . C ustomers may pay f or retail items from the store at

those cash registers.

29 . T he inventory of all Target stores is subject to daily

change . L ocation, geography, supply , and other factors affec t a

store' s inventory. Target stores sell a gamut of items. They

include gr oceries, frozen foods, furniture, rugs, garden tools,

clothing, toys, sporting goods, health products, beauty products,

electronics, office supplies, kitchen appliances, diapers, pet

food, cell phones, and luggage.

30 . A Target store in Delray Beach has a pplied to the

Division to change its beer and wine package license to a COP

license. Target s eeks the COP license in order to make package

sales of liquor. Like the Walmart representative, Target ' s

representative refused to state whether Target planned t o offer

alcohol by the drink at any of its stores. If it held a COP

license, the store would be permitted to sell alcohol by the

drink.

ABC

31 . ABC stores retail alcoholic beverages in Florida. The

stores hold a number of alcoholic beverage licenses iss ued by the

Division. ABC holds 25 4COP licenses issued by the Division. In

his deposition, the ABC corporate representative testified that

he " would not be able to answer " if the proposed rule would have

any impact on ABC. His testimony, however, proved that ABC

stores seek clear guidance about what they can and cannot sell.

Also, t he proposed rule imposes limits upon what ABC stores can

sell that the invalidated rule and the statute alone do not

impose.

F ISA

32 . FISA is an independent association of a lcoholic

beverage retailers. It has 206 members. The Divis ion licenses

and regulates FISA' s members. ABC is a FISA member. Including

ABC, FISA members hold 61 4COP licenses. There is no evidence

proving that any FISA member intend s to apply for a COP license.

Only the FISA members holding COP li censes would be affected by

the proposed rule. This is not a substantial number of members.

The other 145 members hold 3PS licenses (package sales) which the

pr oposed rule does not affect.

33 . Neither the officers, the governing board , nor the

members of FISA voted or took any other official action to

authorize FISA to intervene in this proceeding. The evidence

does not prove that the association is acting as a representative

of its members in this proceed ing. There is also no evidence,

such as the FISA articles of inc or poration, by - laws, or other

a ssociation formation documents , proving the association ' s

general scope of interest and activity or the authority of its

President to act on its behalf. The ev idence does not prove that

participating in this proceeding is within the authority of the

President or FISA.

34 . FISA President , Chris Knightly, testified in deposition

that any change in where liquor could be sold could have an

ext r eme financial impact on small family - owned businesses . But

FISA offered no evidence to show the impact on its members or,

for that matter, that any FISA members were actually small,

family - owned businesses. The President also testified that the

impact of the rule on FISA mem bers would be minimal because the

non - alcoholic items the stores sold were just conveniences for

customers , not significant revenue sources. In light of the

President's statement about minimal impact on FISA members and

the number of members who hold COP licenses, the record does not

prove that the proposed rule would have a substantial effect on

FISA or a substantial number of its members.

Publix

3 5 . Publix is a supermarket chain in Florida . It also

operates a number of liquor stores throughout Florida . P ublix

holds two 4COP license s and ten 2COP licenses (beer and wine

only) issued by the Division. 4/ The proposed rule imposes limits

upon what Publix can sell at its 4COP licensed stores that the

invalidated rule and the statute alone do not impose.

R u lem aking

3 6 . The Division seeks to implement s ection 565.045 . The

pertinent parts of the statute provide:

(1 ) Vendors licensed under s. 565.02(1)(b) -

(f) shall provide seats for the use of their

customers. Such vendors may sell alcoholic

beverages by th e drink or in sealed

containers for consumption on or off the

premises where sold.

(2)(a) 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.

3 7 . The Division, both in the invalid rule and in the

proposed rule , seeks to provid e clarity about the meaning of

" c ustomarily sold in a restaurant " as it is used in the statute.

That desire was the reason it adopted the original rule , now

invalidated, in 1994. The review by the Joint Administrative

Procedures Committee (JAPC) back then observed, " Absent

explanatory criteria, use of the word ' customarily ' ves ts

unbridled discretion in the department. "

3 8 . The Division responded: " As me ntioned in our meeting,

all of proposed r ule 61A - 3.055 [1994 version] is, in itself, the

division ' s attempt to define the admittedly vague phrase ' items

customarily sold in a restaurant ' , as used in s. 565.045. "

39 . The invalidated rule provided:

61A - 3.055 Items Customarily Sold in a

Restaurant.

(1) As used in Section 565.045, F.S., items

customarily sold in a restaurant shall only

include the following:

(a) Ready to eat appetizer items; or

(b) Ready to eat salad items; or

(c) Ready to eat entree items; or

(d) Ready to eat vegetable items; or

(e) Ready to eat dessert items; or

(f) Ready to eat fruit items; or

(g) Hot or cold beverages.

(2) A licensee may petition the division for

permission to sell products other than those

listed, provided the licensee can show the

item is customarily sold in a restaurant.

This petition shall be submitted to the

director of the division at Department of

Business and Professional R egulation,

Division of Alcoholic Beverages and Tobacco,

2601 Blair Stone Road, Tallahassee, Florida

32399 - 1020, and must be approved prior to

selling or offering the item for sale.

(3) For the purpose of consumption on

premises regulations set forth in S ection

565.045, F.S., items customarily sold in a

restaurant shall include servi ces or sales

authorized in the "Florida Public Lottery

Act" , Section 24.122(4), F.S.

40 . The Final O rder invalidating the earlier rule

concluded:

41. A rule is arbitrary if i t is not

supported by logic or necessary facts and is

capricious if irrational. Dep't of Health v.

Bayfront Med. Ctr., Inc. , 134 So. 3d 1017

(Fla. 1st DCA 2012). Desp ite the Division

representative' s best efforts at deposition

to avoid answering direct q uestions, the

record proved that restaurants customarily

sell at least T - Shirts and branded souvenirs.

The Division, through the deposition

testimony of its repr esentative, acknowledged

this.

42. The record offers no explanation why

sub section (1) of th e Restaurant Rule does

not include the se items. Excluding an item

that the Division acknowledges is customarily

sold in restaurants from a list of items

customarily sold in restaurants is illogical.

Rule 61A - 3.055 is arbitrary and capricious.

41 . In 20 18, while the challenge to the existing rule in

C ase No. 18 - 5116RX was underway, the Division began proceeding to

amend r ule 61A - 3.055. This was a response to the challenges to

the existing rule.

42 . The Division conducted six public hearings to receiv e

public comment on various proposed amendments to the rule and to

solicit input from the public. Petitioners did not participate

in the hearing s. The re is no evidence that Petitioners suggest ed

rule language, such as items to be listed as "customari ly s old in

a restaurant " or identi fying characteristics of items

" cu stomarily sold in a restaurant " to the Division.

43 . Representatives of Intervenors attended each of the

public hearings . There is no evidence that they suggest e d

language for the rule eithe r .

44 . During the May 6, 2019, rule development hearing , a

representative of the Florida Restaurant and Lodging Association

suggested that the Division conduct an investigation, study, or

survey to determine what merchandise or services restaurants

custom arily provide. During the rule development proceedings,

the Division did not conduct any investigation, study, or survey

to determine what is customarily sold in a restaurant. The

Division did not examine a sampling of establishments that it

considered r estaurants to determine what is customarily sold in

restaurants.

45 . The Division did not use any of the data collected in

50,000 inspection s each year to perform any studies, surveys, or

analyses of what is customarily sold in restaurants or by COP

lic ense holders . It only sought comment from the restaurant

industry and Division licensees through the public hearing

process. 5/

46 . As required by law, the Division submitted various

iterations of the proposed rule to JAPC for review . For each

version o f the proposed rule that it reviewed , JAPC observed that

the rule appeared to be overly restrictive and that it may be

arbitrary and capricious.

47 . On August 16, 2019, the Division published the final

version of the proposed amended r ule in Volume 45, Issue Number

160 of the Florida Administrative Register. It states:

61A - 3.055 Items Customarily Sold in a

Restaurant.

(1) As used in section 565.045, Florida

Statutes, items customarily sold in a

restaurant shall only include the following:

(a) Food c ooked or prepared on the licensed

premises; or

(b) Hot or cold beverages; or

(c) Souvenirs bearing the name, logo, trade

name, trademark, or location of the licensed

vendor operating the licensed premises; or

(d) Gift cards or certificates pertaining to

the licensed premises.

(2) For the purpose of consumption on

premises regulations set forth in section

565.045, Florida Statutes, items customarily

sold in a restaurant shall include servi ces

or sales authorized in the "Florida Public

Lottery Act" , secti on 24.122(4), Florida

Statutes.

4 8 . The Division explains the wording of section

(1)( c ) of the proposed rule as being based on the conclusion

" the record proved that restaurants customarily sell at

least T - Shirts and branded souvenirs " in the Final Orde r

invalidating the original rule . It also removed from the

original rule language permitting a licensee to petition the

Division to show an unlisted item is customarily sold at a

restaurant. This change is a lso a reaction to the Final

Order.

49 . As of the day of the hearing , the Division, in the

person of its Deputy Director , could not state what a

" restaurant " was. The Deputy Director testified: " The

Department [Division] doesn' t ta ke a position on what is or

isn' t a restaurant in this instance [app lying the proposed

rule] . We didn't define it, so we don' t have a position."

(Tr. Vol. 1, p. 45). As of the hearing date, the Deputy

Director for the Division could not state whether Walmart is

a restaurant. (Tr. Vol. I, p. 84). On October 26, 2018,

t estifying in the earlier rule challenge, Thomas Philpot,

the then Director of the Division and acting De puty

Secretar y for the Department of Business and Professional

Regulation, similarly said that the Divis i on had no formal

policy or procedure for decidi ng if a business was a

restaurant. (Ex. 30, p.48).

50 . A clear definition of " restaurant " is t he

necessary predicate to determining what is cust omarily sold

in a restaurant. Throughout the rule development and

through the hearing , the Division did n ot have a clear

definition of restaurant. The Division's representative

testified that " [t]he Division does not have a definition

that it can cite to either in statute or in rule for the

term restaurant." (Ex. 20, p. 62).

51 . The Division ' s Proposed Fin al Order see ms to take

the position that a "restaurant" is either a public food

service establishment licensed by the Florida Division of

Hotels and Restaurants or a restaurant as defined in

authoritative dictionaries .

52 . None of the parties , including the Division, offered

results from any survey , study , or investigation, of either a

statistically significant random sample or survey of all

" restaurants , " however they may be delineated, to determine what

" restaurants " customarily sell. 6/

53 . Much of t he evidence revolved around the theory

advanced by Target and Wal - Mart East that because they offer

areas where customers can purchase prepared food; because vendors

like McDonalds, Pizza Hut, or Starbucks sell food in sections

where the consumer can pay f or the food and sit down to consume

it ; or because the stores sell deli and baked goods that could be

consumed at the store ; that Target stores and Walmart s tores are

restaurants. From that, Wal - Mart East and Target reason that

everything they sell includ ing toys, clothes, stereos, cleaning

supplies, pet food, electronics, books, and sporting goods are

items commonly sold at restaurants. The Division concentrated

its presentation on countering that theory.

54 . The Division of Hotels and Restaurants licen ses

approximately 56,000 bus inesses as " publ ic food service

establishments." It refers to these businesses as " restaurants. "

Assuming the 463 Walmart - East and Target stores are also

considered restaurants , adding them to 56,000 results in

approximately 5 6,463 " restaurants " in the State of Florida. The

combined Target and Walmart facilities would be .82 per cent of

the total number of Florida " restaurants. " This does not

establi sh that what Wal - M art East stores and Target stores sell

is what restaurants c ustomarily sell.

55 . Wal - Mart East offered the testimony of John Harris, who

worked 28 years for the Division . He served as Director of the

Division and served as Secretary of the Department of Business

and Professional Regulation . At the direction of c ounsel for

Walmart and Wal - Mart East, Mr. Harris visit ed nine Florida

establishments to view the premises and identify items sold at

the establishments . Eight of the establishments hold current COP

licenses. One is a Cracker Barrel restaurant. Mr. Harri s '

testimony proved that the items listed below were for sale at the

selected establishments identified. None are listed as

customarily sold at a restaurant in the proposed rule :

a . Biltmore Hotel (holds a 4 COP license): c lothing,

jewelry, sports attire , golf clubs, over - the - counter medications,

art, golf clubs, golf club bags, tennis equipment, and skin

treatments.

b. Buster' s Beer & Bait (holds a 4 COP License): c igars and

fish bait.

c. CMX movie theater in Tallahassee, Florida ( holds a 4COP

license ) : m ovie tickets.

d. Cracker Barrel (does not hold a COP license ) : a pparel,

hats, toys, stuffed animals, audio books, books, musical

instruments, rocking chairs, hand lotions, jewelry, quilts, small

tools, and cooking utensils.

e. Neiman Marcus departmen t store in Coral Gables, Florida

(holds a 4 COP license): j ewelry, watches, sunglasses, handbags,

clothing, shoes , wallets, pens, luggage, and fine c hina.

f. Nordstrom department store in Coral Gables, Florida

(holds a 4 COP license): i tems similar to tho se for sale in the

Neiman Marcus department store, makeup, grills, record players,

and baby strollers.

g. PGA National Hotel and Golf R esort (holds a 4 COP

license): c lothing, shoes, cosmetics, spa services, haircuts,

golf clubs, and golf attire.

h. Saks Fifth Avenue (holds a 4 COP license): i tems similar

to those sold at the Neiman Marcus department store.

i. Slater' s Goods & Provisions (holds a 4 COP license):

razor blades, lip balm, prepackaged food items, cleaning

supplies, aluminum foil, canned good s, and batteries.

j. Daytona Speedway ( holds a 4 COP license issued for this

location to Americrown Services): g olf clubs, T - shirts, other

clothing items , key chains, tires, specialized motorcycle

mufflers, and event tickets.

56 . For each of the identifie d COP licensees, the

identified items were for sale in areas for which there was free

passage to and from areas where alcohol is stored or sold.

57 . Mr. Harris did not use his experience and expertise to

identify the establishments as representative of COP license

holders. Mr. Harris was not attempting to inspect a random,

representative sample of Florida restaurants. A party's attorney

selected the locations. There was no expert testimony

establishing the validity of Mr. Harris' ad hoc survey.

Mr . H arris also did not know which parts of the premises the COP

licenses of the places that he visited covered . The evidence did

not prove that the establishments were a representative sample of

anything .

5 8 . In addition, Mr. Harris is not an objective or

impartial witness. Mr. Harris is an advocate for Walmart and

Target. He wants the proposed rule to be invalidated.

Mr. Harris also represents Target as a lobbyist.

59 . There is no evidence that the sample size of nine is

significant or representative of all COP license holders . All

t he exercise prove s is that the Division has allowed

establishments that contain areas holding COP licenses to sell a

var iety of items that the Division ' s proposed rule and the

invalidated rule would not permit. The small number of

establishments , the witness's allegiance, and the fact that the

establishment s were selected for use in this proceeding make the

evidence wholly unpersuasive.

CONCLUSIONS OF LAW

60 . Sections 120.56, 120.569 and 120.57(1) grant DOAH

jurisdiction over the parties and the subject matter of this

proceeding.

61 . Walmart, Wal - Mart East, and Target maintain that the

proposed rule is an invalid exercise of delegated legislative

authority. Section 120.52(8), defines invalid exercise of

delegated legisl ative authority. In pertinent part, it provides:

"Invalid exercise of delegated legislative

authority" means action that goes beyond the

powers, functions, and duties delegated by

the Legislature. A proposed or existing rule

is an invalid exercise of de legated

legislative authority if any one of the

following applies:

* * *

(c) The rule enlarges, modifies, or

contravenes the specific provisions of law

implemented, citation to which is required by

s. 120.54(3)(a)1.;

(d) The rule is vague, fails to esta blish

adequate standards for agency decisions, or

vests unbridled discretion in the agency;

(e) The rule is arbitrary or capricious. A

rule is arbitrary if it is not supported by

logic or the necessary facts; a rule is

capricious if it is adopted withou t tho ught

or reason or is irrational.

62 . Petitioners challenge the validity of the proposed

restaurant rule on the grounds identified above.

63 . Section 120.56 creates the procedures for challenging

rules of all sorts. Section 120.56(2) creates a t wo stage

process for deciding whether a proposed rule is invalid. First

challengers must prove by a preponderance of the evidence that

they would be substantially affected by the proposed rule. If

they do, then the agency "has the burden to prove by a

pr eponderance of the evidence that the proposed rule is not an

invalid exercise of delegated legislative authority as to the

objections raised." § 120.56(2)(a), Fla. Stat.

Stage I and Standing

64 . Section 120.56(1)(a) provides:

Any person substantially aff ected by a rule or

a proposed rule may seek an administrative

determination of the invalidity of the rule on

the ground that the rule is an invalid

exercise of delegated legislative authority.

65 . This is the same standard as imposed by stage I of the

pr ocedure for challenging a proposed rule.

66 . A party's substantial interests are determined if:

(1) the party will suffer injury in fact that is of sufficient

immediacy to entitle it to a section 120.57 hearing, and (2) the

injury is within the zone of interest to be regulated or

protected. Jacoby v. Fla. Bd. of Med., 917 So. 2d 358, 360 (Fla.

1st DCA 2005) .

Walmart and Wal - Mart East

67 . The parties agree that as an applicant for a COP license

Wal - Mart East has standing.

68 . Walmart relies upon the determination that it had

standing in Walmart I as a basis for standing in this proceeding.

This is a different case with a different record. Footnote 3 of

the Final Order in Walmart I noted there was no dispute about the

intent of Walmart to obtain a l icense. In this case, the Division

contests standing.

69 . The evidence does not show that Walmart has applied for

a COP license, holds a COP license, or genuinely intends to apply

for a COP license. Thus, it is not at risk for an immediate

injury and is not within the zone of interest to be regulated.

Speculation that a party may take action in the future that would

subject the party to a rule is not sufficient to establish

standing. See Fla. Home Builders Ass'n v. City of Tallahassee ,

15 So. 3d 612, 613 (Fla. 1st DCA 2009) and Fla. SocÓy. of

Ophthalmology v. State Bd. of Optometry , 532 So. 2d 1279 (Fla. 1st

DCA 1988)(speculative injury does not satisfy the "immediacy"

requirement).

70 . Walmart cannot rely upon the fact that Wal - Mart East is

a whol ly owned subsidiary to establish standing. The record

contains no evidence about their relationship other than the bare

fact of its existence. The relationship alone does not infuse

Walmart with Wal - Mart East's standing. See Sanchez v. Suntrust

Bank , 17 9 So. 3d 538, 542 (Fla. 4th DCA 2015) (wholly owned

subsidiary's standing to foreclose does not automatically

establish parent's standing); Am. Int'l Grp., Inc. v. Cornerstone

Bus., Inc. , 872 So. 2d 333, 336 (Fla. 2d DCA 2004)(parent

corporation and wholly - owned subsidiary are separate and distinct

legal entities). Walmart does not have standing.

Target

71 . Target has applied for a COP license for a store in

Del ray Beach . If the proposed rule takes effect, Target must

satisfy its requirements to obtain t he license. These facts place

Target squarely in the zone of interest regulated by the proposed

rule. Target sells items such as electronics and clothing that

the rule does not identify as customarily sold by restaurants.

Because Target sells these item s, adoption of the proposed rule is

likely to cause Target an injury in fact -- denial of its COP

application, just as the application for Store 705 was denied.

Target has standing.

ABC and Publix

72 . ABC and Publix hold COP licenses that will be affecte d

by the rule. The existing (invalidated) rule allows a licensee to

obtain permission to sell items other than those listed in the

rule. The proposed rule removes that right. The statute does not

impose an absolute limitation upon what may be considered

"customarily sold in a restaurant." The proposed rule imposes an

absolute limitation. The proposed rule causes an injury to ABC

and Publix that will take effect immediately if the proposed rule

takes effect. As COP license holders, ABC and Publix are a lso

within the zone of interest regulated by the proposed rule.

73 . This differs from Walmart I. The difference in the

records, the effects of the rules, and the issues in the two cases

are the reason that ABC and Publix have standing here where they

did not have standing in Walmart I. In Walmart I , a determination

that the existing rule was invalid would have removed rule

restrictions on what ABC and Publix could sell. Hence it would

have not caused an injury in fact, which is required to establish

sta nding. All Risk Corp. v. State, Dep't of Labor & Emp't Secur.,

Div. of Workers' Comp. , 413 So. 2d 1200, 1202 (Fla. 1st DCA 1982).

See also Office of Ins. Reg. v. Aiu Ins. Co. , 926 So. 2d 479 , 480

(Fla. 1st DCA 2006)(Even though within the "zone of intere sts"

rule challenger must demonstrate rule application "will result in

a real and sufficiently immediate injury in fact"). A

determination here that the proposed rule is valid will increase

restrictions on ABC and Publix by eliminating the right to seek

a pproval to sell unlisted items. ABC and Publix have standing.

FISA

74 . FISA must prove its standing under the standards

applying to associations. To establish standing in a rule

challenge, an association must prove that the challenged rule is

within i ts general scope of interest and activity. It must prove

that the relief it seeks is appropriate for a trade association to

receive on behalf of its members. An association must also prove

that a substantial number of its members are "substantially

affec ted" by the challenged rule. Fla. Home Builders Assoc. v.

Dep't of Labor & Emp't Sec. , 412 So. 2d 351 (Fla. 1982); See SCF,

Inc. v. Fla. Thoroughbred Breeders' Ass'n , 227 So. 3d 770 (Fla.

1st DCA 2017) (Florida Thoroughbred Breeders' & Owners'

Association , with legal authority to promote Florida's

thoroughbred industry, had standing.) FISA's Petition to

Intervene demonstrates that it is aware of these standa rds. It

alleges: "One of FISA' s primary purposes is to act on behalf of

its members by representi ng their common interests before various

governmental entities of the State of Florida, including the

Department." FISA did not prove what it alleged.

75 . FISA did not prove the scope of its authority or

interests. It did not even prove that the Presi dent had authority

to participate in the proceeding on behalf of FISA.

76 . Although the FISA president talked in generalities about

economic injury, FISA produced no persuasive evidence of it. The

president even described financial impacts as minimal. F ISA's

Petition to Intervene also did not allege economic injury from the

proposed rule. FISA did not prove standing.

77 . In sum, Wal - Mart East and Target have standing to

challenge the proposed rule. ABC and Publix have standing to

intervene. Walmart d oes not have standing to challenge the

proposed rule. FISA does not have standing to intervene. The

challenges of Wal - Mart East and Target move on to Stage II.

Stage II -- Proof of Validity

General Principles and History

78 . The proposed rule and the in validated rule are the

Division's efforts to implement or carry out the statute's

directive with more detail. SW. Fla. Water Mgmt. Dist. v. Save

the Manatee Club, Inc. , 773 So. 2d 594, 599 (Fla. 1st DCA 2000).

The Division is attempting to fulfill its du ty to "flesh out" the

broad legislative requirements with specifics. Brewster

Phosphates et al v. Dep't of Envtl . Reg. , 444 So. 2d 483, 485

(Fla. 1st DCA 1984). Section 120.56, however, constrains and

guides the Division as it adds details and specifics.

79 . Wal - Mart East and Target maintain that the proposed rule

(1) enlarges, modifies, or contravenes specific provisions of

section 565.045; (2) is vague, fails to establish adequate

standards for agency decisions, or vests unbridled discretion in

the age ncy; and (3) is arbitrary and capricious. 7/

80 . The Division must prove " by a preponderance of the

evidence that the proposed rule is not an invalid exercise of

delegated legislative authority as to the objections raised."

§ 120.56(2)(a), Fla. Stat. In order to meet this statutorily

imposed burden, the Division must prove that restaurants

customarily only sell food cooked or prepare d on the premises;

hot or cold beverages; souvenirs bearing the name, logo, trade

name, trademark, or location of the lic ensed vendor; or gift

cards or certificates. The meaning of "restaurant" and

"customarily" are central to resolving the issues here.

81 . Evaluating the Division's efforts to meet its burden

and Petitioners' objections requires some review of the rule

b eing amended and the Order finding it not valid. The rule

adopted in 1994 , albeit currently invalidated, that the Division

seeks to amend reads:

61A - 3.055 Items Customarily Sold in a

Restaurant.

(1) As used in Section 565.045, F.S., items

customarily so ld in a restaurant shall only

include the following:

(a) Ready to eat appetizer items; or

(b) Ready to eat salad items; or

(c) Ready to eat entree items; or

(d) Ready to eat vegetable items; or

(e) Ready to eat dessert items; or

(f) Ready to eat fru it items; or

(g) Hot or cold beverages.

(2) A licensee may petition the division for

permission to sell products other than those

listed, provided the licensee can show the

item is customarily sold in a restaurant.

This petition shall be submitted to th e

director of the division at Department of

Business and Professional Regulation,

Division of Alcoholic Beverages and Tobacco,

2601 Blair Stone Road, Tallahassee, Florida

32399 - 1020, and must be approved prior to

selling or offering the item for sale.

(3) For the purpose of consumption on

premises regulations set forth in Section

565.045, F.S., items customarily sold in a

restaurant shall include servi ces or sales

authorized in the "Florida Public Lottery

Act" , Section 24.122(4), F.S.

82 . As the Divisio n proposes to amend it, the rule would

read (deletions stricken through and additions underlined) as

follows:

61A - 3.055 Items Customarily Sold in a

Restaurant.

(1) As used in Section 565.045, F.S. Florida

Statutes , items customarily sold in a

restaurant shall only include the following:

(a) Ready to eat appetizer items Food cooked

or prepared on the licensed premises ; or

(b) Ready to eat salad items Hot or cold

beverages ; or

(c) Ready to eat entree items Souvenirs

bearing the name, logo, trade name, t rademark

or location of the licensed vendor operating

the licensed premises ; or

(d) Ready to eat vegetable items Gift cards

or certificates pertaining to the licensed

premises ; or

(e) Ready to eat dessert items; or

(f) Ready to eat fruit items; or

(g) Hot or cold beverages.

(2) A licensee may petition the division for

permission to sell products other than those

listed, provided the licensee can show the

item is customarily sold in a restaurant.

This petition shall be submitted to the

director of the division at Department of

Business and Professional Regulation,

Division of Alcoholic Beverages and Tobacco,

2601 Blair Stone Road, Tallahassee, Florida

32399 - 1020, and must be approved prior to

selling or offering the item for sale.

(3) (2) For the purpo se of consumption on

premises regulations set forth in Section

565.045, F.S., items customarily sold in a

restaurant shall include servi ces or sales

authorized in the "Florida Public Lottery

Act" , Section 24.122(4), F.S.

83 . The petitioners in Walmart I had to prove the 1994

version of the rule was invalid. The Final Order in Walmart I

held that the rule was invalid as arbitrary and capricious,

because it excluded items (T - Shirts and branded souvenirs) that

the division acknowledged were customarily sold in restaurants.

Finding 19 of the Final Order, upon which the holding is based,

says: "Restaurants customarily sell items other than those listed

in the Restaurant Rule. At a minimum, they sell T - Shirts and

branded souvenir items." The finding says "[ a]t a minimum." It

does not say restaurants customarily "only" sell T - Shirts and

branded souvenir items. The finding and the holding are also

based upon a different record than the record in this case. The

Final Order in Walmart I did not determine a co mplete list of all

items customarily sold in a restaurant. For instance, the Walmart

I record included evidence of several items other than T - shirts

and souvenirs customarily sold in restaurants. (Ex. 30, pp. 86 -

87, 102, and 108).

Meaning of Restaurant

84 . Axiomatically, one cannot determine what is customarily

sold in a " restaurant " until one establishes the meaning of

"restaurant." During the rule making process and during the

hearing in this matter, the Division did not take a position on

the meanin g of "restaurant." In its proposed order, the Division

argues that "restaurant" means "public food service establishment"

as defined in section 509.013 (5). T he proposed rule and the

Beverage Law do not define "restaurant." Section 561.01(15)

refers to " restaurant" in the definition of "bottle club by,"

excluding "bona fide restaurants licensed by the Division of

Hotels and Restaurants . . . whose primary business is the service

of full course meals . . . ." The definition does not apply

broadly to the B everage Law or specifically to section 565.045.

Florida statutes do not offer a definition of " restaurant , "

leaving the Division and parties subject to section 565.045 to

determine what "restaurant" means. An examination of the history

of "restaurant" in statutes offers some illumination.

85 . In 1935, when the Legislature enacted section 565.045,

the Laws of Florida contained a definition of "restaurant."

Chapter 16042, Laws of Florida (1933) created the Hotel Commission

in the State of Florida as an executive department of the state

government. Section 3 of the law mandated the commission to

"carry out and execute all" provisions of law "relating to the

inspection or regulation of hotels, apartment house s , rooming

houses or restaurants." Section 8 o f the law required every

person or entity in "the business of conducting a hotel, . . . or

restaurant " to obtain an annual license to operate.

86 . Section 7 of Chapter 16042 provided a lengthy definition

of "restaurant." It said:

Every building or othe r structure and all

outbuildings in connection and any room or

rooms within any building or other structure

or any place or location kept, used,

maintained as, advertised as, or held out to

the public to be a place where meals, lunches

or sandwiches are pr epare d or served, either

gratuitously or for pay, shall, for purpose of

this Act, be defined to be a restaurant, . . .

and whenever the word "restaurant" shall occur

in this Act, it shall be construed to mean

every such structure described in this

Section. [ 8/ ]

87 . The definition of "restaurant" remained materially

unchanged until 1955. Chapter 29821, § 6, Laws of Florida (1955),

codified at section 509.241, Fla. Stat. (1955), replaced

"restaurant" with the term "public food service establishment."

It defined a "public food service establishment" as "[e]very

building, vehicle, or other structure . . . , or any rooms or

divisions in a building, vehicle, or other structure . . . , or

any place whatsoever, that is maintained and operated as a place

where food is regularly prepared and sold for immediate

consumption on or in the vicinity of the premises." Id. In

adopting the new term "public food service establishment," the

Legislature declared, "Any reference to a restaurant in the laws

of Florida shall b e construed to mean a public food service

establishment as herein defined unless a different intent is

clearly evident." Id.

88 . This language equating a "restaurant" to a "public food

service establishment" remained until 1979. That year the

Legislature removed the language in section 509.241(2)(a) that

stated that any reference to "restaurant" shall be construed to

mean a "public food service establishment." § 18, Ch. 79 - 240,

Laws of Florida; § 509.013(2)(a), Fla. Stat. (1979).

89 . Language dropped fr om a statute is repealed and no

longer in effect. Dockery v. Hood , 922 So. 2d 258, 260 (Fla. 1st

DCA 2006)( Dropped language deemed repealed even if removed as part

of the statutory revision process).

90 . In 1999, the Legislature amended the Beverage Law to add

a reference to "locations that are licensed as restaurants . . .

pursuant to chapter 509." See Ch. 99 - 156, § 2, Laws of Fla.

(1999), codified at § 562.45(2)(a), Fla. Stat. (1999).

Chapter 509, however, does not provide for licensing

" restaurants. " It provides for licensing "public lodging

establishments" and "food service establishments ."

91 . Presently, Florida law defines a "public food service

establishment" as "any building, vehicle, place, or structure, or

any room or division in a building, vehicle, place, or structure

where food is prepared, served, or sold for immediate consumption

on or in the vicinity of the premises; called for or taken out by

customers; or prepared prior to being delivered to another

location for consumption." § 509.13 (5)(a), Fla. Stat. (2018).

The definition excludes "[a]ny place of business issued a permit

or inspected by the Department of Agriculture and Consumer

Services under s. 500.12." § 509.13(5)(b)6., Fla. Stat.

Section 500.12 provides for permitting operato rs of a food

establishment or retail food store. The Department decides

whether to issue a permit for a food establishment or retail food

store based upon who owns the facility , not upon what it serves or

how. (Finding of Fact 21).

92 . Th is history of t he word "restaurant" in the Florida

Statutes expose s omissions and oversights in the amendments over

the years that leave no legislative de clarat ion of what

"restaurant" means when used in statutes. The history establishes

that since 1979, when the Legisl ature repealed the law equating

"restaurants" with "public food service establishments," it has

not chosen to define " restaurant " as "public food service

establishment" or anything else. T he Deputy Director of the

Division recognized this when he observe d during the rule making

hearing conducted May 6, 2019, that " w e recognize that the

industry grows and we're trying to do what we can in order

to . . . help the industry evolve. Things aren't the same as they

were in 1994." (Ex. 37, p. 24).

93 . The First District Court of Appeal addressed the issue

of the meaning of "restaurant" when a statute refers to the word

but does not define it in State, Dep't of Bus. Reg., Div. of

Alcoholic Beverages & Tobacco v. Salvation, Ltd. , 452 So. 2d 65

(Fla. 1st DCA 1 984). The opinion addressed the fact that a

statute provided for a "special restaurant beverage license" but

did not define " restaurant . " The statute enumerated four criteria

for obtaining the license. The enumerated four included an

ability to serve 15 0 persons full - course meals at one time. Since

the statute did not define "restaurant" or "serve," the court

concluded: "They should, therefore, be given their plain and

ordinary meaning. [citations omitted]." Id at 67.

94. The court rejected the argu ment that the Division

advances here that the definition of "public food service

establishment" in section 509.013(5)(a) should be substituted for

the plain and ordinary meaning of "restaurant." The court turned

to the dictionary. "' Restaurant' is define d as 'a public eating

place.' Webster's New Collegiate Dictionary, p. 979 (1979)."

State, Dep't of Bus. Reg., Div. of Alcoholic Beverages & Tobacco

v. Salvation, Ltd. , 452 So. 2d 65, 67 (Fla. 1st DCA 1984). The

dictionary definition did not include a req uirement that food be

prepared and cooked on the premises. So the court concluded that

the rule adding that criterion to the meaning of "restaurant"

rendered the rule invalid and affirmed the DOAH hearing officer.

The plain and ordinary meaning of "resta urant" also applies here.

95. A more contemporary dictionary definition of

"restaurant" is similar to the 1979 definition. " Definition of

restaurant: a business establishment where meals or refreshments

may be purchased." https://www.merriam -

webster.com/dictionary/restaurant (last visited Dec. 16, 2019).

Customarily

96. To create an exclusive list of items customarily sold in

a restaurant, the Division must determine what is custom ary. The

proposed rule and the statute it implements do not define

"customarily." The word should be given its plain and ordinary

meaning. As with "restaurant," courts refer to dictionary

definitions to ascertain the plain and ordinary meaning of words.

Sch. Bd. v. Survivors Charter Sch., Inc. , 3 So. 3d 1220 (Fla.

2009). The online Merriam - Webster dictionary defines

" customarily " as " by or according to custom or established

practice." https://www.merriam - webster.com/dictionary/customarily

(last visited Dec. 16, 2019). Other dictionary definitions are

similar. https://www.dictionary.com/browse/customarily?s=t , (last

visited Dec. 16, 2019) ("in accordance with custom or habitual

practice; usual; habitual"); Webster's Seventh New Collegiate

Dictionary (1970)("1: based on or established by custom ,

2: commonly practiced, used, or observed."). Custom is the root

of "cust omarily."

97. "Custom" means "a usage or practice common to many or to

a particular place or class." https://www.merriam -

webster.com/dictionary/custom (last visited Dec. 16, 2019).

Ther efore, to prove that something is "customarily" sold in a

"restaurant," the evidence must prove that many restaurants

commonly sell the item. The proposed rule's absolute position

that only a few specific items are customarily sold in restaurants

then req uires proof that these items are the only items sold by

many restaurants. 9/

Enlarge, Modify, or Contravene the Statute

9 8 . The statute permits COP license holders to sell items

customarily sold in a restaurant. Unless the proposed rule's

exclusive lis t of what is customarily sold in a restaurant is

correct, the rule contravenes or modifies the statute. The

Division bears the burden of proving the exclusive list is

correct.

9 9 . The proposed rule says that the only consumable items

customarily sold a t a restaurant are food cooked or prepare d on

the licensed premises or hot or cold beverages. The common

definitions of restaurant provide more broadly that a "restaurant"

is a public eating place or a place where meals or refreshments

may be purchased. The definitions make no mention of where the

food is cooked or prepared. They also make no mention of

licensing. The holding of State, Dep't of Bus. Reg., Div. of

Alcoholic Beverages & Tobacco v. Salvation, Ltd. , supra , rejects

the argument that the mean ing of "restaurant" includes a

requirement that food be cooked or prepared on premises. The

holding applies here.

100 . The Division offered no persuasive evidence about the

meaning of "restaurant." It relied on the incorrect legal theory

that a "restaur ant" is a licensed "public eating establishment."

Consequently, the proposed rule's restriction limiting consumables

"customarily sold in a restaurant" to only food cooked or prepared

on the licensed premises and hot or cold beverages modifie s or

contrave nes section 56 5 .045. Dep't of Health v. Bayfront Med.

Ctr., Inc. , 134 So. 3d 1017, 1020 (Fla. 1st DCA 2012) (Rule that

does not implement statute to be implemented contravenes the

statute.)

Vague, Inadequate Standards or Unbridled Discretion

10 1 . Wal - Mar t East and Target argue that the proposed rule

is vague, fails to establish adequate standards, and vests

unbridled discretion in the Division. A rule is impermissibly

vague if persons of common intelligence must necessarily guess at

its meaning. State, Dep't of Health & Rehab. Servs. v. Health

Care & Ret. Corp. , 593 So. 2d 539, 541 (Fla. 1st DCA 1992). The

proposed rule is far from vague. It is quite specific in listing

what is customarily sold in a restaurant. The standards it

imposes are clear. It confers no discretion on the Division.

102. Petitioner's complaints that "souvenirs" is

impermissibly vague are unpersuasive. Like "restaurant , "

"souvenir" is a commonly used word with a commonly accepted

meaning. It is "something kept as a reminder ( as of a place one

has visited)." https://www.merriam -

webster.com/dictionary/souvenir (last visited Dec. 16, 2019) . The

proposed rule provide s further clarity by saying souvenirs bearing

the name, logo, trade name, trademark, or location of the vendor.

T he proposed rule does not impose inadequate standards or vest

unbridled discretion in the Division.

Arbitrary or Capricious

10 3 . A rule is arbitrary if it is not supported by logic or

n ecessary facts and is capricious if irrational. Dep't of Health

v. Bayfront Med. Ctr., Inc. , 134 So. 3d 1017 (Fla. 1st DCA 2012).

A proposed rule is arbitrary if it is not supported by fact or

logic. A proposed rule is capricious if it is taken without

thought or reason. Dravo Basic Materials Co. v. State , 602 So. 2d

632, 635 (Fla. 2d DCA 1992) (correctly stating standards but

rendered before the Legislature placed the burden of proving

validity on the agency.) The Division bears the burden of

presenti ng facts proving the rule is not arbitrary and capricious.

10 4 . In rulemaking and at the hearing, the Division declared

its list of what was customarily sold in a restaurant without

first determining what a restaurant was. This is illogical and

irration al. A list of items customarily sold in a restaurant

resting on an incorrect or non - existent definition of restaurant

is illogical and irrational from the beginning.

10 5 . The Division compounded the illogic and irrationality

by creating a list of items that is not based upon any factual

examination or evidence about what restaurants, wh at ever the

definition , actually customarily sell. The Division did not prove

that the items listed in the proposed rule are the only items

"customarily sold in a restaur ant." It incorrectly relied upon

the Order in Walmart I which decided a different issue and rested

upon a different record.

10 6 . The record of rule making and the record of the final

hearing do not show logic, facts, or rationale to support the

propo sed rule's limited list of items customarily sold in

restaurants. The Division did not prove that the proposed rule

was not arbitrary and capricious.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED that :

A. The Petitio n to Intervene of Florida Independent Spirits

Association is Dismissed.

B. Proposed Florida Administrative Code R ule 61A - 3.055,

Florida Administrative Register, Volume 45, Number 160, August

16, 2019, is an i nvalid exercise of delegated legislative

author ity .

C. Jurisdiction is retained for the purpose of determining

entitlement to attorneyÓs fees and costs, and the amount, if

appropriate.

DONE AND ORDERED this 18th day of December , 2019 , in

Tallahassee, Leon County, Florida.

S

JOHN D. C. NEWTON, II

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 18th day of Dec ember , 2019 .

ENDNOTE S

1/ All citations to the Florida Statutes are to the 2019

compilation unless otherwise noted.

2/ For instance, endnote three of the Final Order notes " that

there is no di spute about the intent of Target and Walmart to

obtain a license. Due to the stipulation to this fact, this is

not a case where the evidence demonstrates that a petitionerÓs

interest in a rule's validity is speculative, academic, or

conjectural." Here th ere is a dispute.

3/ Failure to provide a complete and detailed sketch of the

premises to be licensed was the other reason. The Division cites

sections 561.01(11), 561.18, and 562.06, Florida Statutes, for

this requirement.

4/ Although the Publix rep resentative testified at her deposition

(Ex. 21) that Publix did not hold COP licenses, the parties

stipulated to the number stated.

5/ The Deputy Director for the Division of Alcoholic Beverages

and Tobacco testified as follows:

Q Î "So the Department [ Division] did not engage some independent

third party or even some in - house people to do any investigation,

study, or survey of what is customarily sold in a restaurant;

correct?

A Î "Other than ask the restaurant industry and its licensees for

comment, no ."

6/ The examination of a few locations selected by Walmart's

counsel conducted by a Walmart Consultant does not amount to a

valid or credible investigation, study, or survey, as discussed

later. The party wanting to admit and rely upon survey evidence

has the burden of establishing its trustworthiness. See Wuv's

Int'l, Inc. v. Love's Enters. , Case No. 78 - F - 107, 1980 U.S. Dist.

LEXIS 16512 (D. Colo. Nov. 4, 1980) (listing seven principles with

which survey methodology should comply).

7/ Petitioners' proposed final orders do not question the

Division's authority to adopt the proposed rule.

8/ The law went on to require a variety of health and safety

features such as heating, plumbing, water closets (when a

waterworks system is available), fire esc apes, fire extinguishers,

and clean bedding.

9/ The argument of Wal - Mart East and Target that if an item is

routinely sold in a single restaurant it is customarily sold in a

single restaurant, is not persuasive and contrary to the

established meaning o f "customary."

COPIES FURNISHED:

Raymond Frederick Treadwell, General Counsel

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

(eServed)

David C. Ashburn, Esquire

Greenberg Traurig, P.A.

101 E ast College Avenue

Post Office Drawer 1838

Tallahassee, Florida 32301 - 7742

(eServed)

Brigid Cech Samole, Esquire

Greenberg Traurig, PA

Suite 4100

333 Southeast 2nd Avenue

Miami, Florida 33131 - 2176

(eServed)

Elliot H. Scherker, Esquire

Greenberg Traurig , P.A.

Suite 4400

333 Southeast Second Avenue

Miami, Florida 33131 - 2184

(eServed)

William D. Hall, Esquire

Dean, Mead & Dunbar

Suite 815

215 South Monroe Street

Tallahassee, Florida 32301 - 1852

(eServed)

William Nicholson Spicola, Esquire

Post Office Box 664

Tallahassee, Florida 32302 - 0664

(eServed)

Ross Marshman, Esquire

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

(eServed)

David W. Aring, Esquire

Department of Business and

Profession al Regulation

Division of Real Estate

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

(eServed)

Daniel Ryan Russell, Esquire

Dean, Mead & Dunbar

Post Office Box 351

Tallahassee, Florida 32302 - 1852

(eServed)

Halsey Beshears, Secretary

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

(eServed)

Sterling Whisenhunt, Director

Division of Alcoholic Beverages and Tobacco

Department of Business and

Professional Regulation

2601 Blair Stone Ro ad

Tallahassee, Florida 32399 - 2202

(eServed)

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicial review pursuant to section 120.68, Florida Statutes.

Review proceedings are governed by the Florida Rules of Appellate

Procedure. Such proceedings are commenced by filing the original

notice of administrative appeal with the agency clerk of the

Division of Administrative Hearings within 30 days of rendition

of the order to be reviewed, and a cop y of the notice,

accompanied by any filing fees prescribed by law, with the clerk

of the District Court of Appeal in the appellate district where

the agency maintains its headquarters or where a party resides or

as otherwise provided by law.