Heifetz v. Department of Business Regulation, Div. of Alcoholic Beverages & Tobacco

Citation10 Fla. L. Weekly 2142,475 So.2d 1277
Decision Date13 September 1985
Docket NumberNo. AX-443,AX-443
CourtCourt of Appeal of Florida (US)
Parties10 Fla. L. Weekly 2142 Mel HEIFETZ, d/b/a Key Wester Inn, Appellant, v. DEPARTMENT OF BUSINESS REGULATION, DIVISION OF ALCOHOLIC BEVERAGES & TOBACCO, Appellee.

Charles L. Curtis and Donna M. Poole, of Allsworth, Doumar, Cazel & Curtis, Fort Lauderdale, for appellant.

Harold F. X. Purnell, Gen. Counsel, Dept. of Business Regulation, Tallahassee, for appellee.

ZEHMER, Judge.

This administrative law case brings into sharper focus the respective roles and responsibilities of hearing officers and agencies involved in license revocation proceedings. Specifically, we review an order of the Department of Business Regulation, Division of Alcoholic Beverages & Tobacco (Division) revoking the beverage license held by appellant, Mel Heifetz, doing business as Key Wester Inn (Heifetz or appellant), on grounds that two employees working in the motel's lounge made drug sales to undercover agents on six occasions.

The Division's charges 1 were tried in a section 120.57 formal proceeding 2 before a hearing officer of the Division of Administrative Hearings. The recommended order of the hearing officer concluded, upon the facts found by him, that there was no evidence that Heifetz was involved in or knowingly condoned the drug activity, that the evidence failed to establish any negligence or lack of due diligence by Heifetz in supervising the licensed premises and employees, and that the evidence established that Heifetz took reasonable steps to screen employees and supervise the licensed premises. The recommended order concluded that Heifetz was not culpably responsible for illegal drug sales by the employees and recommended dismissal of the charges.

It is undisputed that the evidence failed to show Heifetz was involved in or knowingly condoned the illegal drug activity; therefore, the only basis for culpability would be negligent supervision or lack of diligence, in violation of section 561.29(1)(a), Florida Statutes (1983). 3

The Division rejected certain findings of fact made in the recommended order, made additional findings of fact, and concluded that "given the persistent and practiced manner in which the drug transactions occurred, the licensee failed to exercise ordinary care in the maintenance of the licensed premises or the supervision of his employees and is guilty of the violations charged in the Notice to Show Cause, as amended" (R.131-132). Based on these altered findings of fact, the Division ordered the license revoked.

Appellant raises three points on appeal. First, he complains that in substituting findings of fact the Division did not comply with section 120.57(1)(b)9, Florida Statutes (1983), and that the Division's substituted findings of fact and conclusions of law are not supported by competent, substantial evidence and do not comport with the essential requirements of law. Appellant next complains that section 120.60(7), Florida Statutes (1983), regarding emergency suspension of licenses, is unconstitutional on its face and as applied in this case. Finally, he argues that the Division failed to comply with the requirements of the Administrative Procedure Act in the issuance of the emergency suspension order of appellant's license. Finding substantial merit in appellant's first point, we reverse. In view of this disposition, we find it unnecessary to reach the other two points.

Briefly stated, the evidence presented to the hearing officer shows the following facts as found by him. Appellant is owner of the Key Wester Inn in Key West and holds a beverage license covering operation of a lounge located in the motel. On six different days between September 10, 1983, and September 28, 1983, Division undercover agents purchased illegal drugs from two lounge employees. Appellant was not present at the time of these transactions, but the lounge was being operated by managers hired by appellant. The various transactions generally took place in a surreptitious manner, with drugs and money being exchanged with an intent to conceal that drug transactions were being consummated. A significant amount of evidence was presented to the hearing officer regarding the manner in which the drug transactions occurred. Much of the evidence centered around the ability of various witnesses to the drug transactions to determine that a transaction was actually occurring.

After hearing all the evidence, the hearing officer made extensive findings of fact. Among other things, he found that the drug transactions were concealed or hidden from view and not readily observable to the witnesses to the events. Several of these findings of fact were rejected by the Division as not supported by the record, with the Division substituting its own findings that the various transactions were not secretive or concealed and that they were clearly observed by witnesses in the lounge.

Evidence was also presented to the hearing officer regarding whether the various managers of the lounge were aware of the illegal drug transactions. Particularly, there was testimony by investigating officers that the two employees who had sold the drugs had told the lounge managers of the drug sales. This evidence was objected to by appellant on the ground of hearsay, and the hearing officer reserved ruling on admissibility of the evidence. In his recommended order, the hearing officer indicated that this evidence was "of no probative value in light of the total lack of any direct evidence which would show knowledge on the part of those individuals and because of the contradictions between such statements and the very secretive manner in which all the sales were made" (R. 113). The hearing officer weighed the evidence and concluded that the lounge managers were unaware of the illegal drug activities. This finding of fact was rejected by the Division, however, with a substituted finding that the managers were aware of the illegal drug activity.

Finally, there was evidence regarding the various steps taken by appellant to make employees aware of the employer's policy against the use or sale of drugs and to check into the identity and background of prospective employees. The hearing officer made various findings indicating that appellant took substantial measures in these areas, but the Division rejected many of the findings as not supported by the record and substituted its own findings pointing out certain deficiencies in appellant's practices.

Upon complete review of the record, we hold that all relevant and material findings of fact made by the hearing officer are supported by competent, substantial evidence in the record and that the Division erred in rejecting those findings of fact and substituting its own findings on the issues presented.

Despite a multitude of cases repeatedly delineating the different responsibilities of hearing officers and agencies in deciding factual issues, we too often find ourselves reviewing final agency orders in which findings of fact made by a hearing officer are rejected because the agency's view of the evidence differs from the hearing officer's view, even though the record contains competent, substantial evidence to support the hearing officer's findings. So once again we find it necessary to explain the respective roles of hearing officers and agencies in section 120.57 proceedings.

Section 120.57(1)(b)9, Florida Statutes (1983), mandates that an agency accept the factual determinations of a hearing officer unless those findings of fact are not based upon "competent substantial evidence." A number of cases have defined the competent, substantial evidence standard. The seminal case is De Groot v. Sheffield, 95 So.2d 912 (Fla.1957), in which the Florida Supreme Court described it as "such evidence as will establish a substantial basis of fact from which the fact at issue can be reasonably inferred" or such evidence as is "sufficiently relevant and material that a reasonable mind would accept it as adequate to support the conclusion reached." 95 So.2d at 916. Since this oft-cited definition is somewhat broad and capable of diverse interpretations and applications, the following rules for agency review of proposed orders should help agencies understand and properly apply the accepted view of the competent, substantial evidence standard.

Factual issues susceptible of ordinary methods of proof that are not infused with policy considerations are the prerogative of the hearing officer as the finder of fact. McDonald v. Department of Banking & Finance, 346 So.2d 569 (Fla. 1st DCA 1977). It is the hearing officer's function to consider all the evidence presented, resolve conflicts, judge credibility of witnesses, draw permissible inferences from the evidence, and reach ultimate findings of fact based on competent, substantial evidence. State Beverage Department v. Ernal, Inc., 115 So.2d 566 (Fla. 3d DCA 1959). If, as is often the case, the evidence presented supports two inconsistent findings, it is the hearing officer's role to decide the issue one way or the other. The agency may not reject the hearing officer's finding unless there is no competent, substantial evidence from which the finding could reasonably be inferred. The agency is not authorized to weigh the evidence presented, judge credibility of witnesses, or otherwise interpret the evidence to fit its desired ultimate conclusion. We recognize the temptation for agencies viewing the evidence as a whole, to change findings made by a hearing officer that the agency does not agree with. As an appellate court, we are sometimes faced with affirming lower tribunal rulings because they are supported by competent, substantial evidence even though, had we been the trier of fact, we might have reached an opposite conclusion. As we must, and do, resist this temptation because we are not the trier of fact, so too must an agency resist this temptation since it is...

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