The Issue The issue for determination in this proceeding is whether an additional Chevrolet dealership should be established in the Orlando, Florida area.
Findings Of Fact Petitioner, General Motors Corporation ("Chevrolet"), proposes to locate an additional dealer at 9400 State Road 434 South, Altamonte Springs, Seminole County, Florida. Petitioner, Classic Chevrolet Co., Inc. ("Classic"), is the owner and operator of the proposed dealership. Respondent, Don Mealey Chevrolet, Inc. ("Mealey") is located in Orlando, Florida, approximately six miles from the site of the proposed dealership. Respondent, Chevrolet World, Inc., d/b/a World Chevrolet Geo ("World"), is located in Orlando approximately 13 miles from the site of the proposed dealership. The proposed dealership is located within an area identified by Chevrolet as the Orlando multiple dealer area ("MDA"). The MDA is the area of primary responsibility ("APR") described in each contract between Chevrolet and the four existing dealers in the MDA. The four existing dealers in the MDA are Mealey, World, Ken Rummel Chevrolet-Geo ("Rummel"), and Roger Holler Chevrolet ("Holler"). Petitioners propose to establish Classic as a fifth Chevrolet dealership in the MDA. Relevant Community Or Territory This proceeding is governed by Section 320.642, Florida Statutes. 1/ Chapter 320 does not define the community or territory to be used in determining whether existing dealers adequately represent Chevrolet. 2/ The APR described in the contracts between Chevrolet and the existing dealers in the MDA is a material fact entitled to great weight. However, the APR is not determinative of the relevant community or territory. Fringe Areas Ten dealers have an APR adjacent to the MDA ("fringe areas"). The dealers in fringe areas are Seidle, Starling, Gannaway, Holiday, Bondesen, Eckler, Higgingbothom, Sorensen, Steele, and Blount. The issue of whether fringe areas should be included in the relevant community or territory is determined by all of the facts and circumstances surrounding the proposed dealership. 4/ The "cross-sell test" is one means of determining whether fringe areas should be included in the relevant community or territory. The cross-sell test measures sales by a fringe dealer to consumers in the MDA and sales by dealers in the MDA to consumers in the fringe areas. A fringe area satisfies the cross-sell test for inclusion in the relevant community or territory if more than 30 percent of sales by a fringe dealer are made to consumers in the MDA and if more than 30 percent of sales by dealers in the MDA are made to consumers in the fringe area. Only Seidle and Starling make more than 30 percent of their sales to consumers located in the MDA. Therefore, only Seidle and Starling satisfy the first part of the conjunctive requirements for the cross-sell test. Seidle is located in Clermont, Florida. Starling is located in Kissimmee, Florida. Only 19 percent of the consumers located in Kissimmee purchase Chevrolets from MDA dealers. Kissimmee does not satisfy the second requirement of the cross-sell test. Kissimmee is not in the relevant community or territory. More than 40 percent of consumers in Clermont purchase vehicles from MDA dealers. Clermont satisfies the second part of the conjunctive requirements for the cross-sell test. Clermont is not included in the relevant community or territory due to low sales volume by Seidle and ineffective performance by Seidle. Seidle sold only a nominal number of vehicles in 1993 compared to other dealers in the MDA. Of those sales, only 24 percent were sales in the APR for Clermont. The vast majority of consumers in Clermont purchased automobiles from dealers in the MDA or other more remote dealers. Mealey sold more vehicles to consumers in Clermont than did Seidle. Seidle achieved only 56 percent of the sales opportunities available to it. The MDA An Area of Geographic Sales and Service Advantage ("AGSSA") is an area within which a dealer is closer to consumers than any other same line-make dealer. There are five AGSSAs in the MDA. Holler is located in AGSSA 1. Mealey is located in AGSSA 2. Classic, the proposed dealership, is located in AGSSA 3. Rummel is located in AGSSA 4. World is located in AGSSA 5. Each AGSSA satisfies both conjunctive requirements in the cross-sell test. Each AGSSA is connected by consumer behavior, road networks, and inter- brand dealer locations. The relevant community or territory is the MDA. The MDA consists of AGSSAs 1-5. AGSSAs 1-5 are identifiable plots within the relevant community or territory. Adequate Representation In order for the adequacy of representation by existing dealers in the MDA to be assessed, their performance must be compared to a reasonable standard. A reasonable standard for such a comparison is the national average for Chevrolet's market share. The Florida Average The Florida average is not a reasonable standard. Florida has lagged behind the national average from 1991 through June, 1994. In 1993, Chevrolet's market share in Florida ranked 43 out of 50 states. Unique characteristics of Florida consumers account for only a portion of the difference between Florida and national averages. The remaining shortfall is attributable to deficiencies in Chevrolet's statewide dealer network. A dealer network includes the number and location of individual operations. Chevrolet's share of competitive franchises in Florida is below its national average. This is a significant factor in a brand's ability to achieve a reasonably expected market share. The Florida average includes network deficiencies for Chevrolet. It is inappropriate to use the Florida average as a standard to assess the adequacy of representation by existing dealers in the MDA. The National Average National average is first adjusted to account for unique consumer characteristics in Florida. After the appropriate adjustment, Chevrolet market penetration in the MDA is below national average. In 1993, for example, Chevrolet market share expectation in the MDA was 15.42 percent. In AGSSA 3, Chevrolet market expectation was 15.23 percent. In 1993, actual Chevrolet market penetration in the MDA was 12.32 percent. Actual market penetration in AGSSA 3 was only 10.76 percent. The shortfalls experienced in the MDA and AGSSA 3 are not attributable to local characteristics such as the presence of large numbers of daily rental cars in Orlando. More than half of all local markets in Florida exceed market share expectation adjusted for local characteristics. From 1991 through June, 1994, the MDA and AGSSA 3 performed significantly below the minimum market expectation. The degree of shortfall in the MDA has steadily declined on a percentage basis. The contribution by World to Chevrolet performance in the MDA has steadily increased. However, World's contribution to Chevrolet performance in AGSSA 3 did not improve Chevrolet performance in AGSSA 3 even though World had significant improvement in the MDA as a whole. The combined effort of existing dealers besides World has remained relatively constant. Through June, 1994, the MDA reached only 86.9 percent of the minimum expected market penetration. The contribution by existing dealers to Chevrolet performance in AGSSA 3 also remained relatively constant. It ranged from 68.8 percent of minimum expected penetration in 1991 to 71 percent through June, 1994. Vehicle Registration New vehicle registration density for the automobile industry mirrors patterns for population and households. The trend for the industry in the MDA and AGSSA 3 is upward. Each AGSSA in the MDA, including AGSSA 3, has experienced significant growth in population and households during the past 14 years. Growth rates are about four times the national rate and are expected to continue for at least the next five years. 5/ The MDA population has a strong distribution of median and above average income. There are virtually no economically depressed areas. There is a steady upward trend in employment. These factors represent a favorable environment for new vehicle sales. Growth in the MDA and AGSSA 3 represents new opportunity for Chevrolet. Registration activity in AGSSA 5 increased substantially after World was added as an existing dealer in the MDA. Sales by existing Chevrolet dealers in the MDA also increased. From 1991 through 1994, registrations in AGSSA 3 were less than the MDA and AGSSA 5. Chevrolet performance in AGSSA 3 ranks well below expected market penetration. Market Opportunity Gross registration loss is the number of registrations needed to raise each census tract within the MDA to the expected registrations for that area. Gross registration loss is a reasonable means of calculating market opportunity but does not represent the maximum opportunity. The amount and location of gross registration loss for Chevrolet in the MDA demonstrates a consistent pattern of under performance by existing dealers from 1991 through 1994. The establishment of World in 1991 raised the market efficiency of AGSSA 5 from 75.9 percent of expected market in 1990 to 103 percent in 1994. Chevrolet's overall market share increased. However, the addition of World did not eliminate under- performance. After controlling for the establishment of World, the gross registration loss for Chevrolet from 1991-1994 in AGSSAs 1- 4 was 6,083. That is an annual average loss of 1,521. The average annual loss in AGSSAs 1-4 from 1991-1994 is consistent with the loss for each year. The gross registration loss for AGSSAs 1-4 in 1991 was 1,489. In 1992, the loss was 1,510. The 1993 and annualized 1994 losses were 1,667 and 1,632, respectively. Chevrolet's overall registration shortfall in the MDA for 1993, including AGSSA 5, was 1,920 units. Of the units Chevrolet did sell in the MDA, approximately 1,216 were attributable to sales by Chevrolet dealers located outside the MDA ("insell"). If the proposed dealership had existed in 1993 and had penetrated the market at the same level as the average of existing dealers in the MDA, the proposed dealer would have sold 1,602 units. Projected sales by the proposed dealer in 1993 represent only 51.1 percent of combined shortfall and insell. Without insell as a component of opportunity, projected sales would not have eliminated gross registration loss. Assessing lost opportunity by gross registration loss is consistent with actual experience. The addition of World in 1991 raised AGSSA 5 efficiency from 75.9 percent of expected in 1990 to 103 percent of expected in 1994. Sales by existing dealers in the MDA remained stable through 1993 and increased in 1994. Chevrolet's overall market share increased and insell declined. The addition of a new dealer in a market in which there is sufficient opportunity for additional representation generally expands the market. Establishment of a Chevrolet dealer in the MDA for Jacksonville, Florida increased efficiency from below expected to above expected without decreasing sales by existing dealers. Insell also declined. The addition of a GMC Truck dealer in the MDA for St. Petersburg and Clearwater, Florida achieved similar results. Dealer Network Despite significant growth in population, households, and new vehicle registrations, Chevrolet's dealer network in the MDA has not expanded since 1930. Chevrolet's share of automobile franchises nationally is 10 percent. Its share of franchises in the MDA is only five percent. Chevrolet needs 8.5 dealers to achieve the same share of franchises in the MDA that it maintains nationally. The addition of the proposed dealer would raise Chevrolet's share of MDA franchises to 6.25 percent. Chevrolet has not been able to achieve its minimum expected market share with four dealers in the MDA. Proximity The ability of existing dealers to penetrate the market is strongest near their dealerships. It tapers off substantially as distance increases. 6/ Chevrolet is farther from AGSSA 3 than approximately 23 other brands. Ford has nearly a four mile advantage in distance over Chevrolet in AGSSA 3. The proposed dealer would improve Chevrolet's proximity to AGSSA 3 consumers. A brand's ability to penetrate a market diminishes as proximity to consumers diminishes, and vice versa. Before World was added to the MDA, Chevrolet's lowest market penetration occurred nearer the World site. Market penetration in the MDA increased nearer to Chevrolet dealers in existence prior to the addition of World. After World was added to the MDA, Chevrolet's highest market penetration occurred nearest the World site. World improved Chevrolet proximity to consumers in AGSSA 5 by approximately 2.5 miles. Chevrolet's efficiency to the expected market share improved in AGSSA 5 from 74.4 percent to 102.9 percent. Other line-makes experience similar market penetration. Market share for Ford is highest near their respective dealerships. Market share diminishes as distance from the dealerships increases. Ford achieves approximately 200 percent of the market penetration achieved by Chevrolet in the vicinity of the Ford dealer in AGSSA 3. The establishment of the Ford dealer in 1988 resulted in an increase of Ford market share relative to the national average. The site of the proposed dealer is close to an optimal location that maximizes Chevrolet proximity to consumers in the MDA and AGSSA 3. The site of the proposed dealer is further enhanced by an anticipated extension of Maitland Boulevard. The extension will facilitate greater visibility and accessibility to consumers. Operating Efficiency If all dealers in the MDA are operated as efficiently as they can be operated, a new dealer is most disadvantaged in the relevant community or territory. The new dealer lacks customer loyalty, word of mouth recommendations, and an established warranty and customer service business. If an existing dealer is forced to withdraw from the MDA as a result of the addition of a new dealer, the impact on the public interest, consumers, the manufacturer, and remaining existing dealers is positive. The addition of the new dealer eliminates inefficiency and strengthens the brand's overall competitiveness in the market, thereby increasing value and convenience for consumers. It is undisputed that Rummel is an inefficient Chevrolet dealer. Chevrolet loses approximately 1,000 sales each year as a result of inefficient operation of Rummel. Rummel failed to maintain the minimum level of operating capital prescribed in its dealer agreement with Petitioner. From 1989 through 1993, Rummel operated far below its required operating capital level and at a deficit. Inadequate working capital can interfere with a dealer's ability to adequately represent product in the market. Inadequate working capital can prevent the dealer from paying the floor plan lender and thereby prevent the dealer from obtaining product to sell. Rummel's inadequate working capital caused problems in its floor plan financing. Rummel's floor plan financing was revoked from March 16, 1992, through May 1, 1992. Rummel sales were substantially below its contractual sales obligations with Chevrolet from 1990 through 1993. Chevrolet placed Rummel on Chevrolet's Performance Improvement Program in February, 1993. However, Rummel did not submit a plan to address its sales deficiencies that was satisfactory to Chevrolet. Chevrolet granted Rummel's request for a special allocation of vehicles. However, Rummel refused to submit orders so that the allocation could be delivered. Mr. Ken Rummel frequently replaced himself as dealer operator without approval from Chevrolet. The dealer agreement requires a dealer to devote his or her personal services to the daily management of the dealership. Order Bank Management Chevrolet distributes new vehicles to its national dealer body based upon a mathematical formula that accounts for each dealer's rate of sale and current product availability. A dealer can grow its business by increasing the rate at which it sells the product allocated to it. Before Chevrolet can ship a vehicle to a dealer, the dealer must submit a "selectable" order to Chevrolet. Product allocated to a dealer but not ordered may be purchased by other dealers. A dealership must properly manage its order bank. For approximately 100 production weeks for 1992 and 1993 model vehicles, Mealey placed no selectable orders for a broad range of Chevrolet product. From August, 1991, through July, 1993, Mealey frequently rejected its allocation of product through a lack of selectable orders. During the same period, World and other existing dealers in the MDA received additional product which was available to Mealey. To a lesser degree, World practiced selective ordering. World and Mealey are adequately capitalized and in sound financial condition. Neither would suffer any adverse financial impact from the proposed dealership. Enhanced Competition And The Public Interest Where there is sufficient opportunity for additional representation, as there is in the MDA and AGSSA 3, the impact on consumers from an additional dealer is positive. Enhanced intra- brand and inter-brand competition results in lower transactional costs, lower pricing, better trade-in value, better financing, greater selection, and better service. Enhanced competition also increases the perception by consumers that they are receiving greater value. Existing Chevrolet dealers in the MDA will benefit from the proposed dealer. Public exposure to the Chevrolet brand will be greater. Existing dealers will share the benefits of greater advertising, public display, and demonstration of product. Enhanced competition encourages existing Chevrolet dealers to become more efficient and aggressive. There is greater opportunity to convince non- brand or marginal customers to buy Chevrolets. Enhanced competition is unlikely to result in reduced profits for existing dealers due to elasticity of demand in the automobile industry. Enhanced competition stimulates the competitive viability of the line-make in the market through greater efficiency and perceived value. The proposed dealer favorably impacts the public interest. The public obtains greater value, and there is a better allocation of scarce resources. The proposed dealership also means additional employment and enhanced tax revenues.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order and therein GRANT the application for the proposed dealership. RECOMMENDED this 1st day of February, 1996, in Tallahassee, Florida. DANIEL S. MANRY, 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 1st day of February, 1996.
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by June C. McKinney, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Petitioner’s letter of withdrawal of protest of the establishment of AutoNation Dodge of Pembroke Pines, Inc., a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File as its Final Order in this matter. Accordingly, it is hereby ORDERED and ADJUDGED that Respondent, AutoNation Dodge of Pembroke Pines, Inc. be granted a license for the sale and service of Jeepr passenger cars and light trucks manufactured by Chrysler (JEEP) 13601 Pines Boulevard, Pembroke Pines (Broward County), Filed January 27, 2012 3:47 PM Division of Administrative Hearings Florida 33027 upon compliance with all applicable requirements of section 320.27, Florida Statutes, and all applicable Department rules. DONE AND ORDERED this A‘! day of January, 2012, in Tallahassee, Leon County, Florida. skill, Assistant Deputy Director Division of Motorist Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A338 Tallahassee, Florida 32399 Filed with the Clerk of the Division of Motorist Services this | __ day of January, 2012. Nalini Vinayak, Dealer Ycense Administrator NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. MDM/jde Copies furnished: Thomas H. Yardley, Esquire Law Office of Thomas H. Yardley 1970 Michigan Avenue, Building D Cocoa, Florida 32922 Phil Langley Chrysler Motors, LLC 10300 Boggy Creek Road Orlando, Florida 32824 R. Craig Spickard, Esquire Kurkin Forehand Brandes, LLP 800 North Calhoun Street, Suite 1B Tallahassee, Florida 32303 Dean Bunch, Esquire Nelson, Mullins, Riley and Scarborough LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 June C. McKinney Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS MASSEY-YARDLEY CHRYSLER PLYMOUTH, INC., Petitioner, vs. Case No. 11-6492 CHRYSLER GROUP CARCO, LLC, AND AUTONATION DODGE OF PEMBROKE PINES, INC., Respondents.
The Issue The issue in this case is whether Section 320.642(2)(a), Florida Statutes, permits the relocation by Petitioner General Motors Corporation (GM) of the dealership of Petitioner Buddy Foster Chevrolet, Inc. (Foster), from its present location to a new proposed location for the sale of certain line-makes of Chevrolet vehicles. In order to make that determination, the question arises as to whether Respondent Roger Whitley Chevrolet, Inc. (University), and Respondent Gordon Stewart Chevrolet, Inc. (Stewart), are already providing adequate representation for sale of the subject Chevrolet vehicles in the community or territory of the proposed Foster relocation point.
Findings Of Fact Parties GM is a “licensee” and “manufacturer” as defined by Sections 320.60(8) and (9), Florida Statutes. Foster, Stewart, and University are “motor vehicle dealers” as defined by Section 320.60(11)(a)(1), Florida Statutes. Notice and Standing On October 3, 2003, notice of GM’s intent to permit the relocation of Foster (the Proposed Relocation) from its current location at 36822 Highway 54 West, Zephyrhills, Florida (Existing Location) to a proposed location at Interstate 75 and State Road 56 in the Wesley Chapel Area (Relocation Site) was published in the Florida Administrative Weekly, Volume 29, Number 40, page 3964. Both the Existing Location and the Relocation Site are in Pasco County, Florida. Stewart is an existing franchised Chevrolet dealer who timely protested the proposed relocation of Foster. Stewart has standing to maintain that protest. University is an existing franchised Chevrolet dealer. After Roger Whitely Chevrolet, Inc., timely protested the proposed relocation of Foster, University purchased the stock of Roger Whitley Chevrolet, Inc., and changed the name of the dealership to University Chevrolet. University acquired the rights of Roger Whitley Chevrolet, Inc., to protest the proposed relocation, and has standing to maintain that protest. The Community or Territory and Recent Modifications to the Chevrolet Dealer Network The Community or Territory (Comm/Terr) relevant to this proceeding is the area defined by GM as the Tampa Multiple Dealer Area (Tampa MDA) plus the Wesley Chapel and Plant City markets.2/ There are currently four Chevrolet dealers in the Tampa MDA: Stewart, University, Ferman Chevrolet, and Autoway Chevrolet. There are currently five Chevrolet dealers in the Comm/Terr, the four Tampa MDA dealers plus Bill Heard Chevrolet (Bill Heard) in Plant City. Foster is not currently in the Tampa MDA or the Comm/Terr. The area currently assigned to Foster as its Area of Primary Responsibility pursuant to its GM franchise agreement is referred to as a Single Dealer Area (SDA), meaning that Foster is the only dealer assigned to the APR. The Proposed Relocation would add Foster as a fifth Chevrolet dealer in the Tampa MDA and a sixth Chevrolet dealer in the Comm/Terr. The Comm/Terr currently contains four full line Ford dealerships and one light-truck only Ford dealership. All other line-makes currently have four or fewer dealers in the Comm/Terr. In 2004 there were two significant changes in the Chevrolet dealer network within the Comm/Terr. In May of 2004, Bill Heard relocated to a new facility adjacent to Interstate 4, placing Bill Heard in a better position to sell into the Tampa MDA along with the expectation of both a significant increase in Bill Heard’s new vehicle sales and Chevrolet’s level of performance in the Comm/Terr.3/ In June of 2004 University purchased Roger Whitley Chevrolet, changed managers, expanded business hours, and tripled advertising expenditures. The recent ownership change is expected to result in increased new vehicle sales from the dealership and an increased level of Chevrolet performance in the Comm/Terr.4/ Proposed Relocation In the Fall of 2002, the owner of Foster, Harry M. Foster, requested that GM grant him an additional Chevrolet location in the Wesley Chapel, Florida, area. Subsequently, GM conducted a market study to determine whether it was appropriate to add a Chevrolet location in Wesley Chapel. Marvin Beaupre was assigned the task of analyzing the Wesley Chapel market and determining whether an additional Chevrolet location was justified. Beaupre’s subsequent market study revealed that Chevrolet had historically received an adequate level of representation from existing dealers in the area currently assigned to Foster in its GM franchise agreement (the dealership’s APR). Beaupre concluded that although there appeared to be a deficiency in Chevrolet performance in the Tampa MDA, the deficiency was not significant enough to justify the addition of a new dealership in Wesley Chapel. When Foster learned of GM’s decision not to add a new Chevrolet dealership in Wesley Chapel, he requested the opportunity to relocate his existing dealership in Zephyrhills, Florida, to the Wesley Chapel area. GM agreed to allow the Proposed Relocation on the basis of growth in the Wesley Chapel and New Tampa area. Currently, Foster is located in approximately the center of its APR/SDA. The Proposed Relocation would place Foster in the furthest southwestern portion of its APR/SDA, with a location immediately adjacent to the AGSSAs assigned to Stewart and University. As a result of the Proposed Relocation and the addition of Foster to the Tampa MDA, Stewart and University would be assigned new AGSSAs considerably smaller (in both geography and population) than their existing AGSSAs. The new AGSSA that would be assigned to Foster as a result of the Proposed Relocation would be larger in terms of population and sale opportunity than its existing APR/SDA. Those portions of the current Foster APR/SDA which would not be included in the AGSSA assigned to Foster after the relocation would be reassigned to the dealership immediately to the north of Foster, Dade City Chevrolet, increasing the geography, population, and sale opportunity of the Dade City Chevrolet APR/SDA. Harry M. Foster owns both Foster and Dade City Chevrolet. Is Current Representation Adequate As a result of the Proposed Relocation, certain consumers would suffer a negative impact, although some consumers would have more convenient access to a Chevrolet dealer. Consumers in the new AGSSA that would be assigned to Foster would experience an average decrease in distance to a Chevrolet dealer of 3.7 straight-line miles.5/ Contrarily, consumers in the existing APR/SDA assigned to Foster would experience an average increase in distance to a Chevrolet dealer of 4.0 driving miles, and those same consumers would experience an average increase in distance to Foster of 6.0 driving miles. Throughout the Comm/Terr, the Proposed Relocation would only result in an average decrease in the distance from a consumer to a Chevrolet dealer of .4 straight-line miles. Other than convenience, there is a second factor arising from the Proposed Relocation that could impact consumers. There will be a greater number of consumers located between Foster and Dade City Chevrolet. Consumers previously located between Foster and Stewart or University (with easier access to cross-shop between Foster and Stewart or University) would be located between Foster and Dade City Chevrolet after the relocation with convenience lying in the cross-shop between Foster and Dade City Chevrolet. Since both Foster and Dade City Chevrolet are owned and operated by the same individual, it is possible that the Proposed Relocation could result in a decrease of competition among Chevrolet dealers as it relates to some consumers, a negative impact on those consumers and on the public interest. In terms of competition between two Chevrolet dealers, convenience to the customer is the most critical factor. The Proposed Relocation would move Foster significantly closer to both Stewart and University, and to consumers served by those dealerships. In terms of straight-line distance, the Proposed Relocation would be a move of 10.7 miles. Currently, Foster is 20 straight-line miles from Stewart and 19.6 straight-line miles from University. After the relocation, Foster would be 9.7 straight-line miles from Gordon Stewart and 10.8 straight-line miles from its old location. In terms of driving time, Foster is currently 37.7 minutes from Stewart and 33.5 minutes from University. After the relocation, Foster would be 18.4 minutes from Stewart and 14.1 minutes from University. As a result of the Proposed Relocation, Foster would be significantly closer to many consumers now closer to either Stewart or University. Additionally, Foster would be significantly closer (both in straight-line distance and drive time) to a large percentage of the existing new vehicle, used vehicle, and service customers of both Stewart and University. In 2002 and 2003, Stewart and University made 40% of the sales registered in the area to which Foster would gain a convenience advantage as a result of the Proposed Relocation. There exists a statistical correlation between the size of a dealer’s AGSSA and the number of new vehicle sales made by the dealer. As the size of a dealer’s AGSSA decreases the number of sales made by the dealer will typically decrease. In this instance, based on the relative change that would result in the increased convenience of Foster to those consumers who currently find it more convenient to shop at Stewart or University and the decrease in the area in which Stewart or University would have a competitive advantage based on convenience (i.e. a decrease in each dealer’s AGSSA), a reasonable estimate of impact to Stewart from the Proposed Relocation is a loss of approximately 17% of new vehicle sales and 15% of used vehicle sales and service business.6/ A reasonable estimate of impact to University from the Proposed Relocation is a loss of approximately 16% of new vehicle sales and 15% of used vehicle sales and service business.7/ Based on Stewart’s performance in 2003, the financial losses incurred by Stewart as a result of the Proposed Relocation would be in the range of $600,000 per year. Based on the pro forma financial statement submitted to GM by University at the time of its purchase of Roger Whitley Chevrolet, Inc., the financial losses incurred by University as a result of the Proposed Relocation would be in the range of $750,000 per year.8/ The Proposed Relocation could have a significant short-term negative impact on existing dealers, including a significant financial impact on Stewart and University. GM’s expert classified short-term as up to a year, and indicated that after that period the market could adjust and existing dealers re-establish their pre-relocation level of performance. However, that dealership growth would, at least in part, be a result of general growth in the market and does not indicate that existing dealers will regain their pre-relocation level of performance in an economic sense (because they have been denied the opportunity to capture the growth that would have resulted from general market expansion). Significantly, the financial loss expected for both Stewart and University could, because of the “turn and earn” system employed by GM to determine vehicle allocation, result in a circumstance known in the automobile industry as a “death spiral,” where the dealer cannot earn vehicles because of a slow turn rate and cannot turn vehicles because it has not earned them. As the name implies, the “death spiral” results in a dealer either going out of business or having to sell the dealership. Impact on GM GM would not significantly benefit from the Proposed Relocation. Although it is clear that there has been recent growth in the Wesley Chapel area and that other manufacturers have, or plan to, establish locations in that general area, the evidence establishes that existing Chevrolet dealers are actively pursuing sales and service business in the Wesley Chapel area (including producing a significant amount of advertising for Chevrolet products) and, as noted above, that Chevrolet currently has an adequate level of convenience to customers in Wesley Chapel. The evidence does not establish that GM will enjoy increased sales or overall increased customer convenience as a result of the Proposed Relocation.9/ Existing Chevrolet dealers have historically provided an adequate level of customer satisfaction performance and have adequate facilities to serve the Comm/Terr.10/ Short-term competition between Chevrolet dealers for customers in the Comm/Terr could increase after the Proposed Relocation. The likelihood, however, that competing Chevrolet dealers will not be as successful as they have been in the past in making sales into the Wesley Chapel area if Foster is relocated, makes it highly probable that competition among Chevrolet dealers for customers in that area will actually decrease in the long-term. Existing dealers will focus their marketing efforts on areas other than Wesley Chapel. Investment of Existing Dealers The owners of Stewart and University have invested significant dollar amounts to perform their obligations under their respective GM franchise agreements. The owners of Stewart invested approximately $9,000,000 in purchasing land and constructing facilities for the dealership. The owners of University recently purchased the stock of Roger Whitley Chevrolet, Inc., and have an investment of $12,000,000 to $14,000,000 in the dealership. The Proposed Relocation would put the investment of the owners of Stewart and University at significant risk. Market Penetration A line-make’s market penetration is measured by dividing the number of that line-make’s new vehicles registered in a particular area by the total number of competitive new vehicles registered by all line-makes in the same area. In determining whether Chevrolet is currently achieving a reasonably expected level of market penetration in the Comm/Terr a reasonable standard or benchmark must first be established against which Chevrolet’s performance is compared which is neither too high nor too low. Chevrolet’s national average market penetration as a standard against which to judge Chevrolet’s current performance in the Comm/Terr is not reasonable.11/ There are several reasons why use of the national average is not appropriate to test Chevrolet’s current market penetration in the Comm/Terr. First, the national average represents a very large area (the nation), which is demographically very diverse in terms of culture, economy, politics, climate, terrain, etc. The Comm/Terr, or for that matter the State of Florida as a whole, does not share that same level of diversity.12/ Second, most manufacturers have rejected national average as a reasonable standard for evaluating dealer performance. Indeed, GM uses state average when evaluating the performance of its Chevrolet dealers.13/ The deposition testimony of William E.L. Powell, the former Zone Manager responsible for approving network changes such the Proposed Relocation, establishes that, although national average is considered, state average is the focus of GM’s analysis of whether a particular line-make as a whole is being under represented in a market. Third, the national average includes areas that are heavily influenced by special purchasing plans provided to GM employees, those employees’ family members, and employees of GM suppliers. Those plans provide participants an incentive to purchase GM products by establishing a standard price (only slightly above dealer cost) at which the participant may purchase a vehicle from any dealer in the country. It is telling that those states in which Chevrolet’s average penetration meets or exceeds what is expected based on national average are almost exclusively found in the “heartland” of America. Those states, which are the traditional home to manufacturing in this country, are also the states in which Chevrolet’s penetration performance is most likely to be positively influenced by GM’s employee and supplier purchase plans. Use by GM of the national average as a standard to judge Chevrolet’s performance in the Comm/Terr overlooks the fact that the only Florida MDA in which Chevrolet’s market penetration meets or exceeds what is expected based on national average is Pensacola, Florida. In all of the 10 other Florida MDAs, Chevrolet falls short of the expected penetration based on national average. The markets in Florida where Chevrolet does achieve the expected level of market penetration based on national average are significantly different from the Comm/Terr which is the subject of this proceeding. They tend to be more rural in location than this Comm/Terr and significantly smaller in terms of automobile retail activity.14/ In these more rural areas, the market penetration of what are traditionally considered domestic brands, such as Chevrolet, tends to be higher than in urban areas because throughout the rural areas there is a lack of representation of what are traditionally considered import brands. The appropriate standard against which to measure Chevrolet’s performance in the Comm/Terr, when judging the performance of a line-make in a Florida market, is to use that line-make’s performance in the State of Florida as a whole as the standard. Although there exist differences in the demographic, geographic, economic, and political make-up of the various communities throughout the State, Florida as a whole is much more representative of the Comm/Terr than is the Nation as a whole.15/ Chevrolet’s performance in the Comm/Terr has historically been either above or essentially at the expected level of penetration based on Florida average. In 2001, Chevrolet performed at 102.8% of the expected level. In 2002, Chevrolet performed at 99.6% of the expected level, and, in 2003, at 99% of the expected level. In those years where Chevrolet was below the expected level, the shortfall was insignificant (32 out of 7,292 expected units in 2002, and 80 out of 7,517 units in 2003).16/ More importantly, the statistics presented regarding Chevrolet’s performance during previous years do not reflect the performance of the currently existing dealer network.17/ Rather, if a reasonable level of increased performance is attributed to Bill Heard as a result of that dealership’s relocation in May of 2004 (note 3 supra), it is unquestionable that Chevrolet does now achieve its expected level of penetration in the Comm/Terr based on Florida average. As for the AGSSA that would be assigned to Foster if it relocated, Chevrolet’s level of penetration in that market has historically been slightly under its expected penetration based on Florida average. In 2001, Chevrolet performed at 94.3% of the expected level, in 2002 Chevrolet performed at 91.1% of the expected level, and in 2003 Chevrolet performed at 91.9% of the expected level. Again, the shortfall in terms of number of retail units sold was not substantial (50 out of 883 expected in 2001; 82 out of 916 expected in 2002; and 83 out of 1,018 expected in 2003). As with the Comm/Terr, if the impact of changes in the dealer network, which occurred in 2004, are considered (notes 3 & 4 supra), the shortfall in performance within the relocated Foster AGSSA disappears or becomes statistically insignificant. Thus, under the currently existing dealer network, Chevrolet’s present penetration in the relocated Foster AGSSA does not fall significantly below the Florida average. The minimal shortfall that may exist in the relocated Foster AGSSA relates to the fact that Chevrolet products do not perform as well in higher income markets as in markets with more modest incomes. This phenomenon is a factor beyond the control of the dealers within the Comm/Terr. Because Wesley Chapel is a higher income area, Chevrolet cannot be expected to perform as well in that market as in the Comm/Terr as a whole. GM Denial Of Growth Opportunity to Existing Dealers The owners of Stewart established the dealership in 1991. The dealership was established as an additional dealership location granted by GM, and GM established the exact location of the dealership. Prior to agreeing to open the dealership, Gordon Stewart, the principal owner, expressed to GM his concern that the dealership was to be located in a sparsely populated area north of Tampa. In response to Mr. Stewart’s concerns, GM reassured him that it had conducted a market study and determined that the location they had chosen was the optimal location for the dealership based on future market growth GM reasonably expected to occur north of Tampa. Based on GM’s assurances, Mr. Stewart and his partner, Arthur Smith, made considerable investment in constructing and equipping the dealership, with what they believed to be a reasonable expectation of selling approximately 2,500 new vehicles each year. The growth, however, that GM expected north of Tampa did not materialize, except for in the Wesley Chapel area. Nor has Stewart reached its projection of 2,500 new units sold per year, achieving instead only half as many sales. Because of the number of competitive dealers located south of Stewart, the dealership has had to rely on growth in the Wesley Chapel area as the basis for a significant portion of its profits and for future growth potential of the dealership, particularly as areas immediately surrounding the dealership have begun to decline. As discussed above, the Proposed Relocation would have a significant negative financial impact on Stewart and University. Additionally, the Proposed Relocation would deny Stewart the opportunity to serve the North Tampa market, which was the original purpose for establishing the dealership. GM’s approval of the Proposed Relocation would deny Stewart the reasonable opportunity for expansion and growth of its business that GM indicated would be available when Mr. Stewart and Mr. Smith agreed to invest in the dealership. Coercion of Existing Dealers There have been no efforts by GM to coerce existing dealers to consent to the proposed relocation. Distance and Accessibility Distance and travel time, between Foster and Stewart and Foster and University would be reduced by half if the Proposed Relocation were to occur. There, however, is no indication that consumers in the Comm/Terr do not already have easy access to existing Chevrolet dealers in the Comm/Terr. At present, Chevrolet currently enjoys the second lowest average distance to consumer measurement of all the line-makes represented in the Comm/Terr. The Proposed Relocation would not add any significant improvement to the ability of customers in the Comm/Terr to access a Chevrolet dealer. Benefits to Consumers Obtained by Geographic or Demographic Changes Rather than providing benefits to consumers that are not likely to be obtained by geographic or demographic changes in the Comm/Terr, the Proposed Relocation may result in a negative impact to consumers. Protesting Dealers And Dealer Agreements Compliance Stewart and University are in compliance with the terms of their dealer agreements. Adequacy of Interbrand and Intrabrand Competition and Consumer Care The high level of market penetration being achieved by Chevrolet in the Comm/Terr and the increase in that market penetration that will occur as a result of the recent dealer network changes, indicates that there is adequate intrabrand and interbrand competition in the Comm/Terr. (notes 3 & 4 supra.) As previously noted, Chevrolet’s level of convenient consumer care is among the best in the Comm/Terr. As for existing dealership facilities, the existing Chevrolet dealers in the Comm/Terr have facilities which are adequate to service the market. Relocation Justification Based on Economic and Marketing Conditions There are no economic or marketing conditions to justify the Proposed Relocation. The recent changes in the dealer network (the Bill Heard relocation and the change of ownership at University) have made this even more emphatic. Volume of Existing Dealers Registrations and Service Business The existing Chevrolet dealers are transacting a significant level of service and sales business in the Comm/Terr. In terms of retail sales volume, in 2003 Chevrolet ranked second in passenger vehicle sales and second in light- truck sales registered within the Comm/Terr.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, and the candor and demeanor of the witnesses, it is RECOMMENDED: That a final order be entered determining that Petitioner, General Motors Corporation, has failed to satisfy its burden of establishing that existing Chevrolet dealers are not currently providing adequate representation to the Chevrolet line-make within the community or territory of the proposed relocation, and denying the application to relocate Foster from its current location to the proposed location at I-75 and State Road 56. DONE AND ENTERED this 16th day of February, 2005 in Tallahassee, Leon County, Florida. S DON W. DAVIS 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 16th day of February, 2005.
The Issue The issue is whether Respondent discriminated against Petitioner on the basis of her gender or subjected her to a hostile work environment in violation of Section 760.10, Florida Statutes (2006).1
Findings Of Fact Petitioner is an aggrieved person within the meaning of Subsection 760.02(10). Petitioner is a female and filed a complaint with the Commission alleging that Respondent engaged in gender discrimination, sexual harassment, and the creation of a hostile work environment. Respondent is an employer within the meaning of Subsection 760.02(7). Respondent operates a car dealership and services new and used Chrysler-manufactured automobiles and trucks in the State of Florida. Respondent hired Petitioner as a lube tech in Respondent’s service department on July 26, 2006. Petitioner was the only female employee in the service department. Petitioner remained employed as a lube tech in the Quick Lube part of the service department throughout her employment and earned $7.50 per hour. Respondent did not raise or lower Petitioner’s compensation during her employment. Respondent terminated Petitioner’s employment on February 28, 2007. On March 22, 2007, Petitioner obtained employment at an automobile dealership in West Palm Beach, Florida, at an hourly rate of $13.00. Arrigo Dodge Chrysler Jeep (Arrigo) hired Petitioner as a pre-delivery inspection technician, but Petitioner voluntarily terminated that employment for personal reasons unrelated to this proceeding.2 On or about February 28, 2007, Petitioner filed a claim for unemployment compensation.3 Respondent responded to the claim on March 8, 2007. The response stated, in relevant part, that Mr. Richard Burton, the service manager and Petitioner’s immediate supervisor during her employment with Respondent, terminated Petitioner’s employment for violation of Respondent’s so-called “no-dating” policy. The no-dating policy prohibits Respondent’s employees who are managers or supervisors from dating non-management employees. The response to the unemployment compensation claim is an admission within the meaning of Subsection 90.803(18)(a). However, the admission contains two factual inaccuracies. First, Mr. Burton had no authority to hire or fire employees he supervised. Second, the no-dating policy was not a ground for the termination of Petitioner’s employment. As further described in subsequent findings, Respondent corrected the inaccuracies in the response to the claim for unemployment compensation through testimony at the administrative hearing in this proceeding. The fact-finder found the testimony to be credible and persuasive. August 3, 2007, when Petitioner filed the Charge of Discrimination, was the first time Petitioner alleged that Mr. Burton coerced her into having sexual intercourse with him on October 5 and 13, 2006, and harassed her thereafter. The Charge of Discrimination alleges in relevant part: On October 5, 2006, Richard Burton invited me out drinking with a group after work. After drinking, when all others left, he walked me to my car where he began to kiss me. I pushed him away, but he continued. I felt if I did not acquiesce, I would be fired. He grabbed my breast and put his hand down my pants. He then directed me to his car, drove across the street, exited his side of car, came to my side and had sexual intercourse with me. He then drove me back to my care [sic] and I went home crying. On October 13, 2006, Mr. Burton again invited me for drinks, and directed me to perform oral sec [sic] in the parking lot of the bar. He then attempted to have sexual intercourse with again, but could not. . . . I was invited out for drinks with Mr. Burton again, but refused. On two occasions, I was told by Richard Burton that if I did not continue our relationship, I would be fired. The treatment became terrible. Mr. Burton no longer protected me from the nasty comments of other employees, including other employees saying I was “stupid”, telling me to “go home and make babies” because that is what I was supposed to do and that I did not belong. Some of the worst comments came from Joseph Roadkit, technician, Dave Morgan, technician, Curtis, technician, and Devon, porter. I became friends with another technician, Wesley Wilkerson. On occasions when I was not busy, I would attempt to learn from him. I spend time with him as he was an experienced technician. Despite other lube techs talking to other employees when they are slow, I was disciplined in January 2007, for talking to Mr. Wilkerson. I transferred from an inside job with opportunities to learn and advancement to working outside with limited opportunities. This decision was made by Richard Burton and Tom Grabby [sic], Manager of Fixed Operations. Eventually, in February 2007, Joseph Roadkit was terminated due to his behavior. On February 24, 2007, Richard Burton invited me out for drinks for the first time in a while. I initially agreed until he advised I would have to drive him home. I advised him I could not. Mr. Burton assured me he would never fire me as I had hit his “soft spot”. I refused to go out with him. Four days later Richard Burton approached me at work with the manager of fixed operation’s wife, Patti Grabby [sic]. Mr. Burton advised me I was terminated as there was no room for me in the shop anymore. I was not the least qualified nor was I the last hired. Mr. Burton did not testify in the administrative hearing. Respondent terminated the employment of Mr. Burton, sometime after Respondent terminated the employment of Petitioner, because Mr. Burton was no longer licensed to drive, and a valid driver’s license is a job requirement of the position held by Mr. Burton. Petitioner’s testimony was the only testimony concerning the alleged coerced sexual intercourse and sexual harassment by Mr. Burton. The fact-finder finds the testimony of Petitioner to be less than credible and persuasive. Petitioner’s testimony that she was the victim of sexual coercion on October 5, 2006, is less than persuasive. Petitioner had a restricted driver’s license that authorized her to drive to and from work. Petitioner drove to a local Ale House to have drinks with Mr. Burton, Mr. Radtke, and Mr. Radtke’s wife. Everyone at the table was drinking alcoholic beverages. Petitioner consumed six alcoholic beverages in approximately four hours. Petitioner consumed two drinks identified in the record as Smirnoff Ice, a malted-rum, bottled drink, and four shots, identified in the record as vanilla vodka. After the fifth shot, Petitioner went to the bathroom, “puked up my cheeseburger and the rest of the drinks,” returned to the table, and consumed the sixth shot. The testimony of Petitioner during the hearing contains several inconsistencies with her deposition testimony, responses to discovery, and allegations in the Charge of Discrimination. Petitioner alleges in the Charge of Discrimination, “I felt if I did not acquiesce, I would be fired.” Petitioner found greater detail in her testimony during direct examination in the final hearing. Petitioner testified that after sexual intercourse in Mr. Burton’s vehicle, Mr. Burton said, “If you tell anybody, I will fire you.” The Charge of Discrimination does not allege that Mr. Burton used force to engage in sexual intercourse with Petitioner. The testimony of Petitioner during direct examination in the final hearing claims that Mr. Burton prevented Petitioner from exiting the vehicle by grabbing her hand each time she reached for the door handle. Petitioner did not seek medical treatment for rape and did not report a rape to any law enforcement agency. Petitioner viewed the alleged encounters with Mr. Burton as “dates.” Q. Did what happened between you and Richard Burton, did you consider that dating? A. Yes. Q. Why did you consider that dating? A. Because sex is sex. Transcript (TR) at 130, lines 5 through 9. The Charge of Discrimination alleges that Mr. Burton accompanied Petitioner to his vehicle on October 5, 2006, after Mr. Radtke and his wife had left the Ale House. Petitioner testified on direct examination in the final hearing that Mr. Radtke and his wife were at the restaurant while the alleged coerced sexual intercourse occurred. Petitioner testified that she agreed to meet Mr. Burton for drinks again on October 13, 2006. Mr. Radtke and his wife were again present at the restaurant. When Mr. Burton allegedly offered to accompany Petitioner to her vehicle, Petitioner did not ask Mrs. Radtke to accompany her. Petitioner testified that the alleged coerced sexual intercourse on October 5 and 13, 2006, occurred in Mr. Burton’s vehicle. Petitioner’s testimony lacks plausibility. Petitioner weighed 170 pounds at a height of five feet, six inches, and Mr. Burton weighed 194 pounds at a height of five feet, eight inches. Mr. Burton drove a Jeep Compass on both nights, the smallest of the sport utility vehicles manufactured by Jeep. On October 5, 2006, Petitioner testified that Mr. Burton placed Petitioner in the passenger side of the vehicle, told her not to open the door, walked to the other side of the car, sat in the driver’s seat, and drove to a construction site across the parking lot that was abandoned at that time of night. Q. So when he drove the car over to that construction area, how did he get you in the back seat? A. He threw me between the two seats.[4] Q. What happened next? A. Well, he went-–he came into the back. And he put my panties down to about my knees, and he put his dick in me. I’m screaming, “No. Stop.” Q. And what happened next? A. He finished and I ran pulling up my underwear to my car. The Charge of Discrimination alleges that Mr. Burton drove Petitioner back to her car after the sexual intercourse on October 5, 2006. Petitioner’s vehicle was parked in the parking lot at some distance from the construction area. The table where Mr. Radtke and his wife were sitting is in the outside bar area of the restaurant. Petitioner testified that her screams were not heard by patrons in the outside bar because the bar was crowded and noisy. Petitioner did not present the testimony of any witnesses in the outside bar who, more likely than not, would have observed Petitioner running from the construction area to her vehicle at some distance across the parking lot while Petitioner pulled her underwear up from her knees. On October 5 and 13, 2006, Petitioner remained in the passenger seat of Mr. Burton’s vehicle, with nothing preventing her from leaving the vehicle, while Mr. Burton allegedly walked from the passenger’s side to the driver’s side of the vehicle. Other inconsistencies further attenuate the testimony of Petitioner. During the final hearing, Petitioner claimed the coerced intercourse occurred on October 2 and 3, 2006. Although those dates correspond to telephone communications between Mr. Burton and Petitioner, Petitioner’s sworn Answers to Respondent’s First Set of Interrogatories, sworn statement in her Charge of Discrimination, and prior deposition testimony all allege that her contact with Mr. Burton was on October 5 and 13, 2006. Petitioner testified in the administrative hearing that on October 5, 2006, Petitioner contacted Mr. Burton to let him know that she would meet him for drinks. In her deposition, Petitioner testified that on the night of the first incident, Mr. Burton called her to confirm her attendance. Petitioner contends that Mr. Burton called her several times on the night of the second incident, both before and after the incident. The evidence clearly demonstrates that Petitioner received no telephone calls from Mr. Burton on either October 5 or 13, 2006. Petitioner testified in the final hearing that she was wearing a dress on the night of the first incident. However, in sworn Answers to Respondent’s First Set of Interrogatories, Petitioner alleges that Mr. Burton “put his hand down [her] pants.” The same allegation is reiterated by Petitioner in the Petition for Relief. In her deposition, Petitioner testified that Mr. Burton allegedly stuck his hand down her pants and that at the end of the first incident, Petitioner left pulling up her “pants and underwear.” (Emphasis supplied) Petitioner unpersuasively attempted to explain the apparent discrepancy by testifying in the final hearing that when she uses the term “pants” she is referring to her underwear. Petitioner did not avail herself of the procedures outlined in Respondent’s written No Harassment policy for complaining about discrimination, sexual harassment, or the creation of a hostile work environment. Written Equal Employment Opportunity and No Harassment policies are contained in Respondent’s Employee Handbook. The written policy specifically prohibits its employees from engaging in any verbal or physically offensive conduct and expressly prohibits offensive sexual remarks, advances, or requests. Further, the written policy explicitly describes the procedures available to a victim to report violations.5 Petitioner received the Employee Handbook and reviewed the Equal Employment Opportunity and No Harassment policies at the time of her hiring. Petitioner acknowledged in writing her receipt, review, and understanding of these policies. The evidence does not establish a prima facie showing that Respondent discriminated against Petitioner, harassed Petitioner, or created a hostile work environment. Respondent terminated Petitioner’s employment for valid business reasons unrelated to Petitioner’s gender or the alleged coerced sexual intercourse by Mr. Burton. When Respondent first employed Petitioner, Petitioner enrolled in the Chrysler Dealer Connect computer training system for Level I and II courses and examinations, which was the customary practice of new employees in the service department. Technicians such as Petitioner must complete each training course and examination to reach the next level of certification. Petitioner claims, in relevant part, that Respondent prevented Petitioner from talking to and learning from more experienced technicians. However, lube technicians such as Petitioner do not advance through the Chrysler training program by talking to service technicians. Respondent provided Petitioner with access to the Chrysler Dealer Connect training courses through a computer area in its service department. Petitioner, like other technicians, also had access to computers in management offices when available. Petitioner remained in the Chrysler Dealer Connect system up to and through February 2007. In eight months of employment, Petitioner completed Level I certification and several Level II courses. The average for Level I and II course completion and certification in the service department is three and one-half months. Respondent pays lube technicians and service technicians differently. Respondent pays lube technicians an hourly rate and pays service technicians a flat rate based on work actually completed. Respondent maintains a policy that requires lube technicians who are not busy to either clean their work area or train through the Chrysler Dealer Connect system. The policy prohibits lube technicians from training by talking to service technicians in lieu of Chrysler training. Lube technicians who socialize with service technicians reduce the production rates of service technicians and reduce the lube technicians’ Chrysler training time. Respondent repeatedly corrected Petitioner for spending her free time at work socializing with service technicians in their bays rather than utilizing the Chrysler Dealer Connect training system. The corrections were verbal, as are the majority of Respondent’s corrective measures. Chrysler requires Respondent to maintain a monthly Customer Service Index (CSI) of approximately 90 percent. A CSI is a manufacturer-distributed evaluation by consumers based on customer satisfaction with the service provided by the service department. The consequences of a low CSI is detrimental for Respondent. The Quick Lube portion of Respondent's service department has significant CSI implications because of the high volume of customer contact. Petitioner worked in the Quick Lube part of the service department during her employment with Respondent. Respondent repeatedly corrected Petitioner for noncompliance with Respondent’s “Personal Appearance” policy. Petitioner did not keep her shirt tucked in. Petitioner did not wash her hands after working on a customer’s vehicle. Petitioner did not wear a clean uniform despite having several in her possession. Petitioner did not wear her hat facing forward. Petitioner’s unprofessional appearance and her visibility at Respondent’s Quick Lube caused her to be singled out by customers to Mr. Tom Grabbe, the fixed operations manager for Respondent and the immediate supervisor of Mr. Burton. Respondent received numerous customer complaints about Petitioner’s poor quality of work and performance. In August 2007, Petitioner received three negative Customer Feedback Reports (CFRs) for poor job quality and performance. One customer waited an hour and a half for an oil change when the Quick Lube was not busy. Petitioner failed to put the oil cap back onto the engine of another customer’s vehicle. Petitioner put too much oil into the engine of another customer’s vehicle and soiled the fender of that vehicle with oil. On January 25, 2007, a fourth CFR complained about Petitioner’s poor quality of work and performance. Petitioner was using her cellular telephone while rotating tires. Petitioner also dropped a tool on the customer’s vehicle and dented the body of the vehicle. Petitioner received other customer complaints. Not every customer complaint regarding Petitioner’s poor work quality and performance was reduced to writing as a CFR. Some customer complaints that were made on-site to Respondent’s employees would not generate a CFR because the complaint was resolved immediately. Petitioner admitted to being reprimanded at least two times in addition to the previously discussed CFRs for getting grease on cars. Petitioner was also instructed to wipe dirt and grease off customer vehicles after customers complained. In January 2007, Mr. Grabbe transferred Petitioner from an interior lube bay to an exterior lube bay. The transfer was in response to complaints from service technicians that Petitioner’s numerous attempts to socialize with them was affecting their production. The transfer from an inside bay to an outside bay in the Quick Lube portion of the service department was not a demotion. Petitioner continued the duties of a lube tech. Petitioner received the same compensation she received prior to the transfer. Petitioner had the same access to the Chrysler Dealer Connect training system before and after the transfer. Respondent required male lube techs to work in both the inside and outside lube racks. In January 2007, service advisors informed Mr. Grabbe that customers continued to complain about Petitioner leaving grease on their vehicles. After Petitioner received her fourth CFR in January 2007, Mr. Grabbe instructed Ms. Wisty Fisher, the customer relations manager for the Service Department, to gather a sample of the customer complaints about Petitioner and to review the CFRs with Petitioner and Mr. Burton. Ms. Fisher and Mr. Burton both addressed the four CFRs with Petitioner in a meeting and informed Petitioner that she needed to “clean up her act” and be more aware and conscious of the customers’ vehicles. The four CFRs compiled by Ms. Fisher were put into Petitioner’s personnel file. Respondent continued to receive customer complaints regarding Petitioner. On the evening of February 27, 2007, Mr. Grabbe received a telephone call from a customer of Respondent complaining that grease and dirt had been left on his vehicle. Mr. Grabbe reviewed the service ticket number and discovered that Petitioner had been responsible for working on the vehicle. Mr. Grabbe instructed Mr. Burton to terminate Petitioner the following morning because of Petitioner’s inability to refrain from getting grease on customer vehicles. Mr. Grabbe was the sole decision-maker in terminating Petitioner’s employment with Respondent. Mr. Burton did not raise the issue of whether Respondent should terminate Petitioner’s employment. On February 28, 2007, Respondent terminated Petitioner’s employment based on Mr. Grabbe’s determination that Petitioner’s continued poor work quality and performance threatened Respondent’s CSI score. Respondent did not terminate Petitioner’s employment for violation of Respondent’s “No Dating” policy. Neither Respondent nor any of its employees had any knowledge of Petitioner dating any individual employed by Respondent until after Petitioner was terminated. Mr. Burton did not have authority to hire or fire any employee of Respondent. Mr. Burton had the authority to discipline Respondent’s employees subject to the prior approval of Mr. Grabbe. Respondent did not create or acquiesce in a hostile work environment for Petitioner. In September 2006, Petitioner was called a “stupid idiot” by one of Respondent’s employees, Mr. Richard Lawrence. Petitioner alerted Mr. Burton to the comment, and Mr. Burton reprimanded Mr. Lawrence. At the time, Petitioner lived with Mr. Lawrence. The comment by Mr. Lawrence was the only negative comment made to Petitioner prior to October 13, 2006. After October 13, 2006, the only comments which Petitioner was subjected to were from co-employees and pertained to Petitioner needing to “get back to work” and “do more stuff.” Petitioner never complained to any employee of Respondent regarding any alleged comments after October 13, 2006.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order finding that Respondent did not commit the factual allegations and violations alleged in the Charge of Discrimination and Petition for Relief. DONE AND ENTERED this 13th day of November, 2008, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 13th day of November, 2008.
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by James H. Peterson, Il, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Respondent’s Notice of Withdrawal, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File as its Final Order in this matter. Accordingly, it is hereby ORDERED and ADJUDGED that Petitioner, First Coast CIDR LLC, be granted a license for the sale of automobiles of the line-make Dodge (DODG) at 10979 Atlantic Boulevard, Jacksonville (Duval County), Florida 32225, upon compliance with all applicable requirements of Section 320.27, Florida Statutes, and all applicable Department rules. Filed August 6, 2010 3:47 PM Division of Administrative Hearings. DONE AND ORDERED this Yin, of August 2010, in Tallahassee, Leon County, L A. FORD, LES Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Florida. Filed with the Clerk of the Division of Motor Vehicles this day of August 2010. . . Vinayak, Administrator NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. CAF/vlg Copies furnished: C. Everett Boyd, Esquire Nelson Mullins Riley & Scarborough LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 Dean Bunch, Esquire Nelson Mullins Riley & Scarborough LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 Benjamin C. Moore, Esquire St. Denis & Davey, P. A. 1300 Riverplace Boulevard, Suite 101 Jacksonville, Florida 32207 James H. Peterson, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator
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 The issue presented for decision herein is whether or not Petitioner's Antiknock (octane) Index number of its petroleum product was below the Index number displayed on its dispensing pumps.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, documentary evidence received, and the entire record compile herein, I make the following relevant factual finding. Rafael Ruiz is the owner/operator of Coral Way Mobil, an automobile gasoline station, situated at 3201 Coral Way in Coral Gables, Florida. Ruiz has operated that station in excess of ten (10) years. On or about May 13, 1987, Respondent, Department of Agriculture and Consumer Services, received a customer complaint alleging that the fuel obtained from Petitioner's station made her automobile engine ping. Respondent dispatched one of its petroleum inspectors to Petitioner's station at 3201 Coral Way on May 14, and obtained a sample of Respondent's unleaded gasoline. Inspector Bill Munoz obtained the sample and an analysis of the sample revealed that the produce had an octane rating of 86.9 octane, whereas the octane rating posted on the dispenser indicated that the octane rating of the product was 89 octane. On that date, May 14, 1987, Respondent issued a "stop sale notice" for all of the unleaded product which was determined to be 213 gallons. Petitioner was advised by Inspector Munoz that the unleaded produce should be held until he received further instructions from the Respondent respecting any proposed penalty. On May 15, 1987, Petitioner was advised by John Whittier, Chief, Bureau of Petroleum Inspection, Florida Department of Agriculture and Consumer Services, that the Antiknock Index number of the sampled product was 2.1 percent below the octane rating displayed on the dispenser and that an administrative fine would be levied in the amount of $200 based on the number of gallons multiplied times by the price at which the product was being sold, i.e., 213 gallons times 93.9 cents per gallon. Petitioner did not dispute Respondent's analysis of the product sample, but instead reported that he had been advised that three of the five tanks at his station were leaking and that this is the first incident that he was aware of wherein the product tested below the octane rating displayed on the dispenser.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby RECOMMENDED: That the Respondent, Department of Agriculture and Consumer Services, enter a Final Order imposing an administrative fine in the amount of $200 payable by Petitioner to Respondent within thirty (30) days after entry of the Respondent's Final Order entered herein. RECOMMENDED this 7th day of October, 1987, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of October, 1987. COPIES FURNISHED: Rafael E. Ruiz c/o Coral Way Mobil 3201 Coral Way Miami, Florida 33145 Clinton H. Coulter, Jr., Esquire Senior Attorney Office of General Counsel Department of Agriculture and Consumer Services Room 514, Mayo Building Tallahassee, Florida 32399-0800 Honorable Doyle Conner Commissioner of Agriculture The Capitol Tallahassee, Florida 32399-0810 Robert Chastain, Esquire General Counsel Department of Agriculture, and Consumer Services Room 513, Mayo Building Tallahassee, Florida 2399-0800
The Issue Whether Petitioner's application to relocate B.O.O., Inc., d/b/a Acura of South Florida (Acura of South Florida) from its current location in Hollywood, Florida, to its proposed location in Pembroke Pines, Florida, should be approved.
Findings Of Fact Parties American Honda is a licensee and manufacturer as defined by Section 320.60(8) and (9), Florida Statutes. Acura of South Florida and Case Acura are motor vehicle dealers as defined by Section 320.60(11)(a)1., Florida Statutes. At all relevant times, Acura of South Florida's principal is Craig Zinn (Mr. Zinn); Case Acura's principals are Rick and Rita Case (Mr. Case and Mrs. Case, respectively, and collectively, the Cases). Notice and Standing With respect to notice and standing, the parties have stipulated as follows: On October 15, 2004, notice of American Honda's intent to relocate Acura of South Florida (proposed relocation) to Pembroke Pines from its current location in Hollywood was duly-noticed by publication in the Florida Administrative Weekly. Case Acura has standing to protest the proposed relocation, and timely filed its protest. The Community or Territory The parties have stipulated that the Community or Territory (generally referred to in the industry as a "comm/terr" ) relevant to this proceeding is the area defined by American Honda as the Pembroke Pines comm/terr (Pembroke Pines comm/terr or comm/terr). Both Acura of South Florida and Case Acura are located within the comm/terr, as is the proposed relocation site. The proposed relocation site is located west of both Acura of South Florida and of Case Acura. The Proposed Relocation and Related Market Studies Case Acura is, at all relevant times, centrally located in Ft. Lauderdale in Broward County, Florida. Major Broward County traffic arteries provide ready access to Case Acura from the north, south, east and west within the comm/terr. Acura of South Florida is located south of Case Acura, and just north of the Broward County line. Unlike Case Acura, Acura of South Florida does not offer customers ready access from any direction within the comm/terr. Both Case Acura and Acura of South Florida are located well east of the proposed location. From time to time, as circumstances warrant, American Honda evaluates specific existing or proposed comm/terrs, including the Pembroke Pines comm/terr, by performing a so-called market study. American Honda's market studies are an integral part of the company's strategic and long-range planning process. American Honda's market studies are conducted by teams of experienced and appropriately credentialed experts (market study team(s)). With reference to this case, market studies in the Pembroke Pines comm/terr were conducted in 1997 and again in 2003. The proposed relocation grew out of the results and recommendations of the 1997 market study team. The same results and recommendations were reached again by the 2003 market study team, based upon updated information concerning relevant data which emerged between the two market studies. Both studies documented that Broward County's population had been and would continue for the foreseeable future to "trend west" within the comm/terr. This westward population trend has been and is predicted to continue and to be particularly pronounced among affluent households. Because American Honda manufactures luxury vehicles under the Acura brand, American Honda and its dealers seek to "capture" or "conquer," i.e. attract the business, of such households, while maintaining their existing customer base of affluent households. The teams which conducted both market studies determined that the present configuration of Acura dealers within the comm/terr (dealer network) did not provide adequate representation for American Honda's Acura brand (adequate representation). The lack of adequate representation was a function of the westward population trend. To remedy the situation, and in accordance with Florida law concerning dealer relocation, both market study teams reasonably recommended that Acura of South Florida be relocated to western Broward County. The recommendation was not implemented following the 1997 market study; at that time, and for some years before and after, the owners of Acura of South Florida (Mr. Zinn's predecessors) were beset by illness and management difficulties, and not in a position to undertake the recommended relocation. Likewise American Honda was not in a position to force a relocation upon Acura of South Florida, because it had neither contractual rights nor statutory rights to do so. The 2003 market study team revisited the comm/terr in order to verify or refute the conclusions and recommendations of the 1997 study team in light of all that had transpired since 1997. Upon careful consideration of updated data, the 2003 study team reasonably concluded that the dealer network as it was then configured still failed to afford adequate representation. American Honda's market study teams, as a matter of course, conduct informal interviews with all dealers in the comm/terr when assembling market study data. The 1997 and 2003 market study teams followed this practice. During the 2003 interview with him, Mr. Case was asked whether he would like to move his dealership. Mr. Case replied unambiguously that he was well-satisfied with his present location, where he had become one of Acura's most successful dealers. It is noted that Acura dealers are permitted to market and to sell Acuras anywhere, both within and without the comm/terr in which they are located. The Cases have taken particular advantage of this opportunity, a factor which contributes to Case Acura's significant profitability. Dealer input, and the present success or lack thereof of dealers within a comm/terr, are data considered by market study teams in the context of all the other data. Upon consideration of all relevant data, including the input of the dealers within the Pembroke Pines comm/terr, the 2003 market study team adhered to the conclusion of the 1997 team and recommended implementation of the relocation of Acura of South Florida as proposed in 1997. As Acura of South Florida and American Honda set out to implement the relocation recommendation, Mr. Case had a change of heart and came forward to insist that he was entitled to be the dealer to be relocated. He also insisted that Acura of South Florida remain where it was. In support of these late- asserted demands, Mr. Case testified that he had previously been informed by the "zone manager" for the comm/terr, one Ray Mikiciuk (Mr. Mikiciuk) that Case Acura (and not Acura of South Florida) would be relocated. According to Mr. Case, Mr. Mikiciuk was authorized by American Honda to so advise Mr. Case on American Honda's behalf. Mr. Case also claims that Case Acura would have been the dealership relocated but for a threat by Mr. Zinn to sue American Honda should Case Acura be relocated. Contrary to Mr. Case's testimony regarding the foregoing, the persuasive evidence established that since 1997, American Honda executives supported the market study recommendations for the Pembroke Pines comm/terr, including the proposed relocation. Mr. Mikiciuk is a low level employee; there is no persuasive evidence that Mr. Mikiciuk ever had authority to speak for American Honda with reference to dealer relocations, let alone to bind the company. These facts were well known to Mr. Case. Mr. Case had unfettered access to the highest level American Honda executives over decades of mutually lucrative dealings with American Honda and related subsidiaries. Mr. Case had no reluctance to use these open lines of communication with regard to matters of minor as well as major importance to Case Acura. Yet, he now posits that American Honda, speaking through zone manager Mikiciuk, intended to overrule its 1997 and 2003 market study teams and relocate Case Acura, and reneged only because of Mr. Zinn's threat to litigate. The foregoing scenario is charitably described as counterintuitive. No corroborating evidence was provided. Mr. Case's testimony concerning his dealings with American Honda in regard to the proposed relocation is uncorroborated, unbelievable, and not credited by the fact-finder. Mr. Zinn initiated his purchase of Acura of South Florida in the spring of 2003. By the time the transaction was finalized in December 2003, anticipated future change(s)-- including the westward population trend identified in the 1997 market study--had become substantially more pronounced. Other changes had developed, or were reasonably anticipated to develop in the foreseeable future. For example, Acura of South Florida is presently and permanently foreclosed from providing customers and staff even the basic amenity of on-site parking, inasmuch as the Florida Department of Transportation (DOT) has taken by condemnation a 23-foot strip along the entire dealership frontage. Thirty parking places have been lost. Signage advising the public that they had reached Acura of South Florida is no longer permitted. At its present location, it is impossible for Acura of South Florida to be brought into compliance with Acura's so-called Design Image Standards (DIS) because the dealership property is too small to allow for the expansion required by DIS. American Honda and its network of dealers deem implementation of DIS at every dealership to be crucial to Acura's future success or failure in the marketplace. Additionally, the dealership is a prime candidate to be declared a "non-conforming use" by local zoning authorities. Such designation would render it impossible to obtain necessary permits to make needed improvements in the future. An Objective, Reasonable Standard In order to assess the adequacy of representation afforded by the existing dealer network in the comm/terr and to measure the level of opportunity available in the market, it is necessary to develop an objective, reasonable standard against which to compare the actual market penetration achieved by the existing dealer network, which includes, in this case, Acura of South Florida and Case Acura. A standard is a measure of the level of performance a brand can reasonably expect to achieve in the market with an adequately performing dealer network; that is, an adequate number of dealers performing competitively. The most objective data available for measuring the performance of a dealer network is market penetration data. Market penetration is the ratio of a brand's performance against the competitive industry. Market penetration is a direct measure of both inter-brand and intra-brand competition. Intra- brand competition is competition between competitors of the same brand. Inter-brand refers to competitors of different brands. The first step in developing a reasonable standard is to select a suitable comparison area. When choosing a comparison area, it is essential to select an area that is itself adequately represented. In determining whether a proposed comparison area is adequately represented, national average market penetration is an extremely conservative benchmark, because it includes all of the adequately represented, inadequately represented, and unrepresented areas within the United States. By contrast, the State of Florida is not an appropriate standard comparison area against which to judge the performance of Acura in the Pembroke Pines comm/terr because at relevant times the brand performs below national average in Florida. This is so because Florida has a disproportionate number of areas in which Acura has no dealer representation as well as a disproportionate share of underperforming dealers. National average market penetration is, under all the facts and circumstances of this case, the appropriate starting point for developing a reasonable standard for the Acura brand. The national average must be adjusted, however, to take into account unique consumer preferences over which the dealer network has no control, which can affect market share. Unique consumer preferences in the local market can be accounted for through a process called segmentation analysis. In this process, groups of vehicles in the segments to be analyzed are far more comparable with each other than with other vehicles not in the segments. Consequently, segments contain a group of similar vehicles that, by their design and physical characteristics, meet a certain set of consumer transportation needs. American Honda arranges its Acura vehicles into seven segments: small sporty, sporty luxury coupe, mid-size luxury sedan, full size luxury sedan, near luxury, exotic, and mid- luxury. The segmentation analysis process employed by American Honda accurately reflects the demographic features--including age, income, and education--of consumers who have actually purchased the vehicles in Acura's seven segments. In addition, the segmentation analysis employed by American Honda takes into account other factors which are unrelated to any particular consumer. Such factors include the state of the economy, product quality, and design features. Under all the facts and circumstances revealed in the record, the national average performance for Acura as adjusted for local consumer preferences in the Pembroke Pines comm/terr (the expected standard) is the appropriate standard for measuring the adequacy of representation being provided by existing Acura dealer networks and for establishing the level of opportunity available to Acura dealers in the Pembroke Pines comm/terr. At all relevant times, national average penetration, adjusted for local consumer preferences, produces an expected standard in the comm/terr of 10.58 percent, while the comm/terr is 10.3 percent of the retail industry segments in which Acura competes. For the year 2005 through June 30, the expected standard for the Pembroke Pines comm/terr is 11.37 percent while the Pembroke Pines comm/terr is 10.92 percent of the retail industry segments in which Acura competes. The reasonableness of the expected standard is confirmed by the fact that Acura has achieved or exceeded the standard in the recent past or currently meets or exceeds the standard in several markets in Florida; a sixth market in recent years has missed the standard only once, by four-tenths of a point in 2004. The persuasive data established that the expected standard is reasonable and can be achieved in the comm/terr if the Acura brand is adequately represented. Taking the foregoing factors into account, national average, adjusted for local consumer preferences, is the appropriate standard by which to judge the adequacy of representation being provided by the existing Acura dealer network and the level of opportunity available in the comm/terr. Impact on Manufacturer American Honda's Acura brand is, at relevant times, losing available sales in the comm/terr due to the inability of the existing Acura dealer network to penetrate the comm/terr at reasonably expected levels in light of the opportunity available. The persuasive evidence established that the gap between reasonably expected levels of penetration and the actual dealer network performance will grow. Taking reasonably anticipated future changes into account, the evidence of record established that the manufacturer will enjoy increased sales and overall increased customer convenience as a result of the proposed relocation. Investment of and Potential Impact Upon Existing Dealers Mr. Zinn and the Cases have invested significant dollar amounts to perform their obligations under their respective American Honda/Acura franchise agreements. They have likewise invested significant sweat equity, and expect to continue to manage their dealerships in a hands-on manner. The Cases contend that their investment in their Acura dealership will be at risk should the proposed relocation proceed. There was no persuasive evidence to support this contention. Rather, Case Acura is well positioned; well capitalized; and highly likely to respond positively to inter-brand competition arising from the proposed relocation. The Cases are aggressive and highly experienced dealers. It is reasonable to anticipate that the Cases will not lose sales; profit; reasonable opportunity for growth; or growth in the value of their multi-million dollar investment in Case Acura. Likewise, other existing dealers in the comm/terr are reasonably expected to grow and to maintain the value of their investments if the proposed relocation goes forward. Additionally and more specifically, the evidence is sufficient to establish that existing dealers in the comm/terr will be positively impacted by increased sales and service opportunities if the proposed relocation goes forward. Based upon the foregoing, the evidence is sufficient to establish that the proposed relocation is warranted and justified based on economic and marketing conditions, including future changes and present, accelerating trends in the comm/terr, which continues to grow rapidly in terms of population and of affluent households, which factors present increased sales and service opportunity for dealers. These opportunities are likely to be captured if the proposed relocation goes forward, and unlikely to be captured if it does not. Coercion of Existing Dealers There have been no efforts by American Honda to coerce any existing dealer to consent to the proposed relocation. Protesting Dealer Compliance with Dealer Agreement Case Acura is at all relevant times in compliance with the terms of its dealer agreement. Distance and Accessibility Congested traffic conditions in the western portion of the comm/terr militate heavily in favor of the proposed relocation. The proposed relocation will provide consumers with an increased level of convenience, and stimulate inter-brand competition. The market studies and common sense demonstrate that affluent consumers will not travel substantial distances to purchase an Acura when a variety of other luxury cars are more conveniently available. Other luxury vehicle dealers have taken note of the rapid growth of affluent homes in west Broward, and have provided and continue to provide improved accessibility. Acura's current dealer network in the comm/terr has not kept pace with American Honda's need to offer its existing and prospective customers an adequate level of accessibility, convenience and service. Benefits to Consumers Obtained by Geographic or Demographic Changes The evidence is sufficient to establish that consumer benefits will occur as a result of the relocation of Acura of South Florida. Such benefits cannot be obtained by expected demographic or geographic changes in the comm/terr. Adequacy of Interbrand and Intrabrand Competition and Consumer Care The evidence is sufficient to establish that the performance of Acura in the comm/terr is below reasonable levels under the appropriate standard, thereby reflecting inadequacy of inter-brand and intra-brand competition. With regard to consumer convenience, the evidence is sufficient to establish that it is necessary to locate a dealership within in the western portion of the comm/terr, where existing and potential Acura customers have moved and continue to move in large numbers, in order to provide them adequate customer care, including sales and service facilities. Relocation Justification Based on Economic and Marketing Conditions The evidence is sufficient to establish that the proposed relocation is warranted and justified based on economic and marketing conditions, including future changes. Western Broward County continues to grow at a rapid rate in terms of affluent population, households, and increased sales and service opportunities which are likely to be captured if the proposed relocation goes forward. Volume of Existing Dealers Registrations and Service Business The evidence is sufficient to establish that the volume of registrations and service business is hindered by the present configuration of the dealer network in the comm/terr, and that the volume of registrations and service business by existing Acura dealers in the comm/terr will improve if the proposed relocation goes forward.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, the evidence of record, and the candor and demeanor of the witnesses, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles issue a final order approving American Honda's application to relocate Acura of South Florida. DONE AND ENTERED this 25th day of October, 2006, in Tallahassee, Leon County, Florida. S FLORENCE SNYDER RIVAS 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 25th day of October, 2006. COPIES FURNISHED: James D. Adams, Esquire Adams, Quinton & Paretti, P.A. 80 Southwest 8th Street, Suite 2150 Miami, Florida 33130 Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Alan N. Jockers, Esquire Craig Zinn Automotive Group Corporate Offices 2300 North State Road 7 Hollywood, Florida 33021 Dean Bunch, Esquire Sutherland, Asbill & Brennan, LLP 3600 Maclay Boulevard, South, Suite 202 Tallahassee, Florida 32312-1267 Fred O. Dickinson, III, Executive Director Department of Highway, Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Judson M. Chapman, General Counsel Department of Highway, Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0635
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by Jeff B. Clark, an Administrative Law Judge of the Division of Administrative Hearings, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File as its Final Order in this matter. Said Order Closing File was predicated upon Respondents Notice of Voluntary Dismissal. Accordingly, it is hereby ORDERED and ADJUDGED that Intervenor, Regal Pontiac, Inc. d/b/a Regal Chevrolet, be granted a license for the sale and service of the Chevrolet (CHEV) linemake at 925 Highway 98 South, Lakeland (Polk County), Florida 33801 upon compliance with all applicable requirements of Section 320.27, Florida Statutes, and all applicable Department rules. Filed June 30, 2010 8:00 AM Division of Administrative Hearings. DONE AND ORDERED this 28 “day of June, 2010, in Tallahassee, Leon County, Florida. L A. FORD, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Filed with the Clerk of the Division of Motor Vehicles this AS# day of June, 2010. we Vinayak, Dealer ga Administrator NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. CAF: vig Copies furnished: J. Andrew Bertron, Esquire Nelson Mullins Riley & Scarborough, LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 John W. Forehand, Esquire Kurkin Forehand Brandes, LLP 800 North Calhoun Street, Suite 1B Tallahassee, Florida 32303 Robert C. Byerts, Esquire Bass, Sox & Mercer 2822 Remington Green Circle Tallahassee, Florida 32308 Jeff B. Clark Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Florida Administrative Law Reports Post Office Box 385 Gainesville, Florida 32602 Nalini Vinayak Dealer License Section
