STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GENERAL MOTORS CORPORATION, ) GMC TRUCK AND COACH DIVISION, ) AND ROSS CHEVROLET, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 80-1265

) HUNT TRUCK SALES AND SERVICE, ) INC., AND STATE OF FLORIDA, ) DEPARTMENT OF HIGHWAY SAFETY ) AND MOTOR VEHICLES, DIVISION OF ) MOTOR VEHICLES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was conducted in this cause on February

25 and 26, 1981. The hearing was held in Room 602, Park Trammell Building, 1313 Tampa Street, Tampa, Florida.

APPEARANCES

For Petitioner, James C. Cubbin, Esquire General Motors: Office of the General Counsel

General Motors Corporation

14-204 General Motors Building 3044 West Grand Boulevard Detroit, Michigan 48202

Joseph C. Jacobs, Esquire and Dean Bunch, Esquire

Post Office Box 1170 Tallahassee, Florida 32302

For Petitioner, Leonard Lubin, Esquire

Ross Chevrolet: 3151 Third Avenue North, Suite 301

St. Petersburg, Florida 33713

For Respondent, Joseph G. Spicola, Jr., Esquire Hunt Truck Sales 806 Jackson Street

& Service, Inc.: Tampa, Florida 33602

For Respondent Department of Highway Safety and Motor

Vehicles: No appearance.

ISSUE

The issue presented here concerns the question of whether the Respondent, State of Florida, Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles, should grant the Petitioner, Ross Chevrolet, Inc. (Ross), an amendment to its motor vehicle dealer license in accordance with Section 320.642, Florida Statutes, on the basis that the Petitioners in this cause, Ross and General Motors Corporation, GMC Truck and Coach Division (GMC), in the face of the challenge to Ross's licensure offered by the Respondent, Hunt Truck Sales and Service, Inc. (Hunt), have proven that the existing GMC heavy-duty truck dealers in the territory or community are providing inadequate representation for GMC. 1/

FINDINGS OF FACT

Case History

1. On June 4, 1980, the Petitioner GMC entered into a Heavy-Duty Truck Addendum with Petitioner Ross to amend Ross's Dealer Sales and Service Agreement to enable Ross to sell Series 80 and Series 90 model heavy-duty trucks produced by GMC. The heavy-duty truck dealership would be located at Ross's existing heavy-duty truck facility, 2530 30th Avenue North, St. Petersburg, Florida.

   
   

2. The Respondent Hunt having learned of GMC's intentions to grant a franchise to Ross, protested Ross's licensure before the Respondent, State of Florida, Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles, that protest having been made in keeping with the terms of Section 320.642, Florida Statutes.

   
   

3. After receiving the Respondent Hunt's protest, the Division of Motor Vehicles forwarded the case to the State of Florida, Division of Administrative Hearings for a hearing pursuant to Section 120.57(1), Florida Statutes. A formal hearing was held on February 25 and 26, 1981, following the succeeding prehearing matters.

Several theories were advanced prior to hearing on the subject of the ability of the Director, State of Florida, Department of Highway Safety and Motor Vehicles, to consider the issue of granting the Petitioner Ross the motor vehicle dealer's license requested of that Division and the opportunity for the Respondent Hunt to protest the grant of that license. In the logical order of the treatment of these questions, they were presented as follows:

1. The Respondent Hunt's Motion to Dismiss this action on the theory that Ross's application for licensure from the Division was premature, in that the community or territory proposed for this licensure had not been established through the application process.

   
   

2. The Petitioners' Motion to Dismiss or in the Alternative, Motion for Summary Recommended Order on the grounds that:

   
   

   1. The application by the Petitioner Ross was a replacement application and, therefore, not subject to protest under the terms of Section 320.642, Florida Statutes, such protest being by the Respondent Hunt.

      
      

   2. Hunt was not a dealer within the same community or territory as Ross; consequently,

      the Ross application was not subject of protest by Hunt, in keeping with the authority of Section 320.642, Florida Statutes.

      
      

3. A hearing was held on these jurisdictional motions on October 10, 1980, wherein evidence was presented.

   
   

4. The Hearing Officer issued a Recommended Order which recited the fact that Ross's application for a GMC heavy-duty truck franchise resulted from Chevrolet's discontinuation of their heavy-duty truck marketing effort. The Order held that, for the purposes of heavy-duty trucks, Pinellas and Hillsborough Counties are within the same "territory or community." The Order went on to suggest that the dealer franchise sought by Ross was a replacement, not a new dealer license thereby depriving the Respondent agency of subject matter jurisdiction within the meaning of Section 320.642, Florida Statutes, and necessarily depriving the Respondent of standing to challenge the licensure.

   See Southside Motor Company, etc. v. Askew, 332 So.2d 613 (Fla. 1976).

   
   

5. On December 15, 1980, John D. Calvin, Director, Division of Motor Vehicles, issued an "Order on Jurisdiction" which rejected the Recommended Order finding that Ross is a new dealer not a replacement dealer, but accepting the Recommended Order insofar as its finding that Pinellas and Hillsborough Counties are within the same "territory or community."

   
   

6. Calvin remanded the case to the Hearing Officer for a final hearing on the issue of adequacy of representation as set forth in Section 320.642, Florida Statutes.

   
   

7. On January 6, 1981, this Hearing Officer accepted the case on remand from Calvin upon Calvin's conclusion that "there is subject matter jurisdiction to consider the opposition to the motor vehicle application."

   
   

8. GMC and Ross filed a petition for review of non-final agency action, pursuant to Section 120.68(1), Florida Statutes, requesting that the Second District Court of Appeal, State of Florida, review Calvin's Order on Jurisdiction. Subsequent to the filing of the appeal, Hunt filed a Motion for Continuance with the Hearing Officer and a Motion to Stay Order on Jurisdiction directed to the Division of Motor Vehicles. The Motion for Continuance was denied by the Hearing Officer and the Motion to Stay Order on Jurisdiction was granted by Calvin on February 17, 1981.

   
   

9. After having heard oral argument and receiving written citations of authority from the parties, the Hearing Officer, on February 23, 1981, ruled that the hearing would proceed as scheduled.

   
   

10. On February 24, 1981, the day prior to the date set for the final hearing, Respondent Hunt filed a Motion to Confirm Stay in Case No. 81-82, Second District Court of Appeal, which was then pending upon Petitioners GMC and Ross's appeal, and a Petition for Writ of Prohibition and Show Cause Order and Motion for Emergency Stay directed to the Hearing Officer, Case No. 81-359, seeking to prevent the conducting of the final hearing herein. All relief sought by Respondent Hunt was denied by the Second District Court of Appeal on February 24, 1981, and the final hearing on the merits in this matter proceeded as scheduled February 25 and 26, 1981. This Recommended Order results from that hearing.

    Parties

    
    

11. Petitioner GMC is a truck manufacturer that offers for sale light, medium and heavy-duty trucks in the United States primarily through retail outlets owned and operated by independent business entities. The model line which is the subject of this proceeding-includes only heavy-duty trucks in GMC's

    80 and 90 Series.

    
    

12. The Petitioner Ross was the holder of a heavy-duty truck addendum to sell Chevrolet trucks for General Motors Corporation. The Chevrolet heavy-duty truck line is no longer produced by that manufacturer and Ross now seeks a Florida dealer license for permission to sell GMC heavy-duty trucks at the aforementioned location in Pinellas County, Florida.

    
    

13. The Despondent Hunt is a truck dealership, licensed by the State of Florida, to handle (NC light, medium and heavy-duty trucks, as well as White, Freightliner, Volvo, and Mercedes-Benz heavy-duty trucks. Hunt's dealership is located at 8211 Adano Drive, Tampa, Florida, within Hillsborough County.

. 14. The Respondent, State of Florida, Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles, is an agency of the State of Florida which has among other functions the responsibility to evaluate and issue motor vehicle dealer licenses to those applicants who intend to sell motor vehicles in the State of Florida. This responsibility is mandated by Chapter 320, Florida Statutes. As an adjunct to this process, the Respondent, Division must act in accord with the provisions of Section 320.642, Florida Statutes, which creates the opportunity for ongoing dealers in the community or territory of a proposed dealer to protest the grant of the prospective dealer's license, in keeping with prior decisions of the agency and court opinions that have spoken to the issue of the Division's function in this specified requirement.

Marketing

1. The "primary area" of responsibility as designated and defined in the GM Dealer Sales and Service Agreement related to the existing franchisee Hunt, is constituted of Pinellas, Hillsborough, and Pasco Counties, Florida. Should Ross be approved for licensure by the State of Florida it has also been offered that same "primary area" of responsibility by GM. Petitioner's Exhibit No. 10 depicts the physical location of the Hunt operation in Tampa, Florida, and of the facility of Ross in St. Petersburg, Florida. The distance between those two dealerships is approximately 27 miles and the driving time necessary to traverse that distance is approximately 45 minutes.

   
   

2. In the "primary area" of responsibility for Hunt and prospectively for Ross, there are 8 heavy-duty truck manufacturers represented to include: GMC, Volvo, Freightliner, White, Mark, International, Ford, and Kenworth. At Present all of those manufacturers have dealerships in Hillsborough County, Florida.

   
   

3. There are 8 GMC heavy-duty truck dealerships in the State of Florida, which is part of the Atlanta zone for GMC, which has a total of 20 heavy-duty dealerships in four states to include Florida. Three of the GMC heavy-duty truck dealerships in Florida are located on the west coast of Florida. There are 281 GMC heavy-duty dealerships nationally.

   
   

4. As reflected in Petitioner's Exhibit No. 1, heavy-duty truck registrations for all manufacturers for Hillsborough, Pinellas and Pasco Counties for the period 1975 compared to 1979 grew by 125 percent from 605 units

   to 1362 units. That same exhibit indicates registrations in Pinellas County, referring to that time period 1975 through 1979, to be: 1975-78; 1976-108;

   1977-113; 1978-240; 1979-275.

   
   

5. During the period of those full reporting years reflected in Petitioner's Exhibit No. 1 in the aforementioned three-county area, that is 1975 through 1979, the number of Chevrolet heavy-duty trucks sold was 6, 19, 13, 24 and 55 respectively as opposed to 106, 74, 215, 266 and 191, respectively for GMC heavy-duty trucks in those counties.

   
   

6. Petitioner's Exhibit No. 1 shows, when comparing GMC registrations in Pinellas County to those in Hillsborough County, that for the full year periods 1975 through 1979, Pinellas County registrations were considerably less. Pasco County registrations for GMC were even less significant when this comparison is made.

   
   

7. Petitioner's Exhibit No. 5 entered into evidence, is a printout of retail sales made by Hunt and reports part of the calendar year 1976, all of the calendar years 1977, 1978, 1979, and part of the calendar year 1980. This information is based upon data provided by Hunt to GMC. When contrasting this exhibit with Petitioner's Exhibit No. 3, admitted into evidence, which is a summarization from R. L. Polk Company data related to truck registrations in the rePorting years 1977 through 1979, one additional sale by Hunt is reflected in Petitioner's Exhibit No. 5 as contrasted with the Petitioner's Exhibit No. 3, related to registrations. There are also some minimal differences in the registration data in Petitioner's Exhibit No. 1 compared to Petitioner's Exhibit (These differences should be evaluated in conjunction with the following paragraph.)

   
   

8. Turning to an examination of Respondent's Exhibit No. 3, which Respondent Hunt contended represented additional sales by Hunt not reflected in Petitioner's Exhibit No. 5, it should be noted that this exhibit, Respondent's Exhibit No. 3, expands the reporting period of Petitioner's Exhibit No. 5. Taking as correct the stated purpose of Respondent's Exhibit No. 3 to be one of demonstrating additional truck sales in Pinellas County bade by Hunt which are not reflected in Petitioner's Exhibit No. 5, data provided by Hunt; those sales as shown on pages 2, 4, 5, 13, 17, 18, 26, 29 and 32 of Respondent's Exhibit No. 3, add nothing to the total in that they were made by Pinellas Truck Sales, Inc., a light and medium-duty truck franchisee for GMC, not part of the Hunt Addendum with GMC to sell heavy-duty trucks. In addition those sales reflected in pages 10 and 14 of the Respondent's Exhibit No. 3 were not made in Pinellas County. Those sales in Respondent's Exhibit No. 3 found at pages 9, 12 and 16 are excluded for reasons that they are already reflected in Petitioner's Exhibit No. 5. Those sales at pages 19 and 33 of Respondent's Exhibit No. 3, are excluded because they are intradealer sales and should not be counted in marketing analysis. Finally, that sale by Pinellas Truck, which is reflected at cage 17 of Respondent's Exhibit No. 3, is also shown in the Petitioner's Exhibit No. 5, at page 12, line 31, and should be removed from Petitioner's Exhibit No.

   5 as part of the count. Likewise, that intradealer transfer or sale reflected on page 19 of Respondent's Exhibit No. 3 is reported at page 13, line 41 of Petitioner's Exhibit No. 5, and should reduce the Pinellas County sales in Petitioner's Exhibit No. 5 by one unit. In summary, of the 35 additional sales which the Respondent Hunt claims to have made in Pinellas County which are not reflected in the Petitioner's Exhibit No. 5, 16 of those sales are disallowed and Petitioner's Exhibit No. 5 is reduced by 2 units.

9. Again, considering Petitioner's Exhibit No. 1 it indicates that at the time Chevrolet had a heavy-duty truck dealership in Pinellas County, Florida, its performance was stronger in that county than in Hillsborough County, Florida, and the same observation can be made of GMC's heavy-duty truck performance, in that their performance in Hillsborough County had been stronger than its Pinellas County performance in a circumstance wherein GMC had a heavy- duty dealership in Hillsborough County. This indicates a sales advantage for the dealerships in the counties where they are found, particularly when you consider the similarity between GMC and Chevrolet heavy-duty trucks as reflected in the initial Recommended Order in this cause dated October 24, 1980, which findings of fact related to the similarities are incorporated by reference herein.

   
   

10. On the subject of the Pinellas County market, historically sales of Chevrolet heavy-duty trucks made by the Petitioner Ross have been more along the lines of non-fleet customers with one or two purchases as contrasted to truck sales by Hunt, which have been more in the way of fleet sales. Most of the Ross accounts are with small customers.

    
    

11. To be successful in marketing the product in Pinellas County or elsewhere, the heavy-duty truck business requires selling outside the dealership, in that the marketing is not similar to the sales of automobiles. Customers do not come to the showroom to make the purchase, the dealer must canvass outside the dealership through dealer salesmen. Ross had five salesmen canvassing end soliciting in Pinellas County with emphasis on small fleet buyers, i.e. buyers of one to five trucks.

    
    

12. Small customers ordinarily do not do their own maintenance, and location of a dealership for maintenance purposes is an important consideration for that purchaser. This is contrasted with larger buyers who solicit bids with less regard to dealer location and availability of service. Without easily accessible service, the small buyer suffers great business damage when his equipment is down for repair.

    
    

13. Hunt has also actively solicited business in Pinellas County and has employed three full-time parts salesmen, and has made substantial sales on accounts receivable in Pinellas County during the year 1980. It has 168 employees, 28 of which are in parts and 19 are salesmen.

    
    

    Pinellas County as a "Community or Territory"

    
    

14. In the preliminary jurisdictional decision, from the evidence presented it appears that "primary area" of responsibility as designated by GM for Hunt and Ross to sell GMC heavy-duty trucks and the "community or territory" within the meaning of Section 320.642, Florida Statutes, related to Hillsborough, Pinellas and Pasco Counties were synonymous. After reviewing the facts presented in the expanded hearing held in February, 1981, Pinellas County is found to be a separate and distinct "community or territory," and having decided that Pinellas County constitutes a "community or territory" within the meaning of Section 320.642, Florida Statutes, separate and apart from Hillsborough and Pasco Counties, the following supplemental facts are offered in support of this finding: Pinellas County's population, according to the Bureau of Census in 1970, was 522,329 and it has grown to 721,227 - a growth rate of about 38 percent. Projection by the University of Florida, Division of Population Studies, Bureau of Economic Analysis, indicate a growth rate for the next decade of around 29 percent. According to the Center for Economic Management Services, there were 224,000 persons employed in Pinellas County in

    August, 1980. Principal industries in Pinellas County are tourism, construction and light manufacturing. The 1977 Census of Economic Activities by the US. Bureau of the Census indicated 803 manufacturing firms in Hillsborough County as contrasted with 866 of those firms in Pinellas County. A smaller number and percentage in Pinellas County were classified by this census as being large firms with 20 or more employees.

    
    

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action. See Subsection 120.57(1), Florida Statutes.

    
    

16. By this Recommended Order, the reply affidavit of the petitioner, General Motors Corporation, offered to Respondent's Exhibit No. 3 is accepted, together with the counter affidavit by the Respondent.

    
    

17. The petitioner's reply affidavit to the Respondent Freightliner's market research information is accepted together with the Respondent's counter affidavit.

    
    

18. The Respondent Hunt has moved to strike the memoranda by the petitioner, General Motors Corporation, addressing Respondent's Exhibit No. 3 and the Freightliner information. Upon consideration of this motion to strike the sane is hereby DENIED.

    
    

19. By the process of the memorandum offered by the Petitioner, General Meters Corporation, directed to the testimony of Michael Arnold on the Freightliner information, this memorandum appears to move to strike the testimony of said witness. Upon consideration of that motion, the same is hereby DENIED.

    
    

20. In the counter affidavit directed to Respondent's Exhibit No. 3, the Respondent has attached two exhibits. Those exhibits are "A" and "B". The process designed for posthearing affidavits did not allow an expansion of the record to the extent of promoting additional materials not reflected in Respondent's Exhibit No. 3, by way of affirmative proof by the Respondent Hunt. Therefore, the attachments, Exhibits "A" and "B" have not been considered in deciding this case.

    
    

21. Section 320.642, Florida Statutes, makes it incumbent on the manufacturer and his prospective franchisee to prove the existing dealerships in the "community or territory" for which the license is sought are failing to provide adequate representation in that community or territory. [This becomes necessary in this instance premised upon the determination by the Director, State of Florida, Division of Motor Vehicles to the effect that the request made by the name Petitioners is for the grant of a new dealer license as opposed to replacement of a dealer at a "dealer point." See Southside Motor Company etc. v. Askew, 332 So.2d 613 (Fla. 1976).]

    
    

22. When arriving at the decision on the question of a new dealership, the depiction of the "primary area" of responsibility by General Motors by its act indicating a preference that both Ross and Hunt have the same three counties in the "primary area" of responsibility, is a factor to be considered in arriving at the answer of adequacy of present representation; however, it is not necessarily dispositive of this question. See Bill Kelley Chevrolet, Inc. v. Calvin, 308 So.2d 199 (Fla. 1st DCA 1974). The fact that Hillsborough, Pinellas

    and Pasco Counties are the "primary area" of responsibility does not preclude the conclusion that Hillsborough County and Pinellas County nay be determined to be separate communities or territories within the meaning of Section 320.642, Florida Statutes. If Pinellas County is a separate, identifiable, and distinct retail marketing area for GMC heavy-duty trucks and if that distinguished area is not adequately served by the existing GMC heavy-duty truck dealers, then Ross is entitled to licensure.

    
    

23. After considering the facts in this cause, Pinellas County is found to be such a separate, identifiable, and distinct retail marketing area and it is one which is not being served adequately by the present GMC dealers for heavy- duty trucks. The marketing facts demonstrate that Pinellas County has a sales potential for GMC heavy-duty trucks which is not being realized. This is borne nut by the data related to registrations and sales and is further borne out by the fact that at the time the remarkably similar Chevrolet heavy-duty trucks were being sold out of a Pinellas County dealership, similar to the GMC heavy- duty trucks being sold out of Hillsborough County, those product lines were stronger in the county in which the dealership was located. During this time frame of dual dealerships by General Motors selling the similar product line, the greater emphasis by the dealers was placed in the counties in which the dealerships were found, leading to a better performance in the home county. Facts also revealed that customers, and in particular smaller customers, who need continuing service for their vehicles prefer close by dealerships as a cost and convenience consideration. At present it is approximately 27 miles and 45 minutes difference between the location of Hunt and the potential location of Ross. Taking into account the similarity of GMC heavy-duty trucks and Chevrolet heavy-duty trucks it can be expected that Ross could sell GMC heavy-duty trucks in lieu of the Chevrolet product which it was marketing.

    
    

24. Where, as here, there is an identifiable plot, i.e. "community or territory" which has not been adequately cultivated by the existing dealership, the granting of a further license to Ross would be proper. See Bill Kelly Chevrolet, Inc. v. Calvin, 322 So.2d 50 (Fla. 1st DCA 1975).

    
    

25. Section 320.642, Florida Statutes, while designed to furnish ongoing dealers with protection against unfair treatment by the manufacturer/franchisor, see plantation Datsun, Inc. v. Calvin, 275 So.2d 26 (Fla. 1st DCA 1973), this effort must not cause the frustration, impediment or prevention of establishment of a new dealership where there exists market potential that has not been adequately served by the existing franchisees. See Bill Kelly, supra, 322 So.2d 50.

It is, therefore, RECOMMENDED:

That based upon the foregoing Findings of Fact and Conclusions of Law, the application of Ross Chevrolet, Inc., to be licensed as a GMC heavy-duty truck dealership operating out of St. Petersburg, Florida, be GRANTED. 2/

DONE and ENTERED this 7th day of May, 1981, in Tallahassee, Florida.

CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 7th day of May, 1981.

ENDNOTES

1/ There is no contention by this action that Hunt has failed to comply with licensee agreements. See Section 320.642, Florida Statutes, supra.

2/ The Petitioner, General Motors and Respondent Hunt, have offered proposed findings of fact, conclusions of law, and a recommended disposition in this cause. Those materials have been reviewed prior to the entry of this Recommended Order. To the extent that these matters comport with the Recommended Order, they have been utilized. To the extent that these matters do not comport with the Recommended Order they are hereby rejected.

COPIES FURNISHED:

James C. Cubbin, Esquire Office of the General Counsel General Motors Corporation

14-204 General Motors Building 3044 West Grand Boulevard Detroit, Michigan 48202

Joseph C. Jacobs, Esquire and Dean Bunch, Esquire Post Office Box 1170 Tallahassee, Florida 32302

Leonard Lubin, Esquire 3151 Third Avenue North Suite 301

St. Petersburg, Florida 33713

Joseph G. Spirola, Jr., Esquire 806 Jackson Street

Tampa, Florida 33602

Enoch J. Whitney, Esquire Department of Highway Safety and Motor Vehicles

The Neil Kirkman Building Tallahassee, Florida 32301

Docket for Case No: 80-001265

Orders for Case No: 80-001265