STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CHRYSLER CORPORATION and )

DADELAND DODGE, INC., )

)

Petitioners, )

)

vs. ) CASE NO. 96-1388

)

SPITZER DODGE, INC., and ) DEPARTMENT OF HIGHWAY SAFETY ) AND MOTOR VEHICLES, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on August 19-22, 1996, in Tallahassee, Florida, before J. D. Parrish, a duly designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner - Chrysler Corporation:

Dean Bunch, Esquire

Sutherland, Asbill & Brennan, L.L.P. 909 East Park Avenue

Tallahassee, Florida 32301

For Petitioner - Dadeland Dodge, Inc.:

No Appearance

For Respondent - Spitzer Dodge, Inc.:

Daniel E. Myers, Esquire Walter E. Forehand, Esquire Robert A. Bass, Esquire Myers, Forehand & Fuller

402 North Office Plaza Drive Tallahassee, Florida 32301

For Respondent - Department of Highway Safety

and Motor Vehicles:

No appearance

STATEMENT OF THE ISSUE

Whether Dadeland Dodge, Inc. (Dadeland) should be permitted to relocate a motor vehicle dealership from 8455 South Dixie Highway, Miami, Dade County, Florida, to a proposed location at 16501 South Dixie Highway, Miami, Florida.

PRELIMINARY STATEMENTS

This case began when the protesting motor vehicle dealer, Spitzer Dodge, Inc. (Spitzer), received notice of the proposed relocation of Dadeland. Such notice was published on February 9, 1996, and Spitzer timely filed its petition on March 4, 1996, seeking administrative review of the relocation.

The petition alleged that the proposed relocation was governed by the criteria set forth in Section 320.642(3)(b), Florida Statutes. Further, Spitzer argued that the approval of the relocation would violate Section 320.605 or Section 320.645, Florida Statutes, as it would unfairly provide a special incentive to Dadeland against the competitive interests of Spitzer.

The case was forwarded to the Division of Administrative Hearings for formal proceedings on March 15, 1996. The matter was then scheduled for formal hearing in accordance with the parties' request for August 19-23, 1996.

At the hearing, Petitioner, Chrysler Corporation (Chrysler),

presented testimony from the following witnesses: Deborah Morgan, Patrick Aderman, John McLeod, Ralph Smith, and, by deposition, Philip Licina and John Tomlinson. Chrysler's exhibits as identified in the record were admitted into evidence. Spitzer presented testimony from Dr. Ernest Manuel, Leonard Szabo, and, by deposition, John Tomlinson. Spitzer's exhibits

which were admitted into evidence are also noted in the record.

The transcript of the proceedings was filed with the Division on September 5, 1996. Specific rulings on the proposed findings of fact submitted by the parties are included in the appendix at the conclusion of this order.

FINDINGS OF FACT

1. Chrysler manufacturers Dodge automobiles and trucks which are sold by a network of motor vehicle dealerships. In Florida, such dealerships are governed by the provisions of Chapter 320, Florida Statutes.

2. Dadeland and Spitzer are dealerships selling Dodge motor vehicles in Dade County, Florida. There are five Dodge dealers in the community or territory, all of which are within Dade County. Three of the dealers are located north of the existing Dadeland site: Maroone Dodge is near the Broward County line at a point which sells into Broward; Potamkin Dodge North is in North Miami, and Potamkin Dodge is in Hialeah.

3. Dadeland is currently located at 8455 South Dixie Highway (U.S. 1), Miami, Florida. It seeks to relocate its place of business to 16501 South Dixie Highway, Miami.

4. Spitzer is also located on South Dixie Highway just north of Homestead, Florida. Its current location is 17.3 miles south of the existing Dadeland dealership and 11.5 miles south of the proposed Dadeland location.

5. The criteria applicable to this case are found in Section 320.642, Florida Statutes. Such provision requires a determination of whether there is adequate representation in the community or territory. The term "community or territory" is not defined by law.

6. In this case, the community or territory is the area used by the manufacturer to define the dealers' trading zones. Geographically the community or territory includes all of Dade County and small portions of Broward and Monroe Counties.

7. In determining whether Chrysler has adequate representation in the community or territory, sales data was compiled for all new motor vehicle sales registered within the geographic area defined as the community or territory. Such data was for 1994 and 1995 years with projections calculated based upon actual past performance.

8. The automobile industry classifies motor vehicles in segments lumping cars with cars and trucks with trucks. Typically, segments are designated or defined by companies such

   as R.L. Polk which tracks new vehicle sales. The segments group vehicles which presumably compete against one another for buyers. Dodge does not compete in all car segments. For example, it has no vehicle which is classified as mini-subcompact.

9. Similarly, trucks are also classified into segments. Dodge competes in five of the manufacturers' ten segments.

10. In this case, Dodge sales in the community or territory (Comm/Terr) have been compared to Dodge sales in the nation as a whole. In order to account for the buying preferences of the community or territory, the Dodge sales for this community or territory have been adjusted to consider the segment preferences of the Dade Comm/Terr buyers.

11. In computing these projections all sales, foreign and domestic, have been considered.

12. Chrysler does not distinguish between imports and domestics because all vehicles within the segments compete against the Chrysler entry in the segment. While some entries may, by historical buying pattern, have proved more successful, Dodge registers sales in all segments in which it competes. In some instances Dodge has competed well. For example, Chrysler was the originator of the minivan, both domestics and import manufacturers have introduced vehicles to compete in those segments. Customers looking for a vehicle in the minivan segment are going to look for the best minivan they can find, regardless of whether an import or domestic.

13. By comparing Dodge's sales penetration in each vehicle segment in the nation with the industry available in each segment in the community or territory, an appropriate standard is established to determine whether this area is receiving adequate representation.

14. Measuring penetration within each segment takes into account differences in consumer preferences between the two areas without regard to brand.

15. Utilizing this segment analysis, the reasonably expected market share for Dodge in the Comm/Terr is 5.89% of retail industry for cars and trucks.

16. Dodge penetration in the community or territory has been below expected levels in 1994 and 1995. Dodge penetration compared with its expected share (utilizing the national average area as a standard and adjusted for local segment preferences) was between 51.35% and 59.69% effective.

17. On the basis of the net shortfall in units, or number of vehicles which, at the minimum, would be required to be registered in order to bring the community or territory up to the expected performance, the 1994 shortfall was 1075 units, and in 1995 was 907 units.

18. Even using a Florida sales average (as opposed to the national average) as a standard for measuring whether Dodge is receiving adequate representation in this Comm/Terr, the

    performance of the Dodge network in this community or territory falls short.

19. Based upon the foregoing it is concluded that Dodge has lost sales opportunity in the community or territory and that the network of Dodge dealers within this Comm/Terr have failed to adequately represent Chrysler.

20. The community or territory has experienced growth in population, driving age population, and households during the last ten years. This growth is expected to continue.

21. Employment has also grown and corresponds to a predominance of census traits reflecting average household incomes of over $25,000. Presumably such households represent potential new vehicle buyers.

22. Total industry car and truck registrations in the community or territory have grown from 108,483 in 1993 to 112,767 in 1995.

23. Spitzer sales increased in the aftermath of Hurricane

community or territory has decreased by one. Thus, it is important to assure that the remaining Dodge dealerships are appropriately located to serve the car buying population of the market.

1. The importance of the number of dealers also relates to Dodge's major competitors in Dade. Six different brands have more than five points: Ford(10); Chevrolet (7); Honda (7); Chrysler-Plymouth (6); Jeep-Eagle (6); and Toyota (6).

2. There are five dealerships within the Comm/Terr for Lincoln-Mercury, Pontiac, Nissan, and Mazda.

3. The current Dadeland facility is a small facility with no room to expand. Other dealerships in the area offer modern, large facilities.

4. The current Dadeland facility has no enclosed showroom with a very small sales area.

5. The current Dadeland facility is leased by its owner to Chrysler Realty, which in turn leases it to Dadeland. The lease on this real property expires in 1997. Chrysler Realty has no right to renew it.

6. Despite searching for land since 1992, Chrysler Realty has not been able to locate any land within two miles of the existing Dadeland dealership upon which this dealer could relocate.

7. Although the most preferable relocation of Dadeland would move the dealership to the west, there is no site available for use as an automobile dealership in that area either.

8. Other competitive dealerships are located south of the existing Dadeland location along U.S. 1.

9. If Chrysler is not able to relocate Dadeland and were

   to lose the point, the reduction of the dealerships by one would have an adverse impact on competition, the consumer, and on dealer sales by leaving a void in an interconnected market.

10. Dadeland proposes to relocate from its current location at the extreme far north end of the Dadeland auto cluster, into the center of an auto cluster on U.S. 1, in the immediate vicinity of many other dealerships.

11. The auto cluster in which Spitzer is located in Homestead contains most of the same franchises which are in the auto cluster into which Dadeland proposes to relocate.

12. Many of the same line-make dealerships, located in both clusters, are closer to one another, or about as close, as would be Dadeland and Spitzer if the relocation is permitted. The proximity of intra-brand competition promotes same line-make competition which in turn, makes strong inter-brand competitors out of both dealers. Close proximity is, generally, a positive factor for both dealerships.

13. The pattern of Spitzer's sales, which extend in a broad pattern, suggests that Spitzer does and will continue to, make sales in close proximity to other Dodge dealers in the Comm/Terr, especially Dadeland.

14. Spitzer penetrates the market within two miles of its dealership at a rate of 4.9%. This level of penetration falls below the national average and indicates that there is additional sales opportunity to Spitzer within two miles of its dealership.

15. While Spitzer maintains a higher level of penetration within a six-mile radius of its dealership, its share drops after that.

16. Whether at the distance of the proposed Dadeland relocation or where it is now, Spitzer's sales penetration in those areas is low.

17. The relocation of the Dadeland dealership will likely benefit consumers and the public interest. It will provide the growing population of the community or territory with a more convenient place to shop for Dodges in close proximity to the other dealerships where they shop for other brands.

18. Because of the untapped opportunity for Dodge in the community or territory, and depending on Spitzer's response to the competition, ample opportunity exists for both dealers to increase sales by capitalizing on the available sales opportunity in the area.

19. If the relocated Dadeland dealership performs in the future in a similar manner to the way in which it is currently performing at its current location, there should be no adverse impact on the existing dealers, including Spitzer.

20. Dealers are accustomed to the cyclical nature of the automobile business. Sales go up and down through the cycle. Any number of factors could contribute to an individual dealer's sales going up or down. Dealers make adjustments in the operation of their businesses in order to maximize their profits.

21. Within the industry cycle, there are also shifts in the dealers' business between new and used car sales. If new cars are not popular in a down cycle, used cars become far more popular. When buyers don't have the money to buy new vehicles, they will look at used ones. Typically, when the new car business is down, the used car business will be up and service business will be up. Consequently, a dealership's profit should not correlate solely with new car sales.

22. All of Spitzer's estimations of lost new vehicle sales, and the lost profits resulting from those lost sales, were based upon the premise that Spitzer (and the other Dodge dealers) can compete only in the domestic industry market. The persuasive evidence presented in this cause does not support that premise. Accordingly, Spitzer's sales and economic loss estimates are rejected.

23. The Spitzer facility is adequate to serve the Homestead area and to sell into the community or territory as a whole. Spitzer should continue to increase its sales and receive a return on its investment in the facility.

24. Chrysler is attempting to relocate Dadeland in order to promote the existing dealer network as opposed to seeking a new point to address lost market opportunity.

25. Chrysler Realty has executed an agreement with Dadeland which provides that Chrysler Realty will build a new facility for Dadeland on property that it has purchased. All of the costs for

    that facility, including the purchase price of the land and all costs incurred in the construction of the building, including surveys, impact fees, architect and engineering costs will form the basis for a monthly rental amount. Chrysler Realty's return on the total amount is fixed at eleven percent.

26. All dealerships who rent from Chrysler Realty, including one owned by Spitzer in Ohio, pay rent in accordance with the uniform policy and computation proposed for this relocation.

27. There is no evidence that Chrysler has denied its existing dealers opportunities for growth.

28. There is no evidence that Chrysler coerced its existing dealers to consent to the proposed relocation.

29. Spitzer achieved its minimum sales responsibility for 1995; therefore, there is no evidence that Spitzer is not in compliance with its dealer agreement with Chrysler.

    CONCLUSIONS OF LAW

    
    

30. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

31. Section 320.642, Florida Statutes provides, in pertinent part:

    1. Any licensee who proposes to establish an additional motor vehicle dealership or permit the relocation of an existing dealer to a location within a community or territory where the same line-make vehicle is presently represented by a franchised motor vehicle

       dealer or dealers shall give written notice of its intention by certified mail to the department.

       
       

       (2)(a) An application for a motor vehicle dealer license in any community or territory shall be denied when:

       
       

       1. A timely protest is filed by a presently existing franchised motor vehicle dealer with standing to protest as defined in subsection (3); and

          
          

       2. The licensee fails to show that the existing franchised dealer or dealers who register new motor vehicle retail sales or retail leases of the same line-make in the community or territory of the proposed dealership are not providing adequate representation of such line-make motor vehicles in such community or territory. The burden of proof in establishing inadequate representation shall be on the licensee.

       
       

       (b) In determining whether the existing franchised motor vehicle dealer or dealers are providing adequate representation in the community or territory for the line-make, the department may consider evidence which may include, but is not limited to:

       
       

       1. The impact of the establishment of the proposed or relocated dealer on the consumers, public interest, existing dealers, and the licensee; provided, however, that financial impact may only be considered with respect to the protesting dealer or dealers.

          
          

       2. The size and permanency of investment reasonably made and reasonable obligations incurred by the existing dealer or dealers to perform their obligations under the dealer agreement.

          
          

       3. The reasonably expected market penetration of the line-make motor vehicle for the community or territory involved, after consideration of all factors which may affect said penetration, including, but not limited to, demographic factors such as age, income,

          education, size class preference, product popularity, retail lease transactions, or other factors affecting sales to consumers of the community or territory.

          
          

       4. Any actions by the licensees in denying its existing dealer or dealers of the same line-make the opportunity for reasonable growth, market expansion, or relocation, including the availability of line-make vehicles in keeping with the reasonable expectations of the licensee in providing an adequate number of dealers in the community or territory.

          
          

       5. Any attempts by the licensee to coerce the existing dealer or dealers into consenting to additional or relocated franchises of the same line-make in the community or territory.

          
          

       6. Distance, travel time, traffic patterns, and accessibility between the existing dealer or dealers of the same line-make and the location of the proposed additional or relocated dealer.

          
          

       7. Whether benefits to consumers will likely occur from the establishment or relocation of the dealership which the protesting dealer or dealers prove cannot be obtained by other geographic or demographic changes or expected changes in the community or territory.

          
          

       8. Whether the protesting dealer or dealers are in substantial compliance with their dealer agreement.

          
          

       9. Whether there is adequate interbrand and intrabrand competition with respect to said line-make in the community or territory and adequately convenient consumer care for the motor vehicles of the line-make, including the adequacy of sales and service facilities.

          
          

       10. Whether the establishment or relocation of the proposed dealership appears to be warranted and justified based on economic and marketing conditions pertinent to dealers competing in the community or territory, including anticipated future changes.

       11. The volume of registrations and service business transacted by the existing dealer or dealers of the same line-make in the relevant community or territory of the proposed dealership.

       
       

       (3) An existing franchised motor vehicle dealer or dealers shall have standing to protest a proposed additional or relocated motor vehicle dealer where the existing motor vehicle dealer or dealers have a franchise agreement for the same line-make vehicle to be sold by the proposed additional or relocated motor vehicle dealer and are physically located so as to meet or satisfy any of the following requirements or conditions:

       
       

       * * *

       
       

       (b) If the proposed additional or relocated motor vehicle dealer is to be located in a county with a population of more than 300,000 according to the most recent data of the United States Census Bureau or the data of the Bureau of Economic and Business Research of the University of Florida:

       
       

       1. Any existing motor vehicle dealer or dealers of the same line-make have a licensed franchise location within a radius of 12.5 miles of the location of the proposed additional or relocated motor vehicle dealer; [Emphasis added.]

       
       

32. Section 320.605 provides as follows:

    
    

    It is the intent of the Legislature to protect the public health, safety, and welfare of the citizens of the state by regulating the licensing of motor vehicle dealers and manufacturers, maintaining competition, providing consumer protection and fair trade and providing minorities with opportunities for full participation as motor vehicle dealers.

33. In accordance with the foregoing, Chrysler bears the

    burden of proof in this case to establish the basis for the relocation of Dadeland. Section 320.642(2)(a), Florida Statutes.

34. Spitzer has standing to protest the proposed relocation as it is an existing dealership within 12.5 miles of the relocation site. Section 320.642(3)(b), Florida Statutes.

35. Having considered the eleven factors enumerated by the statute, the weight of the persuasive evidence supports the conclusion that Dodge is inadequately represented in this community or territory. While the proposed site is not the optimal location for relocation, it is concluded such relocation is preferable to the loss of the dealer point. Moreover, there is ample opportunity in this market to allow the Dodge dealers to more effectively compete within this Comm/Terr with the relocation of Dadeland to the proposed auto cluster. The loss of the Dadeland point would adversely impact Dodge's ability to compete in this market.

36. With regard to Spitzer's claim that the proposal for Dadeland violates Section 320.605, Florida Statutes, and unfairly prejudices competition with other dealers, the evidence in this case fails to support this allegation. Dadeland will benefit only to the extent other Dodge dealers who rent through Chrysler Realty have benefited. The evidence supports the conclusion that Chrysler Realty will receive a return on its investment based upon the costs incurred to secure the facility in addition to a set-build-in-profit. Spitzer has not refuted this evidence.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED

That a final order be entered granting Dadeland's request to relocate its dealership.

DONE AND ENTERED this 8th day of April, 1997, in Tallahassee, Florida.

J. D. PARRISH

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 8th day of April, 1997.

APPENDIX

At the conclusion of the hearing, the parties stipulated to September 30, 1996, as the deadline for filing proposed recommended orders. This date was presumably selected to secure rulings on the proposed findings of fact. While the parties later waived that opportunity and agreed to submit their proposed orders on October 2, 1996, specific rulings are included below where citation to the record was noted by the party. Where no

citation was listed, the proposed finding of fact is rejected unless otherwise stated in the findings of fact above.

Rulings on the proposed findings of fact submitted by Chrysler:

100, 101, 102, 103, 108, 109, 110, 111, 112, 113, 117, 136, 137,

138, 139 and 140 are accepted.

1. Paragraph 4 is rejected as argument or comment of law.

   
   

2. Paragraphs 8 through 11 are rejected as irrelevant.

   
   

3. Paragraphs 14 and 15 are rejected as comment of law or argument.

4. Paragraphs 19 through 21 are rejected as unnecessary or irrelevant.

5. Paragraph 22 is accepted with the deletion of the word "very" before "conservative" which is contrary to the weight of credible evidence or not defined adequately in the record.

6. Paragraphs 32 through 54 are rejected as argument or comment on the evidence unnecessary to the conclusions reached.

7. Paragraphs 58 through 62 are rejected as argument or comment on the evidence unnecessary to the conclusions reached.

8. Paragraph 64 is rejected as unnecessary to the conclusion reached.

9. Paragraphs 66 through 70 are rejected as comment or argument not necessary to conclusions reached.

10. Paragraph 73 is comment on the evidence. The relocation of the dealership is justified because it can't continue where it is; and, in terms of economic and other conditions, it would be damaging to the Dodge product sales which is already inadequately represented in the Comm/Terr.

11. Paragraph 77 is rejected as comment and unnecessary.

13 Paragraphs 82 through 84 are rejected as irrelevant or unnecessary.

1. Paragraphs 89 is rejected as irrelevant.

   
   

2. Paragraphs 95 and 96 are rejected as argument.

   
   

3. Paragraph 99 is rejected as argument.

   
   

4. Paragraphs 104 through 107 are rejected as unnecessary.

   
   

5. Paragraphs 114 through 116 are rejected as unnecessary.

   
   

6. Paragraph 118 is rejected as comment or speculation unnecessary to the conclusions reached herein.

7. Paragraphs 119 through 135 are unnecessary and comment on the evidence more in the form of argument than fact. To the extent findings have been made which support Chrysler's argument, such findings are accepted.

8. Paragraph 138 is comment and the editorial quality of its statement is rejected as argumentative.

Rulings on the proposed findings of fact submitted by Spitzer:

1. Paragraphs 1 through 5, 7, 10, 13, 14, 16, 17, 18, 21,

25, 28, 29, 30, 64, 65, 66, 67, 68, 73, 75 through 80, 87, 91 are

accepted.

1. Paragraphs 6, 8, 9 and 11 are rejected as contrary to the weight of the persuasive evidence.

2. Paragraphs 12 is rejected in that it considers only geographic proximity as an impacting factor and ignores dealer performance opportunities and the opportunity for additional sales in the Comm/Terr.

3. Paragraph 15 is rejected as it ignores the opportunity for new sales in the Comm/Terr which should offset adverse effects, if any.

4. With regard to paragraph 16, it is accepted that the optimal location for the relocation would be north and west of the proposed site, however, no such site is available. Therefore, references to such site are rejected as irrelevant albeit factually correct.

5. Paragraph 18 is rejected as irrelevant; Dadeland will have to future sales at its current location.

6. Paragraphs 19, 20, 22, 23, 24, 26 and 27 are rejected as irrelevant, contrary to the weight of persuasive evidence, or argument.

7. With regard to paragraph 31, with the addition of "and west" such paragraph is accepted as factually accurate but ultimately irrelevant.

8. Paragraphs 32 through 47 are rejected in their conclusions as contrary to the weight of persuasive evidence.

9. Paragraphs 48 through 63 are rejected as argument, comment on evidence or contrary to the weight of persuasive evidence.

10. Paragraphs 69 through 72 are rejected as contrary to the weight of the credible evidence.

11. Paragraphs 74 through 86 are rejected as comment, argument, irrelevant or contrary to the weight of the persuasive evidence.

12. Paragraphs 88 and 90, 92, 93, and 94 are rejected as comment, incomplete, or contrary to the weight of the evidence.

COPIES FURNISHED:

Dean Bunch, Esquire

Sutherland, Asbill & Brennan, L.L.P. 909 East Park Avenue

Tallahassee, Florida 32301

Daniel E. Myers, Esquire Walter E. Forehand, Esquire Robert A. Bass, Esquire Myers, Forehand & Fuller

402 North Office Plaza Drive Tallahassee, Florida 32301

Charles J. Brantley, Director Division of Motor Vehicles

Room B439, Neil Kirkman Building Tallahassee, Florida 32399-0500

Michael J. Alderman, Esquire Division of Motor Vehicles

Room A432, Neil Kirkman Building Tallahassee, Florida 32399-0500

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 96-001388

Orders for Case No: 96-001388