The Issue Petitioners, Chevrolet Motor Division, General Motors Corporation (Chevrolet), and Bill Heard Chevrolet Corp.-Orlando d/b/a Bill Heard Chevrolet (Bill Heard), propose to relocate Bill Heard from its current location at 3455 Orlando Drive, Sanford, Seminole County, Florida, to a site at State Road 46 at Oregon Avenue and I-4, in Sanford, Seminole County, Florida. Respondent, Fred Bondesen Chevrolet, Oldsomobile, Cadillac, Inc., (Fred Bondesen), whose address is 2800 South Highway 17-92, Deland, Florida, is protesting the proposed relocation pursuant to the provisions of Section 320.642, Florida Statutes. For the relocation to be approved under Section 320.642, Florida Statutes, the Petitioners must demonstrate that existing franchise dealers who register new motor vehicle retail sales or leases of the same line-make in the community or territory of the proposed dealership are not providing adequate representation of such line-make motor vehicles in such community or territory. Adequate representation is the basic issue in the proceeding. Other issues are derived from the considerations listed in Section 320.642, Florida Statutes, including impact of the proposed relocation on the protesting dealer, Fred Bondesen.
Findings Of Fact Stipulated Background Chevrolet is a distributor and licensee as defined by Section 320.60(5) and (8), Florida Statutes. Fred Bondesen and Bill Heard are motor vehicle dealers as defined by Section 320.60(11), Florida Statutes, and are existing franchised Chevrolet dealers. Chevrolet proposed to relocate Bill Heard from its current location at 3455 Orlando Drive, Sanford, Seminole County, Florida, to State Road 46 at Oregon Avenue and the I-4 interchange, Sanford, Seminole County, Florida. The distance of the relocation is approximately five miles to the northwest of Heard's current location. Fred Bondesen's protest of this relocation is governed by the provisions of Section 320.642, Florida Statutes, and he has standing to maintain this protest, as the proposed relocation is within 12.5 miles of his location. Bill Heard Mr. Heard inherited his father's Columbus, Georgia, Chevrolet dealership which, in 1958, was doing about $3 million in business. Mr. Heard now owns Bill Heard Enterprises, with 9 Chevrolet dealerships throughout the south and approximately $200 million in business annually. Bill Heard Enterprises is the largest Chevrolet dealer in the country. Mr. Heard's Chevrolet dealerships sold about 27,000 new retail cars and trucks in 1997. Although Bill Heard also continues to own Cadillac and Oldsmobile dealerships in Columbus, he specializes in Chevrolet and he considers that he is able to do a better job marketing Chevrolets to the public through that specialization. Where his facilities are appropriately located he has had no trouble competing with Ford or Toyota. Bill Heard purchased what was formerly Rummel Chevrolet in Sanford, Florida, in May or June of 1997. At the time he purchased the dealership, Heard did not have an arrangement with General Motors that would allow him to relocate the dealership. Heard did not request permission to relocate the dealership until after he had purchased it. Chevrolet has no investment in the relocation; Heard is paying for both the land and the buildings at the relocation site. The current facility on US 17-92 in Sanford has material physical deficiencies and, in Bill Heard's words, has the appearance of an oyster house rather than a car dealership. The current facility has only 2,000 square feet in the sales facility, and only 9 service bays. The current facility has no body shop. The current facility is at the end of an auto row with only Ford and a Cadillac/Oldsmobile dealership in sight. The Ford dealership will be moving in the near future to I-4, one exit south of the proposed Heard location. The next closest dealership is a Chrysler/Plymouth/Jeep store which is over a mile away from Bill Heard and not within sight. There is an abandoned drive-in movie theater between it and Heard's current location. The remainder of the auto row, beginning with the Chrysler/Plymouth/Jeep dealership, and going south from there another 6-7 miles, is on a congested street, with stop lights, decayed and abandoned buildings, and deteriorating retail environment. Coming from Orlando, a customer would have to drive a congested highway past virtually every other line make of dealership to get to Heard's current location. To Bill Heard, an experienced successful automobile entrepreneur, it does not make economic sense to spend many millions of dollars to build a first class facility, such as the one which is proposed, at the current location. Prior to Heard's purchase of Ken Rummel Chevrolet, the dealership was selling approximately 20 new units per month. Through aggressive marketing and advertising, Heard has been able to increase sales to over 100 a month, but they cannot be increased much more at the current location. Heard already spends approximately 1.2 million dollars a year on advertising. The proposed location is one exit north of the Ford relocation site at I-4 and State Road 46A, and directly across the street from Auto Nation. Both of these operations will bring exposure to Heard by people shopping for new Fords and other types of cars. Also on I-4, beginning in the southeast corner of State Road 46, running south almost to the proposed Ford location at State Road 46, is a major regional mall, Seminole Town Center. The mall location has made this intersection the retail center of Sanford. The proposed location of Bill Heard Chevrolet will draw considerable exposure from the mall, and its proximity to the mall will afford it visibility to the entire Orlando market. Customers coming north from Orlando will use the same route to get to the dealership that they used to get to the mall. In addition, customers will be able to leave their cars at Heard to be serviced while shopping at the mall. The proposed Heard location encompasses 25 acres in the northwest corner of the intersection of I-4 and State Road 46. The facility Heard intends to build at the relocation site is similar to what he has built at his other successful Chevrolet dealerships, and was developed over his forty years in the automobile business. The showroom will be 30 feet high with a lighted roof. It will have about 75 sales offices on the ground floor. The dealership sign will be in lighted letters six to eight feet high. The sales operation will have 30,000 square feet, compared to 2,000 square feet at the present location. The proposed facility will also include a 100,000 square foot state- of-the-art service center, with 80 to 100 service stalls and a body shop with two paint booths and approximately 30 preparation stalls, compared to only 9 service bays and no body shop at the current location. The proposed location will include a 10,000 square foot used car facility. The dealership is being oriented so that it faces south, towards Orlando, rather than towards Deland, where Fred Bondesen's facility is located. The new facility, land and buildings, will cost approximately $15 million. Fred Bondesen Fred Bondesen purchased his dealership known as Fred Bondesen Chevrolet, Oldsmobile, Cadillac, Inc. in December 1986. The facility is located in Deland, Volusia County, Florida. Mr. Bondesen had previously worked approximately 8 years for a dealer in Ft. Lauderdale, Florida, starting out as a service advisor and moving up to the parts department, the body shop, finance and insurance department, sales, and then to general manager. When the facility was purchased in 1986, it was inadequately designed. Fred Bondesen had major renovation done on the buildings, added pavement for parking and inventory and essentially remodeled the entire facility. He currently has invested approximately $1.8 million in the dealership, including $1.4 million that was used for initial capitalization and other retained earnings over the years. Fred Bondesen considers himself a "home town dealer" for the general southwest Volusia County area: Deland, Deltona, DeBary and Orange City. He considers himself to be in a good facility and a good location in the growth area of west Volusia County. His corporation has remained consistently profitable since 1988 after turning the dealership around in 1987. Geographic Definitions All Chevrolet dealers have a contractually defined geographic Area of Primary Responsibility (APR). In metropolitan markets, such as Orlando, two or more Chevrolet dealers share the same APR called a Multiple Dealer Area (MDA). In other areas, one dealer is uniquely assigned the APR, which is called a Single Dealer Area (SDA). MDA's are further subdivided into an Area of Geographic Sales and Service Advantage (AGSSA) for each Chevrolet dealer. An AGSSA is not the dealer's contractual APR; rather, it is that portion of the APR in which that dealer enjoys a competitive advantage over all same line-make dealers due solely to the dealer's geographic location. Heard is one of five dealers located in the Orlando MDA, the others being Holler, Mealey, Classic, and World. Heard's APR, the area in which he is contractually obligated to represent Chevrolet, is the entire Orlando MDA. Heard is located in AGSSA 4. Bondesen is located in Deland, Florida, in an SDA. Bonesen's APR comprises the western part of Volusia County and parts of Seminole and Lake Counties. Dealers are free to sell to customers outside their APRs, and indeed are encouraged to do so. The statutory community or territory (comm/terr) is a market area defined with reference to the proposed dealer location. It is a geographically described market in which most consumers buy from dealers within the market area and where those dealers make most of their sales. The starting point for determining the community or territory was the Orlando MDA. Both the existing and proposed Heard locations are within the Orlando MDA boundary. Once the Heard store is relocated it will be closer than any other dealer to several census tracts that are not currently part of the Orlando MDA, including five census tracts around Lake Monroe (census tracts 909.01, 909.02, 910.07, 910.08, and 910.05). In addition, in 1997, Orlando MDA dealers outsold Bondesen in census tracts 910.05, 212.01, and 212.02, which are currently in Bondesen's APR. The census tracts that will be closer to the relocated Heard or that were dominated by MDA dealers should be assigned to the proposed Orlando community or territory. The relevant comm/terr in this case is the Orlando MDA with the addition of the census tracts identified by the Petitioner's expert, Mr. Anderson, as depicted on Chevrolet Exhibit 1, p. 13. In his Proposed Recommended Order Bondesen accepts this definition of the relevant comm/terr. (page 6, paragraph 11.) AGSSA 4 is an identifiable plot within the larger comm/terr. An Objective, Reasonable Standard In order to judge the adequacy of representation afforded by the existing dealer network in the comm/terr and establish opportunity available in the marketplace, it is necessary to develop an objective, reasonable standard. Dealer network performance for a brand in a local area is judged by comparing market penetration in the local area to the market penetration in a suitable comparison area. When choosing a comparison area against which to compare the market penetration in a local area, it is essential that the comparison area must itself be adequately represented. In determining whether a comparison area is adequately represented, national average market penetration is an extremely conservative measure because it includes all of the adequately represented, in- adequately represented, and unrepresented areas within the United States. Florida average retail penetration for Chevrolet is not an appropriate standard because Florida is presently inadequately represented. Florida ranked 44th worst out of 50 states in retail penetration in 1997, and fell short of the national average from 1994 to 1997. It is necessary to determine how much of the shortfall between the Florida penetration average and national average is due to unique consumer preferences over which the dealer network has no control, and to appropriately adjust for those preferences through segmentation analysis. Unique consumer preferences can influence the market share that Chevrolet achieves in Florida relative to national average, because certain vehicle types or "segments" are more or less popular in Florida than they are nationally. The segmentation analysis applies Chevrolet's national average penetration rate for each vehicle segment in which Chevrolet has a vehicle entry, weighted by the actual number of industry registrations occurring in that segment in that local area. The resulting "expected penetration" may be higher or lower than the national average based on the preferences of customers in the local area. The segment adjustment process takes into account all of the demographic factors affecting consumer sales: age, income, education, size-class preference, product popularity, and retail lease transactions, among others. After adjusting for local Florida consumer preferences, however, there is still a significant shortfall between the expected penetration rate of 14.31 percent and the actual Florida penetration rate of 11.14 percent. Competent statistical analysis reveals that the shortfall in Florida's penetration rate is due to dealer network deficiencies. The national average performance for Chevrolet, adjusted for local consumer characteristics in AGSSA 4, the Orlando comm/terr, and the Orlando comm/terr plus Deland, is the appropriate standard for measuring the performance of the Chevrolet dealer network and for establishing the level of opportunity available to Chevrolet dealers in those areas. Reasonableness of the expected penetration standard was tested by comparing all of the markets in Florida to the expected standard for each market. Forty-one out of 78 Chevrolet APRs in Florida met or exceeded the standard, some by as much as 170 percent. Significantly, markets immediately surrounding the Orlando comm/terr met or exceeded the expected standard: Eustis exceeded the expected standard every year between 1993 and 1997, with retail registration effectiveness ranging from a low of 109.2 percent of expected to a high of 122.1 percent of expected. Kissimmee exceeded the standard every year from 1993 to 1995 by as much as 127.1 percent of expected, dipped to 98 percent in 1996, but exceeded the standard again in 1997. Daytona Beach was 115.6 percent effective in 1997. New Smyrna Beach was 109 percent effective in 1997. Even Deland exceeded the expected standard in 1993 and was 99.5 percent effective in 1994. An analysis of the demographic factors of age and income in AGSSA 4 and the Orlando comm/terr plus Deland produced a higher expectation than the registration-based expected standard, further confirming the reasonableness of the expected standard. Bondesen's expert, Dr. Schink, contends that Florida dealers cannot perform at an average (or better) level compared to the national segment adjusted standard because Floridians are somehow "import biased." But this theory is belied by the real world experience of Bondesen, which used to meet the expected standard, and of Eustis, Kissimmee, Daytona Beach, and New Smyrna Beach, which currently meet or exceed the standard. In the Orlando MDA, moreover, Chevrolet outsold two imports- Nissan and Toyota- in combined car and light truck sales. The reason Chevrolet dealers in MDAs with high import competition have not performed as well is that Chevrolet developed its dealer network in the 1920s-1940s. By contrast, the import manufacturers developed their networks in the 1970s- 1990s, specifically in urban areas. As a result, the imports have a greater proportion of newer, better-placed dealerships than Chevrolet in the large metropolitan areas, and in general they outperform Chevrolet in those markets. Before adding Classic in 1998, Chevrolet had not increased its dealer count in Orlando since the 1920s. Ford achieved 101 percent of its national average in the same Chevrolet MDAs across the country in which Dr. Schink would perdict Chevrolet could not compete against the imports. In fact, Ford does better in the Chevrolet MDAs than it does in the Chevrolet SDAs, where Dr. Schink says import competition is less intense. If Ford can compete against the imports in metropolitan markets, so can Chevrolet. Current Inadequate Representation and the Proposed Relocation's Anticipated Benefits Once the standard is developed and tested for reasonableness, the next step is to measure the actual penetration achieved by the existing Chevrolet dealer network against the expected standard and, for the purpose of illustration, against the lower Florida standard in the three study areas. Any shortfall below the expected standard reflects inadequate representation, although the greater the shortfall, the more severe the inadequacy. Three relevant study areas fell significantly short of the expected standard in 1997: The expected penetration in AGSSA 4 was 15.3 percent, compared to actual penetration of only 9.5 percent. In the Orlando comm/terr, the expected penetration was 14.9 percent, while actual was 9.6 percent. In the Orlando comm/terr plus Deland, expected penetration was 15 percent, but actual was only 10 percent. The fact that Chevrolet penetration in the Orlando comm/terr and the Sanford AGSSA respectively were the 73rd and 76th lowest ranked areas in Florida suggests that they are performing poorly under any standard. Chevrolet's representation in the Orlando comm/terr and AGSSA 4 has been inadequate and declining for at least the last three years. Performance in the Orlando comm/terr has ranged from a high of 77.2 percent of expected in 1995, to a low 64.2 percent of expected in 1997, resulting in a net registration loss in 1997 of 3,525 units. In AGSSA 4, actual penetration was worse, ranging from a high of 68.2 percent of expected, to a low of 58.1 percent of expected, with a net registration loss in 1997 of 425 units. Net registration loss is the number of additional Chevrolet units required to raise penetration in an area such as the comm/terr or AGSSA 4 up to the expected penetration rate. Even using the lower Florida average adjusted for local consumer preferences, Chevrolet's representation in the Orlando comm/terr and AGSSA 4 is inadequate now, has been inadequate for at least the last three years, and is declining. Chevrolet's poor performance in the Comm/Terr and AGSSA 4 from 1994 to 1997 reflects that Chevrolet's dealer network has provided an inadequate level of inter-brand competition in the Comm/Terr over this three-year period. Bondesen does not deny that Chevrolet's performance in the Orlando comm/terr falls short of the national segment adjusted average. Dr. Schink does not dispute that Chevrolet's performance in the Orlando comm/terr and AGSSA 4 was inadequate compared to either the national or Florida standards in 1997, and he does not know whether Chevrolet's performance in the Orlando comm/terr would meet the lower Florida standard today. Complete data from calendar year 1998 was obviously not available at the time of hearing. While Chevrolet made some significant improvements in representation due to the addition of the Classic dealership and the increased sales by Heard over his predecessor, the activity by these two dealers was still not anticipated to close the gap between actual and expected penetration rate. Chevrolet has a plan to add another dealership in Orlando in the Red Bug Road area. There is no evidence as to when that dealership might come on-line, as neither the owner nor property has been selected, and no indication whether the addition of a new dealership will require an administrative proceeding. At this time it is impossible to speculate on the impact such new dealership will have on Chevrolet's sales penetration at an unknown point in the future. From 1980 to 1997, total population, driving age population, households, employment, and retail registrations-all key measures of opportunity for motor vehicle dealers-have all grown at tremendous rates in AGSSA 4, the Orlando comm/terr, and the Orlando comm/terr plus Deland, and are projected to grow continually at significant rates through the year 2002. Employment and retail registrations in the comm/terr have more than doubled. Retail registrations in AGSSA 4 have almost tripled. Virtually all of the households in the study areas fall within the $15,000 to $60,000 income range characteristic of the typical Chevrolet buyer. Chevrolet enjoys a 9.8 percent share of industry franchises nationally, but only a 5.6 percent share in the Orlando comm/terr plus Deland. With below average share of franchises, the Chevrolet dealers in the comm/terr plus Deland enjoy a huge opportunity per dealer. However, in order to capture the opportunity, the existing dealers must be ideally located. Growth creates traffic congestion as increasing numbers of people use the roadways to shop, go to work, and go out for entertainment, producing a greater demand for convenient access to motor vehicle dealerships. Orlando already has a poor road network. In order to achieve at least average penetration effectiveness in the Orlando comm/terr with its tremendous growth, fewer than average dealer outlets, and poor road structure, Chevrolet must have better than average locations, better than average operators, or both. Traffic flows more easily with fewer interruptions on an interstate, making it easier for Heard to draw customers from Orlando on I-4. Visibility on I-4 is important because it will increase Chevrolet's profile as a brand in the comm/terr, having the dual effect of helping Chevrolet gain market share and benefitting consumers by enhancing competition among existing dealers, resulting in more competitive prices and better selection. Mr. Bondesen admits that I-4 is the primary traffic artery used by Orlando consumers. Dr. Schink testified that the relocation will make Heard more convenient to consumers in the Orlando MDA as well as to customers in the southern part of Bondesen's APR. The average daily traffic count at the proposed location is 76,000 vehicles on I-4 and 25,000 on State Road 46, making a total of about 100,000 vehicles, whereas the average daily traffic count at Heard's present location is only 42,000 vehicles. An increase in traffic count is likely to enhance Heard's ability to sell vehicles throughout the greater Orlando area. The site of the proposed relocation is a growing retail area close to the Seminole Town Center Mall, Auto Nation, and other shopping opportunities. The Seminole Town Center Mall is the only mall in Sanford and the retail center of Heard's AGSSA. Having retail activity nearby creates a good environment for selling cars. Heard's visibility on the interstate close to the shopping area would assist Chevrolet in drawing customers in the market to the dealership. When Seminole Ford, currently across the street from the existing Heard location, relocates to its I-4 site just south of the proposed Heard site, there will be an advantage to both because Ford and Chevrolet dealerships create traffic for one another. Moving the Ford and Chevrolet stores to the interstate will create a new "auto row" offering much better access for customers in the Orlando area. The proposed relocation is consistent with Chevrolet's Year 2000 Plan, which calls for maintaining representation in the Sanford AGSSA and taking advantage of opportunities to relocate dealerships to newer and more visible locations in major shopping areas. Relocation Impact On Bondesen Based on his long experience and success in Chevrolet sales, Mr. Heard anticipates that he can easily sell 3,000 Chevrolets a year at his new location and projects as many as 7,000 or 8,000 a year after a 5-year period. He also estimates there are 7,000 to 10,000 unsold Chevrolets in the Orlando market. Whether Mr. Heard's expansive figures or his expert's more precise scientific statistical analysis is applied, Bondesen's predictions of a devastating impact on his Deland dealership are less credible. Gross registration loss is a measure of the opportunity Chevrolet has lost to inter-brand competitors like Ford and Toyota, as measured by the number of additional registrations Chevrolet would need to achieve the expected penetration rate in each census tract that is presently below expected. Gross registration loss measures lost opportunity within the comm/terr, in contrast to net registration loss, which offsets losses within the comm/terr against gains within the comm/terr. In 1997, the gross registration loss in the Orlando comm/terr plus Deland was 3,653 units. In-sell measures losses to intra-brand competitors by counting the number of Chevrolets registered within the Orlando comm/terr plus Deland that were sold by dealers outside this area. In-sell represents lost opportunity to dealers within the market because while those dealers were more convenient to the customers who bought those cars, the more convenient dealers failed to offer their consumers the price, selection, service, or selling approach necessary to make the sales. In-sell in the Orlando comm/terr plus Deland in 1997 added another 1,684 units of lost opportunity. Total lost opportunity in the Orlando comm/terr plus Deland, measured by the sum of gross registration loss and in-sell, was 5,337 units in 1997, more than ample opportunity for the proposed relocation to occur without taking away sales from Bondesen or from other dealerships in the comm/terr. The sufficiency of the opportunity to support this relocation can be proven by projecting the number of incremental sales (ie., sales over and above current levels) Heard is likely to make after the relocation, assuming certain penetration profiles for Heard and for the new Classic dealership. Assuming Heard has the same penetration profile as the average of Holler, Mealey, World, and Bondesen in 1997, his incremental registrations from the proposed location into the area within 20 miles of its dealership would amount to 387 units or only 7.3 percent of the total lost opportunity in the market. If Heard performs like Holler's 1997 penetration profile, which would produce the highest number of sales of any of the existing MDA dealers, Heard's incremental sales within 20 miles of its dealership still would amount to only 628 units or 11.8 percent of the total available opportunity. Heard could double the Holler profile and still not capture all of the available gross registration loss. Even with Classic Chevrolet going into business in 1998, and assuming that it performs at either the MDA average penetration profile or the Holler penetration profile, the sum of the projected Classic sales and the projected incremental Heard sales still equals only 36.2 percent of the available opportunity if Classic has the average dealer profile, or 45.5 percent of the opportunity assuming the Holler profile. In each of these scenarios, all of the incremental sales could be made at the expense of inter-brand competitors alone. In short, even with the addition of Classic, this relocation will not come close to capturing all of the lost opportunity and solving Chevrolet's penetration problems in the Orlando comm/terr. Dr. Schink assumed (at the high end) that Heard would make between 2,261 and 3,085 sales nationwide. Orlando Chevrolet dealers typically capture about 85 percent of their nationwide sales from the comm/terr plus Deland. Therefore, Dr. Schink's nationwide sales estimates would translate into 1,922 and 2,622 sales within the comm/terr plus Deland. Even if Heard sells 1,922 vehicles and Classic sells 1,800 nationwide or 1,530 within 20 miles (the highest projected number of sales for Classic), this results in a total of 3,452 units. After deducting the 460 sales Heard made from his present location in 1997, the total incremental sales of 2,992 is only 56 percent of the available lost opportunity. If Heard sells 2,622, the equivalent result is 3,692 incremental units, or only 69 percent of the available opportunity. Bondesen's current APR has a gross registration loss of 190 units and in-sell of 419 units (excluding sales from MDA dealers) for a total lost opportunity of 609 units. Assuming Heard matches either the average dealer penetration profile or the Holler profile, Heard's incremental sales into the Deland APR would capture less than 15 percent of the lost opportunity available there. If Heard doubled Holler's penetration profile, the incremental sales in Bondesen's APR would be 258 units or 42 percent of the lost opportunity. Even if Heard tripled Holler's profile (which would result in over 3,600 units nationwide), the incremental sales in the Bondesen APR would be 430 units, or 71 percent of the lost opportunity. In 1997, Herd registered 16 percent of his sales in Volusia County. Even if, as Dr. Schink projects, the relocated Heard sells 2,261 units nationwide, only 16 percent of those or 362 units would be registered in Volusia County. Since Heard already makes 90 sales into Volusia County from his existing location, his incremental sales into Volusia county would be 272 units. This assumed scenario would capture only 45 percent of the 609 units of opportunity that was available in Bondesen's APR in 1997. The same calculation, using Dr. Schink's highest estimate of 3,085 units nationwide, results in Heard capturing only 66 percent of the opportunity that was available in 1997 in Bondesen's APR. From 1995 to 1997, the minimum level of opportunity available to Bondesen in his own APR far exceeded his actual sales nationwide. Bondesen's APR was only 89.4 percent registration effective in 1997. Of the Chevrolets registered in the Deland APR, only 39 percent are attributable to Bondesen's sales. Bondesen admits that his APR is performing below its potential and that he should be capturing more sales. He testified that all of Volusia County is a growth area and he acknowledged that this growth represents opportunity for him to make more sales. Dr. Schink concedes that household growth is one of the key factors driving motor vehicles sales, and that household growth in Bondesen's APR is expected to increase at a rate of 1.1 percent per annum from 1997 to 2001. Product allocation cannot explain Bondesen's poor sales performance relative to expected, since all Chevrolet dealers nationwide operate under the same "turn and earn" allocation system. Bondesen's gross profit per new vehicle, which he controls, exceeded the Tampa Zone average in 1997 on every model that Chevrolet makes except Corvette. Bondesen's high profit margin in the presence of high lost opportunity and low market share reflects that Bondesen could be more price competitive, that Bondesen faces inadequate intra-brand competition, and that consumers are paying uncompetitive prices for new Chevrolets at Bondesen's store. Dr. Schink's financial impact model assumes that Bondesen is either a stand-alone Chevrolet store or a Chevrolet/Oldsmobile/Cadillac store without his satellite used car operation. Contrary to this assumption, however, Bondesen Chevrolet, Oldsmobile, Cadillac, Inc. is a fully integrated operation. It is a single corporate entity. It prepares a single set of financial reports for combined dealership operation, including the satellite used car operation, because doing so saves accounting costs. It has a substantial number of company-wide expenses, such as a single overall sales manager, a single clerical staff, and one group of office personnel, all of which are utilized in and supported by the combined dealership operations. Bondesen has no plans to dispose of his Oldsmobile, Cadillac, or satellite used-car operations. Trade-ins on his new-car sales feed Bondesen's satellite "buy-here/pay-here" lot, where he is able to profitably retail the less desirable trade-ins that other dealers typically dispose of wholesale. In fact, Bondesen's operation is substantially geared toward its used-car operation and, from 1993 to 1997, derived most of its profit from used-car sales. Because of this heavy emphasis on used cars, the loss of some new Chevrolet sales as a result of the proposed Heard relocation will not cause substantial financial hardship to the Bondesen operation. Bondesen is a well-capitalized, well-managed, highly profitable integrated dealership that is fully capable of responding to competitive forces in the marketplace. In 1998 Bondesen had to face the opening of Classic Chevrolet, which was projected to sell some 1,500 to 1,800 new units, the increase in Heard's sales to twice the level Rummel and Heard sold in 1997, and Auto Nation going into business and competing for used-car customers; yet despite all of this new competition Bondesen increased his sales of new Chevrolet cars and trucks slightly over the prior year, and he was projected to be more profitable in 1998 than he was the prior year. Overall Benefit of the Proposed Relocation The proposed relocation would benefit consumers in the Orlando comm/terr by providing more convenient access to Heard, a more competitive environment leading to lower prices, a better inventory, and a state-of-the-art showroom in which to shop. Heard's Customer Service Index (CSI) is poor but improving at his current facility. It takes time to build CSI after purchasing an existing dealership. Heard has a CSI specialist on staff at every one of his stores, and has improved CSI performance at other dealerships he has purchased. There is no evidence to suggest that the level of customer service Heard can offer consumers would decline as a result of his relocation. CSI alone does not govern a dealer's market share. Customers often trade off one dimension of the buying experience against another, so a dealer can make up for a negative in one area, such as CSI, by offering a positive in other areas, such as selection or price. Bondesen also has low CSI scores, having failed to meet his contractual obligations regarding CSI from 1992 to February 1998. The public will benefit from the relocation through employment that the new facility construction will generate, and through increased tax revenues from the new dealership. The licensee, Chevrolet, will benefit from the relocation by improving its chances of achieving the minimum level of expected market share in the Orlando comm/terr and AGSSA 4 through enhanced sales from the relocated store. Through the process known as stimulated competitive response, existing Chevrolet dealers, including Bondesen, will benefit from the relocation if they respond positively to the competition by increasing their sales due to the increased advertising, brand awareness, competition, and customer traffic that the relocated Heard dealership will generate.
Recommendation Based on the foregoing, it is hereby, RECOMMENDED: that the Department of Highway Safety and Motor Vehicles issue its final order approving the Petitioners' application to relocate Heard's Chevrolet dealership. DONE AND ENTERED this 1st day of February, 1999, in Tallahassee, Leon County, Florida. MARY CLARK 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) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 1st day of February, 1999. COPIES FURNISHED: Daniel E. Myers, Esquire John W. Forehand, Esquire Myers, Forehand & Fuller 402 Office Plaza Drive Tallahassee, Florida 32301 Counsel for Fred Bondesen Chevrolet Oldsmobile, Cadillac, Inc. Fred Lotterhos, III, Esquire Holland & Knight, LLP 50 North Laura Street, Suite 3900 Jacksonville, Florida 32202 Counsel for Chevrolet Motor Division, General Motors Corporation Louis Anders, Esquire Joseph Letzer, Esquire Burr and Forman 3100 Southtrust Tower Birmingham, Alabama 35203 Co-Counsel for Bill Heard Chevrolet Corporation-Orlando d/b/a Bill Heard Chevrolet Dean Bunch, Esquire Sutherland, Asbill & Brennan, LLP 2282 Killearn Center Boulevard Tallahassee, Florida 32308 Co-Counsel for Bill Heard Chevrolet Corporation-Orlando d/b/a Bill Heard Chevrolet Michael Alderman, Esquire Office of the General Counsel Department of Highway Safety and Motor Vehicles A432 Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Charles J. Brantley, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Room B439, Neil Kirkman Building Tallahassee, Florida 32399-0500 Enoch Jon Whitney, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500
The Issue The issue is whether the Dealer Sales and Service Agreement which Gus Machado Buick-GMC, Inc., has with Buick and GMC Truck Divisions of General Motors Corporation may be terminated by General Motors for abandonment under Section 320.641, Florida Statutes (1989), because Machado Buick failed to engage in business for more than ten consecutive business days.
Findings Of Fact Gus Machado is a Cuban-American. He purchased a Buick-GMC Truck dealership formerly known as Seipp Buick in Hialeah on March 3, 1982, after Mr. Machado had been in the automobile business for more than 30 years. The purchase price for the dealership, including the 6.25 acres of real estate on which the dealership was located, was about $4.5 million, $3 million of which was financed. The loan was secured by a mortgage on the dealership's real estate. Shortly after Mr. Machado purchased the dealership, he transferred the ownership of the real estate to himself, and leased it back to the dealership entity known as Gus Machado Buick-GMC, Inc., of which Mr. Machado is the sole shareholder. When he did this, General Motors told Mr. Machado that it regarded the rent to be charged to the dealership as excessive, but Mr. Machado believed that the rental payments were set in the amount which the dealership could pay given his projected sales volume. Mr. Machado was the only Hispanic dealer for the Buick Division in Dade County, Florida. The City of Hialeah is overwhelmingly Hispanic. The staff of the dealership was about 80 percent Hispanic. Mr. Machado focused his marketing efforts on Hispanic customers. The dealership's sales volume increased from about $19 million fiscal in year 1982, to $26 million in fiscal year 1983, the first full year Mr. Machado owed the dealership, to as much as $36 million dollars in later years. Buick recognized Mr. Machado's achievements in the sale of Buick motor cars by designating him the No. 1 Hispanic dealer in the country for a number of years. From 1983 to 1985, the dealership was profitable, and that profit enabled Mr. Machado to purchase a $2 million home in 1985 in an exclusive area. He renovated it from 1985 to 1990 at a substantial cost (about $7 million dollars) which Mr. Machado paid for with cash from his personal funds. 1/ Profitable times continued through the 1987-1988 models years. In 1987 Mr. Machado refinanced the dealership real estate for $4 million, which increased the amount of the mortgage on the property by $1 million. He then distributed that cash to his various companies, which included 1) a separate Ford dealership also located in Hialeah, Florida, 2) a Budget Rental Car day rental business in Puerto Rico, and 3) a long-term automobile leasing business in Puerto Rico. In 1987, Mr. Machado received a $1,306,000.00 dividend distribution from Gus Machado Buick-GMC. Mr. Machado received no salary from Gus Machado Buick-GMC in 1987, but he did receive the annual rental payments from the dealership over and above the dividend distribution and the $1 million obtained from refinancing the real property on which the Buick-GMC Truck dealership was located. After the increase in the mortgage obligation, Gus Machado Buick-GMC Truck paid $107,100.00 in rent to Mr. Machado, in addition to repayment of the mortgage, taxes, insurance, and repairs on the property. The automobile business is inherently cyclical, and sales of cars from the Buick-GMC Truck franchise began to fall off in the 1988 model year and matters became worse in 1989. At the same time, Buick generally lost market share in 1989 and 1990. This difficult period coincided with the closure of several General Motors dealerships in Dade County. The evidence is insufficient to demonstrate exactly why any one of those dealerships failed. The relative increase in popularity of foreign, especially Japanese, automobiles may have played some part in their financial difficulties. Too little is known of their management to make any finding about whether those failures resulted from poor management, poor times for the automobile industry as a whole, problems with the design, engineering, sales or service of General Motors automobiles, or some combination of all of these factors. Mr. Machado also had an unusual problem because of his Hispanic market. The fall of communist regimes in Europe led many Hispanics to believe the downfall of Castro was imminent. They became inclined to save money to invest in a new free market in Cuba. This also depressed sales of new cars and trucks to some degree. The extent of lost sales due to these beliefs was not, and probably could not be quantified. During this period of decline, Mr. Machado came to believe that it would be an advantage to add another line of automobiles to his dealership. Multiple point dealerships were becoming more common, and his dealership was large (6.25 acres) and could handle another line. He sought the assistance of the Buick Division in adding another franchise to his dealership. Mr. Machado also attempted to reduce his inventory, labor and advertising expenses in an effort to control costs. Mr. Machado's problems were greatly compounded when he discovered, in 1989, that his two Puerto Rican companies were in serious financial difficulty as the result of mismanagement. Mr. Machado had not been deeply involved in their day-to-day management. One of the problems in Puerto Rico was that vehicles in the lease fleets were being disposed of "out-of-trust," which meant that automobiles for which Mr. Machado had received financing through General Motors Acceptance Corporation were being disposed of at retail without repayment of their financed purchase price. In the automobile industry, this is regarded as a serious breach on the part of the borrower in his dealings with his financing source. The total outstanding obligations for the two Puerto Rican businesses exceeded $12 million. The magnitude of the Puerto Rican losses required that these businesses become the focus of attention by Mr. Machado. From July 1989 to November of 1990, he began to devote the greatest portion of his time to management of those distressed companies by spending four days of each week in Puerto Rico. Mr. Machado's management efforts were rather successful. Ultimately, the two Puerto Rican companies were sold or liquidated, and at that time the debt owed to GMAC for the Puerto Rican operations had been reduced from $12 million to $2 million. While Mr. Machado devoted most of his attention to his Puerto Rican businesses, the responsibility for the day-to-day operation of the Buick-GMC dealership in Hialeah was left to Mr. Machado's wife, who had worked in real estate, but never in the automobile business, and the senior employees at the Buick-GMC Truck dealership. The operation of a new car dealership is quite complex. A dealership contains five distinct profit centers, new vehicle sales, used vehicle sales, parts sales, vehicle service, and finance and insurance. One of the most difficult aspects of the management of a new car dealership is maintaining adequate cash flow. For example, a dealership does not realize its profit immediately after performing warranty work on a vehicle or upon the sale of a car. Through billing cycles the profit may not show up on the books for some time. Having adequate working capital is necessary so that the dealership is able to pay its obligations as they mature, even though when comparing total assets to total liabilities, the dealership may be solvent. Mrs. Machado did attend a 30 day dealership management course, but that course is not one designed to qualify a person to manage a dealership, rather it is designed by General Motors to provide family members of a dealer with an introduction to dealership management. That training, plus active participation in dealership management, may ultimately qualify that family member, such as a daughter or son, to take over a dealership. It was too limited to give Mrs. Machado the training, or especially the experience, to lead the dealership through a trough in the automobile sale cycle. Mrs. Machado did have the assistance of the dealership's general manager, comptroller, and the managers of the various departments. This is not a substitute for the experienced oversight of the dealership owner, however. Misplaced reliance on on-site managers for Mr. Machado's Puerto Rican operations had lead to the very serious financial problems of those businesses. Gus Machado Buick-GMC Truck sold a larger number of Buick automobiles and GMC trucks in 1989 than the dealership had sold in 1987. Ironically, 1987 was a profitable year, but 1989 was not, even though the gross profit per unit sold in 1989 ($1,171 for cars and $1,210 in trucks) was slightly higher than the gross profit per unit sold in 1987 ($1,166 for cars and $1,019 for trucks). Mr. Machado ultimately requested assistance from Buick in attempting to identify a potential purchaser for his Buick-GMC Truck dealership. General Motors commonly receives these sort of requests from its dealers. A manager for Buick did locate one prospective buyer and Mr. Machado had some contact with him, but nothing came of it. The most serious problem which Gus Machado Buick-GMC Truck ultimately encountered, and which forced its closure in February 1991, was the loss of its floor plan financing through General Motors Acceptance Corporation (GMAC) in late May or early June of 1990. Although credit difficulties began earlier, they came to the fore in mid to late December 1989 after Mr. James R. Hardesty became the branch manager for the GMAC office which handled dealerships in Miami. Mr. Machado met with Mr. Hardesty in January of 1990 because Mr. Hardesty was concerned about Gus Machado Buick-GMC Truck's credit worthiness. A check written to GMAC by the dealership to pay off a vehicle sold at retail had been dishonored by the dealership's bank, Consolidated Bank. This was not a good footing on which to begin Mr. Machado's relationship with Mr. Hardesty. GMAC had extended floor plan financing for new and used vehicles at the Buick dealership, and also had made a $600,000 loan to the dealership, but Mr. Hardesty believed that the books of the Buick dealership showed insufficient working capital available for the day-to-day operation of the business. Under the separate Dealer Sales and Service Agreement which Mr. Machado had with General Motors, the dealership was required to maintain a minimum net working capital of $2 million. Mr. Machado agreed to infuse additional working capital into the business, although Mr. Hardesty did not require that Mr. Machado obtain a specific amount of additional capital. Mr. Machado acknowledged at hearing that he knew the business needed $600,000 to $700,000 in working capital. Mr. Hardesty knew that the dealership was losing money and was being run on a day-to-day basis by Mrs. Machado, not Mr. Machado. This did not give him a great deal of confidence in the dealership's management team. GMAC had other problems in its relationship with the Machado dealership. Even before Mr. Hardesty came to Miami, GMAC was not receiving timely interest payments on the Machado Buick inventory it had financed, on the $600,000 loan GMAC had made to the dealership, or timely payment on dealer reserve chargebacks. Audits of the dealership inventory revealed GMAC was not being paid in a timely manner when cars were sold at retail, which required GMAC to conduct audits of the cars on the Machado lot more frequently than had been customary. One of the things Mr. Hardesty did was to require that for any unit which Gus Machado Buick-GMC Trucks sold, the floor plan financing for that car would have to be paid off within 24 hours of sale. This requirement was consistent with the written agreements which Mr. Machado had with GMAC. It was the practice in the industry, however, for GMAC to permit dealers in good financial condition more time to pay off cars, perhaps as much as three to four days. By insisting on the 24-hour pay-off, Gus Machado Buick-GMC Truck had less float, and consequently needed more working capital. The 24-hour pay-off requirement had the effect of requiring Mr. Machado to infuse the equivalent of about $120,000 working capital into his business in order to keep current on the dealership's bills. Mr. Machado understood Mr. Hardesty's position. When Mr. Hardesty also attempted to obtain additional security through a mortgage on the dealership property, however, Mr. Machado declined. After the initial meeting, the relationship between GMAC and Gus Machado Buick-GMC which began on a difficult footing because of the returned check became more rocky. Mr. Hardesty discovered that checks written to GMAC were being paid only because the bank used by Gus Machado Buick-GMC Truck, Consolidated Bank, provided the dealership with overdraft protection. In effect, the Machado dealership did not have sufficient working capital to pay off the wholesale financing on cars it was selling and was relying on ad hoc extensions of credit by its bank in order to pay off the GMAC liens on those cars. This was an indication of severe lack of working capital in the dealership. Overdraft protection gives the bank the option to hold a check for up to three days before deciding whether to pay it. This put the floor plan financing entity at considerable risk because cars sold by Gus Machado Buick-GMC Truck had an average pay-off due to GMAC of $15,000 per unit. Over three days Consolidated Bank could accumulate substantial dollar volume in checks presented by GMAC for payment. GMAC would not know for three days whether checks it received from Gus Machado Buick-GMC Truck to pay off the financing on those units which had been sold to third parties would be honored. Moreover, the dealership had significant loans from Consolidated Bank, which could exercise a set-off right against the funds in the Machado account to be used to pay off the GMAC liens. For these reasons Mr. Hardesty insisted that Mr. Machado move his dealership account to a bank which did not provide overdraft protection and did not have other loans to the dealership. The checking account was moved to Southeast Bank. The Machado dealership still did not make timely payments on its wholesale interest obligations and on the $600,000 capital loan which GMAC had made to the dealership. Audits conducted by GMAC of the cars on hand at the dealership revealed that vehicles were being delivered to retail customers without payment being made to GMAC within the time period allowed. Perhaps worst of all, GMAC found that the debt which it had loaned Gus Machado Buick-GMC Truck $600,000 to pay off (see Finding 17) had not been paid, and no satisfactory explanation could be made about what had happened to that money. Over several meetings, Mr. Hardesty stressed to Mr. Machado that it was imperative that additional working capital be provided to the dealership in order for GMAC to continue its relationship as the floor plan financing entity for Gus Machado Buick-GMC. Mr. Machado had difficultly in obtaining additional capital because he had chosen to make substantial investments in real estate, including the purchase and renovation of his home. Mr. Machado repeatedly gave assurances to Mr. Hardesty that he would infuse additional capital into the dealership, but did not do so. After the dealership account had been moved to Southeast Bank, in May of 1990, GMAC received checks for seven or eight cars which had been delivered to retail customers which were dishonored by Southeast Bank. Had the Machado account remained at Consolidated Bank, those checks might have been paid by Consolidated Bank using overdraft protection. The significant point, however, is not only that the checks were returned, but that the returns demonstrated that the Machado dealership continued to have inadequate working capital to pay the business' debts as they matured. This lead Hardesty to put Mr. Machado's credit line on hold, which meant that GMAC would not automatically finance new cars for the dealership. Mr. Machado would have to discuss any new purchases with Mr. Hardesty, who would make a decision of whether or not to finance them. Thereafter, Mr. Machado presented to Mr. Hardesty a deposit slip showing that $300,000 had been deposited in the Gus Machado Buick-GMC Truck dealership's working account as additional working capital. Mr. Machado asked that the normal credit relationship be reestablished. Mr. Hardesty discovery shortly thereafter that two days after that deposit was made, $200,000 had been withdrawn and applied elsewhere, and the remaining $100,000 had been used to cover a bank overdraft. The dealership's recent history of problems, including 1) the manipulation of the $600,000 GMAC loan which had been extended to extinguish a dealership debt, 2) the failure to make timely payments to GMAC on that loan and on interest due on floor plan financing, 3) the dealership's repeated overdrafts, 4) the several returned checks, 5) the lack of candor of Mr. Machado in attempting to mislead Mr. Hardesty into believing that $300,000 had been deposited into the business as additional working capital, 6) the dealership's monthly operating losses, and 7) the operation of the dealership by Mrs. Machado, who was not an experienced dealer, led Mr. Hardesty to believe that Gus Machado Buick-GMC was not credit worthy. He suspended the dealership's floor plan financing. The effect of that suspension was dramatic. General Motors will not build cars for a dealer unless the dealer posts a large cash deposit or had an arrangement with a financial institution to pay General Motors for the cars to be built. Mr. Machado was unable to purchase any new automobiles and had to operate only with its remaining inventory. GMAC did not, as it might have, repossess the existing inventory. Without floor plan financing, however, the only way for Gus Machado Buick-GMC Truck to acquire new vehicle inventory was to pay for it with cash, which Mr. Machado could not do. Mr. Machado did attempt to obtain alternate financing. Due to the difficult conditions in the banking industry, Mr. Machado was not able to find a bank willing to take on floor plan financing for his dealership, and although he approached Ford Motor Credit to provide floor plan financing for the automobiles at his Buick dealership, it was unwilling to do so. The suspension of the line of credit by GMAC, as a practical matter, scared off other lenders. The reasons GMAC had for suspending the line of credit should independently have lead any prudent lender in possession of all the facts to a similar conclusion. Lending money to Gus Machado Buick-GMC Truck at that time was risky business. As the inventory of new cars dwindled, so did sales. Many dealership employees were let go. By early November of 1990, Buick Motor Car Division learned that Mr. Machado was considering converting his dealership property into a shopping center. A Buick employee spoke to Mr. Machado and expressed concern about the use of the dealership property in a manner contrary to the terms of the Dealer Sales and Service Agreement. Mr. Machado stated that if the plan to change the use of the dealership property came to fruition, he would like to discuss relocation alternatives with Buick at that time, but it was too premature to consider a relocation of the dealership yet. Mr. Machado acknowledged that any request for relocation would have to be made in writing. In the fall of 1990 Mr. Machado was sued for $7 million by AmeriFirst for a default with respect to the $4 million loan on the dealership property and a separate mortgage on Mr. Machado's Ford dealership for $3 million. Suits were also filed against him by Universal Bank for $210,000, the Bank of Boston for $300,000 for loan defaults, and another suit was filed by a former employee for $21,000. As late as November of 1990, Mr. Machado believed that the Buick dealership could become profitable if it had the necessary inventory of new vehicles and he was able to devote all of his time to management of the dealership. By February 1, 1991, the Machado Buick-GMC Truck dealership ceased operation. It did not have a sales and service facility open and available for work eight hours a day, five days a week, excluding holidays. General Motors advised Mr. Machado on March 5, 1991, that 15 days from the date of that notice the Dealer Sales and Service Agreements Mr. Machado had would be cancelled because the dealership had been closed for more than ten business days, in violation of the agreement. By letter of March 11, 1991, Mr. Machado asked to relocate his dealership to a facility which was then a Mohawk Tire store. That facility did not meet the requirements for dealer operations, and would require extensive modification and enlargement. In addition, Mr. Machado did not have any assurance that if he could arrange to remodel that location he could also obtain the necessary floor plan financing to operate the Buick-GMC dealership. Later, on July 25, 1991, Mr. Machado entered into a Sales Agreement for the Buick-GMC Truck franchise with Alan Potamkin, who either owns or is involved in the ownership of more than 55 automobile dealerships around the country, including General Motors dealerships. Mr. Potamkin has proposed to move the Buick-GMC Truck dealership to other locations in Hialeah or in Dade County. Mr. Potamkin submitted the necessary paperwork for review of a possible transfer of the Buick-GMC Truck dealership from Mr. Machado to Potamkin, but the acquisition agreement which was presented in evidence specifically shows that Mr. Machado is not selling the existing dealership's land or facilities to Mr. Potamkin. Consequently, he would have to find some other location for the Machado dealership. He could not merely take over the dealerships on the same terms and conditions which Mr. Machado had. The location and facilities necessarily would be different. Mr. Machado would be free to use the 6.25 acres on which the dealership was located for some different endeavor.
Recommendation It is RECOMMENDED that a final order be entered by the Department of Highway Safety and Motor Vehicles finding that Gus Machado Buick-GMC Truck, Inc., abandoned its Dealer Sales and Service Agreement with Buick and GMC Truck by failure to engage in business with the public since February 1, 1990, and that Mr. Machado has failed to prove that the closure of the dealership was due to any reason which would excuse its failure to conduct business under Section 320.641(4), Florida Statutes (1989). DONE AND ENTERED in Tallahassee, Leon County, Florida, this 9th day of April 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 9th day of April 1992.
The Issue Whether Stella Chevrolet, Inc., should be granted a license to establish and operate a new Chevrolet dealership at 1180 South Blanding Boulevard, Orange Park, Clay County, Florida, because of inadequate representation by existing Chevrolet dealers in the relevant territory or community.
Findings Of Fact Stella filed an application with the Department for a license to establish and operate a Chevrolet dealership at 1180 South Blanding Boulevard, Orange Park, Clay County, Florida. Roberts and Nimnicht filed a letter with the Department protesting Stella's application. Stella's proposed location is within an area designated by Chevrolet as the Jacksonville multiple dealer area (hereinafter referred to as "MDA"). The Jacksonville MDA is comprised of Duval County and parts of Clay, Nassau and St. Johns Counties. The Jacksonville MDA is an appropriate starting point in determining the appropriate "community or territory" which will govern in this case. There are five Chevrolet dealerships located within the Jacksonville MDA: Nimnicht Chevrolet, Conrad Hawkins Chevrolet, Jerry Hamm Chevrolet, Steve Hull Chevrolet and Moore Chevrolet. There are seven Chevrolet dealerships located in the area which surrounds the Jacksonville MDA: Roberts Chevrolet (located in Green Cove Springs), Wilson Chevrolet (located in St. Augustine), St. Johns Chevrolet (located in Palatka), Ken Reagh Chevrolet (located in MacClenny), Wells Chevrolet (located in Starke), Gasgarth Chevrolet (located in Fernandina Beach) and Bennett Chevrolet (located in Kingsland, Georgia). The Jacksonville MDA is divided by Chevrolet into six "Areas of Geographic Sales and Service Advantage" (hereinafter referred to as "AGSSA"). AGSSA's are comprised of census tracts. If a census tract cannot be used in determining the boundaries of an AGSSA, the AGSSA's boundaries are designated by Chevrolet based upon other geographic descriptions such as zip codes, C-towns and NTC's. Five of the six AGSSA'S in the Jacksonville MDA have a Chevrolet dealership located within the AGSSA's boundaries: AGSSA Chevrolet Dealership Hull Hawkins Nimnicht Hamm Moore The Chevrolet dealerships located within the Jacksonville MDA are given a competitive advantage within the AGSSA that the dealership is located in because of the geographic location of the dealership. AGSSA 6 does not have a Chevrolet dealership located within its boundaries. Stella is proposing to operate a Chevrolet dealership within AGSSA 6. Roberts has been assigned primary responsibility by Chevrolet for servicing Clay County. When consumer buying habits, as evidenced by vehicle sales and registration locations, are considered, Roberts is the only dealer located on the fringes of the Jacksonville MDA whose market area should be considered as part of an interconnected homogeneous shopping area with the Jacksonville MDA. The area surrounding Roberts should be included as part of the relevant "community or territory" in this case. Taking into account geographic factors which are considered in defining an AGSSA, an area identified by GM as "Area 14" should be assigned to Roberts for inclusion as part of the relevant "community or territory" in this case. GM and the Chevrolet dealerships located within the Jacksonville MDA have entered into Dealer Sales and Service Agreements (hereinafter referred to as the "Dealer Agreement"). The Dealer Agreement establishes the terms of the business relationship between GM and a dealer. Among other things, a Dealer Agreement provides the following general explanation of the purpose of the Dealer Agreement: The purpose of this Agreement is to establish Dealer as an authorized dealer for Chevrolet motor vehicles, to establish the location from which Dealer will operate and to identify the individual Dealer Operator and owner(s) of Dealer on whom General Motors relies in entering into this Agreement. This is a personal service contract setting forth the rights and obligations of Dealer and its approved Dealer Operator and owner(s) and of General Motors relating to the sale and service of Chevrolet motor vehicles and related Parts and Accessories. Among other things, the Dealer Agreement establishes a method of evaluating the performance of a dealer for purposes of determining the dealer's compliance with the Dealer Agreement. The Dealer Agreements entered into with the Respondent dealers do not specifically deal with the question of what constitutes the "community or territory" for purposes of this case or provide that the Jacksonville MDA should be considered the "community or territory" in this case. Nor did the evidence presented in this case establish that the relevant "community or territory" in this case should be limited to the Jacksonville MDA. GM conducted a survey of the Jacksonville MDA. The results of the survey were issued in 1987. In the survey GM concluded that an additional dealership was needed in AGSSA 6. The geographic area of AGSSA 6 for purposes of the survey was different from the geographic area of AGSSA 6 relied upon by GM during the formal hearing of this case. The evidence failed to prove, however, that AGSSA 6 as defined by GM during the formal hearing was not a proper designation for purposes of this case. AGSSA 6 as defined during the formal hearing was proper and should be included within the relevant "community or territory." AGSSA's 1 through 6 and Area 14 constitute a single interconnected market for Chevrolets, based upon consumer buying habits. Based upon this fact and a consideration of vehicle shopping areas and road networks, AGSSA's 1 through 6 and Area 14 (hereinafter referred to as the "Territory"), constitutes the "community or territory" for purposes of the this proceeding. GM has not contended nor proved that the dealers in the Territory have not complied with the terms of their Dealership Agreements with GM. Instead, GM has contended and proved that existing dealers are not providing adequate representation in AGSSA 6. Chevrolet's market penetration in the nation as a whole is represented by national averages. Chevrolet's national averages include adequately and inadequately represented markets. National average market penetration rates are an appropriate starting point to develop a standard to determine whether Chevrolet dealers located in the Territory are providing adequate representation. The Respondents have argued that use of national average penetration rates is improper. Although it is true that Single Dealer Areas, which are included in determining national penetration rates, have a higher penetration rate than MDAs such as the Jacksonville MDA, the evidence proved that national averages are a proper standard to apply in this case. National averages include adequately and inadequately represented Single Dealer Areas and MDAs. Approximately one-half of Chevrolet's Florida markets exceeded national average penetration rates during 1987 and the first six months of 1988. National averages are therefore achievable by Florida Chevrolet markets. AGSSA 6 ranked near the bottom of all Florida markets in penetration rates for cars and trucks. The Territory also ranked in the bottom half. The market penetration rates for AGSSA 6 and the Territory during 1987 and the first six months of 1988 were below national average: AGSSA 6's rate during 1987 was only 59% of national average for cars and 77% for trucks; AGSSA 6's rate during the first six months of 1988 was only 55% of national average for cars and 75% for trucks. Any given market, including the Territory and/or AGSSA 6, can have unique characteristics which affect the buying habits of the population of the market. GM presented evidence concerning a number of these characteristics: product popularity, age and income. Product preference, age and income statistics of AGSSA 6 and the Territory are not significantly different from product popularity, age and income nationally. This supports a conclusion that national averages are an appropriate standard to apply in this case. The relative popularity of various types of vehicles in AGSSA 6 and the Territory is almost the same as popularity of the same vehicles nationally. This fact suggests that unique demographic characteristics in AGSSA 6 or the Territory do not justify or explain the difference in penetration rates for AGSSA 6 and/or the Territory compared with national averages. When the various age groups of new vehicle buyers are compared with the same age groups nationwide, there is no significant difference which explains the lower penetration rate of AGSSA 6 and/or the Territory. This supports a conclusion that national averages are an appropriate standard to apply in this case. A comparison of the income of residents of AGSSA 6 and the Territory with incomes nationwide also supports a conclusion that national averages are an appropriate standard to apply in this case. Various parts of the Territory have equaled or exceeded national penetration rates, supporting application of national averages as the appropriate standard. AGSSA 6 has ranked last in the Territory since 1985. AGSSA 6's averages have been below the national averages, Florida averages and the Territory's averages. A significant difference between AGSSA 6 and the rest of the Territory is the difference in the distances which residents of AGSSA 6 have to travel to a Chevrolet dealership compared to the distances other residents of the Territory must travel. AGSSA 6 residents must travel, on average, almost twice as far. When AGSSA 6's performance is compared with national averages, AGSSA 6's efficiency from 1985 through the first six months of 1988 was only 65 to 70%. Increases in truck penetration during 1987 and the first six months of 1988 were offset by decreases in car penetration. If fleet opportunities, expected penetration, Florida averages, or Territory averages are taken into account the same lack of efficiency is evidenced in AGSSA 6. The population in the Territory has steadily increased since 1970. Households have nearly doubled. In AGSSA 6 households have increased four times. The density of the registration of vehicles generally follows the density of population and households. Between 1982 and 1987, new vehicle registrations have increased 74% in the Territory and 84% in AGSSA 6. During 1988 household income in the Territory generally exceeded $15,000.00. AGSSA 5, an AGSSA with a Chevrolet dealership, had the highest household income of $38,844.00. AGSSA 5 also had the highest penetration rate for Chevrolet. AGSSA 2 was the lowest AGSSA with a Chevrolet dealership with household income of $24,237.00. AGSSA 2 still had the second highest penetration rate for Chevrolet. AGSSA 6, without a Chevrolet dealership, had household income of $39,874.00. Despite its high household income, AGSSA 6 had the lowest Chevrolet penetration rate. Since 1980, the employment rate for an area roughly equivalent to the Territory increased 42%. The employment rate for an area roughly equivalent to AGSSA 6 increased 69%. The increases in population, households and employment in AGSSA 6 represent greater opportunity for vehicle sales. Despite this growth in AGSSA 6 and the population, household and employment increases in the Territory, the number of Chevrolet dealerships in the Territory has remained the same since 1960: six (five in the Jacksonville MDA). When all Florida markets are looked at, the number of markets in which Chevrolet has exceeded national averages has decreased if industry registrations as a whole increased above 6,000 retail industry registrations per dealer. In markets between 1,500 and 6,000 retail industry registrations per dealer, Chevrolet registrations are slightly above national average. Using 6,000 retail registrations as a guideline supports a conclusion that there is need for an additional Chevrolet dealership in the Territory. Looking at just AGSSA 3 and 6 and Area 14 supports the same finding. Competition in the Territory is extremely high. Chevrolet dealers in the Jacksonville MDA maintain one of the largest advertising budgets of any group of Chevrolet dealers. The boundaries of the AGSSA's within the Territory do not prevent the existing dealers from selling Chevrolets to residents of other AGSSA's or even from outside the Territory. The distance of residences from a dealership, however, does affect the ability of a dealer to effectively penetrate those residences. The distances from existing dealerships to the proposed new Chevrolet dealership in AGSSA 6 range from ten miles to over twenty miles. These distances adversely affect Chevrolet's ability to penetrate AGSSA 6. Locating a new Chevrolet dealership in AGSSA 6 would significantly improve the convenience in AGSSA 6 for Chevrolet over competing brands and improve its market share. AGSSA 6 is an identifiable plot. AGSSA 6 is not receiving adequate representation by existing dealers. GM presented evidence of four markets in Florida where the introduction of a new dealership was followed by an increase in Chevrolet penetration rates: Crystal River, Eustis, West Palm Beach and Hudson. The introduction of a new Chevrolet dealership into AGSSA 6 should increase Chevrolet's penetration rate in AGSSA 6. There are sufficient lost sales opportunities in AGSSA 6 to warrant an additional Chevrolet dealership. The Respondents unsuccessfully attempted to prove that there was no lost opportunity. The Respondents' evidence failed to take into account truck lost opportunities. The Respondents presented evidence in an effort to prove that Chevrolet performs well in areas where the population has certain characteristics and that AGSSA 6's population does not have those characteristics. The Respondents conclude from their analysis that Chevrolet sales in AGSSA 6 are as high as can be expected because of the characteristics of the residents of AGSSA 6. The Respondents' position is rejected. The Respondents identified an area as AGSSA 6 which was different from the area designated as AGSSA 6 for this proceeding. The Respondents also assumed that Stella would be located at a site different from the site it is proposing. The Respondents presented evidence concerning efforts by other Chevrolet dealerships to relocate within the Jacksonville MDA. Whether there are better methods of improving Chevrolet's performance in AGSSA 6 is not at issue in this proceeding. The only issue is whether existing Chevrolet dealerships are providing adequate representation in the Territory for Chevrolet. The Respondents also presented evidence in an effort to prove that Stella was selected to provide the new dealership because of Mr. Stella's relationship with officials at Chevrolet. The Respondents' continued arguments concerning this point ignore the evidence in this case and are rejected.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be issued approving the application of Stella to establish a new Chevrolet dealership at 1180 South Blanding Boulevard, Orange Park, Clay County, Florida. DONE and ENTERED this 30th day of January, 1990, in Tallahassee, Florida. LARRY J. SARTIN 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 30th day of January, 1990. APPENDIX TO RECOMMENDED ORDER GM and Roberts and Nimnicht have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. GM's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 3-7. 2 12. 3 8-9 and 13. 4 19. 5 22. 6 23. 7 24. 8 25. 9 Hereby accepted. 10-11 26. 12 27. 13 29-30. 14 See 44. 15 29. 16 29-30. 17 See 31. 18-19 32. 20 33. 21 34. 22 35. 23 See 36-37. 24 See 39. 25 See 38-40. 26-27 See 44. Not supported by the weight of the evidence. See 43. Hereby accepted. See 44. 32 See 14-17. 33 45. See 18. 34 Hereby accepted. 35 See 21. 36-43 Hereby generally accepted. Dr. Matthews' analysis was not persuasive. 44 45. 45 Statement of a witnesses position or not supported by the weight of the evidence. 46 See 18 and 45. 47-48 Hereby accepted. 49-50 Summary of testimony and argument. 51-54 Although partially true, the issue in this case is not whether there is a better way for GM to achieve greater representation through the existing dealers. These proposed findings of fact are not relevant to the issue in this proceeding. Roberts' and Nimnicht's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1-2 No proposed findings of fact were identified as paragraphs 1 or 2. 3 See 14-17. The last sentence is not relevant to this proceeding. 4 4. 5 See 14-17. The last sentence is not relevant to this proceeding. 6 18. 7-8 Not relevant. 9-10 Not supported by the weight of the evidence. 11 Although the second sentence is correct, the weight of the evidence does not support this proposed finding of fact. 12-17 Although there are portions of Dr. Ostlund's and Dr. Matthews' testimony that was acceptable, the overall finding of facts which the Respondent's argue Dr. Ostlund's and Dr. Matthews' testimony proved are rejected in favor of Mr. Anderson's testimony. 18-20 Not supported by the weight of the evidence. Although generally true, Chevrolet's penetration in the Territory and AGSSA 6 is still below national averages. Although generally true, this proposed finding of fact does not prove the ultimate facts it is suggested it proves. Not supported by the weight of the evidence. The first sentence is accepted. The last sentence is not supported by the weight of the evidence. 25 38. 26 6-7. 27 Hereby accepted. 28-29 Not relevant to this proceeding. 30 See 38. The last two sentences are not relevant. 31-33 Although generally true, not relevant to this proceeding. 34-35 Not supported by the weight of the evidence. 36-38 Not supported by the weight of the evidence. Not relevant. Not relevant or supported by the weight of the evidence. 41-42 Not supported by the weight of the evidence. 43-44 Although generally true, the conclusion reached by the Respondents is not supported by the weight of the evidence. 45-48 Not supported by the weight of the evidence. 49--50 Although partially true, the conclusion reached by the Respondents is not supported by the weight of the evidence. 51 Although GM did make such an argument, it was not a "fallback position." Nor was the argument "unavailing." 52-53 Not supported by the weight of the evidence. See 21. 54 Not relevant or not supported by the weight of the evidence. 55-59 See 21. Not supported by the weight of the evidence. Summary of GM position or not supported by the weight of the evidence. Does not prove the position advanced by the Respondents based upon the weight of the evidence. 62-68 Although partially true, the conclusions reached by the Respondents are not supported by the weight of the evidence. 69 Hereby accepted. 70-71 Although partially true, the conclusions reached by the Respondents are not supported by the weight of the evidence. 72-73 Not supported by the weight of the evidence. 74-78 Although partially true, the conclusions reached by the Respondents are not supported by the weight of the evidence. 79 Not supported by the weight of the evidence. 80-89 The conclusions reached by the Respondents based upon regression analysis were not supported by the weight of the evidence. 90-101 Although these proposed findings of fact may be generally true, the issue in this case is not whether there is a better way for GM to achieve greater representation through the existing dealers. These proposed findings of fact are not relevant to the issue in this proceeding. 102 Not supported by the weight of the evidence. 103-113 Not supported by the weight of the evidence. Although parts of these findings of fact were proved, the conclusion that the Respondents' argue should be reached ignores the reality of the evidence presented. 114-116 Although partially true, the conclusions reached by the Respondents are not supported by the weight of the evidence. COPIES FURNISHED: Charles J. Brantley, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Room B-439, Neil Kirkman Building Tallahassee, Florida 32399-0500 William Kelley, Esquire David Brown, Esquire 55 East Monroe Street Suite 4620 Chicago, Illinois 60603 Dean Bunch, Esquire 101 North Monroe Street Suite 900 Tallahassee, Florida 32301 Edward W. Risko, Esquire Office of General Counsel General Motors Corporation New Center One Building 3031 West Grand Boulevard Detroit, Michigan 48232 Stephen J. Calvacca, Esquire Vasilis C. Katsafans, Esquire Post Office Box 1873 Orlando, Florida 32802 Louis H. Anders, Jr., Esquire D. Frank Davis, Esquire Joseph W. Letzer, Esquire Robert H. Rutherford, Esquire Burr & Forman 3000 Southtrust Tower Birmingham, Alabama 35203 Michael J. Alderman, Esquire Office of General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500 Dealer License Section Room A310 Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500
The Issue Whether Volkswagen of America, Inc., should be permitted to establish an additional franchised dealership in Broward County, Florida, as more specifically described in the written notice it provided the Department of Highway Safety and Motor Vehicles advising of its intention to establish such a dealership.
Findings Of Fact Based upon the evidence adduced at hearing and the record as a whole, the following findings of fact are made: VWoA is a Florida-licensed importer and distributor of Volkswagen (VW) vehicles. It is a wholly-owned subsidiary of Volkswagen AG (VAG). VAG, which is headquartered in Germany, manufactures VW- brand motor vehicles. On a worldwide basis, it produces more vehicles than any other manufacturer except Ford Motor Company and General Motors Corporation. VWoA distributes to its franchised dealerships in the United States and Canada VW vehicles manufactured by VAG. VWoA establishes annual planning volumes or sales objectives for each of its franchised dealerships (based upon the dealership's past sales performance and other pertinent factors). For the first quarter of each year, VWoA's allocation of vehicles to the dealership is based upon the established planning volume for that dealership. In determining the number of vehicles to allocate to a dealership during the remainder of the year, VWoA takes into consideration the dealership's to-date sales performance for the year in relation to VWoA's expectations (as reflected by the dealership's planning volume previously established for that year). VWoA's franchised dealerships (VW dealerships) in the United States are assigned to one of five regions, each headed by a VWoA regional team leader. VW dealerships in Florida are assigned to the Southeast Region. James Wolter has been the regional team leader for VWoA's Southeast Region since January 1, 1999. Each region, including the Southeast Region, is divided into districts, each headed by a VWoA area executive. The area (defined in terms of zip codes) around each dealership in a district in which the dealership is deemed to have a geographic advantage over other VW dealerships because of the dealership's proximity (in terms of distance by air) to consumers living in that area is referred to by VWoA as the dealership's Primary Area of Influence or PAI. Three digit numbers are used to designate each dealership's PAI. VW dealerships in southeast Florida, from Indian River County (to the north) to Dade County (to the south), are assigned to District 22. Charles Westly has been the area executive of District 22 since January 1, 1999. At present, there are 11 existing VW dealerships located in District 22: Vista Volkswagen, whose PAI is 012; Esserman International, whose PAI is 029; Vero Beach Motorsports, whose PAI is 031; South Motors, whose PAI is 041; Gunther Volkswagen, whose PAI is 073; Stuart Volkswagen, whose PAI is 087; Esserman Volkswagen, whose PAI is 095; Deel Volkswagen, whose PAI is 223; Borton Volkswagen, whose PAI is 237; Palm Beach Volkswagen, whose PAI is 241; and Schumacher Volkswagen, whose PAI is 242. Nine of these 11 dealerships are located in Dade, Broward, or Palm Beach Counties (which, collectively, are also known as the "Miami Metro"). The dealerships located in Dade County are Esserman International, South Motors, Esserman Volkswagen, and Deel Volkswagen. The dealerships located in Palm Beach County are Borton Volkswagen, Palm Beach Volkswagen, and Schumacher Volkswagen. Borton Volkswagen, which is operated by Borton, is located at 2201 North Federal Highway in Delray Beach in southeast Palm Beach County. Palm Beach Volkswagen and Schumacher Volkswagen are located to the north of Borton Volkswagen. The dealerships located in Broward County are Vista Volkswagen and Gunther Volkswagen. Although Broward County presently has fewer VW dealerships than either of the other two counties which comprise the Miami Metro, of the three Miami Metro counties, Broward County is (based on 1998 registration data) the largest market in terms of the sale of new automobiles (of all makes). Vista Volkswagen, which is operated by Vista (an entity owned by Charles Dascal, Larry Hoffman, and Richard Buttafuoco, who also have an ownership interest in the entity that operates South Motors) is located 17.2 miles south of Borton Volkswagen at 700 North Federal Highway in Pompano Beach in northeast Broward County. Vista also operates (out of separate facilities and using a separate sales and service staff) a BMW dealership at this location. Gunther Volkswagen is located 11.4 miles to the southwest of Vista Volkswagen at 1660 South State Road 7 (441) in the Fort Lauderdale/Plantation area. It is operated by Gunther Motor Company of Plantation, Inc. (Gunther Plantation), which prior to July 15, 1999, was known as Gunther Motor Company, and, which prior to 1991, was known as Gunther Volkswagen, Inc. Gunther Plantation also operates (out of separate facilities and using separate sales and service staff) Kia and Mazda dealerships on the 15-acre tract on which Gunther Volkswagen is located. Joseph F. Gunther, Jr. (Mr. Gunther) is the President of Gunther Plantation and its majority (51%) shareholder. The remaining 49% of the shares of the corporation are owned by Mr. Gunther's three sons, Joseph F. Gunther III (16%), John Casey Gunther (Casey Gunther) (16%), and Michael Gunther (17%). The elder Mr. Gunther has had an ownership interest in Gunther Plantation and has been actively involved in the operations of Gunther Volkswagen since 1970. In 1970, when Gunther Volkswagen opened (as the third VW dealership in Broward County), VWoA had annual sales in the United States of 569,292 units, which were made through a dealer network of 1,160 dealerships. 6/ Thereafter, as Japanese imports became increasingly popular, annual sales of new VWs (VW sales) in the United States declined. There was also a decline in the number of VW dealerships in the United States starting in 1973. (The number of VW dealerships in the United States peaked at 1,203 in 1972.) In 1993, VW sales in the United States were 49,533 units, fewer than had been made in any year since 1955. By that year, the nationwide VW dealership network was "pretty fragmented." It consisted of 639 dealerships (564 less than had been in operation in 1972), not all of which were at the "right" locations. In 1993, Dr. Ferdinand Piech (an engineer by profession) became the Chief Executive Officer of VAG. Under his leadership, VAG took measures that significantly improved the quality of the product it manufactured. At the same time, VWoA reorganized its management structure and began the task of rebuilding the VW dealership network in the United States by closing underperforming dealerships, relocating dealerships to better locations, and selectively adding new dealerships in markets where it was either not represented or not adequately represented. In the years subsequent to 1993, VW sales in the United States have rebounded significantly. In 1994, 1995, 1996, 1997, and 1998, VW sales in the United States were 97,043, 115,114, 135,907, 137,885, and 219,679 units, respectively. While VW sales in the United States have increased over this period of time, the number of United States VW dealerships has declined each year. At the end of 1998, there were 600 VW dealerships in the United States, 39 less than in 1993 and 603 less than in 1972. VWoA anticipates that VW sales in the United States will continue to rise. It has a sales objective of 306,000 units for 1999 and 348,000 units for 2000. There has also been, subsequent to 1993, a substantial increase in VW sales by dealerships in what is now District 22 (the District 22 area) and by dealerships in the Miami Metro. In 1993, 1994, 1995, 1996, 1997, and 1998, VW sales by dealerships in the District 22 area totaled 1,226, 2,448, 3,041, 3,913, 4,264, and 7,757 units, respectively, and VW sales by dealerships in the Miami Metro totaled 1,187, 2,351, 2,941, 3,816, 4,236, and 7,648 units, respectively. In the first six months of 1999, VW sales by dealerships in the District 22 area totaled 5,739 units, and VW sales by dealerships in the Miami Metro totaled 5,509 units. In 1998, Gunther Volkswagen sold more VWs than any other dealership in the United States. In terms of the total number of VW sales made during 1998, the other VW dealerships in the Miami Metro ranked 44th (South Motors), 56th (Esserman Volkswagen), 57th (Deel Volkswagen), 61st (Vista Volkswagen), 88th (Palm Beach Volkswagen), 100th (Schumacher Volkswagen), 105th (Borton Volkswagen), and 319th (Esserman International 7/) out of the 600 VW dealerships in the United States. Out of the 170 dealerships in VWoA's Southeast Region, the Miami Metro dealerships' sales rankings for 1998 were as follows: Gunther Volkswagen: 1st; South Motors: 10th; Esserman Volkswagen: 13th; Deel Volkswagen: 14th; Vista Volkswagen: 16th; Schumacher Volkswagen: 22nd; Borton Volkswagen: 24th; and Esserman International: 84th. For the first six months of 1999, three of the Miami Metro dealerships were among the top 50 VW dealerships in the United States in total VW sales. Gunther Volkswagen was number one, with 1,829 VW sales; South Motors was number 17, with 708 VW sales; and Vista Volkswagen was number 44, with 548 VW sales. The increases in VW sales in the District 22 area and the Miami Metro have occurred despite supply shortages of certain popular models with features desired by consumers that have resulted in dealerships creating "waiting lists" for these vehicles (a nationwide problem VWoA and VAG are taking measures to rectify 8/); the absence of a VW dealership in Martin County in 1997 and 1998; and having one less dealership in Broward County since the closing of Arnie Smith Volkswagen in or about July of 1995. Arnie Smith Volkswagen was located in an older facility in a deteriorating area on Sunrise Boulevard in Fort Lauderdale, approximately halfway between Gunther Volkswagen and Vista Volkswagen. In addition to being in a bad location, it suffered from management problems and high employee turnover. As a result, its VW sales were declining. (From January of 1995 through July of 1995, its VW sales were 63 units, 43 less than the number of VW sales it had made during the first seven months of the previous year.) Arnie Smith Volkswagen was bought out by VWoA and Gunther Plantation (which at the time was known as Gunther Motor Company). Vista was asked to participate in the buy-out, but declined to do so. The closing of Arnie Smith Volkswagen left VWoA with two dealerships in Broward County, neither of which was located in the rapidly growing western portion of the county. At the time of the closing of Arnie Smith Volkswagen, VWoA believed that the most prudent course of action was to keep the Broward County VW dealership count at two to allow the two remaining dealerships to "get some meat on their bones." These two dealerships, Gunther Volkswagen and Vista Volkswagen, did enjoy an increase in VW sales after the closing of Arnie Smith Volkswagen. In the first half of 1995, when Arnie Smith Volkswagen was still in business, Gunther Volkswagen and Vista Volkswagen had 571 and 121 VW sales, respectively. In the second half of 1995, when Arnie Smith Volkswagen was no longer selling VWs, Gunther Volkswagen and Vista Volkswagen had 664 and 160 VW sales, respectively. Gunther Volkswagen's VW sales in 1996, 1997, and 1998 were 1,657, 1,657, and 2,565 units, respectively. Vista Volkswagen's VW sales in 1996, 1997, and 1998 were 370, 515, and 722 units, respectively. By late 1996 to early 1997, VWoA determined that the time was right to establish another VW dealership in Broward County and bring its dealership count in the county to three (which is the same number of VW dealerships that VWoA had in the county from 1970 until Arnie Smith Volkswagen went out of business in or about July of 1995). After reviewing vehicle registration and sales data, which reflected that its principal competitors with dealerships in the Coconut Creek area of northwest Broward County were outperforming VWoA in that area, VWoA made the further determination that this third Broward County VW dealership should be located in the Coconut Creek area (which, in 1970, consisted of either swamp or farm land and today is one of the fastest growing areas in the nation, with a population having income characteristics that make it a "great spot to be selling . . . new vehicles"). There has been no showing that VWoA, at any time, attempted to coerce any of the existing VW dealers to consent to the establishment of such an additional VW dealership. After determining to establish an additional VW dealership in the Coconut Creek area, VWoA began looking for an operator for this additional dealership, and it also retained the services of a real estate company, the Core Company (which is now known as Travel Pro), to search for a suitable site in the Coconut Creek area for the dealership. Vista and Gunther Plantation were among the candidates VWoA considered to operate the dealership. VWoA had several conversations about the Coconut Creek market with Vista (which recognized that the Coconut Creek area was a "boom" area with considerable market potential). At no time during these conversations did Vista indicate that it was willing to operate full-scale VW dealerships in both Pompano Beach and the Coconut Creek area. After reviewing the qualifications and credentials of the candidates under consideration, VWoA, exercising reasonable and sound business judgment, determined that the principals of Gunther Plantation (which at the time was third in the nation in the number of VW sales) were best suited to operate the additional VW dealership in the Coconut Creek area. It then entered into negotiations with them. Thereafter, some time before March 18, 1998, Vista approached VWoA and proposed that it be allowed to either relocate its Pompano Beach VW dealership to the Coconut Creek area or operate a full-scale VW dealership in the Coconut Creek area, while maintaining a satellite VW dealership with limited sales, service, and parts facilities (as opposed to a full-scale VW dealership) in Pompano Beach. VWoA rejected both alternatives inasmuch as it had already selected an operator for the Coconut Creek area VW dealership. It does not appear that, in denying Vista the opportunity to operate a VW dealership in the Coconut Creek area, VWoA acted unreasonably; nor is there evidence that VWoA, in any other respect, acted in a manner that unreasonably denied Vista the opportunity to grow and expand its VW dealership. Notwithstanding VWoA's rejection of Vista's proposal, Vista still intends to proceed with plans to relocate its Pompano Beach BMW dealership to the Coconut Creek area, a move that would result in an increase in Vista's operating expenses. In middle to late 1997, VWoA acquired property in the Coconut Creek area for a VW dealership. The property is located on the northeast corner of State Road 7 (441) and Collum Road (Coconut Creek Site), which is in Vista Volkswagen's PAI. The Coconut Creek Site is in an area where existing dealerships representing other major brands (including brands against which the VW brand competes) are clustered. (Such clustering promotes inter-brand competition and makes it more convenient for consumers to shop for automobiles.) There are six such "automobile clusters" in Broward County and southern Palm Beach County, one each in the Delray Beach, the Pompano Beach, the Coconut Creek, the Plantation, the Ft. Lauderdale, and the Hollywood/Davie/Pembroke Pines areas. In 1997, these clusters generated the following new vehicle sales: Delray Beach area cluster: 22,270 units; Pompano Beach area cluster: 28,281 units; Coconut Creek area cluster: 29,602 units; Plantation area cluster: 24,225 units; Ft. Lauderdale area cluster: 16,968 units; and Hollywood/Davie/Pembroke Pines area cluster: 31,449 units. VWoA is presently represented in only three of these six "automobile clusters": the Plantation area cluster (where Gunther Volkswagen is located); the Pompano Beach area cluster (where Vista Volkswagen is located); and the Delray Beach area cluster (where Borton Volkswagen is located). The three existing VW dealerships closest to the Coconut Creek Site are Vista Volkswagen, which is 6.9 miles away, Gunther Volkswagen, which is 12.7 miles away, and Borton Volkswagen, which is 16.3 miles away. (There are existing dealerships in the Coconut Creek area representing brands other than VW (Chevrolet, Dodge, Ford, Lincoln Mercury, Mazda, Mitsubishi, and Toyota) that are 6.9 miles or less from their closest intrabrand competitor.) The driving time between the Coconut Creek Site and Gunther Volkswagen is anywhere between 26 and 40 to 45 minutes (depending on traffic). It takes from approximately 17 minutes to 30 to 35 minutes (depending on traffic) to drive from the Coconut Creek Site east to Vista Volkswagen. East-west movement in Broward County has become increasingly difficult over the years as the western portion of the county has become more densely populated. As a result, consumers in Broward County tend to move in a north-south, rather than an east-west, direction to make their vehicle purchases. On March 16, 1998, after a period of negotiation and the exchange of draft agreements, VWoA sent the following letter of understanding to Mr. Gunther and Casey Gunther: 9/ This letter will summarize our understanding of the actions to which you and Volkswagen of America, Inc. ("VWoA") are prepared to commit to establish a new, exclusive Volkswagen dealership for the Gunther organization ("Gunther") in Coconut Creek, FL. The following bullet points are a recap of our meeting on January 30, 1998, and include the following. In light of what we believe to be the potential growth in this market, it is the intent of VWoA to designate Coconut Creek as an open point and to construct a new dealership facility on the property owned by VWoA in Coconut Creek. While the building architecture will be based on the new Volkswagen Corporate Design guidelines, VWoA agrees to seek your input into the size of the building and land requirements needed to operate the dealership. The actual facility construction costs are estimated to be approximately $100 per square foot, but this may vary depending on local requirements and conditions. VWoA will defend its right to designate Coconut Creek as an open point in the event that another dealer in the market protests VWoA's action. Once the facility is completed, VWoA and Gunther will enter into a lease agreement for the land and building. The annual lease will be negotiated based on the cost to purchase the land used by the dealership, the final facility construction costs and local market value. Prior to entering into a new lease for the Coconut Creek dealership, Gunther will have purchased or entered into an intent to purchase from VWoA the existing Gunther Volkswagen, Inc. 10/ building and real property located in Ft. Lauderdale, FL. 11/ It is understood by both parties that it will take time to establish service and parts business at the new point in Coconut Creek, which business will be an integral part of the Volkswagen operations at that facility. The parties further understand that to establish that business will require sufficient New and Used Vehicle sales volumes to generate a gross profit reasonably sufficient to support the facility lease. Because this will be a new point, and because at this time there is not an established sales rate for the Coconut Creek market, VWoA agrees to establish annual new vehicle planning volumes in the following manner: At a minimum, an annual new vehicle planning volume will equal one percent (1%) of the national retail sales objective for the respective year. By way of example only, if the national new vehicle retail objective for a given year is 200,000 vehicles, the planning volume for Coconut Creek would be 2,000 vehicles. 12/ This method of calculating planning volumes will remain in effect for the first three years of operation of the new Coconut Creek point. After the third year, the dealership's new vehicle planning volume will be calculated in the same manner then used by VWoA to establish the planning volume for every Volkswagen dealer. After the first year of operation, the dealership's annual planning volume may be set at a level higher than the calculated 1% of national retail objective if supported by actual retail sales rates at the dealership. All requirements as delineated in the then current Volkswagen Dealer Agreement, Standard Provisions and Operating Standards shall apply to your appointment as a Volkswagen dealer in Coconut Creek. In the event that Gunther elects not to pursue this opportunity to operate an exclusive Volkswagen dealership in Coconut Creek, then Gunther (a) acknowledges VWoA's intent to designate Coconut Creek as an open point and (b) agrees to waive its right to protest the appointment of another dealer operator in Coconut Creek. As previously mentioned, this letter is intended to confirm issues we discussed in January. If you are in agreement with the above, please sign the attached copy of this letter and return it to me. Once we receive the executed copy, we will file the necessary documents with the city and state to obtain their approvals to move forward with our plans. This is an exciting opportunity for both Volkswagen and the Gunther organization, 13/ and we look forward to working closely with you as we get this project underway. Please feel free to give me a call if you have any questions. Mr. Gunther and Casey Gunther both signed this letter on March 25, 1998, indicating that they "concur[red]" with the representations made in the letter. VWoA customarily makes special arrangements concerning allocation of vehicles, like those set forth in the letter of understanding signed by Mr. Gunther and Casey Gunther, with dealers operating newly created VW dealerships to "get the dealership[s] going." This is a reasonable business practice. Following the execution of this letter of understanding, Debra L. Kingsbury, Esquire, VWoA's attorney, sent the following letter, dated April 2, 1998, to Ronald Reynolds, the Administrator of the Department's Dealer License Section: Dear Mr. Reynolds: Pursuant to the requirements of Florida Statutes, Section 320.642, notice is hereby given that Volkswagen of America, Inc. ("VWoA") intends to establish Gunther Motor Company as a dealership for the sale of Volkswagen vehicles at Block 89, Lots 22 and 23, Coconut Creek, Broward County, Florida 33073. This vacant property is on the northeast corner of State Rd. 441 and Collum Rd. VWoA intends to engage in business with Gunther as a dealership on or after April 1, 1999, assuming that no protest is filed. The dealer(s) of the same line-make vehicles in the county where the new dealership will be located and all counties adjoining that county are as follows: County Palm Beach County Borton Volkswagen 2201 N. Federal Highway Delray Beach, FL 33483 Palm Beach Volkswagen 6870 Okeechobee Blvd. West Palm Beach, FL 33415 Schumacher Automotive 3720 Northlake Blvd. Lake Park, FL 33403 Broward County Vista Volkswagen 700 N. Federal Highway Pompano, Beach, FL 33062 Gunther Volkswagen 1660 S. State Road 7 Ft. Lauderdale, FL 33317 Collier County A+ Car World 601 Airport Pulling Rd. Naples, FL 33942 Dade County Deel Volkswagen 3650 Bird Rd. Miami, FL 33133 South Motors of Dade County 16125 South Dixie Highway Miami, FL 33157 Esserman Volkswagen 16825 NW 57th Ave. Miami, FL 33055 The names and address of the dealer-operator and principal investors of Gunther Motor Company are: Dealer-Operator Joseph F. Gunther, Jr. Principal Investors Joseph F. Gunther, Jr. 1660 S. State Road 7 Ft. Lauderdale, FL 33317 If you have questions or require additional information, please do not hesitate to let me know. To the extent that Ms. Kingsbury's letter reflected that Joseph F. Gunther, Jr., would be the "dealer-operator" of the dealership VWoA proposed to establish in Coconut Creek, the letter was inconsistent with the representations made in the March 16, 1998, letter of understanding VWoA had sent to Mr. Gunther and Casey Gunther that the "dealer-operator" of this proposed dealership would be the entire "Gunther organization" (that is, the corporate entity which was owned by Mr. Gunther and his three sons, each of whom had an ownership interest in excess of 10%). 14/ By letter dated April 22, 1998, Mr. Reynolds notified Ms. Kingsbury that a "notice of publication to establish a franchise for Gunther Motor Company" was "published in the Florida Administrative Weekly on April 17, 1998." A copy of the "notice of publication" was enclosed, and it read as follows: Pursuant to Section 320.642, Florida Statutes, Volkswagen of America, Inc. ("VWoA"), intends to allow the establishment of Gunther Motor Company, as a dealership for the sale of Volkswagen vehicles, at Block 89, Lots 22 and 23. This vacant property is on the northeast corner of State Road 441 and Collum Road, Coconut Creek (Broward County), Florida 33073, on or after April 1, 1999. The name and address of the dealer operator(s) and principal investor(s) of Gunther Motor Company is Joseph F. Gunther, Jr., 1660 S. State Road 7, Fort Lauderdale, Florida 33317. The notice indicates an intent to establish the new point location in a county of more than 300,000 population, according to the latest population estimates of the University of Florida, Bureau of Economic and Business Research. Certain dealerships of the same line-make may have standing, pursuant to Section 320.642, Florida Statutes, to file a petition or complaint protesting the application. Written petitions or complaints must be received by the Department of Highway Safety and Motor Vehicles within 30 days of the date of the publication of this notice and must be submitted to: Mr. Ronald D. Reynolds, Administrator, Dealer License Section, Department of Highway Safety and Motor Vehicles, Room A-312, Neil Kirkman Building, 2900 Apalachee Parkway, Tallahassee, Florida 32399-0635. A copy of such petition or complaint must also be sent by U.S. Mail to: Debra L. Kingsbury, Attorney, Volkswagen of America, Inc., 3800 Hamlin Road, Auburn Hills, MI 48326. If no petitions or complaints are received within 30 days of the date of publication, a final order will be issued by the Department of Highway Safety and Motor Vehicles approving the establishment of the dealership, subject to the applicant's compliance with the provisions of Chapter 320, Florida Statutes. As noted above, in 1998, including the time when Ms. Kingsbury wrote to Mr. Reynolds and when the April 17, 1998, edition of the Florida Administrative Weekly was published, the corporate entity that is now known as Gunther Motor Company of Plantation, Inc., was known as Gunther Motor Company. It was not until July 15, 1999, that its name was changed to its present name. On that same day, July 15, 1999, a new Florida corporation, named Gunther Motor Company and having Mr. Gunther as its sole shareholder, was formed. If an additional VW dealership is established on the Coconut Creek Site (Proposed Dealership), it would be assigned a PAI consisting of zip codes that are now included in the PAIs of existing VW dealerships which are located further away from the centroids of these zip codes than is the Coconut Creek Site. (The Proposed Dealership's PAI will be referred to herein as the "Coconut Creek PAI.") In 1998, 782 new retail VWs were registered in what would have been the Coconut Creek PAI had the Proposed Dealership been in operation that year. (Only Gunther Volkswagen's PAI (with 1642) and Deel Volkswagen's PAI (with 942) had more than 782 new retail VW registrations that year.) Of these 782 vehicles, 327 were sold by Gunther Volkswagen (constituting approximately 13% of its VW sales), 219 were sold by Vista Volkswagen (constituting approximately 30% of its VW sales), and 113 were sold by Borton Volkswagen (constituting approximately 20% of its VW sales). VWoA takes the position in this proceeding that it is not adequately represented in the "community or territory" in which the Proposed Dealership is located. To evaluate the merits of this claim, it is first necessary to identify this "community or territory." VWoA and Vista agree, and the undersigned finds, that the relevant "community or territory" in the instant case (Comm/Terr) consists of the PAIs now assigned to Gunther Volkswagen and Vista Volkswagen (the two existing VW dealerships in Broward County) and to Borton Volkswagen (which is the southernmost VW dealership in Palm Beach County). In 1998, there was a total of 3,371 new retail VWs registered in the Comm/Terr. While there is no dispute regarding the identity of the relevant "community or territory" in the instant case, VWoA and Vista are not in agreement as to the standard that should be used to measure the performance of VWoA's dealership network in the Comm/Terr. Dealership network performance is generally assessed based upon the "market share" or "market penetration" (which are synonymous terms) achieved by the brand in the market in question during the applicable time period, compared to the "market share" or "market penetration" the brand was "reasonably expected" to achieve. ("Market share" or "market penetration" is expressed as a percentage, and it represents a brand's share of the total number of new vehicle registrations in the market.) A "reasonably expected" "market share" or "market penetration" for the VW brand in the Comm/Terr may be determined by: (a) selecting an appropriate comparison market area separate from the Comm/Terr (but preferably in the same local area) where the brand appears not to be inadequately represented; (b) ascertaining the brand’s "market share" or "market penetration" in that comparison market area; and (c) utilizing a process called "segmentation analysis" to account for any differences in consumer preferences and demographic characteristics that may exist between the comparison market area and the Comm/Terr. VWoA suggests, and the undersigned agrees, that it is reasonable and appropriate to assess VWoA's performance in the Comm/Terr by comparing it with VWoA's performance in the PAIs for Schumacher Volkswagen and Palm Beach Volkswagen (Palm Beach PAIs), as segment adjusted (Palm Beach Standard). 15/ The undersigned rejects Vista's contention that, to properly evaluate VWoA's performance in the Comm/Terr, VWoA's "market share" or "market penetration" in the Comm/Terr should be compared, not with the Palm Beach Standard, but "with [VWoA's] average penetration in the U.S. major metros, the Southeast major metros, and the Florida major metros" (Vista's Approach). Vista's Approach does not take into account, or make adjustments for, any consumer preferences, such as import bias, 16/ and demographic characteristics that may distinguish the Comm/Terr from the "average" "metro" market in the United States, in the southeastern United States, and in Florida. Moreover, Vista's Approach fails to take into consideration that VWoA has an incomplete national dealership network and is inadequately represented in various markets included in "the U.S. major metros, the Southeast major metros, and the Florida major metros." As a result, Vista's Approach yields a standard that, unlike the Palm Beach Standard, is too conservative to reflect a "reasonably expected" "market share" or "market penetration" for the Comm/Terr. Employing the Palm Beach Standard (as segment adjusted), the "reasonably expected" "market shares" or "market penetrations" in the Comm/Terr and the Coconut Creek PAI for the VW brand for the years 1995, 1996, 1997, and 1998 were as follows: Comm/Terr: 1995- 1.9%, 1996- 3.5%, 1997- 3.5%, and 1998- 6.2%; and Coconut Creek PAI: 1995- 1.8%, 1996- 3.5%, 1997- 3.4%, and 1998- 6.1%. The actual "market shares" or "market penetrations" in the Comm/Terr and the Coconut Creek PAI for the VW brand for these years were as follows: Comm/Terr: 1995- 2.2% (which was more than "reasonably expected"), 1996- 3.8% (which was more than "reasonably expected"), 1997-3.2% (which was less than "reasonably expected"), and 1998- 5.4% (which was less than "reasonably expected," but more than VWoA's "average penetration in the U.S. major metros [4.6%], the Southeast major metros [4.4%], and the Florida major metros [4.4%]"); and Coconut Creek PAI: 1995- 2.0% (which was more than "reasonably expected"), 1996- 3.2% (which was less than "reasonably expected"), 1997- 2.8% (which was less than "reasonably expected"), and 1998- 4.6% (which was less than "reasonably expected," but the same as "the average penetration in the U.S. major market metros" and more than the "average penetration in the . . . Southeast major metros, and the Florida major metros"). Accordingly, for every full year after 1996, VWoA's "market share" or "market penetration" in the Comm/Terr has been less than "reasonably expected," and for every full year after 1995, VWoA's "market share" or "market penetration" in the Coconut Creek PAI has been less than "reasonably expected." Comparing VWoA's actual versus its "reasonably expected" "market share" or "market penetration" in the Comm/Terr and the Coconut Creek PAI reveals the "retail registration effectiveness" of its dealership network in those markets. The "retail registration effectiveness" of VWoA's dealership network in the Comm/Terr in 1995, 1996, 1997, and 1998 was 119%, 108.1%, 93%, and 87.1%, respectively. The "retail registration effectiveness" of VWoA's dealership network in the Coconut Creek PAI during those years was 111.6%, 93.4%, 84%, and 76.3%, respectively. Accordingly, for every full year after 1995, the last year that VWoA was represented by four dealerships in the Comm/Terr, the "retail registration effectiveness" of VWoA's dealership network in the Comm/Terr and the Coconut Creek PAI has declined. During this period of decline in VWoA's "retail registration effectiveness" in the Comm/Terr and the Coconut Creek PAI, demographic factors in these markets, insofar as retail vehicle sales are concerned, have been favorable. In fact, such sales increased in absolute terms in the Comm/Terr in 1996, 1997, and 1998 (from 1,367 in 1995, to 1,715 in 1996, to 2,341 in 1997, to 3,902 in 1998), but not enough in 1997 and 1998 to meet reasonable expectations with respect to "market share" or "market penetration" (which measures a brand's performance relative to other brands). The likely cause of VWoA's recent "retail registration [in]effectiveness" in the Comm/Terr is the absence of an adequate number of VW dealerships located within its boundaries (which negatively impacts consumer convenience). There are 132 franchised dealerships (of all brands) in the Comm/Terr. Only three (or 2.3%) of these dealerships are VW dealerships. (The Comm/Terr has had only three VW dealerships since the closing of Arnie Smith Volkswagen in or about July of 1995.) In contrast, in the Palm Beach PAIs, 4% of the franchised dealerships are VW dealerships It does not appear that the recent "retail registration [in]effectiveness" in the Comm/Terr has been caused by the supply shortages of VW product (that have led to the creation of "waiting lists" for certain types of VW vehicles) inasmuch as there is no indication that such supply shortages existed only in the Comm/Terr and were not present elsewhere (including, most significantly, in the Palm Beach PAIs). Having identified the cause of VWoA's recent "retail registration [in]effectiveness" in the Comm/Terr as an insufficient number of VW dealerships, the solution to this problem is obvious: the addition of at least another VW dealership in the Comm/Terr. The Coconut Creek area cluster (where the Coconut Creek Site is located) is an appropriate location for this additional dealership. Relocating one of the existing VW dealerships in the Comm/Terr to the Coconut Creek area would not solve the "retail registration effectiveness" problem that VWoA is experiencing in the Comm/Terr inasmuch it would still leave VWoA with an inadequate share of the franchised dealerships in the Comm/Terr. The establishment of an additional VW dealership on the Coconut Creek site would benefit not only VWoA (by increasing its VW sales and enabling it to attain greater "market share" or "market penetration" in the Comm/Terr than it would with just three dealerships in the Comm/Terr). Consumers, particularly those in the Coconut Creek PAI (Coconut Creek consumers), would benefit as well. At present, with three VW dealerships in the Comm/Terr (none of which is located in the Coconut Creek area) Coconut Creek consumers, on the average, have to travel a further distance (8.6 miles) to buy new VWs (or to have their VWs serviced or repaired) than they do to purchase (or have serviced or repaired) vehicles of any of the 27 major brands that are represented in the Coconut Creek PAI. To purchase (or have serviced or repaired) vehicles manufactured by VAG's and VWoA's principal import competitors, Honda, Mitsubishi, Toyota, Mazda, and Nissan, these consumers have to travel, on the average, 4.1, 4.4, 4.4, 4.6, and 4.8 miles, respectively. If the Proposed Dealership is established on the Coconut Creek Site, Coconut Creek consumers would, on the average, be 4.6 miles away from a VW dealership. The establishment of the Proposed Dealership would not only reduce the distance Coconut Creek consumers, on the average, have to travel to get to a VW dealership, it would also increase the number of service stalls available in the Coconut Creek PAI to service and repair VW vehicles. These additional service stalls are badly needed. For example, consumers wanting to have their vehicles serviced or repaired at Gunther Volkswagen (which has 17 service stalls, four more than the number of stalls Vista Volkswagen has that are completely devoted to VW service and repair 17/), must wait, on average, a minimum of two weeks from the time they make an appointment before the dealership is able to service or repair their vehicles. If there is not an increase in the number of service stalls in the area, as VW sales rise, Coconut Creek PAI VW owners seeking to have their vehicles serviced will face even greater delays and resulting inconvenience. Consumers would also benefit from the increase in interbrand competition and intrabrand competition (among VW dealerships) that would occur as a result of the establishment of an additional VW dealership on the Coconut Creek Site. 18/ The benefits VWoA and consumers would derive from the establishment of the Proposed Dealership would not come at the expense of the existing VW dealers in the Comm/Terr, if these existing dealerships were to respond competitively to a new intrabrand competitor in the market. It is reasonable to anticipate that these dealerships would respond in such a competitive manner and that, among other things, they would increase their marketing efforts in the Comm/Terr. Such increased marketing efforts, along with the addition of a fourth VW dealership in the Comm/Terr, would produce an increased awareness of the VW brand, which, given the significant untapped potential of the brand in the Comm/Terr, would enable each of the existing dealerships, including Vista Volkswagen, to increase its VW sales. Indeed, even if the positive impact (of an additional VW dealership in the Comm/Terr) on consumer demand for the VW brand were disregarded, the opportunity (in terms of VW sales) presently available in the Comm/Terr (that is, the opportunity that the existing VW dealerships have not taken advantage of and therefore have "lost," hereinafter referred to as "lost opportunity" would be sufficient to support a fourth VW dealership in the Comm/Terr and, at the same time, allow the three existing VW dealerships to increase their VW sales in the Comm/Terr inasmuch as this "lost opportunity" in the Comm/Terr is significantly greater than the number of VW sales that it is reasonable to expect the Proposed Dealership would make to Comm/Terr consumers. Vista has made a significant investment ($3,311,971.00 as of October 1998) to perform its obligations under its dealer agreement with VWoA (with which it is in substantial compliance). The establishment of the Proposed Dealership, however, would not cause Vista to be deprived of a fair return on its investment, nor would it have "a significant and unfair negative financial impact on Vista," as Vista claims in its Proposed Recommended Order. While it is true that the size of Vista Volkswagen's PAI would be reduced by the addition of a VW dealership on the Coconut Creek Site, having a smaller PAI 20/ would not have any adverse impact on Vista's VW business if Vista were to respond in an effective, competitive manner 21/ and aggressively take advantage of the opportunity that would be available in the Comm/Terr as a whole 22/ (which, as noted above, would be sufficient to support four dealerships), with its efforts being focused upon the geographic areas closest to its dealership. There is no reason to believe that Vista would not be able to respond in such a fashion and offset any loss of Coconut Creek consumer business that it might suffer as a result of the establishment of the Proposed Dealership with an increase in business from consumers residing in its newly configured PAI and in other areas outside of the Coconut Creek PAI. There is no evidence that VWoA has unreasonably denied Vista opportunities for growth within the Miami Metro market. The establishment of the Proposed Dealership appears to be warranted and justified based upon present and anticipated economic and marketing conditions in the Comm/Terr.
Recommendation Based on 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 approving the proposal/application of Volkswagen of America, Inc., to establish an additional dealership in the Coconut Creek area of Broward County. DONE AND ENTERED this 17th day of December, 1999, in Tallahassee, Leon County, Florida. STUART M. LERNER 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) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of December, 1999.
The Issue Whether Beacon Motors, Inc., is entitled to be established as an additional Chevrolet dealer in Miami, Dade County, Florida.
Findings Of Fact Petitioner, General Motors Corporation, Chevrolet Division, is a manufacturer of automobiles and trucks and is a "licensee" pursuant to Section 320.642, Florida Statutes. Petitioner, Beacon Motors, Inc., is a proposed Chevrolet dealer to be established at 12th Street and 89th Court Northwest, in Miami, Dade County, Florida. Respondents, Anthony Abraham Chevrolet, Co. (Abraham), Tropical Chevrolet, Inc. (Tropical), and Potamkin Chevrolet, Inc. (Potamkin), are existing Chevrolet dealers located in Dade County, Florida. Each has standing to protest the proposed new dealership. All other existing dealers in the community or territory who opposed the proposed dealership have withdrawn their contests. The area described in this record as the Sweetwater Community or Territory (Sweetwater Comm/Terr) is the appropriate geographical area to evaluate this case pursuant to Section 320.642, Florida Statutes. The Sweetwater Comm/Terr includes all of Dade County and part of the southern tip of Broward County, Florida. Typically, the area wherein a dealer maintains a competitive advantage over all other same line dealers is designated an "area of geographic sales and service advantage" (AGSSA). This advantage is presumed because the dealer is closer to consumers within the AGSSA than is any other same line dealer. In this case, Chevrolet is represented in eight of the nine AGSSAs which encompass the Sweetwater Comm/Terr. The proposed additional point would be located in AGSSA 15, currently un-represented by Chevrolet. AGSSAs 7 (Potamkin), 9 (Tropical), 11 (Abraham), 12 (Sun Chevrolet, Inc.), 15 (Proposed Point), and 16 (Grand Prize Chevrolet) comprise an area described as the Miami Multiple Dealer Area ("MDA"). The Miami MDA is the contractual Area of Primary Responsibility ("APR") for these dealers. The Miami MDA and AGSSA 15 are identifiable plots within the Sweetwater Comm/Terr. Chevrolet's share of industry registrations or its "market penetration" in Florida lagged behind Chevrolet's national market penetration for the period 1993 to 1995. In 1995, Chevrolet's national penetration was 16.43%, while its Florida penetration was only 12.18%. In 1995, Florida ranked 44th out of 50 states in Chevrolet market share. Vehicle preferences of Florida consumers for particular sizes and types ("product segments") accounted for only 1.39 percentage points of the 4.25 percentage-point shortfall between the Florida and national penetration rates in 1995. After adjusting for product segment preference, Florida's Chevrolet registration effectiveness compared to the expected average ranked 43rd out of 50. The shortfall between its Florida and national averages is due to deficiencies in Chevrolet's statewide dealer network. The principal deficiency with the dealer network, which would explain the shortfall between Chevrolet's penetration in Florida and its expected penetration, is dealer count, i.e., the number of Chevrolet dealers available to serve the public. Other possible deficiencies include dealer locations and operational performance. Chevrolet's share of competitive franchises in Florida is below national average. This factor correlates to Chevrolet's ability to achieve a reasonably expected market share. In roughly half of all states, Chevrolet's share of franchises equals or exceeds national average. Florida, on the other hand, ranks 46th of 50 states in Chevrolet franchises as a percentage of industry franchises. In this case, the national average (the sum of all adequate, inadequate, and non-represented markets) adjusted for local product segment preferences in the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15, provides a reasonable standard for measuring the performance of the Chevrolet dealer network in the three areas. Mr. Anderson's assessment in this regard has been deemed persuasive. Using national average adjusted for local product segment preferences produces an expected penetration (hereinafter "expected penetration" or "expected average") in 1995 of 14.07% for the Sweetwater Comm/Terr, 13.96% for the Miami MDA, and 14.31% for AGSSA 15. Actual Chevrolet penetration, however, was only 8.97% in the Sweetwater Comm/Terr, 7.86% in the Miami MDA, and 7.64% in AGSSA 15. The shortfall between expected and actual penetration described above demonstrates the level of the dealer network inadequacy in these areas. From 1993 to 1995, Chevrolet's registration effectiveness fell below expected average in the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15. The disparity in performance noted above is not due to a disproportionately high percentage of Hispanics. While the Sweetwater Comm/Terr has a significant Hispanic population, it cannot be concluded that a domestic manufacturer will not perform well in this market. Ford, a domestic competitor of Chevrolet, exceeded or very nearly met its expected penetration from 1993 to 1995 in AGSSA 15 and the Sweetwater Comm/Terr, notwithstanding their large Hispanic populations. Nationally, Chevrolet performs much better against Ford than it does in the Sweetwater Comm/Terr, AGSSA 15, or the Miami MDA. If Chevrolet performed as well as Ford in the Sweetwater Comm/Terr, Chevrolet would have registered 5,364 more vehicles in 1995. Chevrolet currently has 8 dealers in the Sweetwater Comm/Terr; Ford has 10. The applicant for the proposed point, Mr. de la Cruz, who is a Cuban-born Hispanic, acquired Sunshine Ford in Miami in 1993. Since 1993, Sunshine Ford has risen from bankruptcy to become a top Ford dealer in Miami, selling mostly to Hispanics. Mr. de la Cruz also owns Miami Honda. Sunshine Ford and another Ford dealer in Miami, Machado Ford, which is also Hispanic owned, outsell Miami Honda every month in essentially the same market area. Ford also outsells Honda in Hialeah which has large Hispanic population. Mr. de la Cruz, who has actual experience with this market, determined that Hispanic buying preferences are driven more by model of car than by whether the car is an import or a domestic. Potamkin sells most of its Chevrolets to Hispanics. Of the eight Ford dealers in Miami, including the top two in sales, five are Hispanic owned. Of the top three Honda dealers in Miami, two are Hispanic owned, and the third, which is partially Hispanic owned, is managed by an Hispanic. None of the existing Chevrolet dealers in the Sweetwater Comm/Terr is Hispanic. There is no evidence in the record that Hispanics as an ethnic group have an inherent bias in favor of imports against domestics, including Chevrolet. Dade County has been a growing market through 1995, and the demographics forecast that it will continue to grow through the year 2000. It is projected that the population in AGSSA 15 will grow at a rate of over 6% with households growth over 12% from 1995 to 2000. Household growth in the Sweetwater Comm/Terr is to the west along the north/south corridor of the community. Chevrolet's current dealer network in Dade County is located mostly to the east along the ocean side of the market. Abraham and Potamkin are located in areas of high household and population density. Typically, such areas support sales and service opportunity. The population and household density south of the proposed location is also high. Since 1980, the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15 have experienced dramatic growth in total population, driver-age population, and households. Increases in households and population may indicate an increase in car-buying potential. During the same time frame, however, Chevrolet's dealer count in the Sweetwater Comm/Terr has decreased from ten to eight. A comparison of Chevrolet's dealer count and population in Dade County as a percentage of national averages of those factors suggests that Chevrolet's dealer count for this area has lagged behind its population growth. Considering only population, Chevrolet would need two more dealers in Dade County. AGSSA 15 and the Sweetwater Comm/Terr have a good distribution of income levels with very few pockets of extremely low or extremely high income. Because a majority of the population in the Sweetwater Comm/Terr and AGSSA 15 have incomes in the range of the median income of the average Chevrolet buyer, lack of income does not contribute to Chevrolet's poor performance in these areas. Employment trends in Dade County from 1980 through 1995 also reflect growing opportunity to make new car sales. This growing opportunity, coupled with Chevrolet's continued decline in performance, suggest that it is the dealer network causing a problem, and not the local economy or economic variables associated with income. Retail registrations have grown in the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15 from 1991 to 1995. Registrations per dealer is a measure of the level of opportunity available in a market. Without the proposed dealer, the existing Chevrolet dealer network in the Sweetwater Comm/Terr and the Miami MDA has the second largest opportunity in the entire State of Florida. Even with the addition of the proposed dealer, the Miami MDA still remains the second largest opportunity in the State of Florida, while the Sweetwater Comm/Terr will have the fourth highest opportunity in the State of Florida. Other factors which may be beyond the control of the dealers, such as product availability, do not explain the poor performance demonstrated in this record. Additionally, share of voice, a measure of advertising, cannot explain the performance problems demonstrated in this record. Although import dealers utilize aggressive advertising, it cannot be concluded that such efforts produce increased sales. The quality of the advertising, the market that is targeted, the message conveyed, and the timing of the advertisement all play a role in determining the effectiveness of advertising. Other factors which affect advertising effectiveness include the appearance of the dealership, word of mouth from other people as to their experience with the dealership, and the community presence of the dealer. The purpose of advertising is to create awareness and consideration. If a manufacturer already has awareness and consideration, then more advertising may not increase its market share. Share of voice does not necessarily correlate to market share. For example, Chevrolet's factory expenditures for advertising in South Florida increased from 1993 to 1995. And, although the South Florida Chevrolet Dealer Association raised its contribution to the dollars being spent on advertising directed to the Hispanic market, Chevrolet's market share declined. Finally, other factors that might explain Chevrolet's poor performance (such as brand preference, product quality, product design, changes in the economy, age, and income variations of consumers purchasing vehicles) in the same segments and education levels have been accounted for in the segment adjustment process. The growth in households, population and registrations in the study areas, coupled with a decline in Chevrolet's dealer count, the strong correlation between share of franchises and market share, and the inability of existing dealers to adequately penetrate the market in AGSSA 15, explain why Chevrolet is performing poorly in the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15. The existing dealer network has failed to adequately serve consumers in those areas. Given the need to add another dealer to the Sweetwater Comm/Terr dealer network and the fact that there is no dealer in AGSSA 15, the best solution to Chevrolet's representation problem is to add another dealer to AGSSA 15. The proposed Beacon site is a good location for a dealership because of its high visibility from the Dolphin Expressway, which is the main east/west expressway; its substantial frontage on 12th Street; and its location in an area that is becoming an auto cluster or row. Based upon Mr. Anderson's assessment of the gross registration losses together with the insell from outside dealers, which is accepted, there should be enough lost opportunity available in this market to ensure that the proposed dealer will not take sales from existing dealers. Further, it is concluded that under these conditions a concept known as stimulated competitive response should benefit the surrounding Chevrolet dealers. By enhancing their competitive efforts, either by advertising more, improving their service departments, carrying more inventory, cutting their prices, or by having better salesmen, they will gain sales by responding positively to enhanced competition. Abraham and Potamkin are profitable Chevrolet dealerships whose financial well-being will not be threatened by the proposed new point. The addition of the proposed dealer in the Sweetwater Comm/Terr will increase customer convenience for both sales and service. Consumers should also benefit from the increased level of competition among dealers who should offer consumers more selection and better prices and service for their vehicles needs. Raising competition and increasing brand awareness for Chevrolet in the marketplace should benefit the existing dealers. Adding the proposed dealer would give Chevrolet an opportunity to correct one of its dealer deficiencies by increasing its number and improving its location. Further, Chevrolet would have an Hispanic dealer/operator, which it currently does not have. Having an Hispanic dealer with strong business ties to the region would be a favorable cultural development for the community. Adding the proposed dealer would serve the public interest by increasing employment, taxes, and money being spent in the area. Increased convenience serves the public interest. Adding a minority dealer would serve the public interest as expressed in the state franchise law. The proposed dealership will fit in well with the mix of commercial and industrial uses in the proposed area, and it will generate involvement by the dealer in the community and charitable affairs in the area. The proposed location is not so close to Abraham that distance alone must preclude the addition of the new point. The addition of Beacon should benefit consumers and public interest by providing more competitive and convenient sales and service to a growing population. The addition of an Hispanic dealer to the Chevrolet family will direct sales to a market which is largely Hispanic and will continue community involvement by this dealer. The existing dealers' abilities to perform their obligations under their dealer agreements should not be impaired by the addition of a new dealer at AGSSA 15. Based upon the demographic factors of the community or territory, it is expected the market penetration which is currently below reasonably expected levels, would be improved by an additional dealer at AGSSA 15. Chevrolet does not deny its existing dealers opportunities for reasonable growth, market expansion or relocation. Given the market opportunity in this community or territory, all dealers should benefit from the establishment of an additional point. Chevrolet did not attempt to coerce existing dealers into consenting to an additional dealership. With the addition of the Chevrolet point at AGSSA 15, the distance, travel time, and accessibility for this line-make will be improved. Other dealers are closer together than the proposed site is to its nearest Chevrolet competitor (Abraham) without adversely affecting one another. It is expected Chevrolet dealers will react similarly. Although Abraham and Potamkin have failed in specific obligations of their dealer agreements, they are in substantial compliance with such agreements. The existing dealership network has failed to perform at a reasonably expected level. The economic and marketing conditions for this community or territory warrant an additional Chevrolet dealer at AGSSA 15. While Chevrolet has begun efforts to improve performances in the Sweetwater Comm/Terr, the additional dealer at AGSSA 15 will best address the inadequacy of the dealer count in this market.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the additional dealership in AGSSA proposed by Beacon Motors, Inc., be granted. DONE AND ENTERED this 5th day of September, 1997, in Tallahassee, Leon County, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 5th day of September, 1997. COPIES FURNISHED: Charles J. Brantley, Director Division of Motor Vehicles Neil Kirkman Building, Room B439 Tallahassee, Florida 32399-0500 Enoch Jon Whitney, General Counsel Division of Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500 Michael J. Alderman, Esquire Division of Motor Vehicles Neil Kirkman Building, Room A432 Tallahassee, Florida 32399-0500 James Williams, Esquire Michael A. Gruskin, Esquire General Motors Corporation Post Office Box 33122 Detroit, Michigan 48202 Fred J. Lotterhos, III, Esquire Scott D. Makar, Esquire Holland & Knight, LLP 50 North Laura Street, Suite 3900 Jacksonville, Florida 32202 Manual Kadre, Esquire de la Cruz Companies 3201 Northwest 72 Avenue Miami, Florida 33122 James D. Adams, Esquire A. Edward Quinton, III, Esquire Adams & Quinton, P.A. Camino Real Centre 7300 West Camino Real Boca Raton, Florida 33433 Gerald B. Wald, Esquire Murai, Wald, Biondo & Moreno 9th Floor Ingraham Building 25 Southeast 2nd Avenue Miami, Florida 33131
The Issue The issue in the case is whether Pacific Rim International West, Inc. (Pacific Rim), may establish a new franchise motor vehicle dealership at Tropical Scooters, LLC (Tropical), for the sale and service of motorcycles manufactured by Huzhou Daixi Zhenhua Technology Trade Co., Ltd. (DAIX).
Findings Of Fact There was no evidence presented at the hearing to establish that Powersports has a franchise agreement to sell or service DAIX motor vehicles. There was no evidence presented at the hearing that the Powersports dealership is physically located so as to meet the statutory requirements for standing to protest the establishment of the new franchise motor vehicle dealership.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law and upon the post-hearing notice filed by Powersports that the protest was withdrawn, it is RECOMMENDED that the Department enter a final order dismissing the protest filed in this case. DONE AND ENTERED this 18th day of July, 2014, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of July, 2014. COPIES FURNISHED: Boyd Walden, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room B435 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Steve Hurm, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room B432 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Julie Baker, Chief Bureau of Issuance Oversight Division of Motorist Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A338 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Jennifer Clark, Agency Clerk Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A430 2900 Apalachee Parkway, MS 61 Tallahassee, Florida 32399-0635 Mark W. Stanley Tropical Scooters, LLC 11610 Seminole Boulevard Largo, Florida 33778-3206 Wendy Yu Pacific Rim International West, Inc. 2181 East Francis Street Ontario, California 91761-7723 Rob Pelzel, General Manager Pinellas Powersports, LLC Suite A 7000 Park Boulevard Pinellas Park, Florida 33781-3040
The Issue The issue in this case is whether Respondent engaged in an unlawful employment practice by terminating Petitioner because of his age and in retaliation for complaining about age discrimination, or whether, instead, Respondent had a legitimate non-discriminatory reason for terminating Petitioner that was not a pretext for discrimination or retaliation.
Findings Of Fact Petitioner is a male whose date of birth is June 23, 1958. Petitioner completed high school and had specialized training in welding. He has been working since he was 14 years old and has a varied employment history. Before 2006, Petitioner was a welder for a few months with Gencor Industries. He left that position because of what he described as unsafe working conditions. Before working for Gencor, he was a warehouse manager and shop foreman for Structural Waterproofing, but was terminated when he had a disagreement with the boss. Before that job, he was self- employed in construction and photography. In 2006, Petitioner was hired as a sales consultant with the Holler Classic Group, a car dealership. Petitioner had never had a job in car sales previously, but had worked as a travel agent for 13 years. He explained that there was no money to be made in travel anymore, but he heard that there was money to be made in car sales, so he thought he would try it. Petitioner left Holler Classic after about two years, because he found it was getting hard to compete against salespersons who he claimed "were being given deals by management." Petitioner was hired on July 11, 2008, as a sales associate at Courtesy Chevrolet on West Colonial in Orlando. Courtesy Chevrolet is an employer within the meaning of the Florida Civil Rights Act and is a subsidiary of Respondent AutoNation. Petitioner was hired by Courtesy Chevrolet as an at-will employee. The terms of his employment were that he would be paid by commissions earned on car sales and would be given a draw against commissions so that there would be compensation in case there were periods of low sales. According to Petitioner, there was no fixed amount of cars he had to sell, except that, as he acknowledged, "[y]our commissions had to outdo your draw[.]" In other words, Petitioner understood that while the draw might cover an occasional low-sales month, there could not be continual low-sales months such that earned commissions were not sufficient to cover the draw. Petitioner also testified that shortly after he started at Courtesy Chevrolet, in August 2008, the manufacturer, General Motors (GM) imposed a rule that required car salesmen to sell at least six cars per month. Petitioner testified that he was aware this rule went into effect in August 2008, but that he did not think that the new rule applied to him, because he believed he was under the "old system." No evidence was presented to establish that certain car salespersons were allowed to continue under an "old system" that was exempt from the new minimum monthly sales quota. Instead, the more credible, consistent testimony of all witnesses, besides Petitioner, was that the six-car minimum monthly sales quota applied to all dealerships with GM franchises and to all car salespersons at Courtesy Chevrolet, including Petitioner. When Petitioner began working at Courtesy Chevrolet, the general manager was Paul Letso, who was eight or nine years older than Petitioner. Shortly thereafter, Mike Taylor was hired as the sales manager, and he was Petitioner's supervisor. Mike Taylor also was older than Petitioner, approximately 59 years old. Right away, Petitioner had problems working as a car salesman at Courtesy Chevrolet. Within a month or so after starting, he complained of "theft of my commissions" by other employees. He first spoke with the local human resources person at the dealership. She told him to report the problem to Bibi Bickram, who was the head of human resources for the region. Petitioner was given Ms. Bickram's cell phone number, and he contacted her, reaching her while she was at an airport. She got back with him a month later and told him that his manager, Mike Taylor, was handling the complaint. However, Mr. Taylor denied having heard about it, and Petitioner was not happy with the handling of his complaint. When Petitioner was first hired, he underwent training and orientation and was given a large amount of material, including an AutoNation Code of Business Ethics and an Associate Handbook, for which Petitioner signed acknowledgement forms. The form that Petitioner signed to acknowledge receipt of the Code of Business Ethics informed Petitioner that he had a number of options for reporting complaints, problems, or suspected violations of the code, of the law, or of any company policies. These options included notifying a manager, contacting someone in AutoNation's corporate or regional human resources departments, or calling the ACT-AlertLine. The ACT-AlertLine is a third-party administered, tip/complaint hotline where problems or complaints regarding any AutoNation dealership can be raised, anonymously or otherwise. The toll-free number for the ACT-AlertLine was provided in the document signed by Petitioner. In addition, the undisputed testimony was that flyers with the ACT-AlertLine are on display at the Courtesy Chevrolet employee break room. There was no credible evidence that before Petitioner was notified that he was being terminated, Petitioner ever utilized any of these options to notify anyone of problems or complaints, except for the single instance discussed above when Petitioner called Ms. Bickram's cell phone to complain about theft of his commissions. Petitioner's first full calendar quarter at Courtesy Chevrolet was October to December 2008. Based on his sales figures for his first full quarter, Petitioner was given a documented verbal counseling for inadequate work performance, followed by a written corrective action record. In pertinent part, this record provided: Facts and Events: Your performance for the months of October, November and December of 2008 were below target. They were as follows: ** October - you saw 20 customers, sold 1 unit - 5% closing ** November - you saw 22 customers, sold 3 units - 13.6% closing ** December - you saw 15 customers, sold 2 units - 15.1% closing Dealership closing percentage is 27%. Due to your low performance, it has negatively impacted your income and you are currently in the rears [sic: arrears] $2751.54. Required Improvement: The level of performance is below target and you must take action to improve. As a Sales Associate of Courtesy Chevrolet West Colonial, you are responsible for utilizing the company's processes and tools while maintaining an acceptable level of performance. You must maintain a 20% closing ratio each month. . . . Failure to achieve sustained improvement in units sold or other performance issues related to your role as Sales Associate . . . will result in further disciplinary action up to and including termination. Petitioner signed this corrective action record, without commenting in the space provided. At the final hearing, Petitioner claimed that some of the sales figures may have been incorrect, although Petitioner was not specific in this regard and presented no evidence to support his vague claim. Petitioner's claim, more than two years after the fact, is not credible, in light of Petitioner's failure to attempt to correct any errors that may have been in the report at the time he signed it or to otherwise complain about errors in his sales figures. Petitioner acknowledged that he was having trouble meeting his sales goals, but claimed that it was because he "was being harassed" by Paul Letso and Mike Taylor. Petitioner admitted that this asserted harassment had nothing to do with age discrimination, as he was substantially younger than either one of his managers. Petitioner claimed that these two older managers were always trying to blow up his deals, such as by starting arguments with Petitioner in front of potential customers. Business was not good in the auto industry during the time that Petitioner was employed by Courtesy Chevrolet in 2008 and 2009. Overall, there was a lot of consolidation in the industry and staff reductions. Several Chrysler dealerships closed as a result of Chrysler's bankruptcy, including two AutoNation dealerships in the region: Courtesy Chrysler Jeep in Casselberry and Courtesy Chrysler Jeep in Sanford. Other dealerships were under pressure as well. As noted above, one example of how the industry pressures came to bear on the dealerships was the establishment by GM of a new requirement in August 2008 that all car salespersons at its franchise dealerships had to sell at least six cars each month. Courtesy Chevrolet was not doing well. By May 2009, the general manager of Courtesy Chevrolet (one of the managers whom Petitioner claimed had been harassing him), was terminated. In June 2009, several managers and sales associates from the closed Chrysler dealerships were brought over to Courtesy Chevrolet, consolidating the sales forces. Todd Tyree, former manager of the Casselberry Chrysler dealership, was made general manager of Courtesy Chevrolet. Mr. Tyree, though young--in his 30s--had nearly 20 years of experience in the car dealership business, with substantial managerial experience. He was charged with the task of overhauling the dealership to upgrade its facilities, improve its operations, and conform its processes to AutoNation standards, which had been loosely followed or not followed at all previously. Two former managers from the Sanford Chrysler dealership, Mike Stachowicz and Ryan Matthews, were brought over to serve in managerial/supervisory positions in the sales department. Mr. Stachowicz was in his late 40s, approximately three years younger than Petitioner, with 28 years of experience in the car business. Mr. Matthews was younger, but he still had seven years' experience in the car business. The three managers embarked on an immediate effort to tighten up on procedures, spruce up the facilities, review and evaluate employees, and work with the sales staff to turn around the performance of the dealership. According to Petitioner, a sales meeting was held the day after the new managers arrived at Courtesy Chevrolet. Petitioner claims that at this meeting, Mr. Tyree stated that he wanted a young, aggressive sales staff. Petitioner stated that all three of the new managers were present at this meeting and that there were a number of other witnesses to the statement. Despite Petitioner's claim that there were many witnesses to Mr. Tyree's statement, no witness corroborated Petitioner's claim. Mr. Tyree denied making that statement and his testimony was credible in this regard. Messrs. Stachowicz and Matthews confirmed that they never heard Mr. Tyree make such a statement, although according to Petitioner, they were present at that meeting. Petitioner did not produce any other witness who could support Petitioner's claim that the statement was made. There is no evidence that Petitioner complained to anyone in the human resources department, to someone at the dealership, at a regional or national AutoNation office, or even anonymously to the ACT-AlertLine, right after Petitioner claimed the statement was made by Mr. Tyree on June 6, 2009. The first mention by Petitioner of the alleged statement by Mr. Tyree about a "young, aggressive" sales staff was after Petitioner received a monthly sales associate evaluation on June 15, 2009, putting in writing to him for the second time that improvement was needed for his sub-par sales performance; after Petitioner received another monthly sales associate evaluation on July 8, 2009, giving him the lowest rating of "below target" in the categories of meeting sales objectives and meeting profit objectives; and after Petitioner received a "final warning" counseling and corrective action record on July 13, 2009, reporting another three-month period of below-par sales and commissions that did not cover Petitioner's draw. Petitioner's June 15, 2009, evaluation was signed by Ryan Matthews, who was the general sales manager. It indicated that Petitioner had only "sometimes" achieved acceptable performance goals for sales and profit margins, a grade of "C" on a scale of "A" to "D." The evaluation comment was that one-on-one training was needed to improve performance. Mr. Matthews confirmed that he conducted one-on-one training sessions with Petitioner, including sales menu training, which focuses on how numbers are presented to customers; and training in product knowledge, an area found to be critically lacking at this dealership when the three new managers arrived. However, Mr. Matthews testified, as did the other new managers, that Petitioner was not at all receptive to training, improvement, or doing anything to change how he was used to doing things. Instead, he was stubbornly resistant to change and very combative with the new managers. Petitioner apparently resented being told that he was not performing up to standards and needed to improve. Petitioner tacitly acknowledged the new managers' point by testifying that he did not understand how the new managers could come in and evaluate sales associates after only a few short days at the new dealership and expressing skepticism that they could have any kind of meaningful perspective. However, it should have been clear to Petitioner from his prior evaluation, counseling, and corrective action record issued by the prior management team that the focal point for the dealership, and the measure of his performance, would, in large part, be on sales statistics: how many cars were sold and how big was the profit margin. The recent sales information for Petitioner that was available for the new management team to review in June 2009 showed that Petitioner was credited with selling a total of 10.5 cars during the months of February, March, April and May 2009. His best month, and the only month in his employment history with Courtesy Chevrolet in which the evidence showed that he met a six-car sales minimum, was in March 2009, when he sold six and one-half units. In February, he sold three cars; in April, he did not sell a single car; and in May, he sold one car. After Mr. Tyree arrived at Courtesy Chevrolet, he had Petitioner sign a written acknowledgement memorializing the GM requirement that sales associates had to sell six cars each month, with a rolling average of 18 cars every three months. Mr. Tyree testified that he had all of the Courtesy Chevrolet sales associates sign the form that he had utilized at his prior dealership to impress upon them what they already should have been aware was the requirement imposed by GM for the dealership.3/ As noted above, Petitioner was indeed aware of this requirement, acknowledging that GM adopted this rule in August 2008, although Petitioner continued to assert that he was somehow exempt. The monthly sales associate evaluation signed by Petitioner on July 8, 2009, was signed by Mike Stachowicz. This evaluation of continued low sales production, as well as low profit-per-vehicle, was based on Petitioner's sales performance in the month of June 2009, during which he sold two cars. By the end of June 2009, Petitioner had the highest amount of arrears (draws exceeding earned commissions), more by far than any other salesperson at Courtesy Chevrolet. Petitioner signed this evaluation and wrote the following comment on it: "WILL BE FILING COMMENTS BY NEXT WEEK." Petitioner did not elaborate, or explain the nature of the comments he intended to file. Petitioner's consistent sub-par performance continued, as did his resistance to changing how he went about his business so as to be open to improving his performance. For example, despite the fact that Saturdays are the busiest days of the week for car sales, Petitioner took off Saturdays once a month to pursue his hobby of bird-watching. While the new management was willing to accommodate Petitioner's request, the expectation was that Petitioner would be receptive to making changes to improve his car sales, whether it be giving up his bird-watching Saturdays or making up for it in other ways. When this did not happen, Petitioner received his "final warning" and corrective action record on July 13, 2009, from Michael Stachowicz. This record summarized Petitioner's below-target performance in April, May, and June, with an average car sale of only one car per month. The report reminded Petitioner: "You must maintain a level of 6 units sold monthly." Petitioner remained in arrears by several thousands of dollars. Petitioner signed this record, and his sole written comment in the space provided for comments was: "WILL BE FILING COMPLAINT SOON." Petitioner did not explain his comment or volunteer any information about the nature of the complaint he was going to file. The corrective action record signed on July 13, 2009, stated that there would be a meeting in 30 days to evaluate Petitioner's progress and review his "implementation of specific actions to improve units sold." However, after just a few weeks in which the managers saw no sign of any specific actions being taken by Petitioner to improve his overall performance and no change in his attitude with regard to being resistant to change and combative, Mr. Tyree made the decision to terminate Petitioner's employment. Through the month of July, Petitioner's three-month rolling average was 2.166 units per month, well below the target of six units per month, and Petitioner was still in arrears by several thousands of dollars. Indeed, there was no evidence presented that Petitioner ever earned more commissions, for any period of time, than he took out in draws.4/ The termination action record was signed July 31, 2009, which was Petitioner's last day of employment, and he was terminated effective August 1, 2009. On August 3, 2009, a written complaint by Petitioner that he sent on July 28, 2009, to the AutoNation Human Resources Department in Fort Lauderdale, Florida, was received and provided to the ACT-AlertLine to log in. The complaint was then turned over to Bibi Bickram, the human resources specialist, to conduct an investigation. This written complaint by Petitioner was a five-page, single-spaced, rambling diatribe, which lobbed assorted accusations of harassment by the three new managers at Courtesy Chevrolet. The complaint alleged that Mr. Tyree "gawked" at another employee; that the female employee who was "gawked" at had violated safety regulations by coming to work in flip flops; that Michael Stachowicz showed favoritism to another female employee; that some salespersons had to work more hours than other salespersons; that one employee was absent too much; that gay customers had been made fun of; and that some employees have already been given evaluations by the new managers that had "no reflections on actual reality." Ms. Bickram conducted a thorough investigation in which she interviewed numerous sales associates, reviewed records, talked to the managers, contacted Petitioner to see if he wanted to add anything, and then prepared a detailed report that analyzed, point by point, each and every complaint raised in Petitioner's written complaint. Ms. Bickram found all of the complaints unsubstantiated, with the exception of one complaint regarding scheduling inequity, found to be partially substantiated and corrected. None of the complaint issues raised and investigated had anything to do with age discrimination. Months later, in October 2009, in connection with proceedings regarding Petitioner's entitlement to unemployment compensation, Petitioner prepared another detailed document setting forth a timeline of his view of events at Courtesy Chevrolet. This document was also logged in with the ACT-AlertLine and turned over to Ms. Bickram as a follow-up complaint to the written complaint received on August 3, 2009. The October 2009 timeline document included Petitioner's claim that in a June 6, 2009, sales meeting, the day after Mr. Tyree assumed the position of general manager, he had allegedly stated that he wanted a "young, aggressive sales staff." This claim was investigated for the first time by Ms. Bickram as part of her follow-up complaint investigation; Petitioner did not include this allegation in the July 28, 2009, written complaint. Ms. Bickram's report, issued on December 4, 2009, found that in her interviews of numerous sales associates regarding the sales meetings conducted by the new general manager, none of the associates mentioned anything about inappropriate comments. Ms. Bickram also interviewed Mr. Tyree and reported that he denied making any such statement. Further, Ms. Bickram noted that the "current sales staff ranges in age from 33 to 54," so there had been no youth movement under the new management, as one would assume would have occurred following that alleged statement. Petitioner submitted to the FCHR as part of his complaint in 2010 and offered into evidence at the hearing, a two-page letter from Petitioner to "Bebe" in human resources. On the first page, the date is typed in as "July [day obscured], 2009." On the second page, just above Petitioner's signature, the following date reference is typed in: "Post dated July 9, 2009 to be changed and signed at a later date." In this letter of uncertain actual date, Petitioner reported to "Bebe" that since his first verbal complaint to her "regarding thief [sic] of my money," he had "been subject [sic] to NON-STOP harassment" including the following itemized examples: Deliberately blowing deals by 2 General Managers, 2 General Sales managers and 3 Sales Managers. Prejudice towards GAY customers. . . Lying to customers. Having other employees, who were friends of Ian M. Simpson's, harassed and written up . . . At a meeting on June 6, 2009, Todd Tyree made a comment which insulted most of the employees at the meeting. He stated that he wanted a young and aggressive, sales staff. . . . Petitioner testified that he hand-wrote the number "13" in the date on the first page so that the letter was dated July 13, 2009. However, a handwritten date, whether 13 or some other number, cannot be discerned on the letter admitted into evidence. Petitioner's testimony was that he put the letter on Ms. Bickram's desk in her office at the Courtesy Chevrolet dealership on July 13, 2009. Petitioner claims to have personally laid the letter on her desk. While Petitioner said that he "never saw [Ms. Bickram] in the office," he also claimed that he "saw her later on that day reading the complaint." He admits he did not discuss the complaint with her at that time, stating that he "thought she would have to have time to review it." Petitioner's testimony regarding his delivery of the letter on July 13, 2009, was not credible. Ms. Bickram testified that she never received the letter Petitioner claims to have left for her on her desk. Ms. Bickram explained, credibly, that she is in her office that she maintains at Courtesy Chevrolet one or two times per week and that when she is not in the office, even if she is just out for lunch, she keeps the office locked. Others do not enter her office to leave her mail or to take items from her desk; she uses her other office at a different Courtesy location as the primary office where she receives and processes her mail. Therefore, it would not have been possible for Petitioner to have entered her office when she was not there, as he claimed, to leave a letter on her desk. It is also not credible that Petitioner would not have attempted to discuss the complaint with Ms. Bickram if, as Petitioner claimed, he had seen her reading the letter later that day. Petitioner had recently received two sub-par evaluations from the new management, and on that same day, Petitioner had received his "final warning" based on his failure to approach meeting the stated sales target of six cars per month. Petitioner had to know, with nothing but sub-par performance evaluations, below-target sales, and consistent draws exceeding commissions, his time was running out. The more credible testimony and evidence establish that Petitioner did not lodge his complaint of an age-related comment by Mr. Tyree until well after Petitioner was terminated, and that claim was contrived and not genuine. With the exception of Petitioner's claim of a single age-related comment attributed to Mr. Tyree and found not credible, Petitioner presented no direct or circumstantial evidence of any discrimination against him based on his age. To the contrary, Petitioner complained equally about harassment by former managers who were older than he and by the new management team who were younger than, or about the same age as, Petitioner. Petitioner claimed that younger and older managers alike tried to blow up his sales, started arguments with him while he was with customers, gave deals away to other salespersons, and were to blame for Petitioner's consistent sub-par sales performance and Petitioner's consistent failure to earn enough commissions to cover his draws. Petitioner's complaints have nothing to do with his age; instead, Petitioner's complaints are his attempt to blame all others, young and old alike, for his consistent failure to achieve the work performance standards set by Respondents. No credible evidence was presented to establish that Petitioner's termination was in retaliation for Petitioner's complaint about age discrimination. The more credible evidence established that Petitioner did not communicate any complaint about age discrimination until after he was given his termination notice. After Petitioner was terminated from Courtesy Chevrolet, he was hired as a car salesman at Toyota of Orlando, He started working there on December 15, 2009. After about a month and a-half, he was terminated. The reason for Petitioner's termination was not established in the record. Petitioner has been unemployed since being terminated by Toyota of Orlando and has gone back to school. No evidence was presented regarding Petitioner's efforts, if any, to obtain substantially equivalent employment, besides his brief experience with Toyota of Orlando.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is: RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing Ian Simpson's Petition for Relief. DONE AND ENTERED this 25th day of August, 2011, in Tallahassee, Leon County, Florida. S ELIZABETH W. MCARTHUR Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 25th day of August, 2011.
Findings Of Fact Petitioner deals in fuel oil. It buys fuel oil from several wholesalers and sells it at retail, mainly to people who use fuel oil for heating purposes. Petitioner operates a low pressure pump on its premises for pumping fuel oil from a ten thousand gallon tank into five gallon cans and similar containers brought to the pump by its customers. At peak demand, the ten thousand gallon tank supplying this pump had to be refilled twice a week. In general, however, during the cold season, the tank was refilled only every other week or less often still. No fuel oil was ever pumped from the low pressure pump into any motor vehicle. Petitioner also maintained two big dispersing pumps for filling its tank trucks with fuel oil and a gasoline pump for fueling the truck engines. The trucks were equipped with pumps for emptying their fuel oil tanks, which pumped at the rate of forty gallons per minute. Petitioner advertised home delivery of fuel oil in the newspaper, and dispatched its trucks in response to the resulting telephone calls. In addition to delivering fuel oil for home heating purposes, petitioner occasionally sold larger quantities to fellow fuel oil dealers and to other commercial concerns. In February, March and April of 1974, petitioner sold particularly large quantities of fuel oil to Tampa Electric Company. During the period covered by the audit, petitioner sold from 50,000 to 70,000 gallons to other fuel oil dealers. Petitioner did not get resale certificates from its commercial customers, but Mr. Hayes, until recently petitioner's proprietor, required dealers to show him their dealer's licenses and he copied the dealers' license numbers onto the invoices. In March of 1976, Mr. Donald E. Snyder, a tax examiner in respondent's employ, began auditing petitioner's books. At this time most of petitioner's records were in Orlando in the custody of the Federal Energy Administration. Subsequently, some, but not all, of these records were returned to petitioner. In an effort to reconstruct records which were unavailable, Mr. Snyder contacted petitioner's suppliers and examined their records of sales to petitioner. On January 2, 1977, Mr. Hayes and Mr. Snyder took an inventory of petitioner's fuel oil. Mr. Snyder used this information as well as what records petitioner was able to furnish him, and concluded that petitioner had sold, during the audit period, two thousand four hundred seventy-nine (2,479) gallons of fuel oil to persons or concerns who were users of fuel oil for non-exempt purposes. Written on the invoices evidencing these sales, however, was the phrase "non-road use" or words to that effect. The limited materials with which he worked gave Mr. Snyder no indication as to the disposition of an additional two hundred fifty- eight thousand three hundred forty (258,340) gallons of fuel oil. Although Mr. Snyder approximated petitioner's sales month by month, these figures were unreliable because of certain erroneous assumptions, notably the assumption that petitioner never used additional storage facilities.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent abandon its notice of proposed assessment, as revised. DONE and ENTERED this 10th day of January, 1978, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Mr. James P. LaRussa, Esquire Flagship Bank Building, Suite 416 315 East Madison Street Tampa, Florida 33602 Mr. Cecil L. Davis, Jr., Esquire Assistant Attorney General The Capitol Tallahassee, Florida 32304
The Issue The issues presented herein concern the standing of the Intervenors to challenge the licensure of Caruso Chrysler-Plymouth, Inc., to sell Chrysler- Plymouth automobiles in the State of Florida, particularly in Duval County, Florida. See Section 320.642, Florida Statutes. In considering the standing question, specific attention is given to the meaning of the term "real party in interest" as set forth in Rule 15C-1.08, Florida Administrative Code. 1/ WITNESSES AND EXHIBITS The following witnesses testified in the course of the proceedings: John Caruso, President, Caruso Chrysler-Plymouth, Inc.; John McLeod, Dealer Placement Specialist, Orlando, Florida, zone, Chrysler Corporation; Thomas McMenamy of G. T. Automobile Leasing; Michael Gratiano, Jr., school teacher, Sandalwood High School; Paula Bass, customer of Massey Dodge; Charles Cooper, customer of Westside Dodge and owner of Chrysler-Plymouth products and former Chrysler dealer; Robert E. Keel, used car dealer; Ralph Sarotte, Director of Marketing, Planning and Strategy, Chrysler Corporation; John Burnett, President, Massey Dodge; William Shore, President and owner of Westside Dodge; and George Hanlon, Vice President, Rebuilding Services, Inc., which owns two (2) Chrysler- Plymouth dealerships and (1) Dodge dealership. He is also President of River City Chrysler-Plymouth. Petitioners presented Exhibit 6, brochures related to Chrysler Corporation automobiles. Intervenors presented a series of exhibits; Intervenors' A is a copy of September 3, 1982, correspondence from Benry Noxtine, Dealer/License Supervisor, Division of Motor Vehicles to John E. Caruso as President of Caruso Chrysler- Plymouth, Inc.; Intervenors' 1, Chrysler Corporation brochures related to automobiles for the 1983 model year (disregard numbers which appear on the face of the brochures, in that these exhibits were taken from the materials Intervenors had Provided in responding to an interlocutory motion by Petitioners to close the Division of Administrative Hearings' file); Intervenors' 5, parts and service catalogs issued or made for Chrysler Corporation for the 1983 model year; Intervenors' 7, photographs taken of charts related to sales made by Westside Dodge, Inc., in Duval County, Florida; Intervenors' 9, statistics compiled by Chrysler Corporation referencing market penetration and dealer productivity in Jacksonville, Florida, and the zone which includes Jacksonville; Intervenors' 10 is constituted of descriptions of various groups and packages and options related to select Chrysler Corporation automobiles and is found as an attachment to the deposition of John R. McLeod, excerpts of which are part of the record of the final hearing; Intervenors 11, an advertising flyer related to select 1980 Chrysler Corporation automobiles; Intervenors' 12, photographs of some of the automobiles which were viewed, depicting offerings by Dodge and Chrysler-Plymouth; Intervenors' 13, January, 1983, NADA used car reference guide for Southeast United States, and Intervenors' 14, Black Book on used specialty vehicles and trucks for December, 1982, national. (Other exhibits were identified in the Prehearing Stipulation but were not involved in the presentation related to the standing of the Intervenors to challenge the licensure of Caruso Chrysler-Plymouth.) CASE HISTORY In August, 1982, Caruso Chrysler-Plymouth, Inc., made application for Florida Motor Vehicle Dealer licenses to sell Chrysler-Plymouth products and Imperial automobiles. This followed Chrysler Corporation's stated intent to grant franchises to Caruso to sell the aforementioned automobiles. 2/ Prior to the preparation of the application, River City Chrysler-Plymouth, Inc., which is located in Jacksonville, Florida, on Cassat Avenue, had made known its intention to protest the licensure of Caruso. Caruso would locate its facility on Southside Boulevard in Jacksonville, Florida. A copy of the application and the protest letter, together with a request that the Division of Administrative Hearings conduct a formal hearing was forwarded to the Director of the Division of Administrative Hearings on September 7, 1982. The Division of Administrative Hearings' file was then opened to consider the request of Petitioners in the face of the challenge by River City Chrysler-Plymouth. On September 17, 1982, Intervenors filed a direct petition with the Division of Administrative Hearings and a motion to intervene in the ongoing action. This request was honored by order of September 28, 1982, notwithstanding the position of Henry C. Noxtine, Dealer/License Supervisor for the Division of Motor Vehicles, as found in Intervenors' Exhibit A. In that correspondence, which was made known to the Hearing Officer subsequent to the September 28, 1982, order, Noxtine, in correspondence addressed to the President of Caruso and copied to counsel for Intervenors, states "also, letters of protest has (sic] been received by and through its counsel, for Massey Dodge, Inc., 3333 Main Street, Jacksonville, Florida, and Westside Dodge, Inc., 1672 Cassat Avenue, Jacksonville, which will not be considered." Prior to being informed of the contents of the September 3, 1982, correspondence, the Hearing Officer also attempted to ascertain the Division of motor Vehicles' Director's position on the rights of Intervenors. This occurred after September 28, 1982. No change was made as a result of this inquiry. Further treatment of standing was described in the November 16, 1982, order which has been mentioned before. The November 16, 1982, order was entered in response to a motion to close the Division of Administrative Hearings' file in view of the withdrawal from the action of the original protestant, River City Chrysler-Plymouth. It was determined that the withdrawal did not prejudice the rights of the Intervenors. In particular, the withdrawal did not bar the Intervenors' rights to seek consideration of their opposition to the licensure of Caruso Chrysler-Plymouth. The latter portion of the order identified how those claims of Intervenors would be addressed. Ultimately, a final hearing was held on January 10, 1983, leading to a ruling on the record that Intervenors did not have the requisite standing to challenge the licensure of Caruso to sell Chrysler-Plymouth automobiles in Jacksonville, Florida, as augmented by this Recommended Order.
Findings Of Fact John E. Caruso, owner of the applicant, Caruso Chrysler-Plymouth, Inc., is also the owner of Regency Dodge. The Dodge dealership sells Dodge cars and trucks and services Chrysler products at a location which is approximately one (1) mile from the location of the proposed Caruso Chrysler-Plymouth dealership. Caruso is also part owner of a Dodge, AMC and Renault car store in Green Cove Springs, Florida, Caruso Motors. John Caruso has operational responsibility for Regency Dodge and would have some managerial involvement with Caruso Chrysler- Plymouth. We is not involved in the management of Caruso Motors. Caruso motors and the other automobile dealers in Green Cove make a substantial number of automobile sales in Duval County, Florida, the county in which Regency Dodge and the proposed dealership are to be found. Both Regency and Caruso Chrysler- Plymouth would be in the immediate vicinity of the shopping center known as Regency Square and are both found on the south side of Jacksonville, Florida, also referred to as east Jacksonville. In the past, Chrysler-Plymouth sales have been made from a location which was one block away from the present location of Regency Dodge. That store has closed, and there has been no dealership in that location in the last three years. There was also a Chrysler-Plymouth dealership on Phillips Highway on the south side of Jacksonville until February, 1982, when that organization went out of business. At present, the only Chrysler-Plymouth dealership in Jacksonville, Florida, is River City Chrysler-Plymouth which is on the west side of Jacksonville, Florida, on Cassat Avenue. In 1982, of the approximately 1,000 sales of Dodge products made from Regency Dodge, 600 of those were fleet sales. Regency Dodge does warranty work on Chrysler-Plymouth automobiles as well as Dodge. Chrysler's treatment of warranty claims on all automobiles is uniform. Regency Dodge and other Dodge dealers are required to do warranty work on Dodge products and may do warranty work on Chrysler-Plymouth products at their option. Presently, there are three Dodge dealerships in Duval County, Florida, which are constituted of Regency Dodge and the two Intervenors. Ideally, Chrysler Corporation feels that the best balance would be to have two Dodge dealers and two Chrysler-Plymouth dealers in Duval County, Florida, or Jacksonville, which is essentially the same market area. This is borne out by excerpts of a document dealing with prognostication by Chrysler Corporation on the subject of automobile sales in Jacksonville, Florida, found as a part of Intervenors' Exhibit No. 9. Realization of the marketing goals of Chrysler Corporation in the Orlando, Florida, zone, of which Jacksonville is a part, is discussed in the excerpted portions of the deposition of John R. McLeod taken on January 6, 1983. This deposition is being transmitted with the Recommended Order and the excerpts are fully identified in the transcript of the hearing. As the excerpted testimony in the deposition points out, should Massey Dodge, which is located on Main Street in North Jacksonville, Florida go out of business, at that location, it is not the intention of Chrysler Corporation to open up another Dodge dealership at that location. In that same deposition, McLeod establishes that, with the exception of the Caruso arrangement, there are no Dodge and Chrysler- Plymouth dealerships owned by the same individual within the Orlando zone. McLeod identifies in his deposition that the idea of having two Chrysler- Plymouth and two Dodge dealers in Jacksonville, is premised upon information from industry registrations of automobiles and other basic factors involved in the analysis of the metropolitan market. This did not include a survey of the general public. Finally, McLeod indicated that Chrysler Corporation felt that it needed a Chrysler-Plymouth dealership on the east side of Jacksonville, which would include the Regency area, an area also referred to as southside. This led to Chrysler offering Caruso the opportunity to be Chrysler's dealer. Intervenors' Exhibit 10, which is an attachment to the McLeod deposition, demonstrates the interchangeability of parts for Plymouth Reliant and Dodge Aries; Chrysler Cordoba and Dodge Mirada, and Plymouth Turismo/Horizon and Dodge Charger/Omni. These vehicles are manufactured in the same facility. Thomas McMenamy works for a car leasing firm in Jacksonville, Florida, and indicated the similarity between Chrysler K-Cars and Dodge Sportsman and Plymouth Voyagers in his efforts to satisfy lease customers. Michael Gratiano, Jr., a local teacher in Jacksonville, Florida, is the owner of a 1981, Ram Charger, a vehicle he found to be similar to a Plymouth Trail Duster. He also owns a 1982 Dodge 400 Convertible which he purchased from Massey Dodge. Paula Bass bought a 1982 Dodge 400 from Massey Dodge and in her shopping felt that the Dodge 400 and Chrysler LeBaron were similar automobiles. Charles Coopers who was a Chrysler Corporation dealer from 1940 through 1950, owns a 1977 Chrysler New Yorker and 1980 Plymouth Volare which he has serviced at Westside Dodge at their Cassat Avenue premises. Robert E. Keel gave testimony in this hearing. Mr. Keel is a used car dealer in Jacksonville, Florida, and recalls a conversation with John E. Caruso in which Caruso indicated that he might wish to sell Chrysler-Plymouth and Dodge products in the same location, a comment which Caruso denies. Ralph Sarotte, Chrysler Director of Marketing, Planning and Strategy, gave a break-out of the similarities and dissimilarities between various offerings in the Chrysler Corporation product line. These automobiles are depicted in Intervenors' Exhibit 1 and Petitioners' Exhibit 6. These product lines have formerly been advertised by one firm, an arrangement which is now in transition, with the intention to have a second advertising firm involved, at which point Chrysler-Plymouth products would be advertised by one firm and Dodge products by a second firm. At present, there are some ads that are common to all Chrysler Corporation products, to include comments by the Chairman of the Board of Chrysler Corporation, Lee Iacocca, and advertisements related to financing and warranty matters. There is common advertising for performance Parts for Dodge and Chrysler-Plymouth automobiles. The Colt advertising is a common pursuit for Dodge and Chrysler-Plymouth. The emphasis on the future advertisements of Chrysler Corporation would be that Chrysler-Plymouth products represent value, America's way to get its money's worth and economy. The thrust of the Dodge advertising would depict Dodge as a "driving machine" represented by driving excitement and excellence. Chrysler Corporation offers subcompact cars which are depicted in Petitioners' Exhibit 6, as are all models to be discussed through this Recommended Order. The subcompact Plymouth is referred to as the Horizon and the Dodge is the Omni. There are approximately six unique parts on these automobiles which have to do with the grill, tail light assembly, and name plates, out of approximately 3,500 parts. A speciality type of automobile within the Horizon and Omni families would be the Plymouth Turismo and Dodge Charger whose principal differences have to do with the facia, tail lamps, name plates and graphics such as tape strips. Chrysler Corporation sells compact models referred to as the Dodge Aries and Plymouth Reliant which are known as K-Cars of a five or six passenger capacity in two and four door sedans and a five door wagon. The grills, tail lights and name plates of the two automobiles are the unique features. A more luxurious compact offering by Chrysler Corporation would be the Dodge 400 and Chrysler LeBaron lines which are five and six passenger automobiles. This represents Chrysler Corporation' a contribution to the "middle market" and these automobiles have facia, tail light and body side molding differences with Chrysler automobiles carrying a three to five hundred dollar ($300.00 to $500.00) increase in base unit price. In particular, Dodge offers a two door, four door and convertible version of its 400 series. Chrysler offers a two door, four door, basic convertible and Mark Cross designer series convertible, a town and country wagon and a town and country convertible. The latter three models have no Dodge counterpart. Chrysler Corporation intends to market, as a 1983 1/2 model, an automobile known as a Shelby Charger which is a unique product offered through Dodge affiliates. Its body appearance, wheels and tires and engine are distinguishing features of this automobile. In the front-wheel drive line, in the up-market automobiles, Dodge sells a 600 series to include the 600-ES. In the same market, Chrysler offers the E-Class automobile. Basically, there are differences in the appearances of these automobiles related to the front end, tail lights, name plates and fender designs. Also Dodge 600-ES has a unique transmission/engine combination offering a five speed transaxle. Moreover, it has unique exterior graphics, hood ornament and road wheels. Chrysler, in its E-Class automobiles, intends to offer a Chrysler New Yorker and Executive Sedan as 1983 1/2 models in addition to its current E-Class sedan. There are no comparable Dodge models to the New Yorker or Executive Sedan. The New Yorker has a landau roof treatment, special instrument panel and trim and name plate differences. The Executive Sedan has extended wheel base differences when compared to the Dodge line and offers greater seating capacity. The roof, doors and quarter panels and interior are also unique. Chrysler Corporation offers two cars in the mid-specialty line which are rear wheel drive cars. They are the Chrysler Cordoba and Dodge Mirada whose principal differences are the front end design, tail lights, roof adornment, wheels, tires and instruments. Chrysler Corporation offers rear wheel drive mid-price cars. The Dodge Diplomat is offered in two price classes known as the Salon and Medallion. A Plymouth Gran Fury is sold as a Salon, but not as a Medallion. A third model is the New Yorker Fifth Avenue which is unique to the Chrysler-Plymouth line. Dodge is the truck division of Chrysler Corporation. It is the intent of Chrysler Corporation to sell trucks only through its Dodge affiliates. In 1983, Chrysler-Plymouth dealers will only be able to sell 1982 Voyaoers and Arrow Pick-ups which are found at the dealers and 1983 Voyagers. In 1984, the Voyager truck line will be discontinued at Chrysler-Plymouth dealerships. Chrysler Corporation merchandises automobiles, with a utility feature which are sold as cars and known as Plymouth Scamps and Dodge Rampages. There are minimal differences in these vehicles and those differences are of the types described in its Turismo and Charger. Chrysler Corporation markets import models from Mitsubishi Motors Corporation, a Japanese manufacturer. These are two and four door automobiles whose sole differences are designations which indicate that they are imported for sale by Dodge or Plymouth. These automobiles are known as Colts, and are subcompacts. Chrysler Corporation also offers the Mitsubishi automobiles known as Sapporo and Challenger which are rear wheel drive automobiles whose differences relate to grill and tail light and interior appointments. The Challenger is a Dodge product and the Sapporo a Plymouth product. In 1984, Chrysler Corporation will offer sport automobiles known as G- 24s in both the Dodge and Chrysler-Plymouth line to compete with General Motors' Pontiac Firebird, Chevrolet Camaros, and Ford Mustangs. Dodge will offer an individual performance model known as the Turbo Z which will not be available in the Chrysler-Plymouth line. The Chrysler-Plymouth version will be offered with electronic instrumentation which is unique. In 1984, the T-115 series station wagon will be offered by both Dodge and Plymouth and a Dodge van version of that automobile will be offered. Loan values for the similar product lines in the Chrysler Corporation line are the same. Presently, the marketing and sales functions of Dodge and Chrysler- Plymouth are separate groups. Product development of the corporation is not a separate function between the two lines; however, it is intended that these two lines compete with each other. Reliant is the best selling Chrysler-Plymouth product and the Aries is the best selling Dodge product. John Burnett, the President of Massey Dodge, pointed out that twenty Percent (20 percent) of the sales of his company are in the southside area where Caruso would locate his dealership. The north side of Jacksonville is the main sales area. The Massey dealership can and does work on all Chrysler Corporation products with the exception of Imperial and the information related to all warranty work is sent to the same zone or same location in Detroit, Michigan. The dealership has experienced decreased sales in 1902, as compared to 1981, which has been an industry experience and its officials have been counseled to increase its minimum sales responsibility in 1982. This relates to the Chrysler Corporation's expectations on the number of units sold by its dealer. The dealership at Massey sells sixty percent (60 percent) used cars and half of its new car sales relate to Dodge trucks. William Shore, the President and owner of Westside Dodge, who has been in the car business for thirty-two years, established that approximately twenty percent (20 percent) of his automobile sales are in the southside area which would be the area in which Caruso would be opening its business to sell Chrysler-Plymouths. In 1982, Westside sold 234 Colts and Challengers, 154 Aries Ks, and 86 Omnis, to include Chargers and 71 Dodge 400s, up to the month of December for a total of 545 units and for the total year sold 597 new units. Relating again to automobile sales by Westside, 464 trucks were sold by Westside in 1982, out of a total of 1,061 sales. In 1981, 808 cars out of 1,215 sales were recorded; in 1980, 533 cars out of 983 sales were recorded and in 1979, 487 cars and 344 trucks were sold. The opening of the Caruso Chrysler-Plymouth dealership is felt by Shore to be a negative influence on the sale of its K and Colt cars. Moreover, the close proximity of the existing Regency Dodge and applicant Caruso Chrysler- Plymouth would promote a competitive advantage related to service, parts, body work and sale of new and used cars, as shown by Shore's testimony. Ninety-five percent (95 percent) of Westside sales are in Duval County with five percent (5 percent) out of the county. Within the ninety-five percent (95 percent) in Jacksonville, in addition to the twenty percent (20 percent) sales in southside, ten percent (10 percent) would be in the north side and seventy percent (70 percent) in the west side. The distance between Westside Dodge and River City Chrysler-Plymouth is approximately 250 to 300 feet on the same side of the street. George Hanlon, who is a Vice President of Rebuilding Services, Inc., which owns River City Chrysler-Plymouth, and is President of River City, gave testimony. Rebuilding also has a joint dealership in Tallahassee, Florida, which sells Dodge and Chrysler-Plymouths in one location. The availability of Chrysler-Plymouth and Dodge products from the same premises in Tallahassee, Florida, has been an advantage as it relates to overhead in the operation of that business. The Chrysler-Plymouth franchise in that facility is permanent and the Dodge franchise is for a two-year period with the expectation that the Dodge franchise will be relocated in a separate facility in the future. The Rebuilding Corporation had been involved with Ray Mixon Chrysler- Plymouth on Phillips Highway in Jacksonville, Florida, but that business failed. By way of explanation, Hanlon stated that Rebuilding was unable to successfully run both the Phillips Highway store and the River City operation. River City sells primarily in Duval County and in Baker County, which latter county is west of Jacksonville and Hanlon feels that the Dodge product line is the primary competition to Chrysler-Plymouth dealerships. Reference has been made to the utilization of the same facility to construct certain Chrysler Corporation automobiles which are sold as Dodges or Chrysler-Plymouths. In particular, as shown in the response to reguest for admissions made by the Petitioners to the Intervenors, at paragraph 14 of the first request for admissions; 1983 Plymouth Voyagers and 1983 Dodge Ram Wagons; 1983 Dodge Aries and 1983 Plymouth Reliant; 1983 Dodge 400 and 1983 Chrysler LeBaron; 1983 Dodge Challenger and 1983 Plymouth Sapporo; 1983 Dodge Mirada and 1983 Chrysler Cordoba; 1983 Dodge Omni and 1983 Plymouth Horizon; 1983 Dodge 600 and 1983 Chrysler E Class; and 1983 Dodge Rampage and 1983 Plymouth Turismo/Scamp and 1983 Dodge Diplomat and 1983 Plymouth Gran Fury are produced in the same assembly plants. Responses to the second set of admissions made from the Intervenors to Petitioners also connote similarities between various products within these automobiles within the product lines offered by Dodge and Chrysler-Plymouth, of a type previously described. The request for admissions and responses are transmitted with this Recommended order.
Findings Of Fact On February 27, 1980, Respondent converted one of its service station fuel tanks from gasoline to diesel. The tank was cleaned by Garrison Petroleum Equipment Company at Pinellas Park. Respondent paid $67.08 for this service. That same day, Respondent received 5,176 gallons of No. 2 diesel fuel from Jack Russell Oil Company, Inc., of Clearwater, a Union 76 dealer. On March 18, 1980, a standards inspector employed by Petitioner took samples from the Respondent's gasoline and diesel pumps. These samples were delivered to Petitioner's portable laboratory in Clearwater where they were analyzed. The gasoline was found to be satisfactory, but the diesel sample showed fuel contamination. The tests were conducted in accordance with the methods and standards established by Rule 5F-2.01(4)(b), Florida Administrative Code. Specifically, the "flash point" of the diesel sample was 88 degrees F, but must be 125 degrees F or above to meet the established standard. Petitioner's inspector then returned to the Pronto Car Wash station where he issued a stop-sale order to Respondent. Subsequently, the inspector accepted Respondent's cash bond in lieu of fuel confiscation. This procedure, agreed to by both parties, allowed Respondent to pay $865.36 to the State of Florida and retain the contaminated fuel. Respondent originally paid $5,286.25 for 5,176 gallons of diesel fuel. He had sold 736 gallons of this amount at the time of the stop-sale order on March 18, 1980. Total sales of this diesel fuel amounted to $865.36, which was the amount of bond demanded by Petitioner. Respondent paid $200 to Patriot Oil, Inc., to remove the contaminated fuel, but received a $3,225 credit for this fuel. Respondent does not deny that the fuel was contaminated, but seeks to establish that he acted in good faith. Respondent had the tank cleaned prior to the diesel changeover and dealt with established tank cleaning and fuel wholesaling companies. In addition, he kept the tank locked at all times after delivery of the fuel. Respondent does not contest forfeiture of his bond, but seeks refunds of state and federal taxes paid on the unsold fuel. However, Respondent was correctly informed that refund of tax payments will require him to communicate with agencies which are not parties to this proceeding.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That Petitioner enter its order declaring forfeiture of Respondent's $865.36 bond posted in lieu of confiscation of contaminated diesel fuel. RECOMMENDED this 7th day of August, 1980, in Tallahassee, Florida. COPIES FURNISHED: Stephenson Anderson Pronto Car Wash 220 34th Street North St. Petersburg, Florida 33713 Robert A. Chastain, Esquire General Counsel Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32301 John Whitton, Chief Gasoline and Oil Section Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32301 R. T. CARPENTER Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 (904) 488-8584
