FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, DIVISION OF ALCOHOLIC BEVERAGES AND TOBACCO

v.

WALMART INC., WAL-MART STORES EAST, L.P., ABC FINE WINE AND SPIRITS, FLORIDA INDEPENDENT SPIRITS ASSOCIATION, PUBLIX SUPERMARKETS, AND TARGET CORPORATION

appeals a final order declaring proposed Florida Administrative Code Rule 61A-3.055 (proposed rule) invalid. The proposed rule attempts to define items “customarily sold in a restaurant” as that term is used in section 565.045, Florida Statutes, for the purpose of issuing Consumption on Premises (COP) liquor licenses. It was created after the existing rule was found to be invalid, which we affirmed on appeal. See Fla. Dep’t of Bus. & Prof’l Regulation, Div. of Alcoholic Beverages & Tobacco v. Target Corp., No. 1D18-5311 (Fla. 1st DCA May 19, 2021).

In the instant appeal, the Division argues the Administrative Law Judge (ALJ) erred by considering issues not raised by Walmart or Target (Petitioners) in their petitions when it concluded the proposed rule to be an invalid exercise of delegated legislative authority. Because we find the issues sufficiently raised below and conclude that the proposed rule enlarges and modifies the statute, we affirm the order on appeal for the reasons set forth below.¹ 2 I. Facts Pursuant to section 565.045, a COP licensee may not sell “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.” § 565.045(2)(a), Fla. Stat. (emphasis added).

In both the existing rule and the proposed rule, the Division attempts to provide clarification as to what is considered “customarily sold in a restaurant.” After Petitioners successfully petitioned to have the existing rule declared invalid, the Division developed the proposed rule. The proposed rule provides as follows:

(1) As used in section 565.045, Florida Statutes, items customarily sold in a restaurant shall only include the following:

(a) Food cooked or prepared on the licensed premises; or (b) Hot or cold beverages; or (c) Souvenirs bearing the name, logo, 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 services or sales authorized in the “Florida Public Lottery Act”, section 24.122(4), Florida Statutes. Prior to adopting the proposed rule, the Division conducted public rulemaking workshops. Thereafter, Petitioners filed a petition seeking an administrative determination of the validity of the rule. After a final hearing, the ALJ held the proposed rule invalid. Specifically, the ALJ found the proposed rule enlarges, modifies, or contravenes the statute because the proposed rule does not allow for food that is cooked or prepared offsite to be sold; thus, the Division improperly restricted the items “customarily sold in a restaurant” to only those foods listed. The ALJ also found the proposed rule to be arbitrary and capricious because it fails to define “restaurant” or “customarily,” and because the Division created a list of items to be considered “customarily sold in a restaurant” without first conducting any survey, study, or investigation of restaurants to determine what they customarily sell. The Division now appeals the final order.

II. Analysis A. Whether the Issues Were Adequately Raised in the Petitions The Division argues that the final order should be reversed because the ALJ held the proposed rule invalid based on factual and legal objections not alleged in the petitions. A party who is challenging the validity of a proposed or adopted rule must state in their petition “the particular provisions alleged to be invalid and a statement of the facts or grounds for the alleged invalidity.” § 120.56(1)(b), Fla. Stat. The agency is required to prove “that the proposed rule is not an invalid exercise of delegated legislative authority as to the objections raised.” § 120.56(2)(a), Fla. Stat. (emphasis added).

Generally, in all forms of litigation, objections must be pleaded with “sufficient particularity for a defense to be prepared.” Arky, Freed, Stearns, Watson, Greer, Weaver & Harris, P.A. v. Bowmar Instrument Corp., 537 So. 2d 561, 563 (Fla. 1988).

In their petitions, Petitioners argued both that the proposed rule is an invalid exercise of delegated legislative authority because it is arbitrary and capricious, and because it enlarges, modifies, or contravenes the statute it purports to implement. Walmart noted that “restaurant” is not defined by rule or statute and argued that the proposed rule improperly limits the items that are considered “customarily sold in a restaurant.” These issues were identified in the pretrial stipulation as issues of fact to be litigated.

Additionally, in their opening statement, Petitioners argued that the Division failed to define “restaurant” and “customarily” and failed to do any type of investigation or study to determine what is “customarily sold in a restaurant.” Based on the foregoing, we find the basis for the ALJ’s ruling was sufficiently pleaded and provided sufficient particularity for the Division to prepare its defense.

B. Whether the Prosed Rule Enlarges, Modifies, or Contravenes the Statute

As we find the issues were sufficiently pleaded in the petitions, we consider the merits of the Division’s claim. The Division first claims the ALJ erred in holding the proposed rule enlarges, modifies, or contravenes the statute it was meant to implement. The Division argues that there in not sufficient evidence to conclude that food prepared offsite is “customarily sold in a restaurant,” which was the basis for the ALJ’s ruling, and that in so ruling, the ALJ erroneously relied on State, Department of Business Regulation, Division of Alcoholic Beverages and Tobacco v. Salvation Limited, Inc., 452 So. 2d 65 (Fla. 1st DCA 1984).

On appeal, findings of fact will be affirmed if supported by competent, substantial evidence. Jacoby v. Fla. Bd. of Med., 917 So. 2d 358, 359 (Fla. 1st DCA 2005).

However, questions of law are subject to de novo review. SW Fla. Water Mgmt. Dist. v. Save the Manatee Club, Inc., 773 So. 2d 594, 597 (Fla. 1st DCA 2000).

Whether a rule is an invalid exercise of legislative power is a question of law. Id.; see also Orlando Health Cent., Inc. v. Agency for Healthcare Admin., 252 So. 3d 849, 852 (Fla. 1st DCA 2018).

A rule is an invalid exercise of delated legislative authority where it “goes beyond the powers, functions, and duties delegated by the Legislature . . . .” § 120.52(8), Fla. Stat. An agency may not propose to create a rule that “enlarges, modifies, or contravenes the specific provisions of the law implemented.” § 120.52(8)(c), Fla. Stat. It is not enough that the agency’s rule is “reasonably related” to the Legislature’s purpose or statutory provisions. § 120.536(1), Fla. Stat. The agency’s rule and interpretation must comport with the specific authorizing statute. § 120.536(1), Fla. Stat.; State, Dep’t of Children & Family Servs. v. I.B., 891 So. 2d 1168, 1171 (Fla. 1st DCA 2005) (“No agency shall have authority to adopt a rule only because it is reasonably related to the purpose of the enabling legislation . . . or [] within the agency’s class of powers and duties.”).

A rule also must be consistent with the Legislature’s statutory mandates. Cleveland v. Fla. Dep’t of Children & Families Dist.: 07 Seminole Unit 55205, 868 So. 2d 1227, 1231 (Fla. 1st DCA 2004). “Courts are not free to choose an interpretation they conclude is the best public policy, but must defer to the other branches.” Fla. Dep’t of Educ. v. Cooper, 858 So. 2d 394, 397 (Fla. 1st DCA 2003); see also § 120.68(7)(d), (e), Fla. Stat. The ALJ properly concluded that “one cannot determine what is customarily sold in a ‘restaurant’ until one establishes the meaning of ‘restaurant.’” Because “restaurant” is not defined by statute or rule, we look to the plain meaning of the term when analyzing the validity of the proposed rule. See State v. Fla. Senior Living Ass’n, Inc., 295 So. 3d 904, 912 (Fla. 1st DCA 2020) (noting that where a word in a rule is not defined, like a statute, “they are to be given ‘their plain and ordinary meaning’”).

As an initial matter, we note that a plain reading of the proposed rule makes clear that subsection (1) of the rule provides an exclusive list of items customarily sold in a restaurant. If there is an item, such as food prepared offsite, that is proven to be customarily sold in a restaurant, but that item is not included in the list, the rule will likely be deemed invalid. Here, the ALJ did not determine that food prepared offsite is customarily sold in a restaurant based on evidence submitted at the hearing. Rather, he did so based on this Court’s ruling in Salvation Limited. In that case, the Division appealed an order finding the administrative rule at issue invalid. Salvation Ltd., Inc., 452 So. 2d at 66. At the time, Florida law limited the number of liquor licenses that could be issued, with certain “restaurants” being exempt from the limitation. Id. Under the rule used by the Division to determine whether a “restaurant” qualified for the exemption, the “restaurant’s” meals were required to “be prepared and cooked on the premises.” Id. At the time, “restaurant” was defined as “a public eating place” in Webster’s New Collegiate Dictionary. Id. at 67.

This Court held that under that definition of “restaurant” there is no requirement that food be prepared and cooked on the premises. Id. The Division argued in Salvation Limited as it does here— that any reference to “restaurant” should be construed to mean a “public food service establishment.” However, as determined previously, this argument does not support the Division’s conclusion that food must be cooked onsite, as a “public food service establishment” is a place where ‘food is regularly prepared, served, or sold.” Id.

Thus, even if a “restaurant” is considered a “public food service establishment,” the definition of such an establishment does not require food to be prepared onsite.

We find our ruling in Salvation Limited persuasive. We recognize that the definition of “restaurant” has been slightly revised since this Court’s ruling in that case. Merriam-Webster (2019) now defines restaurant as “a business establishment where meals or refreshments may be purchased.” However, as was the case in Salvation Limited the plain meaning of “restaurant” does not require the food to be prepared onsite. Applying the more recent definition to the instant case does not affect the holding in Salvation Limited.

Thus, we agree with the ALJ; the plain meaning of the term “restaurant” supports that such establishments customarily sell food prepared offsite, and by excluding such items, the proposed rule enlarges, modifies, or contravenes the statute.³ C. Whether the Proposed Rule is Arbitrary or Capricious Although we find the proposed rule enlarges, modifies, or contravenes the statute, we disagree that the rule is arbitrary or capricious. A rule is an invalid exercise of delegated legislative authority if it is arbitrary or capricious. § 120.52(8), Fla. Stat. “A rule is arbitrary if it is not supported by logic or the necessary facts; a rule is capricious if it is adopted without thought or reason or is irrational[.]” § 120.52(8)(e), Fla. Stat. The Division first argues the ALJ erred in essentially requiring it to define the terms “restaurant” and “customarily” before determining what is “customarily sold in a restaurant.” We disagree. As explained above, where a term is not defined by statute or rule, the plain meaning of that term will be used. The Division is not required to do more. The Division next claims that the ALJ erred when it held the rule to be arbitrary and capricious because the list of items customarily sold in a restaurant “is not based upon any factual examination or evidence about what restaurants, whatever the definition, actually sells.” However, there is no question that the Division undertook the proper procedures to adopt the proposed

However, we find the argument unpersuasive as the rules do not relate to the same subject. The party supply rule only deals with what is considered party supplies, and the proposed rule strictly addresses what is considered “customarily sold in a restaurant.” rule, and those procedures do not require the Division to conduct an empirical investigation prior to crafting and adopting a rule.

We conclude that it would be improper to require such investigation where it is not otherwise demanded by rule or statute. Rather, the Division simply needs to satisfy their burden of proving the proposed rule is support by logic or the necessary facts and was adopted with thought and is not irrational. See § 120.52(8), Fla. Stat. Here, the Division met it burden by proving it went through the necessary rule adoption procedures and accepted comment from those affected by the proposed rule.

Thus, the proposed rule is not arbitrary or capricious.

III. Conclusion While we do not find the proposed rule to be arbitrary or capricious, we do agree with the ALJ that it enlarges, modifies, or contravenes the statute. We also conclude that Petitioners adequately pleaded the issues ruled on.

Therefore, we affirm the ALJ’s ruling to the extent it finds the proposed rule to be an invalid exercise of delegated legislative authority. AFFIRMED. LEWIS, J., concurs; WINOKUR, J., dissents with opinion.