The Issue Whether the existing same line-make dealers are providing adequate representation for General Motors Corporation/GMC Truck Division in the community or territory.
Findings Of Fact J.O. Stone Buick/GMC Truck, Inc. (Stone) seeks to establish a GM truck dealership in the vicinity of Palm Harbor, Florida. The proposed location is within an area identified by GM as the StPete/Clearwater Multiple Dealer Area (MDA). An MDA represents a single area of primary responsibility (APR) assigned by GM pursuant to its dealer sales and service agreement to more than one GMC truck dealer. Also included within the MDA are GMC truck dealers Bayview Buick GMC/Truck, Inc. (Bayview), Port Richey; Charlie Harris Pontiac, Inc. (Harris), Clearwater; and Crown Oldsmobile GMC/Truck, Inc. (Crown), St. Petersburg. "Fringe dealers" are GMC truck dealers whose APR is adjacent to or touching the MDA. There are five (5) fringe dealers whose area is adjacent to or touching the MDA. Buyer behavior or cross-sell is a means of determining whether areas associated with fringe dealers are connected from a marketing perspective to the MDA, thereby forming a single inter-connected marketing area for a particular line of motor vehicles. Experience has demonstrated that for a fringe area to be connected to an MDA from a marketing perspective, at least 30% of the fringe dealers new vehicle sales should be to MDA consumers. In this case, no fringe dealer makes 30% of their sales to MDA consumers. Courtesy GMC's percentage is highest at only 10.9%, far below the minimum required for inclusion. Accordingly, none of the fringe dealer areas are part of the relevant community or territory. Buyer behavior or cross-sell information is also useful to determine whether the areas contained within the MDA form a single interconnected marketing area. However, the MDA boundary is entitled to "great weight" in making any such determination. The MDA consists of four Areas of Geographic Sales and Service Advantage (AGSSA), each associated with an existing GMC truck dealer of the proposed dealer location; Bayview, AGSSA 8, Harris, AGSSA 9; Crown, AGSSA 10; and the proposed Stone location, AGSSA 14. An AGSSA is an area in which a dealer has a convenience advantage over other dealers of the same line-make due solely to proximity of its location to consumers residing there. These boundaries are verified using road networks, locations and buyer behavior to determine if there are any barriers that may raise a question about geography assignment. In this case, there was no basis to question the area assignment by distance. All vehicle registrations are collected by R. L. Polk & Company. They are organized in areas as large as the nation and as small as census tracts. Sales by individual dealers are reported to GMC and can be subsequently traced to the place of registration. Buyer behavior shows that AGSSA 8 is not connected to the rest of the MDA from a marketing perspective. This is so as only 3.5% of all GMC truck registrations in AGSSA 8 were attributable to Harris or Crown. Conversely, only 10.8% of Bayview's 1990 GMC truck sales were registered in the combination of AGSSAs 9, 10 and 14. Through September of 1991, only one registration in the remainder of the MDA was attributable to a sale by Bayview. This fact, combined with a stretch of approximately 18 miles between the proposed location and Bayview in Port Richey, confirms that AGSSA 8 should not be included in the community or territory for the proposed dealer. Contrawise, 75.7% of Harris' and 78.6% of Crown's nationwide retail registrations are in the balance of the MDA, that is AGSSAs 9, 10 and 14. Thirty-four percent of Harris' sales are registered inside AGSSA 9 and 41% are registered outside AGSSA 9 but inside the balance of the MDA. Thus, Harris satisfies the test for inclusion in any community or territorial definition for a Palm Harbor GMC/Truck Division. AGSSA 10, however, is somewhat more difficult to determine. As example, 23% of the GMC truck customers in AGSSA 9 went to Crown. This level is considerably higher than Port Richey but is still below the 30% criteria. Sixty percent of Crown's sales are registered in AGSSA 10 which is somewhat higher than normal in a connected market. Nineteen percent of Crown's sales are registered outside AGSSA 10 but inside AGSSAs 9 and 14. This percentage does not change the fact that AGSSA 8 is included, further demonstrating that AGSSA 8 is not connected, from a marketing perspective, to the remainder of the MDA. While 19% and 20% do not meet the 30% test, it is still considerably higher than Bayview's participation and it is possible that enhanced intrabrand competition, by the addition of a dealer in Palm Harbor, could stimulate additional cross- sell between the other AGSSAs sufficient to raise Crown's level of participation to 30%. Given that fact, AGSSA 10 is included within the MDA boundary, which must be afforded great weight, and since it is not possible to unequivocally state the area is unconnected, it is appropriate therefore to regard AGSSA 10 as part of any community or territory for the proposed GMC truck dealership. Accordingly, AGSSAs 9, 10 and 14 form the relevant community or territory for this proceeding with AGSSA 14 representing an identifiable plot within the community or territory. Alternatively, AGSSA 14 would be an identifiable plot of any community or territory comprised of the entire MDA. Market share or penetration is one of the most commonly used standards for evaluating dealer network performance. As between state and national averages, national average forms the starting point. A lower state average may affect statewide network deficiencies that would improperly lower the standard to a level of inadequacy measuring adequate performance. National average includes both adequately and inadequately represented and unrepresented markets. It therefore represents a conservative measure for gauging adequate performance. In this case, national average has surpassed the Florida average at least since 1988. Statistical evidence introduced herein, reveals that about two-thirds of this shortfall is due to network deficiencies. Florida is not only below national average, but also below 38 other states and, on average, there are fewer GMC truck dealers in Florida in relation to intrabrand competition. Accordingly, national average is a reasonable starting point for developing a standard to evaluate performance in the community or territory. To properly evaluate dealer network in a given area, the evaluation standard should consider the influence of unique market characteristics. These characteristics may be accounted for by adjusting performance standards according to local area consumer preferences for various types of vehicles, independent of brand, resulting in a minimum expectation or penetration. Depending on a particular brand's performance in a given area, minimum expectations could be either greater or less than overall national average penetration. GM has segmented the light truck industry into ten categories that contain vehicles that are viewed by consumers as relatively more interchangeable than vehicles outside the segment. Differences in segment popularity between the nation and the community or territory result in lowering minimum expectations to account for unique characteristics. Specifically, these expectations are as follows: 6.33% for the community or territory; 6.21% for AGSSA 14 alone; and 6.36% for the MDA, each of which is lower than the national average of 7.41%. GMC truck performs best in the full-size pickup, truck wagon and full-size panel van segments which constitute a smaller portion of the truck market in the community or territory or AGSSA 14 alone accounting for reduced expectation in those segments. Seventeen (17) Florida GMC truck markets in 1990 and twenty-three (23) through September of 1991 met or exceeded expected penetration for the area. That several other Florida markets exceed expected penetration calculated in the same manner confirms its reasonableness as a standard for dealer network evaluation. Of significant note was the fact that the community or territory in AGSSA 14 however not only failed to reach the minimum expected averages but ranked in the bottom fifth of all Florida markets in terms of expected performance in 1990 with AGSSA 14 ranking next to last through September of 1991. Gain tracts are census tracts in which GMC truck market share exceed expected penetration calculated for that specific census tract. Analysis of gain tracts in the community or territory confirms the reasonableness of expected penetration. However, given the low average performance of the community or territory, there are relatively few gain tracts overall and their existence demonstrates that such a standard can be achieved in this area. Additionally, those that do exist tend to be clustered around existing dealer locations in AGSSAs 9 and 10 with only one in AGSSA 14 demonstrating that convenience may be a factor in the ability to achieve expected averages. Analysis of age and income distribution also confirms the reasonableness of expected penetration for measuring performance in the community or territory in AGSSA 14. Based on that analysis, GMC truck's expected market share in the community or territory in AGSSA 14 alone or the MDA is about 20% higher than expected based on product popularity. The performance standards however, should not be changed to reflect these increases as expected penetration, based on what line-makes consumers actually purchased, is more reliable than any standard derived from analysis predicting what consumers should do given certain characteristics. The effects of lease transactions on GMC truck performance in the community or territory or AGSSA 14 was insignificant and did not impact the validity of the evaluation standard or otherwise explain GMC truck's relatively poor performance in AGSSA 14 or the community or territory. The community or territory, AGSSA 14 and the MDA have continuously performed well below minimum expectations since 1988. The community or territory has steadfastly declined from only 74.4% of expected in 1988 to 56.3% of expected through September of 1991. AGSSA 14's level of performance has been worse, declining from 72% of expected in 1988 to a low of 34.2% through September of 1991. Finally, the MDA as a whole has failed to meet its minimum performance requirement decreasing from 78.8% of expected in 1988 to 54.1% through September of 1991. Additionally, GMC truck performance in AGSSA 14 has been below a standard derived from the balance of the community or territory (AGSSAs with dealers or the balance of the MDA). In contrast to the remainder of the community or territory, AGSSA 14 declined from 94.9% in 1988 to 53.5% through September of 1991, and from 87.7% to 56% during the same period for the remainder of the MDA. None of the AGSSAs with dealers are meeting minimum performance expectations. In 1990, AGSSA 8 achieved 64% of the minimum expected; AGSSA 9 - 58% and AGSSA 10 - 61%. Thus, AGSSA 14 is performing at levels that are inadequate even in comparison to a standard derived from inadequately represented markets. Inadequate representation stems from either an improperly designed dealer network or inadequately operated dealerships within the network or both, which may result in an inability to provide effective intra or interbrand competition. Effective competition results in an increased awareness of the product through advertising and convenient presence where consumers shop thereby stimulating additional sales. There has been significant population growth in the community or territory in each of the three AGSSAs with concentrations through AGSSAs 9 and 10 and extensive clustering of growth in AGSSA 14 around the proposed Stone location. Specifically, the southern half of AGSSA 10 shows a decline in households while a greater number of areas in the northern half reflect increases. Areas reflecting an increase in households predominate in AGSSA 9 with only a few census tracts reflecting a decline. All but one census tract in AGSSA 14 reflect an increase in households in higher concentration than observable in AGSSAs 9 and 10 with the greatest concentration around the proposed location. AGSSA 14's growth has been the most dramatic increasing more than 300% from 1970 through 1991. AGSSA 9's increase of 121,755 households during the same period is sufficient and these growth trends are predicted to continue through 1996. Respecting growth in household trends, AGSSA 14 households grew more than 425% during the period and is predicted to grow more than 508% by 1996. AGSSA 9 households too, have increased significantly to approximately 179% from 1970 to 1980 and more than 200% through 1991. A similar trend exists throughout the community or territory and the MDA and this trend is also projected to continue. Based on these growth trends, increased congestion persists which makes it necessary, more than ever, to establish a dealer network conveniently located to adequately service the area consumers. Average household income throughout the entire community or territory consists of middle and upper income levels. Only two census tracts located in AGSSA 10 had household income levels below $15,000.00. These income levels demonstrate strong potential for new vehicle sales. The employment trends in the area mirrors population growth demonstrating strength in the economy with expanding opportunities for new vehicles sales. Retail light truck registrations in the community or territory essentially followed the pattern of household and population density with heavy concentrations in AGSSAs 9 and 10 and around the proposed location in AGSSA 14. Since 1982, light truck registrations have increased 148% in AGSSA 14. Retail light truck registrations in the community or territory have more than doubled during that same time, to wit, 4,866 to 10,095. The community or territory offers more opportunity per existing GMC truck dealer than all but two markets in Florida. Even with the addition of a third dealer, market opportunity per GMC dealer remains higher than that available in 37 other markets providing sufficient opportunity for an additional dealer. Similarly, the marketing network is not too large for the existing network to provide adequate representation. In each significant category, driving age population, household population, and registrations, the rate of growth in AGSSA 14 during the relevant period has surpassed the national rate several fold. To a lesser extent, the rate of growth in the area has surpassed the nation in every category except registration which reflects an increase of almost 6%. To keep pace with the growth rate in the community or territory, an additional dealership should have been added to the community or territory during 1980. Only 14.3% of the markets that exceed 225 expected registrations per GMC truck dealer meet or exceed expected penetration. Based on this inadequacy, the dealer network is too small to provide adequate intra and interbrand competition in the market. To have a reasonable chance of meeting expected penetration, the network should be redesigned to exceed the critical signs of 225 expected registrations per dealer. As it presently exists, the GMC truck dealer network in the community or territory is configured to 320 expected registrations per dealer which is 95 additional registrations over the target number of 225 expected registrations. Respondent Harris' sales are concentrated in AGSSA 9 with some registrations in both AGSSA 10 which has a dealer and AGSSA 14. Respondent Harris' has demonstrated an inability to obtain a reasonable share of the light truck business at distances within close proximity of its dealership and its sales penetration dropped to about 1% of the available business at distances beyond 4 miles of the dealership. Likewise, Crown has demonstrated an inability to penetrate the market in any significant way. Specifically, community or territory registrations attributable to Crown are concentrated in AGSSA 10 with fewer in AGSSA 9 where Respondent Harris is located. While Crown's ability to penetrate the market within two miles of the dealership is slightly better than Respondent Harris, it immediately drops off to less than 2% after six miles and next to nothing at distances closer to the proposed location. Without the proposed dealer, AGSSA 14 consumers are disadvantaged compared to consumers in AGSSAs 9 and 10 with respect to a conveniently located GMC truck dealer. Without the proposed dealer, consumers are on average approximately nine miles from the nearest GMC truck dealer. This is twice as far as the convenience offered customers in AGSSAs 9 or 10. With the proposed dealer in AGSSA 14, convenience will improve to 3.48 miles on average without changing the level of convenience offered consumers in AGSSAs 9 and 10. Likewise, without the proposed dealer, GMC truck offers consumers in AGSSA 14 the worst level of convenience of most brands that offer light trucks placing GMC truck at an interbrand competitive disadvantage. With the proposed dealer, convenience levels reflecting that similar to the interbrand competitors, would be provided. The inadequate penetration in AGSSA 14 is based on the significant growth in that area coupled with poor convenience levels which can only be improved by redesigning the network to add new representation to improve convenience levels in AGSSA 10. Anderson conducted an optimal location analysis which shows that the proposed location is best suited to maximize convenience and improve the level of interbrand competition. Gross registration loss is a measure of the opportunity available inside a market which has been lost both to existing dealers and the manufacturer. It represents the number of registrations needed to raise each census tract to its expected penetration as adjusted for segment popularity. In the case sub judice, the combined gross registration loss for the community or territory is 296 units. Insell are GMC truck sales by dealers outside the community or territory that are registered inside the community or territory representing loss opportunity to existing community or territory dealers though not to the manufacturer. Ninety-seven (97) registrations throughout the community or territory are from insell. Thus, the total loss opportunity to Respondent and Crown is three hundred ninety-three (393) units. Assuming that Stone had been in business in 1990 at the proposed location and performed similar to Respondent and Crown, it would have been responsible for eighty-six (86) GMC truck registrations or approximately 21.9% of the total loss opportunity. This number reflects only 21.9% of the total loss opportunity in the community or territory and is achievable without taking a single sale from existing dealers. Likewise, substantial additional opportunity would remain for existing dealers in areas where they have a competitive advantage, provided they compete for that opportunity. Assuming that Stone had been in business in 1990 and performed the average of all fringe dealers, which is considerably higher than the average for Respondent and Crown, Stone would have registered an additional 186 units reflecting 47.3% of the total loss opportunity and more than 100 units less than gross registration loss alone. The loss opportunity calculation reflects a conservative measure of the opportunity available since it is premised upon the number of sales needed to reach minimum expectation. To realistically measure the opportunity available to an aggressive network, it would be appropriate to include only those markets that are meeting minimum expectations and therefore are being adequately represented. If gross registration losses calculated according to a standard derived from Florida markets that meet or exceed an expected standard, the total loss opportunity increases to 576 units in 1990. The projected sales for the new dealer represent only a fraction of this assessment of the reasonable opportunity available using either community or territory or fringe dealer profiles. This situation remains whether opportunity is calculated within the community or territory or only within a larger 20-mile radius. Previous experience demonstrates that under such marketing conditions, the new dealer sales will come from loss opportunity and not existing dealers in the MDA. As example, when a new GMC truck dealership was added to the West Palm Beach MDA, GMC truck penetration efficiency increased from 17.8% before to 84% after the addition. During that period, sales by existing dealers remained level while the new dealer registered an additional 278 units. Likewise, while the number of registrations for MDA dealers increased, insell declined sharply demonstrating that sales by dealers outside the area represent opportunity to dealers inside the area. Similar GMC truck experiences have been noted (in Florida) where the addition of a GMC truck dealer to a market substantially enhances GMC truck performance often causing performance to increase beyond minimum expected levels. Specifically, in Venice, Florida, with the addition of a new dealer, a resultant increase in performance efficiency was noted from 55.8% going to 158.5% of expected. In Fernandina Beach, efficiency increased from 37.5% to 176.1% of expected. And, in Mount Dora and Fort Pierce, efficiencies increased from 65% to 108% and from 52% to 115.6%, respectively. Respondent's GMC truck operation generated an operating profit of $453,876.00 in 1990. Respondent's dealership is principally devoted to the Pontiac line which comprises 85% of its total operation. Losses from the Pontiac operation accounted for the dealers loss position in 1989 and 1990. A review of Respondent's financial records suggest that existing profit opportunities stem from operational inefficiencies. After adjusting deferred income from previous years is taken into account, the dealership as a whole made approximately $96,000.00 before consideration of the sole owner's salary, leaving nearly two million dollars of undeclared deferred income in the dealership. Respondent's dealership, which was built in 1967 as a Pontiac dealership, added the GMC truck line in 1975. With the addition of the GMC truck line, Respondent made no discernible capital investment. Respondent's permanent investment in land, buildings, and equipment in its dealership is approximately $462,989.00. Most of its assets are relatively liquid and if liquidated in an orderly manner, the owners would receive approximately $4.1 million. If only the liquid assets were converted, the owners would receive approximately $3.7 million, leaving the land, buildings and equipment available for sale, lease or other investment opportunities. Dr. Lyman Ostlund, an expert in automotive retailing, determined that the relevant community or territory for this case consist of the StPete/Clearwater MDA including AGSSA 8. Dr. Ostlund eliminated fringe areas and included AGSSA 8 based on his determination that the level of cross-sell warranted such a configuration. However, he excluded the area occupied by Courtesy in Tampa with 28 registrations while including AGSSA 8 which had only 10 registrations. Likewise, Dr. Ostlund related that a single registration by Bayview in 1991 reflects a sufficient level of cross-sell to regard AGSSA 8 as connected with the rest of the MDA from a marketing respective. Dr. Ostlund's reasoning and analysis is flawed for several reasons and is rejected. Noteworthy was Dr. Ostlund's inclusion of AGSSA 8 in the community or territory when in another case, he found it puzzling that Port Richey would be considered the same market along with Tampa and St. Petersburg. He considered the drive as a long and arduous one concluding that no one in its right mind would take that drive two or three times in their lifetime. Likewise, Dr. Ostlund attributes low GMC truck market share as being reflective of declining interest in GMC truck products. However, he failed to provide any statistical information that he relied upon as supportive of that claim. To the contrary, during the period of GMC truck's decline in the community or territory, GMC truck's marketshare in the nation and Florida increased. Similarly, Dr. Ostlund related that there are three possible causes for market efficiencies below zone or national average: the network; dealership operations; and unique demographic or other characteristics. While pointing to these factors as support for the possible causes for below market efficiency, Dr. Ostlund performed no statistical analysis to determine whether unique consumer characteristics were in any manner based on GMC's declining marketshare in the community or territory leaving dealer operations or network deficiencies as possible causes of low marketshare. Dr. Ostlund rejects consideration of insell as a component of opportunity. However, there was no empirical data provided to support the rejection of insell. Dr. Ostlund ignores the fact that in properly designed network markets, insell is reduced. Dr. Ostlund also concluded there was insufficient opportunity to support an additional dealer based upon a "5-mile ring" analysis. That analysis is likewise flawed since it uses the subject area as a standard for measuring its own performance which, as noted herein, has an inadequate number of dealers. Additionally, while acknowledging that dealer sales are made throughout the area, Dr. Ostlund's analysis ignores opportunities existing elsewhere in the community. Upon consideration of Dr. Ostlund's analysis, the lack of significant data to support his analysis and the flawed methodology used in support of both the definition of the market and the financial impact in his analysis, his inclusion of markets which were not properly in the community or territory and in other instances, included such markets, his entire analysis including his financial calculations. Finally, Dr. Ostlund relied on a "pump- in" and "pump-out" calculation. His theory that a low pump-in/out number reflects adequate representation is likewise rejected. A study of this calculation shows it to be as consistent with inadequate representation as it is with adequate representation with no particular relationship to either. His suggestion that there are too many GMC truck dealers in the community or territory because the MDA has the lowest ratio of truck dealer/GMC truck registrations of all GMARS markets misses the point completely and lends support to GM's contention that there are too few dealers to adequately serve the area. Low registrations per dealer has been found and demonstrated to be more consistent with operational problems and inadequate representation than it is with "over dealering." Significantly, Dr. Ostlund failed to explain why the Orlando market, which is about the same size as measured by industry registration and which has four dealers to the StPete/Clearwater MDA 3, is able to achieve 353 GMC registrations per dealer while the StPete/Clearwater MDA achieves only 150. Dr. Ostlund related that Respondent's level of advertising, being five times above average, reflects attempts to lure customers. He failed, however, to segment out the amount of such expenses which were attributable to GMC advertising and he admitted that those expenses were in combination with Pontiac, which represents 85% of the dealership business. The advertising analysis was at best superficial and did not shed relevance to the adequacy of representation issue. Similarly, Dr. Ostlund presented Respondent's Customer Satisfaction Index (CSI) score of 100 for the three-month period ending November 1991 as reflective of superior performance. That survey, which was based on four responses, was unreliable. Respondent's CSI for the preceding twelve-month period was below average in virtually every CSI category, including overall satisfaction with warranty service, delivery condition, sales staff, and service comebacks. Specifically, as of December 19, 1991, Respondent was ranked 379 out of 399 (with a numerical rank of one being the best). In this case, the community or territory and AGSSA 14, as an identifiable plot, failed to achieve minimum performance standards and there is adequate and sufficient opportunity for an additional GMC truck dealer. The addition of the proposed dealer, under these circumstances, will result in greater customer convenience and enhanced inter and intrabrand competition. The addition would also be in the interest of the public, the manufacturer, and existing dealers and would likely stimulate and maintain effective levels of competition.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: 1. Respondent, Department of Highway Safety and Motor Vehicles, enter a Final Order approving Petitioner's application to establish the Stone GMC Truck Dealership in the vicinity of Palm Harbor, Florida. DONE and ENTERED this 4th day of August, 1992, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of August, 1992. APPENDIX TO RECOMMENDED ORDER Rulings on Petitioner General Motors Corporation/GMC Truck Division Proposed Recommended Order. Paragraph 71, rejected, not probative and unnecessary. Paragraph 74, rejected as conclusionary and not a finding of fact. Rulings on Respondent Charlie Harris Pontiac, Inc. Proposed Recommended Order. Paragraph 5, adopted as modified, Paragraphs 4, 5 and 6, Recommended Order. Paragraph 6, rejected, contrary to the greater weight of evidence, Paragraphs 5 and 9-12, Recommended Order. Paragraph 7, adopted as relevant, Paragraph 3, Recommended Order. Paragraph 9, rejected, irrelevant and not probative. Paragraph 10, rejected, irrelevant and not probative. Paragraph 11, rejected, contrary to the greater weight of evidence, Paragraphs 9-12, Recommended Order. Paragraph 12, rejected, unnecessary and not probative. Paragraph 13, adopted as modified, Paragraphs 21, 22 and 23, Recommended Order. Paragraph 14, rejected, unnecessary and not probative. Paragraph 15, rejected, contrary to the greater weight of evidence and calls for consideration of an inappropriate standard. Paragraph 16, rejected, contrary to the greater weight of evidence and calls for consideration of an inappropriate standard, Paragraphs 23 and 24, Recommended Order. Paragraph 18, rejected, contrary to the greater weight of evidence, Paragraphs 26-33, Recommended Order. Paragraph 19, rejected, not probative. Paragraph 20, rejected, not probative. Paragraph 21, rejected, contrary to the greater weight of evidence, Paragraphs 34, 35, 44, 46 and 56, Recommended Order. Paragraph 23, rejected, contrary to the greater weight of evidence. Paragraph 24, rejected, calls for consideration of an inappropriate standard. Paragraph 25, rejected, contrary to the greater weight of evidence and calls for consideration of an inadequate standard. Paragraph 26, rejected, contrary to the greater weight of evidence and calls for consideration of an inadequate standard. Paragraph 27, rejected, contrary to the greater weight of evidence, Paragraphs 48 and 49, Recommended Order. Paragraph 28, adopted as modified, Paragraph 48, Recommended Order. Paragraph 29, rejected, irrelevant. Paragraph 30, rejected, unnecessary. Paragraph 31, rejected, contrary to the greater weight of evidence, Paragraph 43, Recommended Order. COPIES FURNISHED: EDWARD W RISKO ESQ GENERAL MOTORS CORPORATION NEW CENTER ONE BLDG 3031 W GRAND BLVD DETROIT MI 48232 DEAN BUNCH ESQ CABANISS BURKE & WAGNER 851 E PARK AVE TALLAHASSEE FL 32301 MARK HERRON ESQ AKERMAN SENTERFITT EDISON & MOFFITT PO BOX 10555 TALLAHASSEE 32302 2555 DANIEL E MYERS ESQ WALTER E FOREHAND ESQ FOREHAND AND MYERS 402-B N OFFICE PLAZA DR TALLAHASSEE FL 32301 MICHAEL J ALDERMAN ESQ DEPT OF HIGHWAY SAFETY AND MOTOR VEHICLES A432 NEIL KIRKMAN BLDG TALLAHASSEE FL 32399 0500 CHARLES J BRANTLEY/DIRECTOR DIVISION OF MOTOR VEHICLES DEPT OF HIGHWAY SAFETY AND MOTOR VEHICLES NEIL KIRKMAN BLDG TALLAHASSEE FL 32399 0500 ENOCH J WHITNEY ESQ GENERAL COUNSEL DEPT OF HIGHWAY SAFETY AND MOTOR VEHICLES NEIL KIRKMAN BLDG TALLAHASSEE FL 32399 0500
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by Lisa Shearer Nelson, an Administrative Law Judge of the Division of Administrative Hearings, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File as its Final Order in this matter. Said Order Closing File was predicated upon Respondent's notice of withdrawal. Accordingly, it is hereby ORDERED that this case is CLOSED and a license may be issued to Gas Sippers, LLC to sell motorcycles manufactured by Taizhou Zhongneng Motorcycle Co. Ltd. (ZHNG) at 6480 20th Street, #106, Vero Beach (Indian River County), Florida 32966 upon compliance with all applicable requirements of Section 320.27, Florida Statutes, and all applicable Department rules. Filed October 15, 2009 3:39 PM Division of Administrative Hearings. DONE AND ORDERED this ;J? ay of October, 2009, in Tallahassee, Leon County, Florida. Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Filed with the Clerk of the Division of Motor Vehicles this _/;JJJ day of October, 2009. . 0..- .t.dmlnlstrallo NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. CAF:vlg Copies furnished: John Dikov Valley Scooters, LLC 1687 Blythe Island Drive Brunswick, Georgia 31523 2
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the parties' stipulations of fact, the following relevant facts are found: In 1985, petitioner Linder Truck Center, Inc. (Linder) purchased Lakeland Frame and Axle, which was then a General Motors Corporation (GMC) Truck dealer in Lakeland, Florida. In July of 1985, Linder entered into a Dealer Sales and Service Agreement with GMC, and thereafter, entered into a replacement Agreement effective November 1, 1985. Under the terms of the Dealer Agreement and various addenda, Linder was granted a non-exclusive right to buy, sell and service certain specified light duty, medium duty and heavy duty trucks marketed by GMC. The provisions of the Agreement between Linder and GMC provide that GMC may discontinue any product at any time and its only obligation is to manufacture and deliver to the dealer accepted orders which the dealer does not elect to cancel. The Dealer Agreement and addenda delineate Linder's areas of primary responsibility (APRs) for the three types of trucks. The APRs are different for light, medium and heavy duty trucks because of the different volume base for each category. Since the volume base for heavy duty trucks is smaller, the APR for such trucks is larger in order to provide the dealer with sufficient volume base to make economically viable the dealer's heavy duty marketing and after- market support. On or about November 1, 1985, GMC certified to the Florida Department of Highway Safety and Motor Vehicles (DHSMV) that Linder was authorized as a dealer to sell and service new motor vehicles commonly known and designated as GMC Trucks. On or about September 10, 1986, GMC notified all its truck dealers of the anticipated creation by AB Volvo and GMC of a joint venture company which would manufacture and distribute heavy duty trucks. On or about November 7, 1986, Linder received from GMC four Motor Vehicle Addenda to the Dealer Sales and Service Agreement which superseded prior addenda. At the same time, GMC delivered a letter informing Linder that GMC had agreed to form a joint venture with AB Volvo which would manufacture, assemble and distribute heavy duty trucks in the United States, and that GMC would discontinue and no longer distribute or market heavy duty trucks in the United States. The letter also stated that it was anticipated that Linder's Heavy Duty Motor Vehicle Addendum would be cancelled no later than December 31, 1987. This same letter was sent to all GMC truck dealers. By letter dated December 23, 1986, GMC notified Linder that GMC would cease offering heavy duty trucks for sale in North America on December 31, 1987, and that, consequently, the current Heavy Duty Motor Vehicle Addendum would expire on that date. The Department of Highway Safety and Motor Vehicles was likewise informed of this action. During the period ending December 31, 1987, GMC manufactured and distributed three heavy duty truck products: the Brigadier, the Astro and the General. Prior to the early 1980's, GMC held a relatively strong position in the heavy duty truck industry, with its market share being in excess of 16 percent. Its share of the market for heavy duty trucks declined precipitously to 8 percent thereafter and the manufacture and sale of its heavy duty truck models became increasingly unprofitable for GMC. It balanced the alternative of completely liquidating its hard assets formerly devoted to the manufacture and distribution on its heavy duty truck models against that of utilizing those assets as contribution with another manufacturer in a joint venture operation. Considering that it then had approximately 170,000 heavy duty trucks on the road and desiring to assure coverage and availability of service parts, GMC determined to contribute its heavy duty truck assets and other assets to form a joint venture with AB Volvo, to be known as the Volvo GM Heavy Truck Corporation. As it did with Linder, GMC provided to all its heavy duty truck dealers approximately a year's notice of the joint venture agreement with Volvo, as well as notice that GMC would cease offering heavy duty truck products for sale in North America on December 31, 1987. It also notified its dealers that a priority for the joint venture would be the selection of a dealer network to sell and service the joint venture's products. GMC's heavy duty truck dealers were advised that not all would obtain a dealer agreement for heavy duty trucks from the joint venture. At the time of the joint venture, Volvo had approximately 200 to 210 dealers for heavy duty trucks, and GMC had approximately 350 heavy truck dealers. In January of 1988, approximately 240 dealerships were awarded on behalf of the joint venture. While Linder actively sought to be selected as a Volvo GM Heavy Truck Corporation dealer, it was notified by letter dated July 30, 1987, from Volvo GM that it had not been selected as a joint venture dealer. There was no evidence adduced at the hearing to establish how many of the dealerships awarded by the joint venture were formerly GMC or formerly Volvo heavy duty truck dealers. Likewise, there was no evidence as to whether or not a dealership was awarded for Linder's former area of primary responsibility for the sale and/or service of heavy duty trucks. Pursuant to the joint venture agreement, GMC owns a 24% stock interest in Volvo GM Heavy Truck Corporation, and the remaining 76% interest is owned by Volvo North America Corporation. GMC has the option to purchase an additional 11% of the stock in 1993. GMC is a Class B stockholder, and holds 3 of the 10 seats on the Board of Directors. By majority vote of the GMC Directors, GMC does have veto powers over some 18 out of the ordinary-type decisions, such as a change in the vehicle nameplates, waivers of dividends and a sale of the company. The business of Volvo GM is to manufacture and market Class 8 vehicles (heavy duty trucks) and to sell the Volvo Line of medium duty trucks. The joint venture calls for the discontinuance by GMC of the manufacture of all heavy duty truck models, with the temporary exception of the Brigadier model. Had the Brigadier model not been manufactured during 1988, Volvo GM would not have been able to meet the demand for heavy duty trucks in 1988. That model was manufactured by GMC during 1988 under exclusive contract to the joint venture, Volvo GM Heavy Truck Corporation, for distribution by the joint venture under its own nameplate (White GMC Brigadier) and warranty. The manufacture of the Brigadier trucks was discontinued on or about December 16, 1988. Thereafter, the joint venture will design, produce and market a completely different vehicle as a replacement to sell into the market that the Brigadier previously sold into. During 1988, GMC had no involvement in the marketing of the Brigadier heavy duty truck. The joint venture had the responsibility for everything beyond production. Approximately 4,000 Brigadiers were produced in 1988, as compared with 7,000 or 8,000 during 1986 and 1987. Linder's GMC Dealer Sales and Service Agreement continues in effect, and Linder remains an authorized dealer of General Motor's light duty and medium duty trucks.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the Department of Motor Vehicles and Highway Safety enter a Final Order determining that GMC's cancellation or termination of petitioner's heavy duty truck addendum to its Dealers Sales and Service Agreement as of December 31, 1987, was not unfair or prohibited, and that petitioner's third amended complaint be dismissed. Respectfully submitted and entered this 13th of March, 1989, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of March, 1989. APPENDIX Case No. 87-5007 The parties' proposed findings of fact have been fully considered and are accepted and/or incorporated in this Recommended Order, with the following exceptions: Petitioner 30 - 49. These proposed findings are accepted as factually correct with respect to the terms of the various agreements and documents, but are not included as irrelevant and immaterial to the ultimate issues in dispute. 73, 74. Rejected as contrary to the greater weight of the evidence. 76. Rejected as an improper factual finding, and discussed in the Conclusions of Law. Respondent 10. Rejected as irrelevant and immaterial to the issues in dispute. 19. Rejected as irrelevant and immaterial to the issues in dispute. COPIES FURNISHED: Stanley H. Eleff and Richard M. Hanchett, Esqs. Trenam, Simmons, Kemker, Scharf, Barkin, Frye & O'Neill, P.A. 2700 Barnett Plaza Post Office Box 1102 Tampa, FL 33601 Dean Bunch, Esquire Rumberger, Kirk, Caldwell, Cabaniss, Burke & Weschler, P.A. 101 North Monroe Street Suite 900 Tallahassee, FL 32301 Charles J. Brantley, Director Division of Motor Vehicles Room B439 Neil Kirkman Building Tallahassee, FL 32399-0500
The Issue Did the Respondents commit the offenses alleged in the Administrative Complaint, and, if so, what penalty should be imposed?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: The Department is the agency of the State of Florida responsible for the enforcement of the Florida Motor Vehicle Repair Act (Sections 559.901-559.9221, Florida Statutes). At all times pertinent to this proceeding, Respondents were engaged in the business of motor vehicle repair. At all times pertinent to this proceeding, Allen J. Hobbs (Hobbs), was employed by the Department as a Law Enforcement Investigator. Hobbs became familiar with Respondents, Brian Waterman, John Waterman, and Transmission Mart, Inc., through complaints sent to the Department's office in Polk County, Florida, from the Department's office in Tallahassee, Florida Hobbs opened an investigation concerning Respondents on January 22, 1999. The investigation involved "preparing a vehicle" by taking the transmission apart to make sure the transmission was working properly and marking all parts of a transmission with an identifying number. The purpose of marking the parts was to determine if a part had in fact been replaced when such was indicated on Respondents' repair bills. On February 11, 1999, while working undercover, Joanne M. Taylor (Taylor), Law Enforcement Officer with the Department, presented a 1992 Buick Skylark, which had previously been prepared by having the transmission checked and the transmission parts marked with the number 04, to Transmission Mart at 3550 Recker Highway, Winter Haven, Florida. Taylor had a coupon for a transmission service. A man, with a name patch of "John" on his shirt, advised Taylor that he could service the transmission. Upon being advised that the transmission service had been completed, Taylor paid the bill and received an invoice for the service, which indicated that a new filter had been installed. Taylor left Transmission Mart and returned the 1992 Buick Skylark to Hobbs. On February 15, 1999, John Denny (Denny), the Department's mechanic who had originally marked the transmission parts, inspected the transmission along with Hobbs and found that the filter marked with the number 04 was still in place and had not been replaced by Transmission Mart as indicated on the invoice. Other than the time during which the vehicle was being serviced at Transmission Mart, the vehicle was under the control of the Department's employees. On February 25, 1999, while working undercover, M. E. (Cookie) Sikes (Sikes), Law Enforcement Officer with the Department, presented a white 1990 Oldsmobile Eighty-Eight, which had previously been prepared by having the transmission checked and the transmission parts marked with the letter T and the number 5 (T5), to Transmission Mart at 3550 Recker Highway, Winter Haven, Florida. Sikes had a discount coupon for a transmission service. The Service Manager named Brian, advised Sikes that it would take approximately one and one- half hours to service. Sikes had someone pick her up and later returned to pickup the vehicle. Sikes was given an invoice that indicated that she was being charged $15.00 for a new filter, with a total amount owed of $35.99. However, due to the unavailability of change, Sikes' bill was reduced to $30.00. Sikes returned the car to the Division of Plant Industry Office where it was secured. On March 1, 1999, the vehicle in question was transported to the Division of Forestry Vehicle Repair Shop in Brooksville, Florida. On March 16, 1999, Denny, with Hobbs observing, removed the transmission from the vehicle and inspected the filter to determine if Transmission Mart had in fact replaced the filter that was in the vehicle when presented to Transmission Mart on February 25, 1999. Upon examination, both Denny and Hobbs observed that the filter containing the identifying mark T5 was still in the transmission. Although Sikes paid for a new filter, Transmission Mart did not install a new filter in the vehicle presented by Sikes. Other than the time the Oldsmobile Eighty-Eight was being serviced by Transmission Mart, the vehicle was under the control of the Department's employees. On August 16, 1999, Hobbs drove a black 1991 Ford Taurus automobile to the Division of Forestry Motor Vehicle Repair Shop in Brooksville, Florida, for the purpose of having the transmission checked by John Denny, Forestry Mechanic, to assure that the vehicle's transmission was functioning properly. After determining that the vehicle's transmission was functioning properly, Denny, with Hobbs observing, removed the transmission fluid pan and the transmission filter. Denny installed a new fluid pan gasket and fluid filter. The fluid filter was marked with the letter O and the number 3 (O3), which was the code used by Denny to previously identify the other parts of the transmission. On August 19, 1999, Paula R. Wheeler (Wheeler), Law Enforcement Officer with the Department, while working undercover, presented the black 1991 Ford Taurus for servicing. Wheeler spoke with Brian Waterman. After a few minutes, Wheeler was advised by Brian Waterman that they were unable to service the transmission due some problem with the transmission. After some discussion, Wheeler authorized the expenditure of $225.00 for the repair of the transmission. On August 20, 1999, when Wheeler called to inquire about the transmission, she was informed that there were additional problems and that the estimate for repair was now $1,849.60. Wheeler agreed to this new estimate for repair. Although Wheeler was advised by Waterman that the vehicle would be ready on Monday, August 23, 1999, the vehicle was not ready until Wednesday, August 25, 1999. On Wednesday, August 25, 1999, Wheeler paid Transmission Mart $1,972.29 for the repair of the transmission and received an invoice for the repair. The invoice indicated that Wheeler was charged for the installation of a Transmission Mart remanufactured transmission with an exchange recondition torque converter using the following parts: (a) 1-OH Kit with steels; (b) 1- Bushing Kit; (c) 1- Reconditioned Valve Body; (d) 1- Reconditioned front Pump; (e) 1-Torque Converter; (f) 1- Set of Snap Rings; and (g) a filter. After picking the Ford Taurus up from Transmission Mart on August 25, 1999, Wheeler proceeded to the Department's office in Winter Haven, Florida, where the vehicle was loaded on a trailer and turned over to Hobbs. On August 31, 1999, Steve Merrick, Investigator for the Department, transported the vehicle by trailer to the Division of Forestry Repair Shop in Brooksville, Florida, so that Denny could disassemble the transmission for the purpose of determining if Transmission Mart had performed the work and replaced the parts indicated on the invoice presented to Wheeler. Hobbs videotaped the disassembling of the transmission on August 31, 1999, and September 1, 1999. Upon disassembling the transmission, it was determined that the front pump and both parts of the valve body had not been replaced in that they still had the code O3 on them, which had been placed there earlier by Denny. The forward, intermediate, and rear clutch was inspected, and it was determined that 11 steels and 7 friction plates had not been replaced by Transmission Mart as indicated on the invoice in that these parts still bore the code O3 which had been previously put there by Denny. The rear clutch was removed and upon inspection it was determined that four steels had not been replaced as indicated on the invoice in that they still bore the code O3, which had been placed there earlier by Denny. At all times pertinent herein, the Ford Taurus was in the possession of, or under the control of, Department employees. There is no evidence that Respondents, on May 10, 1999, knowingly and falsely charged Bob Bloomquist for the removal, rebuilding, and reinstallation of a transmission as alleged in paragraph 11 of the Administrative Complaint. Likewise, there is no evidence that Bob Bloomquist had any contact with Respondents until sometime in late April or early May 2000. The Administrative Complaint contains no allegation charging Respondents with having falsely stated that they were members of the Automatic Transmission Rebuilders Association and thereby an authorized warranty dealer. On November 10, 1999, Judi Sylvia (Sylvia) presented her 1995 Ford Windstar Van (Van) to Transmission Mart for a service check of her transmission. The purpose of the service check was preventive maintenance because the transmission had a slight hesitation in reverse. Brian Waterman initially inspected the Van and concluded that there was a problem. Brian Waterman advised Sylvia that he would need to remove and dismantle the transmission in order to make an internal inspection. The cost for this internal inspection would be $225.00. However, if major repairs were needed, the $225.00 would apply toward that bill. Sylvia gave her approval for the cost of the internal inspection. After the internal inspection, Brian Waterman advised Sylvia that it would cost $500.00 to repair but changed that estimate to $750.00, which Sylvia agreed to pay because she was not knowledgeable about transmission repair and did not understand what she was being told by Brian Waterman. Subsequently, the estimate went to $750.00 and then to $1,749.00. Not having any choice, Sylvia agreed to the repairs. The invoice given to Sylvia by Transmission Mart indicated that a Transmission Mart Reconditioned Transmission with a full Life Time Warranty had been installed in the Van. The invoice indicated that warranty did not cover towing. However, the newspaper ad, which included the coupon, indicated that there was free towing with internal repairs. Sylvia was charged for internal repairs. Transmission Mart falsely charged Sylvia for towing. The Van stayed in the shop at Transmission Mart for a large part of the time between November 10, 1999, and December 22, 1999. Sylvia continued to experience problems with the transmission during this period. Eventually, Sylvia paid Transmission Mart a total of $1,981.50, which included towing charges. During the time the Van was being allegedly repaired at Transmission Mart, Brian Waterman told Sylvia that the Van was at Rowan Lincoln Mercury being repaired. However, the van was never at Rowan Lincoln Mercury being repaired during the time it was at Transmission Mart. On December 22, 1999, Sylvia retrieved her van from Transmission Mart and transported the Van to Aamco for repairs. Sylvia paid $1,757.48 for the repairs made by Aamco to the Van's transmission. Transmission Mart falsely charged Judi Sylvia for the removal, rebuilding, and installation of a Transmission Mart Reconditioned Transmission. There is insufficient evidence to establish facts to show that Transmission Mart falsely charged Raymond D. Skipper for the removal, rebuilding, and reinstallation of a transmission in Skipper's 1994 Dodge Caravan.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law it is, accordingly, Recommended that the Department of Agriculture and Consumer Services enter a final order finding Respondents guilty of: (a) violating Section 559.920(3), Florida Statutes, on four separate occasions as alleged in paragraphs 6, 7, 9, and 12 of the Administrative Complaint; (b) violating Section 559.920(4), Florida Statutes, on one occasion as alleged in Paragraph 8 of the Administrative Complaint; (c) violating Section 559.920(8), Florida Statutes, on one occasion as alleged in paragraph 14 of the Administrative Complaint; and (d) violating Section 559.920(9), Florida Statutes, on one occasion a alleged in paragraph 13 of the Administrative Complaint. It is further recommended that an administrative fine of $1,000.00 for each violation be imposed for a total administrative fine of $7,000.00. It is further recommended that the allegations contained in paragraphs 10, 11, and 15 through 18 be dismissed. DONE AND ENTERED this 18th day of September, 2001, in Tallahassee, Leon County, Florida. ___________________________________ WILLIAM R. CAVE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of September, 2001. COPIES FURNISHED: Honorable Terry L. Rhodes Commissioner of Agriculture The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard D. Trischler, General Counsel The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Brenda D. Hyatt, Bureau Chief Bureau of License and Bond Department of Agriculture 541 East Tennessee Street, India Building Tallahassee, Florida 32308 Suzanne V. Estrella, Esquire Department of Agriculture and Consumer Services 407 South Calhoun Street 515 Mayo Building, Fifth Floor Tallahassee, Florida 32399-0800 James R. Franklin, Esquire Post Office Box 2883 Lakeland, Florida 33806-2883
The Issue The issue is whether GMC Truck Division of General Motors Corporation is receiving adequate representation in the community or territory where General Motors proposes to add an additional dealer.
Findings Of Fact The Relevant Community or Territory Coral Oldsmobile-GMC Truck, Inc. ("Coral") seeks to establish a GMC dealership in the vicinity of Coral Springs, Florida. The location chosen is within an area which GM has identified as the Fort Lauderdale multiple dealer area ("MDA"). The MDA is an area of primary responsibility ("APR") assigned by GM in its Dealer Sales and Service Agreements to more than a single GMC truck dealer. The three protesting dealers, Sheehan, located at Lighthouse Point, King in Fort Lauderdale and Scott in Hollywood, already have been assigned to sell GMC trucks in the Fort Lauderdale MDA. The Fort Lauderdale MDA comprises a large portion of the land area of Broward County, and its boundaries are defined U.S. Census Tracts. GMC truck dealers located in nearby APRs which touch the Fort Lauderdale MDA are known in the industry as "fringe dealers." No fringe dealer makes enough truck sales to consumers who register their vehicles in the Fort Lauderdale MDA so that any fringe dealer could be considered to fall within the community or territory at issue here. Information about the addresses where new car or truck owners register vehicles is available and can then be aggregated by census tracts or other geographic designations such as zip code areas. Nationally, from 62% to 85% of the sales made by each dealer within an MDA are made to persons who register the vehicles within the MDA boundary. General Motors has designated areas surrounding each dealer within an MDA as an "Area of Geographic Sales and Service Advantage" ("AGSSA"). The boundaries of each AGSSA is also defined by census tracts. For the Fort Lauderdale MDA, AGSSA 1 is located in the northeastern county, and has been assigned to Sheehan, in Lighthouse Point. AGSSA 2 is the central portion of the county, its dealer is King, in Fort Lauderdale. AGSSA 3 is in the southern portion of the county, its dealer, Scott, is in Hollywood. Each AGSSA is designed as the area in which its dealer has a convenience advantage over other dealers of the same line-make because of its proximity to consumers residing in that area. The proposed AGSSA to be created for the Coral dealership in the Fort Lauderdale MDA is designated as AGSSA 10 [why this is not designated AGSSA 4 is not clear, but it is also not significant]. Eighty four percent (84%) of customers registering new trucks in the area to comprise AGSSA 10 purchased their GMC trucks from dealers in the Fort Lauderdale MDA. King and Sheehan sell GMC trucks that are registered throughout the MDA. A significant number of consumers go outside the Sheehan AGSSA 1 and King AGSSA 2 to purchase GMC trucks from other MDA dealers. It is undisputed that AGSSAs 1, 2 and 10 should be included within the definition of the relevant community or territory. The dispute centers on whether AGSSA 3 is also part of the community or territory. Eighty-six percent (86%) of all GMC truck registrations in AGSSA 3 were attributable to sales by dealers in the Fort Lauderdale MDA, which includes sales by Scott. Of the registrations which were not generated by sales at Scott, 72% were from other Fort Lauderdale MDA dealers. Thirty-six percent (36%) of those registering GMC trucks in AGSSA 3 (the Scott AGSSA) purchased them from other Fort Lauderdale MDA dealers. AGSSA 3, therefore, does not perform like an isolated, unconnected market. Based on consumer behavior, the Fort Lauderdale MDA, including AGSSAs 1, 2, 3, and 10, perform as a large market shared by multiple dealers. The test commonly used for determining whether markets are so connected as to form an appropriate community or territory to use as a unit of analysis requires that there be cross-sell of at least 30% in both directions. In other words, at least 30% of a dealer's sales should be made to consumers outside of the dealer's AGSSA but inside the MDA, as well as at least 30% of the consumers inside the dealer's AGSSA should buy from the other dealers in the MDA. The Scott dealership, in the southern portion of Broward County, does not fit this classic definition. The Scott data for the most recent year show that for Scott, 33 sales were made to persons registering vehicles in other AGSSA's within the Fort Lauderdale MDA. Scott's nationwide retail sales were 241 units, so only 13.7% of Scott's sales were to persons residing in the Fort Lauderdale MDA, but outside of the Scott AGSSA. On the other hand, as pointed out in the prior Finding, 86% of all registrations in the Scott AGSSA were attributable to dealers in the Fort Lauderdale MDA (including sales made by Scott). Scott does not sell vehicles into the other AGSSAs of the MDA very well, but the customers in the Scott AGSSA are going to other MDA dealers to buy trucks more than they were going to dealers in any other area. On balance, this evidence demonstrates that it is appropriate to include the Scott AGSSA, AGSSA No. 3, in the Fort Lauderdale MDA, and that the Fort Lauderdale MDA defines the community or territory which should be the unit of analysis here. Standard of Evaluation The next question is whether the existing GM dealers are providing "adequate representation" in the relevant community or territory, i.e., the Fort Lauderdale MDA. Since 1988 GMC Truck sales performance in the Fort Lauderdale MDA as a whole and in AGSSA 10 have steadily declined. The most common measure for evaluating the performance of a dealer network is analysis of market penetration data. GMC Truck has a 7.41% market share nationally. National data includes markets where GM is inadequately represented, where it has no dealers at all, and markets where it is represented adequately. National data is, of course, only a starting point. There are variations in consumer preferences for different types of vehicles, and even a dealership network in an area which fails to match the 7.41% market penetration for the nation as a whole may be adequately representing GM in its area, if consumers there tend to prefer different types of vehicles, something which even the most efficient dealer cannot change. Conversely, the dealer or dealership network selling at the national average may be inadequately representing GM if it reaches no more than the national average market penetration in an area where the type of vehicle under consideration is quite popular with the area's consumers. Historically, GMC truck has had greater market penetration in the large pick-up truck, truck wagon and full size panel van segments of the market than in the small pick-up truck segment. In places where large pick-up trucks are popular (agricultural areas, for example, where trucks commonly are used on farms) market conditions are favorable to GM. Taking into account the different popularity of distinct segments of the truck market nationally and in the Fort Lauderdale MDA, GM expects the Fort Lauderdale MDA to achieve a market penetration of 6.45%, which is somewhat lower than the national average for market penetration. Applying the same analyses to AGSSA 10 (the proposed new dealership) shows an expected market penetration of about a 6.04%, or about 80% of the National average. (Anderson testimony, at 31.) These percentages are computed by identifying demand shown by actual consumer purchases in the Fort Lauderdale MDA and in AGSSA 10 for each segment of the product category (i.e., large pick-ups, small pick-ups, and mid-size vans, panel vans, etc.) and applying to those sales the national average GM achieves for each of those segments. This produces an expected number of registrations for the dealer according to the local popularity of each product segment. This standard of comparison is useful because it takes into account unique characteristics of the local market. In 1988 AGSSA 10 achieved 95.5% of its expected penetration. Performance declined to 76.6% of expected penetration by 1990. Analyzing AGSSA 10 based on age distribution of the area's population rather than on truck market segment popularity, shows that GMC truck projects a 7.59% market penetration in AGSSA 10 and in the Fort Lauderdale MDA, which is somewhat higher than the national average and the expected penetration described in Finding 13. When one takes into account income distributions in the area, GM projects a market penetration of 7.41% in the Fort Lauderdale MDA and 7.43% in AGSSA 10, which is quite close to the national average market penetration, and higher than AGSSA 10's projected market penetration based upon product segment popularity. See Finding 13, above. Expected penetration calculations for other markets in Florida show that 17 areas of Florida actually exceed their expected market penetration, which is evidence that the expected penetration calculation produces a reasonable expectation, and has not been manipulated by GM to become an extreme standard which dealers could not actually meet. Sheehan, in AGSSA 1 had sales equal to almost 150% of its expected penetration in 1990. It is significant that in census tracts within the Fort Lauderdale MDA that meet or exceed the expected penetration, based on product segment popularity, the average distance of the purchasing consumer from the nearest dealer is 3.4 miles. This confirms that convenience of dealer location affects consumers' purchasing decisions in an important way. Consumers in AGSSA 10 are, on average, now 8.7 miles from the nearest GMC Truck dealer. This increased distance is a very persuasive explanatory factor for the low sales in AGSSA 10 now, which fall below expected market penetration. The expert for the protesters, Dr. Mizerski, challenged GM's use of national averages to assess dealer performance in AGSSA 10 and the Fort Lauderdale MDA. Dr. Mizerski would have used as the standard for assessing the adequacy of representation of the GMC truck products by the protesting dealers market penetration in the State of Florida, on the theory that the State of Florida data more closely matches AGSSA 10 and the Fort Lauderdale MDA than national data does. This theory has some initial appeal, but it fails to take into account the question of whether Florida itself has a disproportionate share of inadequately represented markets. This could come from the substantial growth in Florida in recent years. Florida falls below the national average, and below 34 states in the ratio of GMC Truck dealers to all other dealers. More than half the Florida markets have penetration below that expected based on product segment popularity, which is an indication that Florida has a disproportionate share of inadequately represented markets. There is no proof that the number of sale points (i.e., dealerships) has increased in proportion as Florida's population has increased. (See Finding 30, below, as to Broward County). If market penetration for GMC truck products in Florida is lower than the national average not because of unique characteristics of the Florida market, but because of network inadequacies, it makes no sense to use that inadequate network as the standard for evaluating the adequacy of dealer performance. On balance, the expected penetration standard advocated by GM based on product segment popularity is more persuasive than the "actual penetration" standard advocated by Dr. Mizerski. The penetration achieved in AGSSA 10 in 1990 was only 4.63%, which is well below the expected penetration of 6.04%, the national average of 7.41%, the Florida average of 5.8%, and the Florida MDA average of 5%. It began to fall below expected penetration in 1988 and performance has declined since then. Performance in the Fort Lauderdale MDA as a whole was also below expected penetration in 1989 and 1990. If lease registrations are included within the definition of the retail market, the figures are essentially the same. Consumer lease transactions are not distorting performance data. All Fort Lauderdale MDA dealers have not had trouble meeting expected penetration projections. The performance by Sheehan in AGSSA 1 is almost 150% of its expected penetration. Existing dealers have not been able to penetrate the market in AGSSA 10 adequately from their current locations. The most likely cause of the low penetration is the lack of a GMC Truck dealership in the geographic area. Market Characteristics The three existing dealers are located in what was the densely populated eastern or coastal half of Broward County in 1980. The Broward population has grown significantly from 1980 through 1990 in the western half of the Fort Lauderdale MDA, especially near the proposed location for the Coral dealership. The population in AGSSA 10 rose nearly 200,000 from 1970 to 1980, and rose 129,000 from 1980 to 1990. The 1990 population of 357,958 is about nine times the 1970 population, and twice the 1980 population. There have been similar increases in the number of households and an observable increase in household density in western Broward. This population growth in AGSSA 10 should continue into the future, reaching an estimated 530,554 within the next 10 years. This growth rate is five times greater than that of Broward County as a whole, which itself is growing at twice the national rate. Despite the significant increase in population in AGSSA 10 and in the western two thirds of AGSSA 3, there is no local GMC truck dealer to serve this growing population. The growth has not been limited to AGSSA 10. The entire Fort Lauderdale MDA had grown in terms of population, household and driving age population during the same period. Each AGSSA in the Fort Lauderdale MDA had population increases and increases in the number of households both in absolute numbers and on a percentage basis from 1970 to 1980. AGSSA 10 had the largest percentage increases (500% in population, 600% in households), although the entire Fort Lauderdale MDA grew very significantly. From 1980 to 1990 the population of AGSSA 10 grew 56.24% and households grew 66.66% and it became the second largest AGSSA in Fort Lauderdale MDA. The population of AGSSA 1 grew 10.92% and 19% in number of households during 1980-1990. AGSSA 3 increased 22.58% in population and 28.48% in households. AGSSA 2 population remained basically stable (decreasing by about 1.84%) and the number of households increased only moderately, 5.33%. The very significant growth in the Fort Lauderdale MDA and in AGSSA 10 has two implications. It has offered greater opportunities for sales of GMC trucks and also highlights the need for expansion of the dealer network so that dealers will be conveniently located to the new residents of the western areas of Broward County. AGSSA 10 currently holds strong prospects for additional sales due to its household incomes. Sales potential is better predicted by a household's income than by individual income. Areas of average household incomes below $15,000 generate few new vehicle sales, while household incomes of greater than $15,000 have significant potential for new vehicle sales. The average household income in AGSSA 10, and throughout the entire Fort Lauderdale MDA, are predominately of middle and upper income levels. Only one census tract in AGSSA 2 and one in AGSSA 3 have household income levels of below $15,000. The employment figures in the decade from 1980 to 1990 in Broward County are consistent with its population growth. The increases in employment and real income in Broward County have been significantly higher than those of the United States as a whole, and Broward's rate of unemployment has been lower. This economic strength is predicted to continue throughout the next decade. These facts indicate that the large growth in the Fort Lauderdale MDA and in AGSSA 10 is of a type likely to provide significant opportunities for sales of new GMC Trucks. As the population increased, light truck registrations have increased too. From 1982-1990, retail light truck registrations in the Fort Lauderdale MDA increased 112%, and in AGSSA 10 increased 213%. These increases in population, households, income and employment also point to an increased potential for traffic congestion in areas where current dealers are located, as individuals use the road networks to travel to and from work. Providing convenience to consumers by locating new dealerships in areas experiencing growth is important. See Findings 15 and 24. Areas which experience rapid development can outgrow the ability of the dealer network to provide adequate service to potential customers. The Fort Lauderdale MDA offers more sales opportunity per existing GMC truck dealer than all but three markets in Florida. Even with the proposed additional dealer, the opportunity per dealer would remain higher than that available in 39 other Florida markets. Merely to increase dealers in proportion to increases in the number of households, an additional dealer should have been added as long ago as in 1983, and another likely will be needed by 1995 in the Fort Lauderdale MDA. Based on GMC's experience over the years, the existing dealer network cannot continue to expand to fulfill the needs of Broward's increased population and especially the population of the Fort Lauderdale MDA. A dealer network designed to produce more than 225 expected GMC Truck registrations per dealer fails to achieve the minimum expected registrations 86% of the time. Thus, to have a reasonable chance of meeting expected market penetration, the network should not exceed a critical size of 225 expected GMC Truck registrations per dealership. This 225 registration goal is not a measure of total sales at a dealership. GMC Trucks are sold from dealerships which also sell other GM lines. The 225 registrations applies only to GMC Truck products. In the absence of the proposed new dealer in AGSSA 10, the GMC Truck network is configured to expect 365 registrations per dealer, which is much above critical optimum design capacity of 225. The Fort Lauderdale MDA simply has grown too large for a three dealer network. Appropriate planning by GM requires redesigning the network to allow for at least four and as many as five dealers. Perhaps the most telling facts are those showing selling success at distances. The existing dealers' market penetration is strongest close to their dealership locations, but declines as the distance from the dealerships increase. This makes intuitive sense. Sheehan has been able to meet or exceed the expected penetration within four miles of its dealership and has only moderate impact on GMC truck sales performance at distances near the proposed location for Coral in AGSSA 10. King does not penetrate the market significantly beyond four miles from its dealership, and has even less impact on GMC truck penetration at the proposed location, which is 10 miles away from King. Scott is not penetrating the market significantly at a distance, achieving only a 3/10 of one percent of its sales at a distance equal to that of the proposed new Coral dealership. Because there is no dealer in AGSSA 10, potential customers residing there are 8.7 miles from the nearest GMC truck dealer, on average. This is almost three times the average distance in AGSSA 1 (2.8 miles), twice the distance in AGSSA 2 (3.5 miles), and 2 and 1/2 miles farther than in AGSSA 3. If the proposed new dealership is established in AGSSA 10, convenience is improved to 4.1 miles on the average, which still is not as good as that provided in AGSSAs 1 and 2. Of course, the convenience GM offers to consumers residing in AGSSAs 1, 2 and 3 remains the same whether or not a new dealer is added in AGSSA 10. Other manufacturers of light trucks offer higher degrees of convenience to residents of AGSSA 10, which places GM at a competitive disadvantage. Performance of GMC truck in AGSSA 10 fell below minimum expected penetration in 1988 (see Finding 13). That year a light truck competitor, Dodge, established a dealership there. GMC truck performance has continued to decline in the area as other light truck manufacturers established representation in the area in 1989 (Id.). Based upon their distance from AGSSA 10 consumers, the existing Fort Lauderdale dealers are unable to overcome the convenience disadvantage they face in attracting consumers residing in AGSSA 10, and consequently have been unable to provide adequate inter-brand competition. This is partially the result of the design of Broward County roadways, which carry traffic better north-south than east-west. The problem is inherent in the current design of the GM sales network, and the solution is to add a GMC truck dealer in AGSSA 10 to improve convenience to consumers. Based on previous experience, this improvement in convenience should result in increased efficiency and additional sales. Impact on Existing Dealers GM computes a gross registration loss, which is the number of registrations which would raise each area within the MDA to the expected penetration level (see Finding 13). This is a conservative measure of possible additional sales because it is based upon the expected penetration, which is a minimum standard, not the maximum number of sales which might be achieved by effective dealers such as Sheehan. For 1990, the gross registration loss for GMC trucks in the Fort Lauderdale MDA was 295 units, which was mostly concentrated in AGSSA 10, and in the western 2/3 of AGSSA 3. If the proposed Coral dealership had been operating in 1990, and if it had performed at the average of the performance levels of the existing Sheehan, King and Scott dealerships, it would have produced a total of 313 registrations within a 20 miles radius of the dealership, which includes some areas beyond the boundary of the Fort Lauderdale MDA. This is 18 registrations more than the gross registration loss in the entire Fort Lauderdale MDA. Computed on the same basis, sales to the more relevant group of persons registering vehicles in the Fort Lauderdale MDA would have been 286 sales. This shows a new dealer in AGSSA 10 could theoretically make 286 sales without supplanting a single sale from existing dealers in the MDA. Moreover, in 1990 151 sales were made to persons who registered the vehicles within the Fort Lauderdale MDA from sales by dealers outside the Fort Lauderdale MDA. These sales represent additional potential sales to be captured by the three existing dealers.
Recommendation It is RECOMMENDED that the application to establish the GMC Truck dealership at Coral Oldsmobile be granted. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 22nd day of October 1992. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of October 1992.
The Issue The issue for determination at final hearing was whether Florida Diesel Truck and Industrial, Inc., has standing to protest the termination of its franchise agreement with Mitsubishi Fuso Truck of America, Inc.
Findings Of Fact William Dowdy is the President and owner of Florida Diesel Truck and Industrial, Inc. (Petitioner). He owns all of the stock and controls the day- to-day operation of the business. Dowdy bought out his family members' interest in the business. Petitioner is primarily engaged in industrial, marine and agricultural parts and service. Dowdy has been working with Petitioner as an administrator for approximately 20 years. He joined Petitioner in 1973 in the accounting office when it was Florida Diesel and Marine Service and was primarily engaged in marine repairs. Dowdy has no actual, hands-on repairing experience with Petitioner of any significance. In 1989, Mitsubishi Fuso Truck of America, Inc. (Intervenor), was searching for new dealerships, so it initiated contact with Dowdy. Intervenor's branch manager had numerous conversations, regarding a truck franchise, with Dowdy. At that time, Petitioner had two locations: one in Riviera Beach and one in Ft. Pierce. The Riviera Beach location was the original facility, the larger of the two locations, and the main office. As a result of the talks, in October 1989, Petitioner applied for a dealership. In December 1989, Petitioner entered into an Interim Sales and Service Agreement (Interim Dealer Agreement) with Intervenor, which was the dealership franchise agreement. The Interim Dealer Agreement was for a one-year period (December 1989 to December 1990) only. In order to become an authorized dealer, Petitioner had to comply with the Interim Dealer Agreement. A term and condition made a part of the Interim Dealer Agreement and incorporated by reference as "Exhibit B" was that Petitioner would "show a growth rate in the areas of net worth, working capital, retail sales, parts sales, service sales, and show a positive trend towards profitability at the end of this interim agreement." Also, a development plan was entered into setting forth, among other things, an annual minimum sales objective of 25 units or vehicles for 1990. Petitioner's interim dealership was located at its Ft. Pierce location. Intervenor provided the trucks, through its credit plan, and Petitioner purchased the parts. As a dealer, Petitioner needed a salesperson but did not have one. Dowdy decided that Petitioner's branch manager in Riviera Beach would double as a salesperson for the dealership in Ft. Pierce. In addition to handling parts and service at the Riviera Beach location, the branch manager was also now a truck and parts salesperson. Needing a full-time salesperson for the dealership, Dowdy continued to search for a salesperson. Sometime within the contract year, Petitioner hired a full-time salesperson. The salesperson had no truck sales experience but did have automobile sales experience and local contacts which Petitioner felt was an asset. However, because his sales were lacking, the salesperson was replaced. Intervenor provided Petitioner with assistance during its year of operation. Intervenor's district sales manager met periodically with Dowdy, visited the dealership frequently, assisted with sales and made contacts with customers and potential customers. In December 1990, at the end of its first year of operation as a dealer, Petitioner received written communication from Intervenor regarding deficiencies, among other things, in the submission of monthly financial statements and the timely payment of accounts. Notwithstanding, in December 1990, Intervenor renewed the Interim Dealer Agreement for a second year from December 1990 to December 1991. Petitioner's profit trend did not indicate to Intervenor that it should offer Petitioner a three-year dealer contract as opposed to a one-year interim dealer contract. During the second contract period, Petitioner continued to have a salesperson problem. Petitioner replaced its salesperson with someone who had truck sales experience. However, the new salesperson was not selling a satisfactory number of trucks, so he was dismissed. Again, Petitioner's branch manager in Riviera Beach became the Ft. Pierce dealership salesperson. Additionally, in the second contractual year, on more than one occasion, Petitioner received written communication from Intervenor regarding submission of monthly financial statements and timely payment of accounts. Finally, in December 1991, Intervenor notified Petitioner by written communication that payment for parts shipment would be thereafter on a C.O.D. basis. In January 1992, Intervenor again renewed the Interim Dealer Agreement for a third year from January 1992 to January 1993. Prior to the renewal, Intervenor discussed increased truck sales with Petitioner and both agreed that increased trucks sales were necessary. A term and condition made a part of the Interim Dealer Agreement and incorporated by reference as "Exhibit B" was that Petitioner agreed to [S]ell a minimum of fifteen (15) units during the term of this contract. [S]ubmit monthly financial statements. [P]ay monthly parts account according to MFTA [Intervenor's] terms. Prior to the third contractual year, Dowdy had been having financial difficulty, due to his purchase of his family members' interest in Petitioner. However, during the third contractual year, the financial difficulties worsened with the absence of a salesperson which lead to disappointing truck sales. In March 1992, Intervenor's credit department denied approval for the shipment of a vehicle to Petitioner's dealership because Petitioner had not submitted to Intervenor the 1991 year-end financial statement and monthly financial statement and had not paid prior interest charges. Additionally, in June 1992, Intervenor notified Petitioner by written communication that its floor plan insurance premium was past due, i.e., Petitioner had not paid the premium on its inventory. Also, in May 1992, because of financial concerns, Petitioner sold its Riviera Beach location. Since Petitioner had no full-time salesperson for its Ft. Pierce location, Petitioner's former branch manager, who had remained with the new Riviera Beach owners, agreed to continue to sell trucks for it. This arrangement continued for approximately two or three months before Petitioner's former branch manager severed his salesperson relationship. Petitioner was without a salesperson. The absence of a salesperson continued to plague Petitioner, which affected its sales and in return, its finances. In or around late August 1992, Intervenor's district sales manager who had been working with Petitioner during each of the yearly contractual periods, initiated the subject of Petitioner resigning its dealership. They engaged in several discussions on the subject of resignation; however, during those discussions, the subject of Intervenor terminating the dealership franchise came up. On or about August 31, 1992, Intervenor's district sales manager prepared a letter of resignation for Dowdy's signature. Even though the resignation letter was dated August 31, 1992, it was not presented to Dowdy for his signature until September 11, 1992, when the manager visited Petitioner in Ft. Pierce. On September 11, 1992, Dowdy reviewed the resignation letter, and after discussing it with the sales manager, he signed the letter and had it witnessed. That same day, Intervenor's district sales manager notified Intervenor's manager of dealer operations, who was located at its home office in New Jersey, of the resignation letter being signed, and when he returned to his office in Orlando, the district sales manager gave the resignation to the Regional Vice-President. Prior to signing the resignation letter, on or about September 3, 1992, Petitioner, with Intervenor's assistance, transferred two of its trucks to another dealer in Broward County. On September 15, 1992, Petitioner, by fax transmission, submitted its tool inventory to Intervenor, and shortly thereafter, Intervenor repurchased the tools from Petitioner. In a letter dated September 14, 1992, Intervenor notified Dowdy that it had accepted his "voluntary resignation" of the dealership, and included a proviso that the effective date of the franchise termination was October 11, 1992, 30 days from the date of resignation. The letter was mailed from Intervenor's home office in New Jersey. The Interim Dealer Agreement provides that any notice to be given under the agreement may be delivered, as it pertains to the case at hand, to the party of the agreement if a sole proprietor, to an officer of the party if a corporation, or may be given by sending the notice by registered mail or tested telex addressed to the principal office of the interim dealer or to Intervenor's principal office. It provides further that notice given as indicated is considered given when delivered or mailed. Intervenor's Dealer Sales and Service Agreement Standard Provisions (Standard Provisions) was incorporated by reference and made a part of the Interim Dealer Agreement. Section X.A. of the Standard Provisions provides that a dealer may terminate the agreement upon 30 days prior written notice to Intervenor. Further, Section X.C. provides that the date of the notice of termination is the date of mailing. Shortly after signing the letter of resignation, individuals wishing to invest in Petitioner's truck dealership contacted Dowdy. After receiving positive assurances from the investors, Dowdy attempted to rescind the resignation. He forwarded a witnessed letter dated September 18, 1992, to Intervenor by fax transmission requesting that his "voluntary resignation be abated." At that time, he had not received Intervenor's letter of September 14, 1992. By certified letter dated October 2, 1992, Intervenor notified the State of Florida, Department of Highway Safety and Motor Vehicles (DHSMV) of Petitioner's "voluntary resignation" of its dealership. In response to Dowdy's letter of September 18, 1992, by letter dated October 9, 1992, Intervenor refused to abate Petitioner's resignation and treated his letter of September 18, 1992, as an application for a new franchise. Intervenor indicated in its response that it was not interested in a new franchise. On October 21, 1992, Dowdy sent a letter by fax transmission to Intervenor's CEO regarding the resignation letter and his (Dowdy's) plan to reorganize the dealership. The CEO contacted Dowdy the same day by telephone and discussed the low and decreasing market for truck sales in the Ft. Pierce area and whether Dowdy had been coerced or forced to sign the letter of resignation. Responding to the inquiry of coercion or being forced, Dowdy responded that he was neither coerced nor forced to sign the letter of resignation. Subsequently, however, in a letter dated October 28, 1992, Dowdy informed Intervenor's CEO, among other things, that Intervenor terminated the dealership and that he was requesting a hearing before the DHSMV for unfair cancellation. By letter dated October 28, 1992, Dowdy requested such a hearing from DHSMV. By letter dated November 9, 1992, Dowdy informed the DHSMV that, among other things, he had signed the "voluntary resignation" prepared by Intervenor, but later changed his mind and requested Intervenor to cancel the "voluntary resignation" on September 18, 1992. By certified letter, dated November 12, 1992, the DHSMV notified Dowdy that its determination was that he lacked standing to protest a termination and that he had 21 days from the service of that letter to request a formal hearing. Dowdy received the DHSMV's letter on November 18, 1992. On December 9, 1992, Dowdy forwarded a letter, bearing the same date, by Federal Express to the DHSMV requesting a formal hearing, which was received by the DHSMV on December 10, 1992.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order denying Florida Diesel Truck and Industrial, Inc.'s, request for an unfair cancellation hearing in that it lacks standing for such a request. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 21st day of March 1994. ERROL H. POWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of March 1994.
Findings Of Fact At all times pertinent to the issues herein, the Respondent, Department of Transportation, (Department), was the state agency regulating the utilization of the state highway system by commercial vehicles. The Petitioner, Consolidated Freightways, (Consolidated), is a long haul interstate carrier operating in forty-eight states, including Florida. It has a freight terminal in Brooksville, Florida, a city approximately 11 miles west of I-75 which it has used since December 1, 1986. On October 24, 1990, Andrew J. Gay, Jr., Petitioner's Southern Area Safety Supervisor, requested tandem trailer access to its terminal facilities in Brooksville, via a route over State Road 50 from its intersection with I-75 to the old Dade City highway, then over that road to the terminal. The application indicated the proposed route would be used for on the average of 10 round trips per 7 day week, during the approximate hours of from 2:00 AM to Noon. Upon receipt at the Department, the file was forwarded to the District Operating Engineer in the Department's District VII office in Tampa, that office responsible for supervision of operations in the pertinent area, where it was given to Kevin Dunn, an assistant civil engineer, for evaluation. This was the first evaluation such as this that Mr. Dunn had made. In accomplishing the evaluation, he relied upon a department directive, TOPIC NO. 750-010-050-C; effective November 21, 1990, good to May 21, 1991, entitled, EVALUATION OF PROPOSED TANDEM TRAILER TRUCK ROUTES, in which, at PROCEDURE; (4)(B) 1 & 2, rejection criteria, including vehicular safety and highway safety considerations, are listed. Section (4) of the Directive deals with Terminal Access Route Evaluation Standards, and provides that when an operator of a terminal facility located more than 5 miles from the tandem trailer truck highway network submits a request for access routing, it shall be for the shortest route available, and shall be evaluated utilizing the rejection criteria outlined which indicate that a request may be rejected when one of the criteria for rejection are met, but shall be rejected when two or more are met. Mr. Dunn considered that one of the vehicular safety considerations was met as was one of the highway safety considerations. The former, he felt, authorizes rejection when: The total combined length of high accident locations exceeds 15% of the total length of the proposed route. In analyzing the stretch of highway involved, Mr. Dunn compared it with similar highway sections throughout the state for its accident frequency record. He found that each year there was a segment along the proposed route which appeared as a high accident segment area. He added these up to get the total length of high accident highway and got a figure that was 13% of the total route. Though the directive considered a minimum of 15% as disqualifying, Mr. Dunn concluded that 13% was close enough to qualify. The figure arrived at was not the required 15%, however. Mr. Dunn also considered that Highway safety consideration which read: d. The route does not provide a minimum passing sight distance of one-half mile at a maximum of three mile intervals. To qualify as a safe segment, there must be passing areas with a 1/2 mile sight distance, within 3 miles of each other. This road does not comply with that criterion. Mr. Dunn made field measurements of the route in question and found that heading westbound, the first passing zone started at mile 1.3 and ended at mile 1.8; the second started at mile 2.4 and ended at mile 2.5; and the third started at mile 4.1 and ended at mile 4.8. After that, westbound, there were no more 1/2 mile passing zones within the 3 mile maximum separation. Evaluating that stretch, while the 1.3 - 1.8 segment is 1/2 mile in length, it is not within 3 miles of the next qualifying passing segment. The same can be said for zone 4.1 - 4.8. Passing segment 2.4 - 2.5 is no good because it is not 1/2 mile in length. Looking at the eastbound route, there is one qualifying passing zone, between mile .4 and mile 1.0 and one between mile 3.8 and mile 4.3, but there are no more 1/2 mile passing zones within 3 miles of each other, so, in his opinion, the eastbound route does not qualify, either. Sometime later, Mr. Dunn measured the highway again based on information presented to him that the route had been re-striped. His second evaluation indicated the situation is now worse that it was before since fewer areas are now striped for passing. A 1989 report of the Transportation Research Board of the National Research Council, supports the method of evaluation Mr. Dunn used here. It increases the minimum passing distance to 3040 feet, a distance much greater than the 2640 feet, (1/2 mile) utilized in the Department's criteria. In addition, the Manual on Uniform Traffic Control Devices, published by the Federal Highway Administration, supports a 900 foot passing distance for passenger cars passing passenger cars. That's a much shorter distance than is needed for cars passing large trucks. Mr. Dunn concluded that taken alone, the passing distance rejection criteria would have been enough to disqualify the Petitioner's application, and when it was considered along with the close issue of the high accident percentage, he was satisfied that rejection was clearly appropriate. However, he did not make any recommendation to his supervisor as to what should be done with this application. He merely reported his findings to his supervisor, Mr. Buser, who made the decision to deny approval. Mr. Buser has serious doubts was to whether the intersection of State Road 50 and I-75 is a trouble spot. The high number of accidents utilized by Mr. Dunn in his analysis all took place at or near the intersection, a point argued by Mr. Gay. Mr. Buser is of the opinion that even if that intersection is not a trouble spot, the Department could prohibit tandem trailer trucks from exiting the interstate there in any case. This has not been done, however. According to Petitioner's representative, Mr. Gay, the requirement to break down the tandem rigs and tow them individually over the route to the terminal creates additional traffic and a resultant increased risk of accident. It also requires increased fuel usage, utilizes increased mileage, and results in increased environmental pollutions. Costs increase, wear to the equipment increases and the result is a loss in productivity. Allowing tandems to traverse the route to the terminal intact would, he claims, reduce traffic and avoid the other undesirable consequences he cited. No doubt it would. On May 13, 1991, Mr. Gay covered the route from I-75 to the terminal. He got behind a truck at I-75 and by the time they got to the first passing zone, the truck was doing 55 mph in a 55 mph zone. After that, there was no reason to pass, since 55 mph is the maximum speed permitted. This presupposes that all drivers observe the speed limit. Travel on the highways of this state show this to be an unjustified presumption. On May 20, 1991, he repeated the experiment and followed a truck to the first passing zone, by which time he was going 49 mph. These two experiments do not have major evidentiary value. Mr. Gay also noted some other pertinent facts regarding permitted activities on State Road 50, which went uncontradicted by the Department. Mobile homes up to 85 feet in length may be towed by a tractor; trailers up to 57.6 feet in length with a 12 month permit, (when the tractor is added, the total length is 68.6 feet); large boat haulers are allowed; and tandem trailers for household movers are allowed anywhere. Only tandem long haulers are not allowed on highway 50. These tandems trailers are 28 feet long each, with a 4 foot dolly between them. When a tractor is added, the total length is 71 feet, which is 2 1/2 feet longer than a large tractor and trailer. In light of the above, Mr. Gay contends that since all these other units are allowed, his should be allowed as well. He admits, however, that mobile homes and other oversize loads generally have escort vehicles preceding and following. He also recognizes that the handling characteristics of the tandem rig are different than those of the single unit trailer. Nonetheless, based on his research, he contends there are sufficient passing zones all along the route to make it safe. State guidelines, however, indicate to the contrary. Nothing above is intended to indicate that Petitioner is operating other than in a satisfactory manner. In its most recent rating by the United States Department of Transportation, the company was awarded a satisfactory evaluation. In addition, there is no doubt that numerous commercial enterprises served by the Petitioner would consider the opportunity to carry more cargo beneficial to their operations.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that if such action is consistent with then existing legislation, the Petition by Consolidated Freightways, for a tandem trailer route over State Road 50 from I-75 to its terminal near Brooksville, Florida be denied. RECOMMENDED this 11th day of July, 1991, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 COPIES FURNISHED: Filed with the Clerk of the Division of Administrative Hearings this 11th day of July, 1991. Charles G. Gardner, Esquire Department of Transportation 605 Suwannee Street, MS - 58 Tallahassee, Florida 32399-0450 Andrew J. Gay, Jr. Safety Supervisor Consolidated Freightways 5625 Carden Road Orlando, Florida 32810 Ben G. Watts Secretary Department of Transportation Hayden Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0458 Thornton J. Williams General Counsel D.O.T. 605 Suwannee Street Tallahassee, Florida 32399-458
Findings Of Fact In 1984 and for many years prior Petitioner held a Certificate of Qualification to bid on and be awarded contracts let by the Department. On April 10, 1984, Petitioner entered into a voluntary plea, and was convicted of a one-count criminal violation of Title 15, USC, Section 1, which is commonly known as "The Sherman Antitrust Act." The charge involved a public contract with the Florida Department of Transportation in which Petitioner received a complimentary bid from another contractor who was bidding on the same project which was awarded to Petitioner. This practice is commonly known as "bid rigging." The conviction took place in the U. S. Northern District Court of Florida. Petitioner would have submitted the same bid on this project without the benefit of the complimentary bid. 33 C.F.R, Part 16, provides for a maximum debarment on first conviction of 36 months by a federal agency. Petitioner was debarred by the Federal Highway Administration for only six (6) months based upon a review and determination of culpability of the Petitioner in the crime of which Petitioner was convicted. Immediately subsequent to December 17, 1984, Petitioner was declared acceptable for employment on highway projects which required approval or concurrence of the Federal Highway Administration. On June 18, 1984, Respondent revoked the Petitioner's Certificate of Qualification for a period of 36 months pursuant to Florida Statutes 337.165(2)(a). The only reason given for the revocation was the aforementioned conviction. With the exception of Petitioner, who has never had a decision rendered on a Petition for Reinstatement by Respondent, every contractor who has been debarred and/or had its Certificate of Qualification revoked by Respondent pursuant to Section 337.165, Florida Statutes, who has petitioned for reinstatement, has been reinstated by Respondent. Exhibit "A" hereto is a list of contractors who were debarred by Respondent and were reinstated. It was in the public interest to reinstate each of these contractors. It is in the public interest and the interest of the Respondent to build roads, build them at a good price, and have a competitive bidding system with integrity. Petitioner has promptly and voluntarily continued to pay its fine of $65,000 to the Federal Court. No payment of damages has ever been requested by the State as a result of the Petitioner's violation of state or federal antitrust laws. The Petitioner notified the Respondent within thirty (30) days after his conviction of the contract crime. Petitioner has the manpower, equipment, financial resources, and contracting experience to meet the Respondent's requirements in those areas for the purpose of a Certificate of Qualification. Howard H. Hewitt became affiliated with Square D Contracting Company in 1967 when he acquired a minority interest in the company. He subsequently increased that interest to 50 percent. In 1980 he acquired the remainder of the stock and changed the name of the company to Hewitt Contracting Co., Inc. In 1980 the Florida Attorney General's Office commenced an investigation of bid rigging by road contractors. In February 1983 the Attorney General's Office subpoenaed Hewitt to appear under their Civil Investigative Demand procedures and give evidence about his knowledge of bid rigging in Florida. He appeared and, on the advice of counsel, refused to give testimony claiming protection under the Fifth Amendment. By Court Order, Exhibit 8, dated June 24, 1983, Hewitt was directed to give testimony to the Florida Attorney General under grant of immunity from criminal prosecution and from any civil penalty as provided in s. 542.21(1), Florida Statutes (1981), as to those transactions about which he testifies. In compliance with that order he submitted documents and testified before assistant attorneys general three times. A grant of immunity by the Florida Attorney General's Office would not shield Hewitt from federal prosecution. Following the filing of charges by the Federal District Attorney, Hewitt provided testimony to federal officials several times regarding his knowledge of contract crimes, dropped his membership in the Florida Road Builders Association, started using a different hotel during his appearances in Tallahassee, and limited his contacts with fellow contractors to those necessary to conduct business. In a subsequent damage trial brought by the Attorney General's Office against Ezelle Construction Company, Hewitt advised both parties that he would testify for neither and, upon advice of counsel, would claim the Fifth Amendment if subpoenaed. Neither side subpoenaed Hewitt. The jury found Ezelle not liable for damages as claimed by the Attorney General. The only witness called by Respondent, Assistant Attorney General Bayard W. Heath, testified that the critical part of the bid rigging investigation in which he was involved occurred in 1983 at which time Hewitt asserted the Fifth Amendment privilege and caused a change in the investigation plans of the antitrust division. When Hewitt's counsel in January 1985 advised Heath that Hewitt would take the Fifth Amendment if subpoenaed to testify in the civil damages suit brought against Frank Ezelle, et al., he released Hewitt from the subpoena and did not attempt to enforce the subpoena. Petitioner presented one rebuttal witness, the attorney who represented Hewitt during the civil investigative demand procedures by the antitrust division of the Attorney General's Office. He testified that he was never advised by Heath or any other attorney from the Florida Antitrust Division that there was a critical period during which Hewitt's testimony was wanted, or that they were in any manner dissatisfied with the cooperation given by Hewitt after the grant of immunity. This witness also testified that an offer by Hewitt to settle any charges against him by an offer to pay damages to the state was flatly rejected by the antitrust division and that he was told that if Hewitt cooperated with the antitrust division they would decide after the fact what action they would take against petitioner. Prior to the revocation of its Certificate of Qualification in 1984, Square D and subsequently Hewitt Contracting Co., Inc., enjoyed a reputation as a competitive bidder who completed projects in a timely and professional manner. Two witnesses employed by Respondent in the area of Petitioner's headquarters opined that reinstatement of Petitioner's Certificate of Qualification would enhance the road building and construction work in Florida by the addition of Petitioner as an active participant in the bidding process. Subsequent to the conviction in the Federal Court Petitioner prepared a Code of Conduct for Employees of Hewitt Contracting Company (Exhibit 4) and distributed this to all personnel involved in preparing bids for Petitioner. Additionally, Howard H. Hewitt personally approves all bids submitted by Petitioner and supervises those preparing these bids. Howard H. Hewitt expressed remorse about the company's prior activity leading to the conviction and is committed to ensuring that it never occurs again.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that respondent Department of Highway Safety and Motor Vehicles enter a final order granting the application of petitioner Naughton Chrysler- Plymouth and Dodge, Inc., for a motor vehicle dealer license. RECOMMENDED this 18th day of September, 1985, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 18th day of September, 1985.
Findings Of Fact CENTRAL FLORIDA's complaint for Unfair Termination in the form of a letter dated July 9, 1986, was filed in triplicate with the Department of Highway Safety and Motor vehicles on July 10, 1986, and alleged as follows: CENTRAL FLORIDA MACK TRUCKS, INC. has two agreements with MACK TRUCK, INC. The first agreement is a Mack Distributor Agreement dated July 1, 1967. The second agreement is a Mack Mid-Liner distributor Agreement dated September 20, 1979. MACK TRUCKS' letter of April 10, 1986, indicates they are "terminating" my agreements. As alleged by Petitioner CENTRAL FLORIDA, Respondent has terminated two Distributor Agreements, the MACK Agreement dated July 1, 1967, and the Mid-Liner Agreement dated September 20, 1979. To the extent the letter/complaint addresses the Mack Distributor Agreement dated July 1, 1967, it should be dismissed upon authority of Yamaha Parts Distributors, Inc. v. Ehrman, 316 So.2d 557 (Fla. 1975). In Yamaha, the Florida Supreme Court was faced with the unfair termination statute here at issue, Section 320.641 Florida Statutes, and the issue of its applicability to dealer agreements entered into between manufacturers and dealers prior to the effective date of the statute, January 1, 1971. On the basis of Article I, Section 10, of the U.S. Constitution and Article I, Section 10, of the Florida Constitution, regarding impairment of contracts, the Supreme Court held We hold that Section 320.641, Florida Statutes, applies prospectively to motor vehicles franchise contracts signed after its effective date. Yamaha Parts Distributors, Inc. v. Ehrman, 316 So.2d at 560. Yamaha is unambiguous. Therefore, as to the Mack Distributor Agreement, Section 320.641 does not apply. The Department of Highway Safety and Motor Vehicles, and through it the Division of Administrative Hearings and the undersigned hearing officer, have no jurisdiction to adjudicate the Complaint for Unfair Termination as it addresses the July 1, 1967 Mack Distributor Agreement. This determination was made in an Order entered in DOAH Case No. 86- 2622 on August 28, 1986. Since August 28, 1986, Petitioner has provided a more definite statement as to the Mack Mid-Liner Distributor Agreement which has been determined by the under signed Hearing Officer to be in compliance with her previous order. On October 3, 1986 Respondent moved for severance of the two distributor agreements, which severance was granted by an Corrected Order entered October 27, 1986. That order re-numbered the cause as pertains to the July 1, 1967 Mack Distributor Agreement as DOAH Case No. 86-4136 and retained DOAH Case No. 86-2622 for the cause as it pertains to the Mack Mid-Liner Distributor Agreement. Within its motion, Respondent represented that a recommended order (presumably leading to a final order) be entered at this time. Respondent has shown good cause for granting the relief prayed for. Without such relief, the Mack Distributor agreement hangs in limbo until such time as a recommended order is entered incorporating the August 28, 1986 ruling on the Mack Distributor Agreement and resolving all disputed issues of material fact concerning the Mack Mid-Liner Distributor Agreement is entered (presumably at least 30 days after conclusion of the final formal evidentiary hearing now scheduled to conclude January 6, 1987). Continuation of this situation pending the formal evidentiary hearing on the Mack Mid-Liner Distributor Agreement, typing of transcripts, submission of proposed findings of fact and conclusions of law, entry of a recommended order, filing of exceptions, and entry of the agency's final order prejudices Respondent Mack in that Mack is unable to appoint a new distributor in Central Florida.
Recommendation That the Secretary of the Department of Highway Safety and Motor Vehicles enter a final order dismissing this cause only as the July 1, 1967 Mack Distributor Agreement. DONE and ORDERED this 28th day of October, 1986, in Tallahassee, Florida. ELLA JANE P. DAVIS 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 28th day of October, 1986. COPIES FURNISHED: Donald E. Cabaniss, Esquire 11 East Pine Street Post Office Box 1873 Orlando, Florida 32302 Dean Bunch, Esquire 305 South Gadsden Street Post Office Drawer 1170 Tallahassee, Florida 32302 C. Jeffrey Arnold, Esquire 857 North Orange Avenue Post Office Box 2967 Orlando, Florida 32802
