97-000545RX John A. Stephens And John Stephens, Inc. vs. Department Of Citrus Status: Closed DOAH Final Order on Tuesday, July 29, 1997.

Summary: Department of Citrus rules in existence for 30 years are not invalid exercise of legislative authority and are based on specific grant of authority.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOHN A. STEPHENS and JOHN )

STEPHENS, INC. , )

)

Petitioners , )

)

vs. ) Case No. 97-0545RX

)

DEPARTMENT OF CITRUS , )

)

Respondent. )

___________________________________)

FINAL ORDER

Pursuant to their waiver of formal administrative hearing by

the parties, disposition of this case is based upon stipulated

facts and documents, together with proposed final orders and

supporting memoranda.

APPEARANCES

For Petitioner: William E. Williams, Esquire

Huey Guilday and Tucker, P.A.

Post Office Box 1794

Tallahassee, Florida 32302-1794

For Respondent: Clark R. Jennings, Esquire

Department of Citrus

Post Office Box 148

Lakeland, Florida 33802-0148

STATEMENT OF THE ISSUES

The issue for determination is whether Department of Citrus

Rules 20-1.009 and 20-1.010, Florida Administrative Code, are

invalid exercises of delegated legislative authority, as alleged

by Petitioners.

PRELIMINARY STATEMENT

O n February 3, 1997, Petitioners filed their petition for

determination of invalidity of administrative rules. The case

was assigned and set for hearing within the 30-day deadline.

After a waiver of the deadline and agreed motion for continuance,

the hearing was reset and was later cancelled when the parties

requested submittal of the case by stipulated record in lieu of

an evidentiary hearing.

That record, filed on June 26, 1997, includes the following:

Petitioners’ exhibit 1 : citrus fruit dealer’s agent

registration application, dated September 26, 1996, filed by John

A. Stephens and John Stephens, Inc., with the Florida Department

of Agriculture and Consumer Services (DACS);

Petitioners’ exhibit 2 : December 26, 1996, letter from DACS

denying the application for agent registration;

Petitioners’ exhibits 3-14: twelve Final Orders by DACS from

1991 and 1992, establishing indebtedness by J. A. Stephens, Inc.,

d/b/a Frostproof Groves, a licensed citrus fruit dealer, to

various claimants;

Department of Citrus exhibit 1 : Florida Citrus Commission

minutes of meetings in 1964;

Department of Citrus exhibit 2 : Florida Citrus Commission

minutes of meetings in 1964 and 1965;

Department of Citrus exhibit 3 : House of Representatives

Committee on Streamlining Governmental Regulations Final Bill

Analysis and Economic Impact Statement concerning Bill numbers

CS/SB’s 2290 and 2288, dated June 14, 1996; and

The parties’ Prehearing Stipulation, with stipulations of

facts.

The parties also filed their proposed final orders on June

26, 1997.

FINDINGS OF FACT

1. John Stephens, In c., Petitioner, was at all times

material hereto a Florida corporation duly licensed as a citrus

fruit dealer in the State of Florida.

2. J. A. Stephens, Inc., was a Florida corporation, and

held a valid fruit dealer’s license in the State of Florida.

3. At all times material to this proceeding, Petitioner,

John A. Stephens, served as an officer and director of J. A.

Stephens, Inc. John A. Stephens is not an officer, director or

shareholder of John Stephens, Inc.

4. John A. Stephens, Jr. is the president a nd sole

director of John Stephens, Inc. and is not an officer, director

nor shareholder of J. A. Stephens, Inc.

5. On or about September 26, 1996, Petitioners, John

Stephens, Inc., and John A. Stephens, applied to the Florida

Department of Agriculture and Consumer Services to register John

A. Stephens as an agent of John Stephens, Inc., pursuant to

Section 601.601, Florida Statutes. The application form

furnished by the Department of Agriculture and Consumer Services

indicates that the licensed dealer seeking registration of an

agent agrees to “... accept full responsibility for all his

activities....” (Petitioners’ Exhibit 1)

6. By letter dated December 26, 1996, Petitioners were

advised by the Department of Agriculture and Consumer Services

that their application for registration of John A. Stephens as an

agent of John Stephens, Inc., had been denied on the basis of

Rule 20-1.010, Florida Administrative Code. As indicated in the

notice, that rule provides, in part, that an application for

registration of a dealer’s agent can be disapproved if a proposed

registrant has a “...record, either as an individual, co-

partnership, corporation, association or other business unit,

showing unsatisfied debts or orders issued by the Commissioner of

Agriculture with respect to prior dealings in citrus fruit.”

(Petitioners’ Exhibit 1.) Specifically, the Department of

Agriculture and Consumer Services advised Petitioners that

“...Mr. Stephens has not satisfied orders issued by the

Commissioner of Agriculture with respect to prior dealings in

citrus fruit ...,” listing as the final orders in question

Petitioners’ Exhibits 3 through 14.

7. Between April 30, 1991, and September 30, 1992, the

State of Florida, Department of Agriculture and Consumer Services

entered a total of 12 final administrative orders in which it

found that J. A. Stephens, Inc., was indebted to claimants for

various sums arising from prior dealings in citrus fruit.

(Petitioners’ Exhibits 3 through 14.) At the time of the action

of the Department of Agriculture and Consumer Services denying

Petitioners’ application, there remained amounts due and unpaid

on each of the orders entered by the Department against J. A.

Stephens, Inc.

8. Petitioner, John A. Stephens was not named as a party

respondent in any of the 12 proceedings culminating in final

orders against J. A. Stephens, Inc., which formed the basis for

the denial by the Department of the application for registration

as a citrus dealer’s agent. (Petitioners’ Exhibits 2, and 3

through 14.) In denying a Motion for Relief for Final Order in

the only Department of Agriculture and Consumer Services

proceeding in which a claimant sought to join Mr. Stephens

individually as a party, the Department found that:

The complaint filed by Claimant named J. A.

Stephens, Inc. as the respondent. Because

the complaint was against J. A. Stephens,

Inc., it was served on J. A. Stephens, Inc.

J. A. Stephens, an individual, was never

subjected to the jurisdiction of the Agency

with regard to this matter. J. A. Stephens,

an individual, was not afforded an

opportunity to defend against the allegations

of the complaint. There was no discussion at

the hearing about whether J. A. Stephens,

Inc. was or was not the proper respondent.

There was no allegation at the hearing that

J. A. Stephens, an individual, was the proper

respondent.

The Claimant has failed to express any legal

basis for grant of his motion and this Agency

could find no such basis. This Agency has no

personal jurisdiction over J. A. Stephens, an

individual, with regard to this matter and

therefore cannot enter an order with respect

to him. Further, even if such an order were

to be entered, it would be of no force or

effect because of the lack of personal

jurisdiction. (Petitioners’ Exhibit 4, pg.

2.)

9. The rules that are the subject of this proceeding had

their inception in 1964, when the Florida Citrus Commission

considered and adopted rules governing the registration of agents

acting on behalf of licensed citrus dealers. These rules, which

appear in the text of the minutes of the Commission as Regulation

105-1.05, are almost verbatim the same rules now found in Chapter

20-1, Florida Administrative Code. (Respondent’s Exhibits 1 and

2.)

10. As reflected in the minutes of the Florida Citrus

Commission, the rules were adopted to help protect the grower and

shipper or processor in matters involving the normal movement of

citrus fruit in all channels of distribution. The regulation was

recommended by the Fresh Citrus Shippers Association and was

endorsed by a resolution of the Florida Sheriffs Association. In

presenting the Sheriffs’ resolution to the Commission, Sheriff

Leslie Bessenger of the Florida Citrus Mutual Fruit Protection

Division cited the results of a seven-month investigation that

found 71 out of 200 registered agents with criminal records.

Those two hundred agents represented only nine dealers.

(Respondent’s exhibit 1, June 19, 1964, meeting.) Minutes of

Commission meetings after rule adoption thoroughly explain the

efforts to require accountability and curb abuse of the dealer-

agent relationship.

11. The rules, as they appear today in the Florida

Administrative Code, have not been revised since July 1, 1975.

CONCLUSIONS OF LAW

12. The Division of Administrative Hearings has

jurisdiction in this proceeding pursuant to Section 120.56,

Florida Statutes (Supp. 1996), which provides that any person

substantially affected 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.

13. As stipulated by the parties, Petitioners have standing

to maintain this challenge to Rules 20-1.009 and 20-1.010,

Florida Administrative Code.

14. Petitioners, to prevail, must prove by a preponderance

of the evidence that the challenged rules are invalid exercises

of legislative authority. Agrico Chemical Company v. Dept. of

Environmental Regulation , 365 So. 2d 759 (Fla. 1st DCA 1979).

“Invalid exercise of delegated legislative authority” is defined,

in pertinent part, in 120.58(8), Florida Statutes:

120.52 Definitions.–

As used in this act:

(8) "Invalid exercise of delegated

legislative authority" means action which

goes beyond the powers, functions, and duties

delegated by the Legislature. A proposed or

existing rule is an invalid exercise of

delegated legislative authority if any one of

the following applies:

...

(b) The agency has exceeded its grant of

rulemaking authority, citation to which is

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

(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 establish

adequate standards for agency decisions, or

vests unbridled discretion in the agency;

(e) The rule is arbitrary or capricious;

(f) The rule is not supported by competent

substantial evidence;

...

A grant of rulemaking authority is necessary

but not sufficient to allow an agency to

adopt a rule; a specific law to be

implemented is also required. An agency may

adopt only rules that implement, interpret,

or make specific the particular powers and

duties granted by the enabling statute. No

agency shall have authority to adopt a rule

only because it is reasonably related to the

purpose of the enabling legislation and is

not arbitrary and capricious, nor shall an

agency have the authority to implement

statutory provisions setting forth general

legislative intent or policy. Statutory

language granting rulemaking authority or

generally describing the powers and functions

of an agency shall be construed to extend no

further than the particular powers and duties

conferred by the same statute.

15. The language regarding agencies’ authority to adopt

rules is repeated in Section 120.536(1), Florida Statutes (Supp.

1996). That section requires agencies to provide the

Administrative Procedures Committee by October 1, 1997, a list of

rules adopted prior to October 1, 1996, which exceed their

permitted rulemaking authority. Section 120.536(3), Florida

Statutes, (Supp. 1996) provides:

(3) All proposed rules or amendments to

existing rules filed with the Department of

State on or after October 1, 1996, shall be

based on rulemaking authority no broader than

that permitted by this section. A rule

adopted before October 1, 1996, and not

included on a list submitted by an agency in

accordance with subsection (2) may not be

challenged before November 1, 1997, on the

grounds that it exceeds the rulemaking

authority or law implemented as described by

this section. A rule adopted before October

1, 1996, and included on a list submitted by

an agency in accordance with subsection (2)

may not be challenged before July 1, 1999 , on

the grounds that it exceeds the rulemaking

authority or law implemented as described by

this section. (emphasis added)

This section does not preclude challenges to the invalidity of a

rule under other provisions of Chapter 120. (Respondent’s

exhibit 3, p. 26.)

16. The rules that are challenged in this proceeding

provide:

20-1.009 Examination of Agent Application.

(1) The Department of Agriculture shall,

within a reasonable time, examine each

application for agent registration and

consider the information submitted therewith.

The Department of Agriculture shall also

consider the past history of any applicant

for whom registration is sought, either

individually or in connection with any

individual, copartnership, corporation,

association or other business unit with whom

any person being considered for registration

as a citrus fruit dealer's agent shall have

been connected in any capacity, and may, in

proper cases, impute to the applicant,

association, or other business unit, the

liability for any wrong or unlawful act

previously performed by said individual,

corporation, copartnership, association or

any other business unit .

(2) Any application for the registration of a

person as a citrus fruit dealer's agent,

believed to be a subterfuge to permit a

person to act as a citrus fruit dealer

without proper licensing, shall, prior to

registration being granted, be referred to

the Department of Citrus, together with a

report detailing the facts and circumstances

surrounding the application. Agent

registration shall not be approved if the

Florida Citrus Commission makes a finding

that such person would not be qualified for

license as a citrus fruit dealer and that

such agent registration would be a subterfuge

to permit the person to operate as a citrus

fruit dealer without a license.

20-1.010 Grounds for Disapproval of Agent

Registration.

An application for the registration of a

citrus fruit dealer's agent may be

disapproved if the person for whom

registration is requested has:

(1) A record, either as an individual or in

connection with any individual,

copartnership, corporation, association or

other business unit, showing unsatisfied

debts or orders issued by the Commissioner of

Agriculture with respect to prior dealings in

citrus fruit .

(2) Violated or aided or abetted in the

violation of any law of Florida applicable to

citrus fruit dealers, or any lawful rules of

the Department of Citrus.

(3) Been guilty of a crime against the laws

of this or any other state or government,

involving moral turpitude or dishonest

dealing.

(4) Knowingly made, printed, published or

distributed, or caused, authorized or

knowingly permitted the making, printing,

publication or distribution of false

statements, descriptions, or promises of such

a character as may reasonably induce any

person to act to his damage or injury, if the

applicant for registration as agent knew, or

should have known, of the falsity of such

statements, descriptions or promises.

(5) Committed any act or conduct of the same

or different character as enumerated herein

which shall constitute fraudulent or

dishonest dealing.

(6) Violated any of the provisions of

Sections 506.19 through 506.28, Florida

Statutes. (emphasis added)

17. Sections 601.10(1), and 601.601, Florida Statutes,

provide:

601.10 Powers of the Department of Citrus.–

The Department of Citrus shall have and shall

exercise such general and specific powers as

are delegated to it by this chapter and other

statutes of the state, which powers shall

include, but shall not be confined to, the

following:

(1) To adopt and, from time to time, alter,

rescind, modify, or amend all proper and

necessary rules, regulations, and orders for

the exercise of its powers and the

performance of its duties under this chapter

and other statutes of the state, which rules

and regulations shall have the force and

effect of law when not inconsistent

therewith.

601.601 Registration of dealers' agents.–

Every licensed citrus fruit dealer shall:

(1) Register with the Department of

Agriculture each and every agent, as defined

in s. 601.03(2), authorized to represent such

dealer; make application for registration of

such agent or agents on a form approved by

the Department of Agriculture and filed with

the Department of Agriculture not less than 5

days prior to the active participation of the

agent or agents on behalf of such dealer in

any transaction described in s. 601.03(2);

and be held fully liable for and legally

bound by all contracts and agreements, verbal

or written, involving the consignment,

purchase, or sale of citrus fruit executed by

a duly registered agent on his behalf during

the entire period of valid registration of

such agent the same as though such contracts

or agreements were executed by the dealer.

Registration of each agent shall be for the

entire shipping season for which the applying

dealer's license is issued; however, a

licensed dealer may cancel the registration

of any agent registered by him by returning

the agent's identification card to the

Department of Agriculture and giving formal

written notice to the Department of

Agriculture of not less than 10 days. In

addition, such dealer shall make every effort

to alert the public to the fact that the

agent is no longer authorized to represent

him. An agent may be registered by more than

one licensed dealer for the same shipping

season, provided that each licensed dealer

shall apply individually for registration of

the agent and further provided that written

consent is given by each and every dealer

under whose license the agent has valid prior

registration.

(2) When the above requirements and such

additional requirements as may be set forth

by regulations adopted by the Department of

Citrus for registration of an agent have been

met and the fee required by s. 601.59(2) has

been paid, the Department of Agriculture

shall duly register the agent and issue an

identification card certifying such

registration. The identification card, among

other things, shall show in a prominent

manner:

(a) The name and address of the agent;

(b) The authorizing dealer's name, address,

and license number;

(c) The effective date and season for which

registration is made;

(d)1. A space for signature of the agent;

2. A space to be countersigned by the

licensed dealer;

3. A statement providing that the card is not

valid unless so signed and countersigned.

The Department of Citrus may, from time to

time, adopt additional requirements or

conditions relating to the registration of

agents as may be necessary . (emphasis added)

18. As observed by the Petitioners, the regulatory

requirements for review and approval of registration of agents

are very similar to requirements imposed by Statute on dealers in

citrus fruit:

601.57 Examination of application; approval

of dealers' licenses.–

(1) The Department of Citrus shall, within a

reasonable time, examine the application and

consider the information submitted therewith,

including the applicant's financial statement

and the reputation of the applicant as shown

by applicant's past and current history and

activities, including applicant's method and

manner of doing business. The Department of

Citrus shall also consider the past history

of any applicant, either individually or in

connection with any individual,

copartnership, corporation, association, or

other business unit with whom any applicant

shall have been connected in any capacity,

and may in proper cases impute to any

individual, corporation, copartnership,

association, or other business unit liability

for any wrong or unlawful act previously done

or performed by such individual, corporation,

copartnership, association, or other business

unit .

(2) If the Florida Citrus Commission shall,

by a majority vote, be of the opinion that

the applicant is qualified and entitled to a

license as a citrus fruit dealer, the

commission shall approve the application;

otherwise the application shall be

disapproved. However, commission approval of

any application may be contingent upon such

reasonable conditions as may be endorsed

thereon by the commission, or commission

action on an application may, by majority

vote, be deferred to a subsequent date.

(3) In cases of deferred action, as set forth

in subsection (2), if the applicant so

requests and the factual circumstances are

deemed by the commission so to justify, the

commission may approve the granting of a

temporary license to be valid for a period to

be set by the commission, not to exceed 60

days. No more than one temporary license

shall be approved for any applicant during a

shipping season. No temporary license may be

approved unless all requirements relating to

bonds or fees required to be posted or paid

by the applicant have been met the same as

though the approval were not of a temporary

nature.

(4) Grounds for the disapproval of the

application include, but are not limited to :

(a) Any previous conduct of the applicant

which would have been grounds for revocation

or suspension of a license as hereinafter

provided if the applicant had been licensed.

(b) Delinquent accounts of the applicant

owing to and growing out of the ordinary

course of business with producers and other

persons or firms .

(c) Delinquent accounts of the applicant with

any person or persons with whom applicant has

dealt in its operations under a previous

license.

(d) Failure of the applicant or its owners,

partners, officers, or agents to comply with

any valid order of the Department of

Agriculture or the Department of Citrus

relating to citrus fruit laws or rules .

(e) Applicant's violation, or aiding or

abetting in the violation, of any federal or

Florida law or governmental agency rule or

regulation governing or applicable to citrus

fruit dealers.

(5) When the applicant is a corporate or

other business entity, the term "applicant"

as used in this section shall be deemed to

include within its meaning those individuals

who have been, or can reasonably be expected

to be, actively engaged in the managerial

affairs of the corporate or other business

entity applicant.

(6) The Department of Citrus shall designate

not more than three employees directly

involved in the processing of citrus fruit

dealer license applications, who shall be a

part of, and shall have access to, the

criminal justice information system described

in chapter 943, for purposes of investigating

license applicants.

(7) The Department of Citrus is authorized to

establish by rule the procedure and

guidelines for granting interim conditional

staff approval for issuance of a conditional

citrus fruit dealer's license, which license

shall at all times be subject to final

approval or other action by the commission at

its next regular meeting. Any license so

issued shall clearly and conspicuously

indicate thereon the conditional nature of

the approval and pendency of final action.

(emphasis added)

19. The predecessor statute governing licensing of dealers

was found to be a valid exercise of police power in Mayo v. Polk

County , 169 So. 2d 41, 44 (Fla. 1936):

The method of growing and marketing a citrus

fruit crop is fraught with hazards not

peculiar to any other fruit crop. The period

of growing and marketing from the bloom is

from ten to eighteen months. The crop is

grown, packed, and marketed in different

places by different people, and under

different circumstances. Fires, freezes, and

other destructive agencies may intervene over

which the grower has no control. It often

becomes advantageous to bargain for packing

and sale months in advance of maturity.

These and other contingencies are accompanied

by hazards singular to the citrus fruit

industry that amply justify the provisions of

the act complained of.

20. Petitioners argue that if the legislature had intended

that agents be subjected to the same scrutiny as dealers, it

could have specifically described those requirements as it did in

Section 601.57, Florida Statutes. More compelling is

Respondent’s argument that the legislature fully intended to

leave to the Department of Citrus the discretion to adopt

requirements as needed. The authority conferred in the last

sentence in Section 601.601, Florida Statutes, is simple and

direct. The principle of expressio unius est exclusio alterius ,

invoked by Petitioners, does not always circumscribe an agency’s

ability by rule to embellish requirements described in a statute.

It is necessary to determine legislative intent in a broader

examination of the regulatory scheme. See , Agency for Health

Care Administration v. University Hospital , 670 So. 2d 1037 (Fla.

1st DCA 1996).

21. Petitioners complain that Rules 20-1.009 and 20-1.010,

Florida Administrative Code, contain no standards to assess an

applicant’s involvement with a corporation or other business

entity, and are thus vague, fail to establish adequate standards

or vest unbridled discretion in the agency. As described above,

the rules track the language of the statute governing licensing

of dealers . The statute has been applied for more than 30 years.

The rules, like the statute do not require “men of common

intelligence” to guess at their meaning. Bouters v. State of

Florida , 659 So. 2d 235 (Fla. 1995). Whether the terms of the

rule should properly apply to the Petitioners is a matter for

disposition in an administrative hearing pursuant to Section

120.569 and 120.57(1), Florida Statutes (Supp. 1996).

22. The record of proceedings of the Florida Citrus

Commission amply supports that agency’s original adoption of the

rules that are challenged here. The Commission recognized that

persons representing dealers of citrus fruit require much the

same scrutiny as the dealers themselves, as growers, producers,

and other persons are egregiously harmed by the defalcations of

either.

23. Petitioners have not met their burden of demonstrating

the invalidity of Rules 20-1.009 and 20-1.010, Florida

Administrative Code. The Department appropriately exercised its

authority granted in Sections 601.10(1) and 601.601, Florida

Statutes. This conclusion recognizes that the rules in their

present form have reposed in the Florida Administrative Code for

22 years and have been applied and interpreted by the Agency for

some 10 years longer. See , Jax Liquors, Inc. v. Division of

Alcoholic Beverages and Tobacco, Dept. of Business Regulation ,

388 So. 2d 1306 (Fla. 1st DCA 1980). The presumption of validity

substantially outweighs the level of proof and argument provided

by Petitioners.

ORDER

Based on the foregoing, it is hereby,

ORDERED: the petition for Determination of Invalidity of

Administrative Rules is DENIED.

DONE AND ENTERED this 29th day of Ju ly, 1997, in

Tallahassee, Leon County, Florida.

___________________________________

MARY CLARK

Administrative Law Judge

Division of Administrative Hearings

DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488- 9675 SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 29th day of July, 1997.

COPIES FURNISHED:

Carroll Webb, Executive Director

Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399-1300

Liz Cloud, Chief

Bureau of Administrative Code

The Elliott Building

Tallahassee, Florida 32399-0250

Brenda D. Hyatt, Chief

Bureau of License and Bond

Mayo Building, Room 508

Tallahassee, Florida 32399-0800

C. Geoffrey Vining, Esquire

Suite 501

230 South Florida Avenue

Lakeland, Florida 33801

Clark Jennings, Esquire

Department of Citrus

Post Office Box 148

Lakeland, Florida 33802-0148

William E. Williams, Esquire

Huey Guilday & Tucker, P.A.

Post Office Box 1794

Tallahassee, Florida 32302-1794

Dan Santangelo, Executive Director

Department of Citrus

Post Office Box 148

Lakeland, Florida 33802-0148

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 one copy of

a notice of appeal with the Clerk of the Division of

Administrative Hearings and a second copy, accompanied by filing

fees prescribed by law, with the District Court of Appeal, First

District, or with the District Court of Appeal in the Appellate

District where the party resides. The notice of appeal must be

filed within 30 days of rendition of the order to be reviewed.