Presents may be coming early for businesses licensed as food establishments in the Sunshine State.  Several grocerant and similar concepts popping up across the State may have foregone an attempt to obtain a consumption on premises liquor license, due to an outdated agency rule. Dining establishments are increasingly blending the grocery market and dining experience into one modern concept; albeit limited to providing patrons only with beer and wine. This is due in part to the unknowable standards to maintain a consumption on premises license, as outlined in the vague “Restaurant Rule.” This vague rule was recently and successfully challenged.

By way of brief background, businesses hope for license issuance decisions by state agencies be administered in a fair manner. Without a fair process or rules in place to govern the process, business owners may be faced with changing important strategies or ultimately closing their business due to unforeseen circumstances. TopGolf found themselves a victim of the arbitrary nature in which the Division of Alcoholic Beverages and Tobacco conducted the licensing process for issuance of a liquor license. In light of potentially losing a license, they decided to fight back by challenging the agency’s rule.

TopGolf maintains four consumption on premise licensed establishments in Florida. Each location features several high-tech, climate-controlled, golf, hitting bays, food and beverage options, and employs a staff of associates to provide patrons with a golf-themed food, beverage, and entertainment experience.  In the process of obtaining a fifth license for their Doral location, they were alerted by the agency that they may be selling items other than those listed in the agency rule. The rule’s list limits items to the following:

  • Ready to eat appetizer items;
  • Ready to eat salad items;
  • Ready to eat entrée items;
  • Ready to eat vegetable items;
  • Ready to eat dessert items;
  • Ready to eat fruit items; or
  • Hot or cold beverages

If an item is not listed, an applicant or licensee may petition to the agency in an attempt to establish that the item is customarily sold in a restaurant. The crucial drawback is that anyone making a petition does not receive any other assistance or guidance on how to demonstrate that an item is customarily sold.  In the present case, items at issue included TopGolf-branded and/or golf-themed t-shirts, caps, visors, golf balls, cups, key chains, gloves and other trinkets. Notably, all of TopGolf’s Florida locations sell items similar to those at issue in the Doral location, yet there was no issue with those location obtaining and maintaining their license, in good standing.  But now, the agency’s inspection of the Doral location exposed them to potential administrative and/or criminal penalties for the purported violation of the Restaurant Rule at each of its Florida locations. This unbridled discretion in granting licenses and then choosing when to enforce the rule leaves businesses in an awkward position, and many choose to forfeit any potential opportunities by just abstaining from liquor. Others, like Walmart and Target, joined TopGolf in this challenge, and are seeking guidance as to the validity of the rule itself.

The Administrative Law Judge determined that not only was the rule vague, therefore granting unbridled discretion, it was also applied in an arbitrary and unpredictable nature. During the hearing, the agency’s own representative could not provide a definition of “customarily sold” or “restaurant” as used in the rule. Furthermore, they could not describe the standards used to determine whether an item is customarily sold in a restaurant. his alone, illustrated the vagueness of the rule and demonstrates the enormous amount of discretion the agency has on a case by case basis since there are no real standards to abide by.

Additionally, the Judge felt that with the agency’s own acknowledgment that restaurants customarily sell t-shirts and branded souvenirs at a minimum, its exclusion from the rule’s listed items is “illogical.”  The agency inspector flagged these items, due to an outdated rule, and the agency ultimately confounded the problem by saying the items are customarily sold in restaurants when an agent, following their own rule, said otherwise. The level of confusion in which the agency interprets and administers this rule is maddening at the least, and ultimately the court ruled in favor of TopGolf, Walmart, and Target.

This case provides a great example of why it is important businesses consider potential rule challenges when it comes to departmental licensure actions. As shown here, agencies are not perfect and even their rules may be an invalid use of power granted by the State, and as such it would not truly limit you from a business opportunity.  It is important to hire a competent administrative law attorney in a case like this one to challenge the questionable practices of various agencies.

If you have any questions about any penalties or fees imposed by Florida’s Division of Alcoholic Beverages and Tobacco or the Florida Department of Revenue, then please contact our office for a free initial consultation. If any agency in Florida threatens you or your business’s Florida professional license or Florida business license, then please contact a competent Florida attorney to fight back.  If you don’t already have an attorney, then contact our offices today to help keep your business doors open.

 

Posted in Administrative Law, Alcoholic Beverages, Florida DBPR, Regulated Substances