STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
COLLECTION CHEVROLET, INC., MIAMI, ) FLORIDA, and CHEVROLET MOTOR ) DIVISION/GENERAL MOTORS CORP., )
)
Petitioners, )
)
vs. ) CASE NO. 87-3025
) ANTHONY ABRAHAM CHEVROLET CO. INC., ) MIAMI, FLORIDA, and DEPARTMENT OF ) HIGHWAY SAFETY AND MOTOR VEHICLES; )
)
Respondents. )
)
RECOMMENDED ORDER
This cause comes on for consideration upon motions by Collection Chevrolet, Inc., (Collection) and General Motors Corporation (GM) to dismiss the petition of Anthony Abraham Chevrolet Company, Inc., (Abraham) in protest of the application of Collection to relocate an existing GM car dealership.
FINDINGS OF FACT
Abraham timely filed with the Department of Highway Safety and Motor Vehicles its July 6, 1987 letter of protest, which became the initial petition herein.
On July 24, 1987, Collection and GM filed a Motion to Dismiss that initial petition. Abraham moved for leave to file an amended Petition. Collection and GM consented to the filing of an amended petition. By Order of August 25, 1987, the undersigned granted the filing of the proposed amendments, which had not been incorporated by Abraham into a fully new petition. Collection and GM addressed these amendments in a Motion to Dismiss Amended Petition, which addressed the new matters raised in the Abraham's amendatory paragraphs. This August 24, 1987 Motion to Dismiss Amended Petition also incorporated Collection's and GM's arguments from heir earlier Motion to Dismiss.
Abraham filed a Motion for Reconsideration of the August 25, 1987 Order, together with Abraham's Amended Petition on September 2, 1987; upon which pleadings oral argument was heard by telephonic conference call. Thereafter, by September 18, 1987 Orders Abraham's Amended Petition filed September 2, 1987, was deemed to be Abraham's duly filed second Amended Petition; GM's and Collection's July 24, 1987 Motion to Dismiss and August 24, 1987 Motion to Dismiss Amended Petition were permitted to stand over against Abraham's September 2, 1987, second Amended Petition; GM and Collection were permitted to file amendments to their motions to dismiss directed specifically to the September 2, 1987 second Amended Petition, which amendments Collection and GM
timely filed; and Abraham was permitted to file a response to Collection's and GM's final motions/amendments, which response was filed October 5, 1987.
Although untimely by the terms of the September 18, 1987 Order, Abraham's response has also been considered.
Collection has applied to the Department of Highway Safety and Motor Vehicles for a license to relocate Collection's GM dealership from its existing location at 9200 N.W. 27th Avenue between 91st and 95th Streets, to a new location on the south side of the Tamiami Trail between N.W. 139th and 143rd Avenues, in Miami, Dade County, Florida. The relocation would result in the distance between applicant Collection and protestant Abraham being more than doubled from 4.4 miles to 9.6 miles.
Collection's application is not an initial applications and seeks only a change of physical address. Thus, it is not an application for a new license but an application for relocation.
The map attached to the second Amended Petition as Exhibit A contains the legend, "Abraham AGGSA 11" and a line drawn on the map outlining an area of central Dade County, Florida. The western boundary is irregular but is between 87th Avenue and 67th Avenue, centering around the Palmetto Expressway, State Road 826, which is approximately at 78th Avenue. On the north, the boundary is irregular but centers around N.W. 30th Street. The southern and eastern boundaries are irrelevant.
In its second Amended Petition, Abraham pleads the map's boundaries as its area of primary responsibility. In its October 5, 1987 Response to the motions to dismiss, Abraham admits there is no dispute of fact regarding the further distance relocation, the existing physical location of Collection, or the proposed physical location of Collection but perversely argues that, "In dispute as well is the area of primary responsibility contractually assigned to Abraham by GM. Abraham has serviced for a number of years, the proposed area into which Collection proposes to move, with the knowledge and consent of GM."
GM does not admit that the area designated on the map attached as Exhibit A to Abraham's second Amended Petition has been contractually assigned by GM to Abraham as a primary area of responsibility or by any other designation as alleged by Abraham. However, assuming arguendo for purposes of these motions, that the area specifically pled by Abraham has been so designated, then Collection's proposed new location will be no closer to Abraham's alleged area of responsibility than is Collection's existing location. The existing Collection location north of 91st Street is approximately 61 blocks north of the northern boundary of Abraham's alleged area of responsibility, which is in the vicinity of 30th Street. The proposed relocation of Collection west of 139th Avenue is similarly approximately 61 blocks west of the western boundary of Abraham's alleged area of responsibility, which is in the vicinity of 78th Avenue.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties and subject matter of this cause.
The factual bases of Paragraph 2 of the second Amended Petition are that:
Abraham has been servicing the area into which Collection proposes to move
... General Motors Corporation has failed to object to Abraham's representa- tion in said area, and should now be estopped from doing so.
Collection's change of location would have the effect of restricting Abraham's movement and result in restraint of trade.
Abraham is providing adequate representation with respect to its servicing of its territory as a whole...
In pleading the substantial interest affected protestant Abraham's second Amended Petition sets forth in Paragraph 1:
... Collection Chevrolet's proposed new location would adversely affect Abraham's ability to sell new cars within its well established area of Primary Responsibility designated by agreement between Abraham and General Motors Corporation (see attached Exhibit "A") 1/
thereby resulting in economic injury to Abraham.
The internal inconsistency of Abraham's arguments (See Finding of Fact
7) and pleadings (See Conclusions of Law 2 and 3) has obfuscated the issue to some degree, however, since the map pled in paragraph 1 of the second Amended Petition specifies the Abraham community/territory with geographical precision, it must be accepted as true for purposes of the pending motions over paragraphs 2(a) and (c) which are largely speculative and which define no area.
Since Collection's application is a relocation application; this case is controlled by Stone Buick, Inc. v. Keelan Buick Inc., et al., DOAH Case No. 84-4475, final order entered May 20, 1985. Therein, it was determined that if the existing location of a relocation applicant were already in the "community or territory" of the protestant, and if the proposed relocation is within the same "community or territory," then the proposed change of location does not implicate the substantial interests of the protestant, protected within the zone of interests of Section 320.642, Florida Statutes.
In the instant case, the applicant, Collection, has never been located within the geographical area which Abraham claims via its second Amended Petition (Paragraph 1) and incorporated map (Exhibit A), as its community or territory. In the instant case, the applicant, Collection, does not propose to relocate within that specifically pled community or territory, either. By analogy to Stone Buick, Abraham, as an existing dealer, does not have standing to protest the change of address of Collection, a same-line dealer not invading Abraham's existing territory or community.
No construction of the facts as established by the map will support Abraham's claim to standing as a protestant in this cause. If the area of
primary responsibility or community/territory of the applicant (Collection) and the protestant (Abraham) are presently the same and would remain the same with the relocation of Collection, then Abraham has no standing. Alternatively, if the existing area of primary responsibility or community/territory of the applicant (Collection) is already outside the area of primary responsibility or community/territory of protestant (Abraham) and the applicant seeks to move further away from protestant but the move never invades the community/territory of protestant, there logically can be no invasion of protestant's established territory and so Abraham has no standing. Alternatively, if applicant (Collection) is within protestant's (Abraham's) community/territory and seeks to relocate further away and outside of their mutual community/territory, there is likewise obviously no intrusion into protestant's community/territory. Indeed, there is the reverse. Whether a change of location from one community/territory to another is within the zone of interests of existing dealers in the community/territory of relocation protected by the law is a legal issue not determined by Stone Buick, supra. See also Haines City Motor Co. & Florida Motor Co. v. Barry Cook Ford Inc., et al., DOAH Case No. 87-2918 (Interlocutory order entered August 24, 1987). However, it would seem that only if an applicant seeks to relocate from outside a protestant's community/territory to inside it or seeks to relocate closer to the protestant's borders in such a way that applicant's and protestant's communities/territories overlap, can there occur such an intrusion upon protestant's interests or such an "injury in fact," as to create standing in protestant. Although no clear community/territory for applicant Collection now or in its new location has been established, neither does any logical construction of the pleadings establish circumstances which would bring Abraham and Collection within the final scenario which could establish standing in Abraham.
The allegations of Paragraph 2(b) of the second Amended Petition, are not allegations of fact, merely speculations on what might occur if Abraham itself ever applies for relocation.
Neither the statute, Section 320.642, Florida Statutes, nor Rule 15C- 1.08, Florida Administrative Coded grants any jurisdiction to the Department of Highway Safety and Motor vehicles to deny an application for change of address based solely upon the protest of another dealer in the same county.
Moreover, economic injury alone to existing dealers is not a cognizable factor under Section 320.642, Florida Statutes. By analogy, see: Stewart Pontiac Co. v. Department of Highway Safety and Motor Vehicles, 12 FLW 1880 (Fla. 4th DCA 1987).
Abraham's position with regard to GM's alleged breach of contract is not within the jurisdiction of the Division of Highway Safety and Motor Vehicles nor the Division of Administrative Hearings. Exclusive jurisdiction of contract disputes is vested in the respective Circuit Courts, Article V, Florida Constitution and Chapter 542, Florida Statutes; See: Peck Plaza Condominium v. Division of Florida Land Sales and Condominiums, 371 So.2d 152 (Fla. 1st DCA 1979). Abraham's allegations of an estoppel against GM is likewise not cognizable in this forum. Under certain circumstances; estoppel may be properly raised against an agency, but that is not the situation here.
Abraham's allegations with regard to restraint of trade are at best only speculative, but even assuming restraint of trade to be adequately pled, which it is not, Chapter 320, Florida Statutes, contemplates the elements thereof with the result obtained in Stone Buick, supra. Collection and GM are entitled to rely on this stare decisis.
Abraham has been afforded liberal opportunity for amendment. Although an administrative complaint need not fulfill the technical niceties of a pleading filed in a court of law, still, it cannot be so defective as not to plead standing on its face. In its per curiam opinion, the court in Florida Gas Co. v. Arkla Air Conditioning Co., 260 So.2d 220 (Fla. 1st DCA 1972) held at page 221:
The second point posed by Florida Gas is that the trial court abused its discretion in not permitting it one more opportunity to state a cause of action. "Three strikes are out" in a baseball game; Florida Gas has been at bat four times. Under the most liberal construction of our modern rules, we hold that ample opportunity has been proffered to appellant."
Abraham has been permitted what is in effect three attempts to plead standing sufficient to proceed with its protest of Collection's relocation application and has struck out. Upon authority of Florida Gas, supra, and its progeny, Price v. Morgan, 435 So.2d 1116 (Fla. 5th DCA 1983) and Alvarez v. DeAguirre,
395 So.2d 213 (Fla. 3d DCA 1981), Abraham is not entitled to another turn at bat. The second Amended Petition should be dismissed with prejudice. See also: All Risk Corp. of Florida v. Department of Labor and Employment Security, 413 So.2d 1200 (Fla. 1st DCA 1982).
Upon consideration of the foregoing, it is,
RECOMMENDED that Abraham's second Amended Petition/protest be dismissed with prejudice.
DONE and RECOMMENDED this 21st day of October, 1987, at Tallahassee, Florida.
ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 21st day of October, 1987.
ENDNOTE
1/ This is the map with outlined area described in the foregoing findings of fact.
COPIES FURNISHED:
Jose E. Martinez, Esquire Stephen M. Klimacek, Esquire 4665 Ponce de Leon Boulevard Coral Gables, Florida 33146
Michael Robinson, Esquire General Motors Corporation New Center One Building Post Office Box 33122 Detroit, Michigan 48232
Dean Bunch, Esquire
101 North Monroe Street Suite 900
Tallahassee, Florida 32301
Dale Heckerling, Esquire 3650 Bird Road
Miami, Florida 33133
Charles J. Brantley, Director Department of Highway Safety
and Motor Vehicles Neil Kirkman Building
Tallahassee, Florida 32399-0500
STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
COLLECTION CHEVROLET, INC., and )
GENERAL MOTORS CORPORATION, )
)
Petitioners, )
)
vs. ) CASE NO. 87-3025
) ANTHONY ABRAHAM CHEVROLET COMPANY, INC., ) and THE DEPARTMENT OF HIGHWAY SAFETY AND ) MOTOR VEHICLES, )
)
Respondents. )
)
RECOMMENDED ORDER
Pursuant to notice, a formal hearing was held in this case on August 28-31, 1989, in Tallahassee, Florida, before the Division of Administrative Hearings, by its designated Hearing Officer, Diane K. Kiesling.
APPEARANCES
For Petitioners: Vasilis C. Katsafanas
Attorney at Law
11 East Pine Avenue Orlando, Florida 32802
Dean Bunch Attorney at Law
101 North Monroe Street, Suite 900 Tallahassee, Florida 32301
Edward W. Risko Attorney at Law
General Motors Corporation 3031 West Grand Boulevard Detroit, Michigan 48232
For Respondents: Mark Freund
Attorney at Law
101 North Monroe Street, Suite 1000 Tallahassee, Florida 32301
Joe Martinez Attorney at Law
4665 Ponce de Leon Boulevard Coral Gables, Florida 33146-2199
STATEMENT OF THE ISSUE
The issue is whether General Motors is inadequately represented in the relevant community or territory and whether Collection Chevrolet, Inc., (Collection) should be permitted to relocate as requested in its application.
PRELIMINARY STATEMENT
General Motors Corporation (GM) appeared through counsel at the formal hearing. Collection did not appear but simply acquiesced in the case presented by GM.
GM presented the testimony of James Anderson, John A. Ford, and Marc W. Davis. GM exhibits 1-150 and 155-158 were admitted in evidence.
Anthony Abraham Chevrolet Company, Inc., (Abraham) presented the testimony of Henry Knoxtine, James C. Anderson, Ronald T. Luke, and James Glowney.
Abraham exhibits 1, 6A, 10, 13, 21, 25, 31, 32A and B, 35, and 38 were admitted
in evidence Abraham proffered exhibits 2-5, 6B, 7-9, 11, 14, 28A-D, 33, 34, and
Abraham also proffered certain surrebuttal testimony of Ronald T. Luke by transcript filed September 29, 1989.
The transcript of the formal proceeding was filed on September 29, 1989.
The parties filed their proposed findings of fact and conclusions of law on September 30, 1989. Abraham's proposed findings of fact do not contain citations to the record as required by Rule 22I-6.031(3), Florida Administrative Code. All proposed findings of fact and conclusions of law have been considered. To the extent possible, a specific ruling on each proposed finding of fact is made in the Appendix attached hereto and made a part of this Recommended Order.
FINDINGS OF FACT
On June 1, 1987, Collection Chevrolet, Inc., applied to relocate its dealership from 9200 N.W. 27th Avenue, Miami, Florida, to a location on the south side of Tamiami Trail between N.W. 139th and 143rd Avenues, Miami, Florida.
Both locations are within the Chevrolet Miami Multiple Dealer Area (MDA). An MDA is a geographic area assigned by Chevrolet to more than one dealer.
Five Chevrolet dealers surround but are not included within the MDA. These are called fringe dealers.
None of the fringe dealers meet minimum requirements for retail sales to customers within the MDA (30 percent) to be considered part of any interconnected shopping area within the MDA.
Only D. Fonrath Chevrolet (Fonrath) in Delray Beach, with 27.1 percent of its sales into the MDA, even approaches the minimum requirement of 30%. Even if Fonrath met this requirement, insufficient numbers of consumers in the Delray Beach area went to MDA Chevrolet dealers to consider Fonrath part of any interconnected shopping area within the MDA (only 14.8 percent). This is confirmed by examination of typical consumer behavior in a metropolitan market, such as the MDA, reflecting substantial cross-sell.
Therefore, none of the fringe dealers are included within the relevant community or territory.
The MDA consists of fifteen AGSSA's. The acronym AGSSA stands for Area of Geographic Sales and Service Advantage and represents the area surrounding a dealer location where that dealer enjoys a competitive advantage over other dealers of the same line-make due to geographic location. AGSSA's consist of
U.S. census tracts or, where census tracts cannot be used, other geographic descriptions such as zip codes, C-towns, and NCT's, which are assigned to the nearest dealer unless there is some overriding consideration, such as natural or man-made barriers, or demonstrated consumer unwillingness to travel from one area to another.
An analysis similar to that regarding fringe dealers applied to the fifteen AGSSA's within the MDA demonstrates there are three separate markets within the MDA.
From a consumer perspective, AGSSA's 6, 7, 9, 11, 12, 15, and 16 form a single, contiguous, well connected marketing area within the MDA.
These AGSSA's generally consist of the northern two-thirds of Dade County.
Dealers in these AGSSA's have far more of their retail sales registered to addresses within this area than do other MDA dealers (75.1 percent to 90.8 percent vs. 2.5 percent to 39.5 percent).
Only Liephart Chevrolet (Homestead AGSSA 13) exceeds the 30 percent minimum requirement for retail sales to customers within the area to possibly be considered part of the interconnected market. However, insufficient numbers of
consumers from the Homestead AGSSA purchased new Chevrolets from dealers located within the area to consider Liephart part of the interconnected market (only
19.1 percent). Furthermore, the high level of registrations in the Homestead AGSSA attributable to Liephart indicates the Homestead AGSSA is a separate market.
Two other MDA dealers, Kelly Chevrolet (Hollywood AGSSA 4 with 25.7 percent) and Maroone Chevrolet (Hollywood AGSSA 5 with 26.9 percent), marginally approach the 30 percent minimum required for sales within these AGSSA's. However, neither satisfies the second half of the cross-sell test necessary for inclusion in the interconnected market. AGSSA 4 and 5 consumers do not purchase Chevrolets from dealers in AGSSA's 6, 7, 9, 11, 12, 15, and 16 in an amount sufficient to be included in the market. (Kelley only 10.3% and Maroone only
20.4 percent.)
Examination of road networks and locations of auto shopping areas confirms the area comprised of AGSSA's 6, 7, 9, 11, 12, 15 and 16 is a single interconnected market in the MDA. Homestead AGSSA 13 is a second separate but less distinct marketing area and the balance of the MDA, essentially Broward County, forms a third distinct and separate marketing area.
The proposed Collection site is located in AGSSA 15 and Respondent, Abraham Chevrolet, is located in AGSSA 11. AGSSA 6 is occupied by Mandel Chevrolet, AGSSA 7 by Potamkin Chevrolet, AGSSA 9 by Tropical Chevrolet and AGSSA 12 by Sun Chevrolet. No dealer currently occupies AGSSA 16; however, the Department of Highway Safety and Motor Vehicles has approved establishment of Koons Chevrolet in AGSSA 16 in 1990.
For purposes of this hearing the area comprised of AGSSA's 6, 7, 9, 11, 12, 15 and 16 is the relevant community or territory and will be referred to as the Dade community or territory.
In 1988 both the Dade community or territory as a whole and AGSSA 15 separately ranked in the lowest 10 percent of all Florida markets with regard to Chevrolet retail car penetration. The Dade community or territory ranked 10th of
78 for cars and AGSSA 15 ranked 74th of 78 for cars. With regard to retail light truck penetration, the Dade community or territory and AGSSA 15, though better, still ranked in the lower half of all Florida market: Dade community or territory was 50th of 78; AGSSA 15 was 53rd of 78.
In 1988, the Dade community or territory as a whole and AGSSA 15 separately were below both national and state Chevrolet retail penetration averages:
national = 13.23 percent (cars)
26.57 percent (trucks) state = 11.2 percent (cars)
23.63 percent (trucks) Dade c/t = 9.58 percent (cars)
23.61 percent (trucks) AGSSA 15 = 9.26 percent (cars)
23.04 percent (trucks)
Chevrolet's national retail penetration average includes adequately represented markets, inadequately represented markets and non-represented markets throughout the United States. If inadequately represented markets and non-represented markets were excluded before calculating national average, the
result would be much higher. Therefore, national average represents an extremely conservative standard for measuring the performance of a dealer network.
More than half of all Florida markets exceed national average for Chevrolet retail penetration, tentatively confirming that national average is a reasonable standard in this case.
Unique market characteristics may explain why penetration in an area such as the Dade community or territory or AGSSA 15 deviates from national average.
The effect of any unique characteristics may be determined by ascertaining the relative popularity of various vehicle types independent of brand preference compared to their popularity nationally.
Chevrolet arranges vehicles into size/price classifications, including subcompact, compact, midsize, regular, and high. R.L. Polk & Co. categorizes registration data according to these classifications. These categories are appropriate for use in this case.
If particular vehicle types are either extremely popular or unpopular in a market, it may not be reasonable to measure dealer network performance based on overall national average. For example, if consumers in an area disproportionately preferred "high group" vehicles, and the manufacturer penetrates that category poorly or does not have an entry into that category, less than national average may be appropriate. Conversely, if a particular category in which the manufacturer does well is disproportionately popular, national average may be an unreasonably low expectation.
The relative popularity of vehicle types in AGSSA 15 is sufficiently similar to their relative popularity nationally to support use of national average to measure performance of the dealer network in AGSSA 15 with regard to cars (13.23 percent). A difference of less than five per cent does not justify adjustment. AGSSA 15 preferences differed from national by only 1.8 percent in 1986, 2.5 percent in 1987, and 2.5 percent in 1988.
The differences between the relative popularity of vehicle types in the Dade community or territory as a whole and the nation are sufficient to justify a reduction to 92.7 percent of national average for car (12.36 percent).
A similar analysis of segment popularity for light trucks results in a reduced expectation in AGSSA 15 to 90.8 percent of national average or 24.14 percent, and a reduced expectation in the Dade community or territory to 92.7 percent of national average or 24.63 percent.
Data reflecting what consumers actually did is more accurate in measuring market performance than data estimating what consumers might do based upon assumed demographic characteristics. Registration data reflects actual consumer behavior as opposed to a projection based on demographics. However, demographic information may be used to confirm conclusions drawn from actual consumer behavior.
Based upon Chevrolet's penetration in various age categories and after calculating for differences in age distribution between AGSSA 15 and the nation and the Dade community or territory and the nation, Chevrolet should expect
100.6 percent of national average in AGSSA 15 and 98.5 percent of national
average in the Dade community or territory. Thus, differences in age distribution do not justify rejecting national average as a reasonable standard.
A similar analysis based on income distribution confirms there is no meaningful difference between AGSSA 15 and the nation or the Dade community or territory and the nation that challenges conclusions drawn from the product popularity analysis.
Existence of census tracts within the Dade community or territory that meet or exceed the adjusted national average for car and truck confirms that standard is a reasonable measure regarding performance in the dealer network.
Furthermore, there is no meaningful difference between the relative popularity of the various vehicle types in the "gain" census tracts, i.e., those which exceed adjusted national average, and AGSSA 15 census tracts, indicating the higher penetration rates in the gain tracts are not due to unique demographic characteristics. Thus, not only is the adjusted national average a reasonable standard, but differences in penetration must be attributable to something other than area demographics.
A significant difference between the gain census tracts and AGSSA 15 census tracts is customer convenience. On average, consumers in the gain tracts are about three miles from a Chevrolet dealer; however, consumers in AGSSA 15 are about seven miles from a Chevrolet dealer, more than twice as far. It is reasonable to conclude, then, that low penetration in AGSSA 15 is due to lack of representation.
If resale of current model vehicles originally registered by fleet customers, such as rental companies, substitute for a new retail sales, the maximum possible deviation from Chevrolet's actual penetration is .53 percentage points for Dade County or .37 percentage points for Dade and Broward Counties together, which is insignificant compared to the shortfall in the Dade community or territory or AGSSA 15.
Similarly, inclusion of bank and factory lease transactions in retail market share do not meaningfully alter Chevrolet's penetration in AGSSA 15 or the Dade community or territory and, therefore, would not justify deviation from national average.
Therefore, subject to adjustments noted above, national average is a reasonable standard against which to measure Chevrolet network performance in the Dade community or territory and AGSSA 15.
From 1986 through 1988, Chevrolet's retail penetration for cars in the Dade community or territory and AGSSA 15 consistently fell below national, adjusted national (expected) and state of Florida averages. 1/ Additionally, performance in AGSSA 15 consistently fell below performance in the Dade community or territory as a whole.
During the same period, a similar situation exists with regard to Chevrolet retail penetration for trucks in the Dade community or territory and AGSSA 15. Both areas consistently fell below national and adjusted national averages. Although in 1986 and 1987 market share in both areas exceeded the lower Florida state average, this would not have occurred absent registrations attributable to Collection. In 1988, both areas fell below even the state average.
These registration calculations include registrations attributable to sales by Collection. Without Collection, representation in AGSSA 15 and the Dade community or territory could only be worse.
Collection ceased operations at its current location in March 1989, due to a high rate of theft, increased security expenses, difficulty retaining employees or attracting customers due to its location, and advice that insurance would not be renewed effective April 1989. Collection does not intend to resume business at that location.
Including registrations attributable to Collection, Chevrolet retail efficiency in the Dade community or territory to adjusted national average or expected penetration for cars ranges from a low of 77.7 percent in 1988 to only
83.3 percent during the period 1986 through 1988. "Efficiency" is a comparison of penetration in one area to another typically larger area expressed as a per cent. Efficiency of 100 percent means the two areas being compared are equal. Excluding registrations attributable to Collection, efficiency during that period ranges from a low in 1988 of 69.7 percent to a high of only 75.2 percent.
Although efficiencies to expected penetration in the Dade community or territory for trucks are somewhat better than car penetration efficiencies, during the same period they were still below 100 percent and declined in 1988. Efficiency in this context is measured against an average comprised of good representation, bad representation and no representation and is further adjusted to reflect product popularity in the local area. Consequently, 100 percent efficiency is merely the equivalent of "average," and nothing suggests representation cannot be better than average. Here again, elimination of registrations attributable to Collection reduces efficiency even further.
AGSSA 15 efficiencies are worse. During the period 1986 through 1988 efficiencies for cars ranged from a low in 1988 of 69.9 percent to a high of only 76.7 percent. Even though adjustment to national average is unnecessary, if adjusted the efficiencies for cars increases by only about two percentage points (72.1 percent to 78.5 percent). Again, elimination of Collection reduces efficiencies even further.
The situation for truck efficiencies in AGSSA 15 mirrors that of the Dade community or territory.
These registration inefficiencies translate into the following Chevrolet retail net registration losses in the Dade community or territory:
1986 2,273
1987 1,543
1988 1,980
three-year total 5,796 registration shortfall
Net registration loss is the number of additional registrations necessary to raise market share of the indicated area to a given standard, in this case, expected penetration. Net registration loss was calculated using adjustment for product popularity as indicated on GM Exhibit 31.
In AGSSA 15, the net registration shortfall is as follows:
1986 486
1987 598
1988 493
three-year total 1,577 registration shortfall
The efficiency analysis and the conclusions drawn from it do not change if the entire MDA is considered as opposed to the Dade community or territory. Indeed, the net registration loss in the MDA is more then three times that of the Dade community or territory during the same three-year period (19,311).
Total population and driving age population in AGSSA 15 increased dramatically from 1970 through 1988:
total increased from 41,001 to 182,550 driving age increased from 26,532 to 142,302
Increases in the number of households in AGSSA 15, which is a better indicator of market potential than raw population, were even more dramatic, increasing to nearly six times 1970 levels in 1988 (11,323 to 62,243).
A similar pattern has occurred in the Dade community or territory as a whole:
total increased from 1,184,961 to 1,670,824 driving age increased from 885,761 to 1,362,921 households increased from 405,081 to 630,959
Each AGSSA in the Dade community or territory experienced steady population and household increase during 1970 to 1980 and 1980 to 1988.
The tremendous growth in the Dade community or territory corresponds with areas of low penetration where Chevrolet is not represented. This indicates that a contributing cause of the inadequate representation is market growth and its attendant congestion which dealers in their current locations are unable to address.
Average household income in the Dade community or territory is not an impediment to the sale of new cars. In fact, average household income in AGSSA
15 is $41,537, close to the average Chevrolet buyer's household income.
Annual average employment levels in Dade County (roughly equivalent to the community or territory) have steadily increased from 1980 through 1988, indicating a generally healthy economy (749,890 to 891,788).
The density of car and truck retail registrations essentially follows the pattern of household and population densities. The southwest portion of the Dade community or territory has high registration concentrations that are considerable distance from existing Chevrolet dealers.
New vehicle retail registrations in the Dade community or territory (cars and trucks/all brands) increased more than 42 percent from 1982 through 1988 and by 64 percent in AGSSA 15.
As a result, even including within the Dade community or territory Collection in AGSSA 15 and the approved Koons dealership in AGSSA 16, Dade community or territory Chevrolet dealers have above average market opportunity when compared with other Florida markets. Market opportunity is defined as the number of new car and truck registrations for the entire industry within an existing dealer's AGSSA. Without Collection, average market size in the Dade community or territory is the largest in Florida. Indeed, AGSSA 15 with 12,937 industry registrations is larger than most Florida markets and it currently does not have a Chevrolet dealer. Additionally, with Collection, Abraham's AGSSA 11 has 15,525 industry registrations, far more than the highest Florida average.
Yet, despite increases in population, households, employment and market size, the number of Chevrolet dealers in the Dade community or territory has remained constant since 1970. Reducing the network by eliminating Collection could only make an inadequate situation worse.
Based upon all Florida markets, as average market size increases, measured by industry retail registrations, the number of markets in which Chevrolet exceeds national average decreases. Of all markets over 6,000 industry registrations per dealer, only 16% achieved or exceeded national average; whereas of all markets between 1,500 and 6,000 registrations, 58.3% met or surpassed national average. Thus, designing a market where average market size is greater than 6,000 registrations results in the network having only a
16.7 percent chance of meeting national average or, stated another way, an 83.3 percent chance of failing.
Chevrolet's average combined market share (cars and trucks) in markets averaging between 1,500 and 6,000 industry registrations per dealer is 18.7 percent compared to 14.1 percent in markets averaging more than 6,000 registrations per dealer. Chevrolet national average for cars and trucks combined is 17.71 percent. Accordingly, Chevrolet's average efficiency in markets between 1,500 and 6,000 registrations is slightly above national average while efficiency in markets over 6,000 is well below national average (105.6 percent vs. 79.6 percent).
Thus, once a market size exceeds 6,000 retail industry registrations per dealer, Chevrolet loses a reasonable opportunity to achieve national average. As noted above, the Dade community or territory averages almost 12,000 registrations per dealer with Collection and nearly 13,000 without Collection.
Based on the Dade community or territory's actual size according to the number of retail industry registrations, and using 6,000 as a guideline, there should be fourteen Chevrolet dealers, seven more than currently exist, including Collection and Koons. This demonstrates that the Dade community or territory has outgrown the ability of the current dealer network to serve it.
Inadequate numbers of dealers is a statewide problem for Chevrolet. Chevrolet dealers represent a smaller percentage of dealerships in Florida than in any other state in the continental United States. If Chevrolet were to have even its national average share of the dealership count in the Dade community or territory (19.8 percent), 12.3 dealers would be required, or five more than are currently authorized.
AGSSA boundaries do not prevent dealers from selling into other areas, which is typical of dealers in a connected market. However, existing dealers in the Dade community or territory are generally unable to effectively penetrate
areas further than four miles from their dealership. Yet, only two dealers are even within ten miles of the proposed Collection location.
Based upon new vehicle registrations, the average distance of consumers to a Chevrolet dealership in each AGSSA ranges from 2.3 miles to 3.4 miles except for AGSSA 15, which is more than twice that at 6.9 miles. However, with Collection in AGSSA 15, convenience there improves to 4.1 miles, more in line with what is offered in the rest of the Dade community or territory. Additionally, with Collection in AGSSA 15, Chevrolet's position regarding convenience vis a vis inter-brand competition also improves.
An optimal location analysis confirms that to maximize customer convenience in the community or territory, a Chevrolet dealer should be located in AGSSA 15.
As a result of inadequate representation, lost opportunity in the Dade community or territory in 1988 alone was more than 5,000 cars and trucks:
cars | gross loss | 2,126 |
in-sell | 1,103 | |
trucks | gross loss | 603 |
in-sell | 1,248 |
Lost opportunity is a combination of gross registration loss and in-sell. Gross registration loss is the number of additional registrations needed to raise each geographic area within the community or territory to national average. In-sell is the number of registrations within the community or territory attributable to sales by dealers outside the community or territory.
Assuming Collection penetrates the Dade community or territory like the average existing dealer, Collection will have virtually no impact on lost opportunity. However, assuming Collection penetrates the community or territory like Abraham, the relocation will result in an incremental gain of 315 cars and trucks, leaving the vast majority of the lost opportunity for other dealers, should they care to compete for them. Coupling the more optimistic projection for Collection with the projection for the Koons dealership still only consumes less than 25 percent of the lost opportunity available to area dealers. Thus, it is reasonable to expect that any additional sales will come from lost opportunity and not existing dealers.
Studies indicate Chevrolet purchasers more often than not visit more than one Chevrolet dealer before purchasing. Accordingly, addition of a dealer to an area with poor levels of convenience, such as AGSSA 15, will stimulate interest of those consumers in Chevrolet by the proximity of the dealership and its marketing efforts, which may result in other Chevrolet dealers making sales.
Studies also indicate that more than half of Chevrolet purchasers visit at least one other brand before purchasing a Chevrolet. Proximity sensitive consumers are likely to trade off Chevrolet for a brand that offers more convenience and thus lower Chevrolet penetration. Sixty per cent of respondents to another survey indicated that convenience was an extremely important factor in their purchase decision.
Except for Sun Chevrolet (AGSSA 12), Collection will be further from existing dealers at the proposed site than it was at the current location. Collection will still be more than eight miles from Sun, and nearly ten miles from Abraham, well beyond those dealers' range of effective penetration.
Previous experience regarding adding and relocating dealerships to a market confirms that where lost opportunity exceeds the number of registrations projected for the new dealership, the result is an increase in efficiency.
Respondent presented testimony by Dr. Ronald Luke regarding adequacy of representation. However, Dr. Luke had never designed or assisted in the design of a retail distribution network for any manufactured product, let alone automobiles. Furthermore, Dr. Luke had no previous experience with R.L. Polk & Co. automobile registration data.
Petitioners' expert, James Anderson, on the other hand, is president of Urban Science Applications, Inc. (USAI), a company committed to network analysis for distribution of products and services, with a division devoted to the automobile industry. USAI has offices in Michigan, California and England and consults regularly on dealer networking issues with virtually every major auto manufacturer.
Dr. Luke contends convenience does not impact the market share a manufacturer will receive in a given area. This, however, leads to the anomalous conclusion that an area with five Chevrolet dealers and one Hyundai dealer has the same level of inter-brand competition as an area with five Chevrolet dealers and five Hyundai dealers each located next to one another.
Dr. Luke's position regarding convenience appears premised upon his interpretation of consumer surveys ranking purchase decision factors according to their importance to responding consumers. These surveys, however, did not address the reasons consumers overlooked certain brands. Furthermore, although not ranked as high as price, a majority of the respondents in the surveys listed convenience, as "important," "very important" or "extremely important." Dr. Luke's interpretation of these responses is, therefore, at the very least, doubtful.
Furthermore, Dr. Luke's position is premised upon the speculation that Chevrolet's market share would not be affected even by elimination of existing dealers. Not only is this speculation contrary to empirical behavioral data presented at length in this hearing but, if accepted, would preclude entry of additional dealerships in any market with just one representative. This concept is unrealistic and unsupported and, therefore, it is rejected.
Dr. Luke also speculated that Chevrolet should expect lower penetration in the Dade community or territory because of its large Hispanic population. However, Dr. Luke presented no evidence that Dade community or territory Hispanics disfavor Chevrolets disproportionately to Mr. Anderson's product popularity analysis. Moreover, Chevrolet's actual penetration in areas of the Dade community or territory with higher concentrations of Hispanics directly refutes Dr. Luke's hypothesis by achieving equal or greater than expected penetration.
Dr. Luke attempted to develop a penetration standard for evaluating Chevrolet's performance utilizing what he characterizes as the top 20 metropolitan markets. However, Dr. Luke did not know which areas were included, how they were determined, or anything about the dealer networks of those areas.
Some Florida areas included in Dr. Luke's sample were Hillsborough County (including Tampa), Dade County (including Miami) and Orange County (including Orlando), three of the lowest performing Florida MDA's for Chevrolet.
And some Florida areas excluded from Dr. Luke's sample were Escambia County (including Pensacola), Duval County (including Jacksonville) and Palm each County (including West Palm Beach), three of the highest performing Florida MDA's for Chevrolet. Given that these areas seem arbitrarily defined for purposes of developing any standard for measuring Chevrolet performance, there seems no basis for asserting that they are acceptable for evaluating the Dade community or territory.
Dr. Luke determined his penetration standard using life-style clusters ostensibly categorizing the U.S. population into forty-eight segments and estimating buying rates in each cluster. However, Dr. Luke's entire sample for calculating the buying rates included only 4,070 vehicles, of which only 281 were Chevrolet purchases during a two-month period. This resulted in using only three Chevrolet purchases to calculate the buying rate for twenty-eight per cent of Dade community or territory households.
The problems with Dr. Luke's analysis are manifested in its inability to predict retail industry registrations, let alone predict the penetration for a particular brand. Additionally, although Dr. Luke's analysis predicts a zero Chevrolet buying rate in certain census tracts of a particular life-style group due to lack of observations, actual registration data establishes that Chevrolets were registered there. Moreover, Dr. Luke's model is plainly unreliable since it describes the Dade community or territory as eighteen per cent Hispanic when it actually is forty-two percent Hispanic.
For all of these reasons, Dr. Luke's opinions are not credited. James Anderson's opinions are entitled to great weight.
Therefore, the area described as the Dade community or territory is currently being inadequately represented by existing licensed dealers. Furthermore, the area identified as AGSSA 15 is an identifiable plot within the Dade community or territory which is also receiving inadequate representation by existing licensed dealers.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to and subject matter of this proceeding. Section 120.57(1), Florida Statutes.
Section 320.642, Florida Statutes (1987), establishes the following standards for issuance of a motor vehicle dealer license:
The Department shall deny an application for a motor vehicle dealer license in any community or territory where the licensee's presently licensed franchised motor vehicle dealer or dealers have complied with the licensee's agreements and are providing adequate representation in the community or territory for such licensee. The burden of proof in showing inadequate representation shall be on the licensee.
GM did not assert that existing dealers have not complied with their Dealer Sales and Service agreements. Therefore, the sole issue is whether
"presently licensed franchised motor vehicle dealer[s] ... are providing adequate representation in the community or territory..."
The term "community or territory" is not defined by the statute. However, the plain language of Section 320.642 and principles of statutory construction compel the conclusion that determination of the relevant community or territory must be based upon facts presented at the hearing. Legislative intent is determined primarily from a statute's language and the legislature is assumed to know the meaning of the words it used. Thayer v. State, 335 So.2d 815, 817 (Fla. 1976). Furthermore, in construing a statute, it must be assumed that the legislature used particular wording advisedly and for a purpose. Lee v. Gulf Oil Corp., 148 Fla. 612, 4 So.2d 868, 870 (1942).
Although the legislature defined terms such as "agreement," "licensee," "manufacturer" and "motor vehicle dealer," it chose not to define the term "community or territory." Sections 320.60 and 320.642, Florida Statutes (1987). Nothing in the statute suggests rigid adherence to some predefined boundary was intended. Indeed, the fact that the legislature could have but chose not to require application of a specific boundary reveals an intention to leave determination of the relevant area to the department based on facts presented in each case.
Accordingly, Florida appellate and administrative decisions have held that although the area defined in a franchise agreement is a material fact to be considered, determination of the relevant community or territory is based upon all facts presented at the hearing. See, Bill Kelley Chevrolet, Inc. v. Calvin,
308 So.2d 199, 201 (Fla. 1st DCA 1974)(area described in the contract is a material fact); Anthony Abraham Chevrolet Co. v. Collection Chevrolet, Inc., 533 So.2d 821, 824 (Fla. 1st DCA 1988)(determination of the community or territory "is a question of fact that must be resolved in an evidentiary hearing and not on a motion to dismiss."); Seacrest Cadillac, Inc. v. Larry Dimmitt Cadillac, Inc., DOAH Case No. 88-2242 (Fla. DHSMV 1989) (based upon consumer behavior data, relevant community or territory was western half of Tampa MDA); Ed Morse Chevrolet of Seminole, Inc. v. Jim Quinlan Chevrolet, Inc., DOAH Case No. 88- 3523, (Fla. DHSMV 1989)(rejected the MDA and defined the community or territory according to consumer shopping patterns); General Motors Corp. v. Hunt Truck Sales & Service, Inc., DOAH Case No. 80-1265 (Fla. DHSMV 1981)(accepted an area smaller than area of primary responsibility as community or territory because it constituted "a separate, identifiable, and distinct retail marketing area. ");
Ed Mullinax Ford, Inc. v. Bolton Hooley, Inc., DOAH Case No. 87-1694 (Fla. DHSMV 1988)(determination of community or territory based on consumer behavior data).
Here, GM presented extensive unchallenged evidence based upon consumer behavior establishing that from an auto marketing perspective: (1) none of the Chevrolet dealers that surround the Chevrolet Miami MDA are included within any interconnected auto shopping area within the MDA; and (2) that AGSSA's 6, 7, 9, 11, 12, 15, and 16 form a single interconnected market within the MDA constituting the relevant community or territory.
Inadequacy of representation may be demonstrated either in the community or territory as a whole, or in an identifiable plot within the community or territory "not yet cultivated, which could be expected to flourish if given the attention which the others in their turns received ...." Bill Kelley Chevrolet v. Calvin, 322 So.2d 50, 52 (Fla. 1st DCA 1975) cert. denied
336 So.2d 1180 (Fla. 1976). If there is inadequate representation in the community or territory as a whole, it is not necessary to determine whether an
identifiable plot exists. Dave Zinn Toyota v. Department of Highway Safety & Motor Vehicles, 432 So.2d 1320, 1322 (Fla. 3rd DCA 1983).
In this case, the evidence establishes that there has been phenomenal population and household growth in the Dade community or territory as a whole and even more dramatic increases in AGSSA 15. Chevrolet's penetration into both areas does not meet minimum reasonable expectations after accounting for unique market characteristics that may affect Chevrolet's penetration, resulting in substantial registration losses for the past three bears. Consideration of the entire MDA, with AGSSA 15 as an identifiable plot, does not alter this situation, Establishment of Collection at the proposed relocation site would improve average consumer convenience in the community or territory and, furthermore, would bring customer convenience in AGSSA 15 more in line with the convenience Chevrolet offers in other AGSSA's within the community or territory. The relocation would also improve the convenience offered by Chevrolet in AGSSA
15 as compared with inter-brand competition. There is more than sufficient opportunity in the Dade community or territory and in AGSSA 15 to support the relocation and existing dealers at their current locations are simply too far from the proposed location to adequately penetrate or serve that market.
Therefore, GM has satisfied its burden under Section 320.642, Florida Statutes (1987), and has demonstrated that Chevrolet is not being adequately represented in the Dade community or territory as a whole, and, furthermore, that Chevrolet is not being adequately represented in AGSSA 15, an identifiable plot within the Dade community or territory.
RECOMMENDATION
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Collection's application to relocate its dealership to a
location on the south side of Tamiami Trail between 139th and 143rd Avenues, Miami, Florida, in the vicinity of AGSSA 15 be GRANTED.
DONE and ENTERED this 29th day of November, 1989, in Tallahassee, Florida.
DIANE K. KIESLING
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, FL 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 29th day of November, 1989.
ENDNOTE
1/ In many large Florida markets, including Clearwater/St. Petersburg, Tampa, Orlando, Jacksonville and Miami, Chevrolet is attempting to establish additional dealerships to address inadequate networks in those markets. This inadequacy of representation in the large metropolitan areas has reduced state average to an
unreasonably low level, making it unreliable as a standard for measuring network performance. However, both the Dade community or territory and AGSSA 15 failed to meet even this unrealistically low standard.
APPENDIX TO RECOMMENDED ORDER IN CASE NO. 87-3025
The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case.
Specific Rulings on Proposed Findings of Fact Submitted by Petitioners, Collection Chevrolet, Inc., and General Motors Corporation
Each of the following proposed findings of fact is adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1-70 (1-70), 72-81 (71- 80) and 83 (82).
Proposed findings of fact 71 and 82 are unnecessary.
Specific Rulings on Proposed Findings of Fact Submitted by Respondent, Anthony Abraham Chevrolet Company, Inc.
Proposed findings of fact 1 and 2 are unnecessary.
Proposed findings of fact 3, 5-9, 12, 14, 16, 18, 24, 26, and 31 are subordinate to the facts actually found in this Recommended Order.
3. Proposed findings of fact 4, 10, 11, 13, 15, 17, 20-23, 25, 27-30, and 32-37 are rejected as being unsupported by the creditable, competent, substantial evidence.
4. Proposed finding of fact 19 is not a proposed finding of fact, but is instead argument.
COPIES FURNISHED:
Vasilis C. Katsafanas Attorney at Law
11 East Pine Avenue Orlando, Florida 32802
Dean Bunch Attorney at Law
101 North Monroe Street Suite 900
Tallahassee, Florida 32301
Edward W. Risko Attorney at Law
General Motors Corporation 3031 West Grand Boulevard Detroit, Michigan 48232
Mark Freund Attorney at Law
101 North Monroe Street Suite 1000
Tallahassee, Florida 32301
Joe Martinez Attorney at Law
4665 Ponce de Leon Boulevard Coral Gables, Florida 33146-2199
Charles J. Brantley, Director Division of Motor Vehicles Department of Highway Safety
and Motor Vehicles
Room B439, Neil Kirkman Building Tallahassee, Florida 32399-0500
Enoch Jon Whitney, General Counsel Department of Highway Safety
and Motor Vehicles Neil Kirkman Building
Tallahassee, Florida 32399-0500
| Issue Date | Proceedings |
|---|---|
| Oct. 21, 1987 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Feb. 21, 1990 | Agency Final Order | |
| Oct. 21, 1987 | Recommended Order | ""Adequate representation in community or territory"" subject to proof. Area defined in franchise agreement not determinative. |
