The Issue The issue in these cases is whether two applications for new point franchise motor vehicle dealerships filed by Puma Cycles Corporation and Wild Hogs Scooters and Motorsports, LLC (Respondents), should be approved.
Recommendation Based on the foregoing Finding of Facts and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order denying the two applications filed by the Respondents to establish new point franchise motor vehicle dealerships at Wild Hogs Scooters and Motorsports, LLC, for the sale of line-make FSTI motorcycles. DONE AND ENTERED this 22nd day of February, 2012, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of February, 2012.
The Issue The issue is whether, pursuant to section 320.642, Florida Statutes (2013), Respondent Jaguar Land Rover North America LLC (JLRNA) may relocate the dealership of Respondent Warren Henry Jaguar from 20800 Northwest Second Avenue, Miami, to the east side of Biscayne Boulevard, about 306.45 feet south of Northeast 151st Street, in North Miami.
Findings Of Fact Warren Henry Jaguar is an authorized Jaguar dealer located at 20800 Northwest Second Avenue in Miami Gardens. Warren Henry Jaguar has occupied this location since 1985. Since December 2012, Warren Henry Jaguar has shared this location with the Land Rover dealership of Land Rover North Dade, LLC. Both entities are owned by Warren Henry Automobiles, Inc., which also owns Infiniti and Fiscar dealerships near Warren Henry Jaguar's present location, as well as Land Rover South Dade, LLC, which is mentioned below. By notice dated December 2, 2013, JLRNA informed the Department of Highway Safety and Motor Vehicles (DHSMV) that it intended to permit Warren Henry Jaguar to relocate its Jaguar dealership to a new facility to be located on the east side of Biscayne Boulevard in North Miami, about 306.45 feet south of the intersection of Biscayne Boulevard and Northeast 151st Street, in North Miami. The new dealership would be in a development to be known as Biscayne Landing. The existing and proposed locations are both in Dade County, whose population exceeds 300,000 persons. On December 9, DHSMV published notice to this effect in the Florida Administrative Register. Despite an incorrect proposed street address, The Collection's principal, Kenneth Gorin, knew the proposed location of the relocated Jaguar dealership and timely protested the proposed relocation. The Collection is an authorized dealer for Jaguar, Audi, Porsche, Ferrari, Maserati, McLaren, Aston Martin, and Alfa Romeo. The Collection sells and services these vehicles from a single dealership located at 200 Bird Road in Coral Gables, Dade County. Warren Henry Jaguar and The Collection are "motor vehicle dealers" within the meaning of section 320.60(11)(a)1., Florida Statutes. JLRNA is a "distributor" and "licensee" within the meaning of section 320.60(5) and (8), Florida Statutes. As such, JLRNA is authorized to distribute Jaguar and Land Rover motor vehicles to its respective authorized dealers in Florida. In general, JLRNA assigns each of its dealers an area of responsibility (AOR) based on the proximity of zip codes to each dealership. Each Jaguar dealership has a non-exclusive AOR, meaning that JLRNA may unilaterally change a dealer's AOR. Although the AOR of Land Rover of North Dade is also non- exclusive, the AOR of Land Rover of South Dade is exclusive, meaning that JLRNA may not unilaterally change its AOR. The present location of Warren Henry Jaguar is east of the Sun Life Stadium. This area is in economic decline, as evidenced by widespread commercial vacancies and elevated crime levels. Within Warren Henry Jaguar's AOR for its current location, the new location would be about 7.2 road miles and less than five air miles to the southeast of the current location. The proposed location would be directly west of Oleta River State Park, which is separated from Haulover Park on the ocean by a narrow finger of the northernmost portion of Biscayne Bay. The proposed location is in an area that is economically vibrant. During at least one 12-month period within the 36 months preceding publication of notice of the relocation, The Collection made more than 25% of its retail sales of new Jaguars to persons who registered those vehicles within a radius of 12.5 miles of the proposed relocation site. Warren Henry Jaguar's present location is about 16.3 air miles from The Collection's dealership. The proposed location is about 2.4 air miles and 2.2 road miles closer to The Collection's dealership; the new location would be about 13.9 air miles and 15.8 drive miles from the Collection. The drive time between The Collection's dealership, on the one hand, and the present and proposed locations, on the other hand, would be almost unchanged. The "community or territory" within which to judge the performance of the Jaguar brand is the combined AORs of The Collection, Warren Henry Jaguar, and Alpine Motors, which is the Jaguar dealership in Ft. Lauderdale, Broward County (CommTerr). The parties agree upon this designation of the CommTerr, which captures the three Jaguar dealers operating in Dade and Broward counties. As noted in the Conclusions of Law, the adequacy of Jaguar representation in the CommTerr requires consideration of at least 11 factors, as set forth in section 320.642(2)(b). These statutory factors are considered, where appropriate, in groups. Two of the 11 statutory factors are the reasonably expected market penetration for the CommTerr and the volume of registrations and service business transacted by the existing dealers in the CommTerr. See § 320.642(2)(b)3. and 11. The assessment of the performance of the CommTerr requires the establishment of a benchmark against which the CommTerr may be measured. A reliable benchmark must reflect the relevant demographics of the CommTerr. A benchmark relatively close to Broward and Dade counties would better reflect the market and demographic conditions than a more distant benchmark. After considering a number of factors, JLRNA's dealer network analyst selected as a benchmark the AOR of the West Palm Beach Jaguar dealer. The analyst has testified as an expert in almost 100 cases of this type, including 10 to 15 dealer- relocation cases, and has been accepted as an expert in each case that went to trial. In the alternative, JLRNA's dealer network analyst selected as a benchmark the AORs of all Florida Jaguar dealers outside of the CommTerr. The exclusion of the CommTerr from the alternative benchmark was necessitated by the fact that the size of these two counties would have overrepresented their sales performance and effectively distorted the sales of Jaguar dealers through the remainder of Florida. These benchmark selections are reasonable. The Collection's dealer network analyst did not object to the alternative benchmark, although his Florida benchmark includes the CommTerr. However, the Collection's dealer network analyst objected to the West Palm Beach AOR primarily because this was the second-highest-performing AOR in Florida in 2012, although it has since ranked lower. As already noted, reliance on the West Palm Beach AOR as a benchmark tends to control demographic variables. The reasonableness of this selection is further evidenced by the fact, noted below, that Alpine Motors performed quite well when compared to the benchmark West Palm Beach AOR during the period in question. The objection to the West Palm Beach AOR is therefore rejected. To address any material difference in market conditions between the CommTerr and the benchmark area, JLRNA's dealer network analyst analyzed consumer purchase preferences in these two markets. During the relevant period, Jaguar's offerings have been the XF, which is in the medium premium sedan segment, and the XJ, which is in the large premium sedan segment. During most of the relevant period, JLRNA also offered the now-discontinued XK, which was in the large premium sport segment. In the last couple of years, JLRNA replaced the XK model with the F model--first a convertible and then a coupe; the F model is in the premium sport segment. Segmentation analysis applies more objective filters, such as body type (e.g., sedan vs. coupe) and body length, plus more subjective filters, such as eliminating otherwise-eligible line-makes, such as Hyundai, due to the perception that they are not within the core premium brand associated with Jaguar. After applying these filters and making relatively minor adjustments for segment-based market preferences between the CommTerr and the West Palm Beach AOR, the JLRNA dealer network analyst reasonably determined that Jaguar sales in the CommTerr were inadequate. For instance, in 2012, for the medium premium, large premium, and large sport premium (XK not yet replaced by F) segments, the Jaguar dealers would have been expected to generate 1129 retail registrations, but achieved only 822. The expected penetration for Jaguar dealers in the CommTerr was 8.32%, but the actual penetration was only 6.06%; this translates to a retail registration effectiveness of 72.8%. At the time that the JLRNA dealer network analyst prepared his initial report, 2012 was the last year for which retail registration effectiveness data was available. At the time, though, 2012 was not an anomaly. The retail registration effectiveness of the CommTerr compared to the West Palm Beach AOR was 98.1% in 2009, 83.1% in 2010, and 93% in 2011. Updating his earlier work, the JLRNA dealer network analyst showed that the CommTerr underperformed in 2013 and 2014 (through June) with retail registration effectiveness, when compared to the West Palm Beach AOR, of 85.6% and 78.2%, respectively. The downward trend from adequate performance in 2009 and near-adequate performance in 2011 became more pronounced from 2012 through June 2014. As noted above, Alpine Motors performed well during this period. In 2009, 2011, and 2013, its retail registration performance exceeded the performance of the West Palm Beach AOR benchmark. The underperformance of the CommTerr is thus attributable to the underperformance of Warren Henry Jaguar and The Collection, whose retail registration performance fell below that of the West Palm Beach AOR benchmark each year from 2009 through June 2014. The CommTerr performed no better when compared to the alternative benchmark of Florida less the CommTerr. Here, the CommTerr achieved retail registration effectiveness of 100% in 2010, 95.7% in 2011, 87.5% in 2012, 90.83% in 2013, and 84.81% through June 2014. And the below-benchmark performance is attributable to Warren Henry Jaguar and The Collection, as, again, Alpine Motors' retail registration effectiveness exceeded that of Florida less the CommTerr in 2009, 2010, 2011, and 2013. Based on the foregoing, new Jaguar sales have achieved below-expected market penetration in the CommTerr after consideration of all relevant factors, and JLRNA has received inadequate representation in the CommTerr as a whole. These findings are driven by penetration and representation factors applicable to the portion of the CommTerr in Dade County. Two of the 11 statutory factors are: a) whether there is adequate interbrand and intrabrand competition with Jaguar in the CommTerr and adequate consumer care for Jaguar in terms of sales and service and b) whether the relocation is justified based on economic and marketing conditions pertinent to dealers in the CommTerr. See § 320.642(2)(b)9. and 10. Based on population and demographics, the CommTerr encompasses one of the more important markets for luxury vehicle manufacturers in the world in terms of opportunities for sales and corporate branding. The CommTerr promises to continue to represent an important market for new luxury vehicle sales into the future. For relevant segments, new-vehicle registrations in the CommTerr have increased from 10,054 in 2010 to 17,984 in 2013. For the first six months of 2014, these registrations reached 9611, annualizing to another increase in new-vehicle registrations in 2014. For the most part, the period in question covers the recovery of the auto industry from the Great Recession of 2008. However, there is some evidence that Jaguar may be a brand in decline, as its popularity among older buyers has not transferred to younger buyers. From 2006 to 2011, U.S. Jaguar sales dropped from 19,943 to 11,138 new vehicles. But the vast potential of the south Florida market to support more luxury vehicle sales supports the finding that Jaguar sales in the CommTerr are inadequate. Based on the foregoing, inadequate performance by Jaguar in the CommTerr during the period in question has not been due to adverse economic and marketing conditions. Inadequate performance by Jaguar in the CommTerr is due to inadequate representation by The Collection and Warren Henry Jaguar in engaging in interbrand and intrabrand competition. Two factors of the 11 statutory factors are: a) the impact of the relocated dealer on consumers, the public interest, existing dealers, and JLRNA and b) the size and permanency of investment reasonably made and reasonable obligations incurred by existing dealers to perform their obligations under their dealer agreements. See § 320.642(2)(b)1. and 2. There is substantial opportunity for additional Jaguar sales in the CommTerr through two means: conquest sales, meaning the sale of Jaguar models to purchasers who own corresponding models of competitors' vehicles, and the sale of Jaguar models by CommTerr dealers to displace pump-in sales, which are sales by Jaguar dealers outside of the CommTerr to purchasers within the CommTerr. If the CommTerr dealers achieved the retail registration effectiveness of the West Palm Beach AOR, based on 2012 registration data, 350 conquest sales and 106 displaced pump-in sales would be available to the CommTerr dealers. These two categories thus represent a total opportunity of 456 new- vehicle sales. JLRNA's dealer network analyst estimates that Warren Henry Jaguar would obtain about 116 of these sales, if it relocated to the proposed location, leaving about 340 sales to The Collection and Alpine Motors. For 2013, the dealer network analyst estimates that, if it relocated, Warren Henry Jaguar would obtain 127 sales from conquest and pump-in displacement sales, leaving 246 sales to The Collection and Alpine Motors. By some measures, The Collection had, at 103 units, the largest shortfall in sales, when measured against average sales, among all U.S. Jaguar dealers for the 12 months ending in July 2014. Even The Collections' dealer network analyst conceded that sales performance of The Collection--as well as Warren Henry Jaguar (except in 2008), but not Alpine Motors--was below his Florida benchmark every year. (Pet. Ex. 2, Tab 11, p. 4.) The Collection contends that its below-average performance is due to its status as a single-line Jaguar dealer, as contrasted to the dual-line (Jaguar and Land Rover) dealership of Warren Henry Jaguar and its affiliate. The Collection's claim of disadvantage as a single-line dealer fails for two reasons. First, The Collection represents numerous other luxury brands, including Audi, which features SUVs that are competitive with Land Rover SUVs. Second, Alpine Motors, which has consistently outperformed The Collection and Warren Henry Jaguar, is a single-line dealer without other brands--and has earned a profit each year since 2009. Evidence offered by The Collection concerning the financial impact of the relocation was flawed. For instance, The Collection's dealer network analyst could offer no support for his assumption of a direct relationship between reduced sales revenues and reduced service and parts revenues. Worse, The Collection's accountant incorrectly assumed a direct relationship between reduced gross revenues and reduced profits. The relationship between dealership revenues and profits can be complicated. For instance, notwithstanding the lost sales opportunities of 103 units for the 12 months ending in July 2014 and poor sales over the entire period in question, The Collection is the most profitable Jaguar dealership in the United States. From 2011 to 2013, The Collection's net after- tax profit climbed 45% on the sale of seven fewer new Jaguars. Similar indirect relationships between new-Jaguar sales and gross or net after-tax profits exist from 2009 through August 2014. For example, The Collection's gross profit increased 23.3% from 2010 to 2012 while its vehicle sales decreased by 9.2%. Less dramatically, in attempting to demonstrate that The Collection's Jaguar-based financial performance was precarious, The Collection's accountant imputed excessive rent based on an overly generous value assigned to the facility and an excessive allocation to Jaguar of a share of the facility and facility costs. The accountant also distorted The Collection's Jaguar-based financial performance by including one-time legal expenses paid or incurred in 2013 in connection with this dealer-relocation litigation. As noted above, there is little risk posed to The Collection from the proposed relocation because there is plenty of sales opportunity in the CommTerr to go around. Thus, there is little risk posed to The Collection's investment and obligations in connection with its dealer agreement with JLRNA. Moreover, there is little, if any, evidence as to the size or permanency of investment or obligations incurred by The Collection to perform its obligations under its agreement with JLRNA. The record does not permit a precise allocation of facility expenses to Jaguar--and, thus, The Collection's obligations to Jaguar--but the facility-expense allocation is smaller than estimated by The Collection's accountant. JLRNA argues that a Jaguar loss, if any, would be a rounding error, given the sales and profits generated by The Collection's sales and service of the other seven brands. As framed, this argument is irrelevant because it impermissibly enlarges the scope of the issues of these cases. But where, as here, the protesting dealer represents several line-makes in a single facility and the subject line-make is a small fraction of its overall business, the investment risk posed to such a Jaguar dealer, as The Collection, is much less than the risk posed to a single-line Jaguar dealer that represents no other line-makes. Based on the foregoing, the relocation of Warren Henry Jaguar would not have an adverse impact on existing dealers, nor would it have an adverse financial impact on The Collection. And this relocation would not pose an unreasonable risk to The Collection's investment and obligations under its agreement with JLRNA. Another factor of the 11 statutory factors is any action by JLRNA to deny The Collection, as to the Jaguar brand, the opportunity for reasonable growth, market expansion, or relocation, including the availability of line-make vehicles in keeping with the reasonable expectations of JLRNA in providing an adequate number of dealers in the CommTerr. See § 320.642(2)(b)4. Although owned by JLRNA, Land Rover is not the same line-make as Jaguar, so JLRNA's refusal to grant The Collection a Land Rover franchise is not cognizable under this statutory factor. At some point, Mr. Gorin and Mr. Zinn negotiated the sale of Land Rover of South Dade to Mr. Gorin, The Collection, or an affiliate of either of them. But these negotiations were unsuccessful, and, of course, this proceeding cannot serve as a means of forcing Mr. Zinn (or Mr. Gorin) to sell so as to create a dual-line dealership in south Dade County. As noted above, the dealer agreement between Land Rover of South Dade and JLRNA precludes the manufacturer's unilateral revision to the dealer's AOR, so JLRNA could not create for The Collection an AOR out of the AOR of Land Rover of South Dade, even if JLRNA were motivated to do so. The corporate policy of JLRNA is to encourage dual- line dealers. There is nothing inherently objectionable in such a policy. Even with the growing popularity of Land Rover and declining popularity of Jaguar over the past several years, this corporate policy, on the present record, has not denied The Collection a reasonable opportunity for growth. However, Jaguars and Land Rovers share a common engine on a number of models, and JLRNA allocates these engines between the two line-makes. Obviously, the potential exists for JLRNA to restrict the growth of single-line Jaguar dealers by allocating a disproportionately large number of engines to Land Rovers. But the record does not demonstrate that JLRNA has done so in these cases. Except for a few months leading up to the administrative hearing, when the supply of XF and new F models was constrained, all Jaguar models have otherwise been in free supply during the period in question, so JLRNA's allocations of engines between Jaguars and Land Rovers could not have denied The Collection a reasonable opportunity for growth. Further, The Collection may have declined allocations, even of the F model, during the period in question, further underscoring the free-supply status of all Jaguar models during the relevant period. Based on the foregoing, JLRNA has not denied The Collection the opportunity for reasonable growth, market expansion, or relocation, including the availability of Jaguar vehicles in keeping with the reasonable expectations of JLRNA in providing an adequate number of dealers in the CommTerr. Another factor of the 11 statutory factors is any attempt by JLRNA to coerce The Collection into consenting to the relocation of Warren Henry Jaguar. See § 320.642(2)(b)5. On one occasion, JLRNA's Vice President of Dealer Network Development warned Mr. Gorin that he would be "crossing a line" if The Collection persisted in objecting to the relocation of Warren Henry Jaguar. The officer made the comment at an informal encounter with Mr. Gorin during a Jaguar dealer meeting. The officer added that The Collection's relationship with JLRNA would never be the same if Mr. Gorin did not drop its protest of the relocation. The officer characterized the protest as The Collection's "suing" JLRNA. The Vice President of Dealer Network Development has considerable power over Jaguar dealers. He was and is in charge of the Business Builder Program, which is the program by which dealers, such as Warren Henry Jaguar and The Collection, earn manufacturer hold-backs by various activities. For Jaguar, these hold-backs, which are more formally known as a "variable margin program," amount to up to 7% of the manufacturer's suggested retail price (MSRP) of a vehicle and may provide the difference between a profit and loss in Jaguar dealership operations over the course of a year. Notwithstanding the source of these threats, their seriousness is negated by the absence of any attempt whatsoever by JLRNA to punish The Collection for maintaining this protest. Had there been such evidence, the weight that would have been assigned to this factor would have been considerable and possibly jeopardized the proposed relocation. Another factor of the 11 statutory factors is the distance, travel time, traffic patterns, and accessibility between The Collection and the proposed relocation. See § 320.642(2)(b)6. As noted above, as a result of the relocation, the air distance between The Collection and Warren Henry Jaguar would be reduced by about 2.4 miles and the road distance would be reduced by about 2.2 miles. The relationship between relatively small changes in distance between dealers and the lack of meaningful impact on the non-relocating dealer is reflected in section 320.642(5)(a)4., which bars a protest if the relocating dealer reopens less than six miles from its existing location and its new location is more than 15 miles from the non- relocating dealer. The proposed relocation meets the first criterion and, by road miles, the second criterion. But the new location, by air miles, is about one mile short of the 15-mile threshold. Nonetheless, the relatively short distance that Warren Henry Jaguar would be moving and the relatively small change in the proximity of its new location to The Collection are facts to be considered under this statutory factor. In terms of travel time, the existing and new locations of Warren Henry Jaguar are both about 20.6 minutes from The Collection. And the relatively modest distance between the existing and new locations would not produce any changes in average driving time for owners of Jaguars in operation within Warren Henry Jaguar's AOR. Based on the foregoing, there are no material differences in distance, travel time, traffic patterns, and accessibility between The Collection, on the one hand, and, on the other hand, Warren Henry Jaguar's existing and new locations. Another factor of the 11 statutory factors is whether benefits to the consumer will likely occur from the relocation and whether these benefits are not obtainable by other geographic or demographic changes or expected changes in the CommTerr. See § 320.642(2)(b)7. The MSRPs of the Jaguar models at issue range from about $50,000 to over $100,000. Any foreseeable changes in the demographics of the immediate vicinity of Warren Henry Jaguar's present location are not going to be of any benefit to the public that might constitute customers of these luxury cars. The relocation toward the coast benefits the public because the demographics of the immediate vicinity of the new location is more in tune with the luxury car market. After the relocation, more of Jaguar's potential customers would be able to examine JLRNA's offerings in closer proximity to their homes, and all of Jaguar's potential customers would be able to examine Jaguar's offerings in a safer setting that hosts other luxury brands for comparison shopping, such as Audi, Lexus, and Lamborghini, and other high-end retail attractors, such as fine restaurants and high-end stores, including those at the nearby Aventura Mall and planned for the Biscayne Landing development itself. Based on the foregoing, the relocation of Warren Henry Jaguar will provide relevant consumers benefits that cannot be obtained by other geographic or demographic changes. The final factor of the 11 statutory factors is whether The Collections is in substantial compliance with its dealer agreement with JLRNA. It is. Balancing these 11 statutory factors, JLRNA has proved that its existing dealers in the CommTerr--particularly, The Collection and Warren Henry Jaguar--have provided inadequate representation. No other factors persuade otherwise.
Recommendation It is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order dismissing all protests of The Collection to the proposed relocation of Warren Henry Jaguar to the east side of Biscayne Boulevard, about 306.45 feet south of Northeast 151st Street, in North Miami. DONE AND ENTERED this 22nd day of May, 2015, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 22nd day of May, 2015. COPIES FURNISHED: Jennifer Clark, Agency Clerk Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-430 2900 Apalachee Parkway, MS 61 Tallahassee, Florida 32399 (eServed) Richard N. Sox, Esquire Bass Sox Mercer, P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 (eServed) J. Martin Hayes, Esquire Akerman Senterfitt 106 East College Avenue, Suite 1200 Tallahassee, Florida 32301 (eServed) Stephanie Leigh Carman, Esquire Hogan Lovells US LLP 600 Brickell Avenue, Suite 2700 Miami, Florida 33131 (eServed) John J. Sullivan, Esquire Hogan Lovells US LLP 875 3rd Avenue New York, New York 10022 (eServed) Barrett Rachel Charapp, Esquire Charapp & Weiss, LLP 20801 Biscayne Boulevard, Suite 403 Aventura, Florida 33180 (eServed) Michael G. Charapp, Esquire Charapp & Weiss, LLP 8180 Greensboro Drive, Suite 1000 McLean, Virginia 22102 Brad D. Weiss, Esquire Charapp & Weiss, Llp 8180 Greensboro Drive, Suite 1000 Mclean, Virginia 22102 Ryan L. Ford, Esquire Hogan Lovells Us Llp 555 13th Street, Northwest Washington, Dc 20004 Kimberly S. Maccumbee, Esquire Charapp & Weiss, Llp 8180 Greensboro Drive, Suite 1000 Mclean, Virginia 22102 Terry L. Rhodes, Executive Director Department Of Highway Safety And Motor Vehicles Neil Kirkman Building, Room B-443 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 (Eserved) Steve Hurm, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 (eServed)
The Issue Whether Respondent, Maserati North America, Inc.’s ("MNA"), proposed 2017 Commercial Policy Program ("2017 Program") is a modification of the franchise agreement between MNA and Petitioner, New Country Motor Cars of Palm Beach, LLC, d/b/a Maserati of Palm Beach ("Palm Beach"), or Petitioner Recovery Racing, LLC, d/b/a Maserati of Ft. Lauderdale ("Fort Lauderdale"); and, if so, whether it is fair and not prohibited by section 320.641(3), Florida Statutes (2016). Whether MNA’s proposed modifications to the Existing Franchise Agreements with Petitioners are fair and not prohibited under section 320.641(3).
Findings Of Fact Based on the evidence presented, the Pre-hearing Stipulation of the parties and the record as a whole, the following relevant and material Findings of Fact are made2/:
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: A final order be entered by the Department of Highway Safety and Motor Vehicles: (1) DISMISSING Petitioners’ claims regarding MNA’s 2017 Commercial Policy Bonus Program; and (2) GRANTING, IN PART, AND DENYING, IN PART, Petitioners’ claims regarding modifications in the Proposed New Agreement, as set forth above. DONE AND ENTERED this 23rd day of January, 2018, in Tallahassee, Leon County, Florida. S ROBERT L. KILBRIDE 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 23rd day of January, 2018.
The Issue The issue is whether Petitioners are entitled to a proposed motor vehicle dealership in Seminole County, Florida.
Findings Of Fact DOAH provided the parties with adequate notice of the final hearing. On December 11, 2008, DOAH mailed a Notice of Hearing to each of the parties, scheduling the final hearing for April 6, 2009. No Notice was returned as undelivered. No party objected to a final hearing on April 6, 2009. On December 11, 2008, DOAH also issued an Order of Pre- hearing Instructions that, in relevant part, required the parties to file a pre-hearing stipulation which was to include a list of witnesses and exhibits to be called and submitted at the final hearing. No party complied with the Order. The documents forwarded to DOAH by the Department support the findings. The Notice of Publication for a New Point Franchise Motor Vehicle Dealer in a County of More than 300,000 Population was published in the Florida Administrative Weekly, Volume 34, Number 43, on October 24, 2008. On behalf of Respondent, Mr. James Sursely timely filed a protest letter dated November 7, 2008, with Ms. Nalini Vinayak, the administrator at the Department responsible for receiving such protests. The remaining facts are undisputed in this proceeding. The proposed new point franchise motor vehicle dealer is for a line-make identified in the record as Chunfeng Holding Group Co. Ltd. (CFHG) motorcycles. The proposed location is in Seminole County, Florida. Seminole County has a population in excess of 300,000. The proposed new point franchise motor vehicle dealer is located at 3311 West Lake Mary Boulevard, Lake Mary, Florida. Respondent owns and operates an existing CFHG dealership that is located at 306 West Main Street, Apopka, Orange, County, Florida, 32712. The proposed dealership is within a 12.5-mile radius of Respondent's dealership. Respondent has standing to protest the establishment of the proposed dealership. The petitioners submitted no evidence that Respondent is "not providing adequate representation" of the same line-make motor vehicles in the community or territory.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order denying the establishment of the proposed franchise dealership. DONE AND ENTERED this 21st day of April, 2009, 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 21st day of April, 2009.
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File and Relinquishing Jurisdiction by E. Gary Early, Administrative Law Judge of the Division of Administrative Hearings. The Department hereby adopts the Order Closing File and Relinquishing Jurisdiction as its Final Order in this matter. Accordingly, it is hereby ORDERED and ADJUDGED that Petitioner, Daytona Beach Cycles, LLC d/b/a Indian Motorcycle of Daytona, be granted a license to sell motorcycles manufactured by Victory (VICO) at 420 North Beach Street, Daytona Beach (Volusia County), Florida 32114, upon compliance with all applicable requirements of Section 320.27, Florida Statutes, and all applicable Department rules. Filed March 8, 2012 9:15 AM Division of Administrative Hearings DONE AND ORDERED this Io day of March, 2012, in Tallahassee, Leon County, J “Baker Chief Bureau of Issuance Oversight Division of Motorist Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Florida. Filed with the Clerk of the Division of Motorist Services this Oy day of March, 2012. 2 Pobias Vinegek Nalini Vinayak, Dealer Kicense 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. JB/jc Copies furnished: Andrew Pallemaerts Volusia Motorsports, Inc. 1701 State Road 44 New Smyrna Beach, Florida 32168 Jonathan Brennen Butler, Esquire Akerman Senterfitt 222 Lakeview Avenue, Suite 400 West Palm Beach, Florida 33401 E. Gary Early Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by William F. Quattlebaum, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Respondent’s request for dismissal, 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 that this case is CLOSED and no license will be issued to TT of Orlando, inc. d/b/a Maserati of Orlando to sell Maserati automobiles manufactured by Maserati (MASE) at 4225 Millenia Boulevard, Orlando, (Orange County), Florida 32839. Filed December 1, 2011 4:03 PM Division of Administrative Hearings DONE AND ORDERED this 36 day of November, 2011, in Tallahassee, Leon [s SandraC. Lambert, Director Division of Motorist Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 County, Florida. Filed with the Clerk of the Division of Motorist Services this _20%l>day of November, 2011. NOTICE OF APPETITES =m" 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. SCL:jde Copies furnished: C. Everett Boyd, Esquire Nelson, Mullins, Riley and Scarborough LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 Robert Craig Spickard, Esquire Kurkin Forehand Brandes, LLP 900 North Calhoun Street, Suite 1B Tallahassee, Florida 32301 John F. Walsh, Esquire AMSI-Automotive Management Services, Inc. 505 South Flagler Drive, Suite 700 West Palm Beach, Florida 33401 Donald St. Denis, Esquire St. Denis and Davey 1300 Riverplace Boulevard, Suite 101 Jacksonville, Florida 32207 William F. Quattlebaum Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator
Findings Of Fact The licensee is a subsidiary of British Leyland Motors, Inc. British Leyland Motors, Inc. is the United States subsidiary of the British corporation which manufactures Triumph, MG, and Jaguar automobiles. The licensee sells British Leyland products to retail dealers throughout the United States. The licensee's Southeast zone, which distributes British Leyland products in Florida and several other southeastern states is headquartered in Jacksonville. The applicant is a retail dealer of Triumph and MG automobiles. Its offices are located at 13595 South Dixie Highway, Miami, Florida. Applicant has been a Triumph retail dealer since 1972, and a MG dealer since 1976. Applicant has served in these capacities in accordance with written franchise agreements with the licensee. Through the application it filed with the Division of Motor Vehicles, the applicant, already licensed as a MG and Triumph dealer, is seeking a license to act as a retail dealer of Jaguar automobiles. The objector is a retail dealer of Triumph, MG, and Jaguar automobiles. Objector contends that no additional Jaguar retail dealers should be authorized for Dade County until the supply of Jaguar automobiles increases. Prior to 1975, the licensee had five (5) retail dealers located in Dade County. No single dealer sold all three British Leyland products. The applicant sold Triumph automobiles, and the objector sold MG and Jaguar automobiles. Orange Motors of Miami, a dealer which apparently was owned by the same persons who own the objector, sold MG and Jaguar automobiles. Autorama, Inc. sold only Triumph automobiles. Wayne Jones, Inc., a dealer no longer in business, sold only MG automobiles. This arrangement caused substantial problems for the licensee, and in late 1975, the licensee sought to implement a plan to reduce the number of retail dealerships from 5 to 3. The licensee wished to have each of the 3 remaining dealers act as "full line" British Leyland dealers. In other words, each of the 3 dealers would sell Triumph, MG and Jaguar automobiles. The licensee obtained agreement from each of its Dade County dealers for this plan. The applicant arranged to purchase the assets of Wayne Jones, Inc., thereby acquiring the MG line. Autorama, Inc., purchased the assets of Orange Motors of Miami, thus acquiring the MG and Jaguar lines. The objector was given a Triumph franchise agreement to add to its existing MG and Jaguar agreement. The cooperation of all 5 dealers was obviously required in order to accomplish the licensee's plan. Each of the dealers agreed not to protest efforts by the others to take on all three lines. Thus, when the objector sought a license from the Division of Motor Vehicles to operate as a Triumph dealer, the applicant filed a letter expressing no objection. It was anticipated that the objector would do likewise when the applicant requested a permit to act as a Jaguar dealer. The objector expressed this intention through its agents to agents of the licensee. When the applicant first sought its permit from the Division of Motor Vehicles in December, 1976, the objector withheld its letter of no protest, stating that it did not wish the applicant to become a Jaguar dealer until it had completed construction of adequate facilities. After the applicant completed its facilities, the objector nonetheless declined to issue a letter of no protest, and instead filed a letter expressing objection to awarding a Jaguar franchise to the applicant. In anticipation of receiving a Jaguar franchise agreement, the applicant has expended over $600,000.00 in constructing sales and service facilities. The applicant has constructed the largest indoor automobile show room in Dade County, and the largest service facility south of New York City. The applicant's facility is clearly adequate to handle the full line of British Leyland products, including Jaguar automobiles. Autorama, Inc. is located within the city of Miami, and serves generally a Northern Dade County trading area. The objector is located in the city of Coral Gables, and generally services the central portion of Dade County. While there are numerous exceptions, each dealer generally sells Jaguar automobiles to customers who reside nearer to it than to other dealers. The applicant is located approximately 8 miles south of the opponent, and approximately 13 miles south of Autorama. Neither the opponent, nor Autorama have made significant sales of Jaguar automobiles in the areas of Southern Dade County. The population of the Southern portion of Dade County is growing rapidly, and many persons with the financial means to purchase Jaguar automobiles reside in that area. The licensee is not achieving the sales of Jaguar automobiles in Southern Dade County that it could achieve with a dealer located in that area. The applicant could serve to achieve that market penetration. Most of the sales of Jaguar automobiles made by the opponent and by Autorama, have been made in the areas adjacent to their dealerships. Neither of these dealers have achieved many sales in the areas near to the applicant's location. The opponent has indicated that if it could receive from the licensee the number of Jaguar automobiles which it desires, it would not object to the applicant being named a Jaguar dealer. The opponent has contended that for the past year it has not received the volume of Jaguar automobiles from the licensee which it has requested, or which the licensee has promised it. The problem that the objector is experiencing is apparently nationwide, or at least Southeast region-wide in scope. The general shortage in availability of Jaguar automobiles has resulted from production problems in England, and is being felt by all Jaguar dealers in the Southeastern region. It is not merely the objector which has had a shortage of Jaguar automobiles in recent months, and it does not appear that the licensee has been prejudicial in delivering automobiles to the objector. It is the licensee's hope that the shortages will be of short duration. It is apparent that within a year prior to the hearing the objector actually turned back Jaguars that were delivered to it by the licensee because they were not the models or the colors which the objector could easily sell. No evidence was presented to show when the present shortage situation might end. Adding the applicant as a Jaguar dealer in Dade County will not appreciably reduce the number of Jaguar automobiles delivered to the objector or other dealers. The applicant's quota of automobiles would be taken from the total number of vehicles available in the Southeastern United States. It appears that granting the applicant a Jaguar franchise would result in the objector having approximately one Jaguar less to sell every two years. No evidence was presented which would indicate that either of the present Jaguar dealers in Dade County have violated any provisions of the licensee's franchise agreement, and the licensee did not contend such.
Conclusions This matter came before the Department for entry ofa Final Order upon submission of an Order Closing File by Daniel Manry,, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Petitioner’s request for 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 that this case is CLOSED and no license will be issued to JMSTAR Powersports, Inc. and John T. Faulkner d/b/a Faulkner Motorsports to sell motorcycles manufactured by Shanghai Honling Motorcycle Co. Ltd. (HONL) at 4237 US Highway 19, New Port Richey (Pasco County), Florida 34652. DONE AND ORDERED this 22%y of July, 2009, in Tallahassee, Leon County, Florida. LA. FORD, Direct6r 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 2&4E day of July, 2009. NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, | one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. CAF/vlg Copies furnished: John T. Faulkner Faulkner Motorsports 4237 US Highway 19 New Port Richey, Florida 34652 Andrew Hennosy Connie Hennosy Pine Woods Center, Inc., d/b/a Pasco Cycle 10312 State Road 52 Hudson, Florida 34669 Yenong Xie JMSTAR Powersports, Inc. 796 Sunflower Circle Weston, Florida 33327 Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway, Room A432 Tallahassee, Florida 32399 Daniel Manry Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator Florida Administrative Law Reports Post Office Box 385 Gainesville, Florida 32602 Jul.08 69 08:47a john "9643896138 p.1 UM le Dom'el Manry Abignde IMSTAR POWERSPORTS INC 0624.06 ry 796 SUNFLOWER CIR, WESTON, FL 33327 VY { TEL: 954 684 9724, FAX: 954 B389 6138, E-MAIL: PANDAINDUSTRY@MSN.COM CANCEL THE APPOINTMENT OF ADDITIONAL DEALER Daniel Manry, Administrative Law Judge 06.26.09 Division of Administrative Hearings The DeSoto Buid, 1230 Apalachee Pwy Tallahassee, Florida 32399-3060 Tel: 850 488 9675, Fax: 850 921 6847 s Dear Mr. Manry: odd Kat Case No. 09-3354 I decide to cancel my appointment of pp woo CENTER INC, d/b/a PASCO CYCLE as my franchise dealer of products of JMST, ZXYV, HONL? Due to this company never buy any products from my company since was approved as my franchise dealer. So, there is no need for any hearing any mere. » Sincerely, AM Yenong Xie President CC: Pine woods center, Inc John T. Faulkner “pear Wr. Daniel Many : tees . Re. Sor [eller of Jane 20 2009. his dealer Pre ey f Fe can J wy AM has no ight Be retest iy pidition , Due, it never “f ; we con wos cpanel os my dealer Aer two years A even From x, eud an pilction Fo PML Cone never co mumranieetes with me. Mow 5S terminal th dealershwp . yer ong xe 67.08.09
The Issue Whether J.S. Imports, Inc. should be granted a new point Mazda dealership at 631 South Military Trail, West Palm Beach, Florida, pursuant to Section 320.642, Florida Statutes.
Findings Of Fact Petitioner, Mazda Motor of America, Inc., is a manufacturer of automobiles and trucks which are distributed and sold through a network of dealerships. Under Florida law Mazda is denoted a "licensee." On January 5, 1996, a notice of publication for a new point franchise motor vehicle dealer was published which announced Mazda intends to allow the establishment of J.S. Imports, Inc., as a dealership for the sale of Mazda vehicles at 631 South Military Trail, West Palm Beach (Palm Beach County), Florida 33415. The notice further provided, in pertinent part: Mazda Motor of America, Inc., intends to engage in business with J. S. Imports, Inc., as a dealership on or after February 1, 1996. The name and address of the dealer-operator and principal investor of J. S. Imports, Inc., is: John Staluppi, Jr., 42 Davidson Lane East, West Islip, New York 11795. * * * Dealerships of the same line-make which can establish standing to protest the establishment of the new point may do so by filing a written petition or complaint with the Florida Department of Highway Safety and Motor Vehicles. Thereafter, on February 1, 1996, Respondents, Stewart Mazda, Delray Mazda, and Jupiter Dodge Mazda, filed a petition or complaint challenging the proposed new point dealer. Respondents are the existing Mazda dealerships located within Palm Beach County. There are no other same line-make motor vehicle dealerships which are physically located so as to meet or satisfy the requirements of Section 320.642(3), Florida Statutes. Thus, all dealers with the potential for standing have participated in this proceeding. Palm Beach County is a county with more than 300,000 population. Respondent, Stewart Mazda, is located at 2001 South Dixie Highway, West Palm Beach, Florida, and is within 12.5 miles of the proposed location for the new point site. In fact, the Stewart dealership is within five miles of the proposed new point. Respondent, Delray Mazda, is not located within 12.5 miles of the proposed location. Nevertheless, Delray Mazda established that during any 12 month period of the 36 month period preceding the filing of the licensee's application for the proposed dealer Delray Mazda made 25% of its retail sales of new motor vehicles to persons whose registered household addresses were within a radius of 12.5 miles of the proposed site. Respondent, Jupiter Dodge Mazda, is not within 12.5 miles of the location for the proposed new dealership yet it also met the sales standard described in paragraph 7. The proposed new motor vehicle dealer, J.S. Imports, Inc., is owned by John Staluppi, Jr., the son of John Staluppi. No other person or entity owns more than a 10% interest in JSI. It is proposed that J.S. Imports, Inc. will be located at 631 South Military Trail, West Palm Beach. Such real property is part of an automobile mall or auto mall (a cluster of automobile dealerships) which is owned or controlled by John Staluppi. The new Mazda vehicle sales facility would be located at 631 South Military Trail; however, the service facility for the dealership would be located elsewhere within a shared space at 561 South Military Trail, West Palm Beach. Both parcels are owned or controlled by John Staluppi. Both parcels are part of the same auto mall. As part of its documentation to establish the dealership, J.S. Imports, Inc. (JSI) submitted an unsigned lease for the subject property between John Staluppi and the proposed dealer. On or about October 25, 1996, just prior to this case going to hearing, John Staluppi entered into an agreement to sell the assets of the automobile dealerships located within the auto mall. He also agreed to lease the real estate upon which they are located. The lease included the sites for the new Mazda point as well as the service location. Without going into details of the agreement which are not material to the issues of this case, and without listing all of the corporate entities involved in the transaction, the principals in this new agreement were John Staluppi and Terry Taylor. Material to this case, however, is the covenant between Mr. Taylor and John Staluppi, Jr. Those parties reached an agreement to sublease the real estate at 631 South Military Trail and the service department at 561 South Military Trail, West Palm Beach. Such agreement to sublease was also executed October 25, 1996. Based upon the foregoing, as of October 25, 1996, the proposed site for the Mazda new point dealer continued to be 631 South Military Trail with service work to be at 561. These sites are identical to the information submitted by the applicant to the Department of Highway Safety and Motor Vehicles. This information was also disclosed to Respondents during discovery of the case, prior to the prehearing stipulation. Subsequently, the transaction between Mr. Taylor and John Staluppi was abandoned. Mr. Taylor’s deposit on the transaction was refunded. Apparently, these parties no longer intend to abide by the terms of the asset purchase agreement. JSI does not own the proposed site. If approved, JSI will lease the property from John Staluppi or entities he owns or controls. As of the time of hearing, JSI did not have a signed lease for the subject property. Typically, Mazda does not submit applications for new point dealerships without some documentation substantiating control of the proposed site. A proposed dealer would normally either own or control the proposed site. Control of the site may be shown by a lease, an option to purchase or an option to lease. In this instance, Mazda presumed the proposed site would be secured through the efforts of John Staluppi, Jr. on behalf of his company which would lease from his father. Moreover, Mazda believes its agreement with JSI (for the applicant dealer to reimburse it for costs or expenses incurred should the dealership effort fail due to an act or omission of JSI) adequately protected its interests in this regard. As of the dates of filing the application for a new point dealership, the notice of same, and the hearing in this cause, no person or entity, other than John Staluppi, Jr., had a beneficial ownership interest in the proposed dealership. To determine whether an additional same line-make dealer should be approved, the existing network of motor vehicle dealers must be evaluated to determine whether they are providing adequate representation to the community or territory. The applicable statutory criteria do not define "adequate representation" nor the "community or territory." Typically, sales data of past dealership performance is utilized by all parties to establish a community or territory (Comm/Terr) and to evaluate the dealers' effectiveness. In this case how the Comm/Terr should be defined is disputed by the parties. Although entitled to weight in the consideration of how the Comm/Terr should be defined, the dealer agreements with the three existing dealers (Respondents) do not assign an area by geographical boundaries. Respondents believe the Comm/Terr, based upon their interpretation of their agreements, should be defined as Palm Beach County as a whole. In contrast, Mazda studies have defined the market for these dealers in different ways; however, it believes the Comm/Terr should be Palm Beach County excluding the primary market area (PMA) ascribed to Jupiter Dodge Mazda. In making this determination, Mazda constructed the PMAs for the existing dealers as well as the new point (or open point) which has been designated as the Staluppi PMA. Within the Staluppi PMA it is presumed that dealer would have a competitive advantage in the market. Similarly, within the Stewart PMA that dealer would have the competitive edge due to customer preference and convenience. The actual shopping patterns of Mazda customers was also assessed. In this case, the three dealers are located in three distinct geographical areas: one toward the northern boundary of the county at Jupiter; one to the south at Delray; and one in the eastern central portion at downtown West Palm Beach. The proposed Staluppi/JSI site is west of the Stewart location. Based upon the actual shopping patterns the majority of the sales by these three existing dealers are made to customers in the same county. Because few of Mazda's customers come from adjacent counties, the largest area which should be used to define the Comm/Terr is the county itself. Within Palm Beach County there are also identifiable plots associated with the three dealers which show that while Stewart and Delray are connected to the JSI site (via established purchasing patterns), Jupiter is not. For this reason, Mazda's expert in rendering his initial opinions regarding this matter excluded Jupiter from the Comm/Terr. This approach has been deemed persuasive. Currently, there are three clusters of automobile and truck dealerships within the Palm Beach Comm/Terr: Delray, where Mazda is now located; Military Trail/Okeechobee Boulevard, where Mazda wants to be located; and North Lake Boulevard. Eighty percent of the customers who shop for new cars, regardless of brand, go to one of the three clusters. Mazda is not represented in two of these popular shopping venues. Mazda and Dodge are the only brands offered in Jupiter. Less than 5% of the customers from the remainder of Palm Beach County (away from the Jupiter PMA) went to Jupiter to purchase a new vehicle. To determine a reasonable expected market penetration standard, it is appropriate to exclude certain factors, such as the consumer preferences for certain types of vehicles (independent of brand) over which the dealers have no control. Market penetration is the traditional standard used to measure adequacy of representation because it reflects the competitive efforts of the competing dealers. Registration data of all brands is used to comprise a single indicator called market share, which is an objective and accurate measure of market activity. Registration data reflects actual consumer purchases. Actual registrations account for demographic characteristics, including age, income, education, size-class preferences, and product popularity. Market penetration for any area is computed utilizing all registrations to addresses in the area, regardless of the location of the selling dealer. After registration data is compiled, the performance of the Comm/Terr can be compared to another market area (allowing for differences in segment popularity). In this case, Mazda compared the Palm Beach Comm/Terr to the Miami/Ft. Lauderdale market. Typically, manufacturers and companies which compile data regarding vehicle sales classify new vehicle sales into segments. These segments list models which are comparable to one another and are, presumably, competing for the same customer. Mazda classifies its vehicles into nine segments. Although it could be argued Mazda is ineffective against Ford, General Motors, and Chrysler, part of that theoretical ineffectiveness is due to the lack or absence of entries from Mazda into markets or segments flooded by those make vehicles. For example, Mazda does not have a vehicle to compete with a Chevrolet Suburban. Nevertheless, on a segment-by-segment basis where Mazda competes with an entry comparable to the other line-makes (in size and class) Mazda's effectiveness can be computed and demonstrated. By measuring Mazda's penetration in each segment achieved in the Miami/Ft. Lauderdale area, applied to the industry data available in each segment in the Staluppi/JSI PMA, an appropriate standard is established for what could be expected if the latter were receiving adequate representation. Similarly, by applying the penetration rate to the Palm Beach Comm/Terr as a whole it is possible to establish what could be expected if the Comm/Terr were receiving adequate representation. By considering the segment analysis the process takes into account differences in consumer preferences between markets as to the popularity of segments, and thereby gives a more accurate measure of what Mazda's reasonably expected market penetration should be. Utilizing this segment analysis, the reasonably expected 1995 Mazda market share in the Staluppi/JSI PMA was 5.97%. The actual penetration for Mazda in this PMA was 3.81%. Similarly, in the Palm Beach Comm/Terr in 1995, Mazda's reasonably expected share in the segments was 6.21%. The actual penetration for Mazda in the Comm/Terr was 4.49%. Alternatively, adding Jupiter to the Palm Beach Comm/Terr, Mazda's reasonably expected market share in 1995 was 6.19%. The actual penetration in the Palm Beach Comm/Terr (adding Jupiter) was 4.65%. Thus, in each analysis Mazda performance fell short of its reasonably expected penetration. With a properly constructed dealer network, containing the appropriate number of dealerships in proper locations, it is reasonable to expect the dealer network in Palm Beach County to perform as well as the dealer network in Miami/Fort Lauderdale after adjusting for the local consumer patterns that make Palm Beach different from the other area. Net shortfall is the number of additional Mazdas that would have to be registered in order to equal the expected level based on average performance across an area. On the basis of the net shortfall in units, or units required to be registered in order to bring the Staluppi/JSI PMA up to the expected performance, the 1995 shortfall was 246 units. In reviewing the Palm Beach Comm/Terr as a whole over the three year period from 1993 to 1995, the efficiency has changed from 70.1% to 72.4%. For the Comm/Terr plus Jupiter, the efficiency has changed from 68.6% to 75.2% during the three years immediately following the insertion of Jupiter Dodge Mazda. Mazda was not receiving adequate representation from the standpoint of not achieving reasonably expected market share. That conclusion is the same whether the area under review is the Staluppi/JSI PMA, the larger Palm Beach Comm/Terr, or the Palm Beach Comm/Terr with Jupiter included. Increases in performance in 1996 (after the existing dealers knew an additional dealer was being sought for the Palm Beach Comm/Terr) while commendable do not negate the historical pattern of providing inadequate representation. The growth of population and households in Palm Beach County has been predominately to the west and central portions of the county and throughout the Delray Beach area. The proposed Staluppi/JSI PMA has also experienced rapid growth in households and population which is expected to continue. Among Mazda buyers, 28.5% thought that the location of the dealer was extremely important; 35.1% thought it was very important; 22.8% thought it was somewhat important; whereas only 8.7% thought it was not important, and 4.9% not important at all. The Military Trail auto mall into which JSI proposes to open the additional Mazda dealership, now contains Toyota, Jeep Eagle, Chrysler Plymouth, Nissan, Infiniti, Kia, GMC, Saturn, Ford and Isuzu. Other brands considered part of this cluster are on Okeechobee Boulevard. They are VW, Hyundai, Acura, Subaru, Volvo, Oldsmobile, Buick, Audi, BMW, Lexis, Lincoln Mercury, Chevrolet, Dodge, Mitsubishi and Mercedes Benz. Mazda would be required to have 3.2 dealerships in order to have the same share of the franchises in the Palm Beach Comm/Terr as it has in the Miami/Ft. Lauderdale area. Because Jupiter Dodge Mazda does not serve the Palm Beach Comm/Terr in a meaningful way, the Comm/Terr has two Mazda dealerships, and needs at least one more dealership to have a reasonable opportunity to receive adequate interbrand competition and gain expected market share. The likely cause of the current inadequacy of performance for the Palm Beach Comm/Terr is insufficient dealer count and poor dealer location. Without a dealer in the Staluppi/JSI PMA, consumers average 9.9 miles from the nearest Mazda dealer, which is higher than the major competitors located in the Staluppi/JSI PMA. With the addition of a Mazda dealer in the Staluppi/JSI PMA customers will be 7.2 miles, on average, to the nearest Mazda dealer a distance which should be more competitive with other brands such as Ford (3.9 miles), Chevrolet (4.7 miles), Nissan (7.2 miles), and Toyota (7.2 miles). Optimal location analysis also demonstrates that the proposed location would maximize customer convenience. If the J. S. Imports dealership is allowed to "float" in the Palm Beach Comm/Terr, while the other dealer locations are fixed, the location which would maximize customer convenience is near the proposed site. The proposed location is near the optimal location, and in the midst of a cluster of dealerships where approximately 30% of the sales of all Palm Beach County dealers are made. The proposed site is good in terms of solving the customer convenience problem in the area, and providing Mazda a presence in the cluster where many sales are made. The addition of a dealership will likely benefit consumers and the public interest. It will provide the growing population of the Staluppi/JSI PMA with a more convenient place to shop for Mazdas and more convenient Mazda service. It will take Mazda to a growing cluster of dealerships allowing customers a one stop opportunity to comparison shop Mazda and its competitors. Moreover, with increased interbrand and intrabrand competition Mazda and the existing dealers should be able to improve sales penetration and take advantage of the available market for Mazda products. Therefore, because of the large untapped opportunity for Mazda in the Palm Beach Comm/Terr as a whole, in the Comm/Terr plus Jupiter, and in the "identifiable plot" known as the Staluppi/JSI PMA, the addition of a new dealer should not cause a decrease in the existing Mazda dealers' sales over the long term. The addition should have a positive impact upon the overall sales opportunities for all the Mazda dealers. If you compute the total lost opportunity for sales in this market (941 units) and allocate a portion of sales to the Staluppi/JSI PMA (555), the remainder would be available to the existing dealers of the Comm/Terr. This remainder of the lost opportunity, (467 units utilizing the average penetration profile; 386 using the Jupiter profile), would be available for all Palm Beach Mazda dealers. Therefore, the proposed addition of a dealership can take place without taking any sales from existing Mazda dealers. The existing dealers should increase their sales because a large number of customers are now shopping in the Northlake and Okeechobee/Military Trail clusters, and could not previously consider Mazda conveniently because of the lack of a dealer. Having a dealer in the Okeechobee/Military Trail cluster should stimulate interest in Mazdas. All existing dealers have made substantial financial investments to perform their obligations under their dealers' agreements. In Stewart's case, the total investment is close to $5,000,000. Stewart's real estate and building are valued at approximately $3,000,000. Jupiter Dodge Mazda has about $1,000,000 invested in its dealership. Delray Mazda has approximately $3,500,000 invested in its dealership. All three existing dealerships should benefit from an increased Mazda presence in the market place. The reasonably expected market penetration for Mazda should improve with an additional dealership at the Staluppi auto mall. Mazda has not denied its existing dealers an opportunity for reasonable growth, expansion or relocation. In fact, Mazda urged Stewart to establish the dealership at the proposed location. Only when efforts with Stewart failed did Mazda go outside the existing dealers for an operator for the additional point. Mazda has not attempted to coerce the existing dealers into consenting to the additional dealership. In reaching this conclusion the single incident complained of by one existing dealer (that Mazda withdrew some advertising support) has been considered but is not persuasive that Mazda has acted improperly in its efforts to establish the new point. The distance travel time, considering traffic patterns and accessibility, between the proposed site and its nearest same line-make dealer (Stewart) is approximately ten minutes. While geographically closer than other dealers of same line-make vehicles, traffic and accessibility put the proposed site and Stewart at a reasonable distance. No evidence in this case supports a conclusion that consumers could have the same benefits offered by the proposed dealership from other changes. No evidence suggests the existing dealers are not in compliance with their dealer agreements. Intrabrand and interbrand competition should improve with the establishment of the new point. Service and sales facilities will be more convenient to customers. All existing dealers make sales into the area of the proposed site. With anticipated population growth and market availability, any sales lost to the new point should be offset by Mazda’s increased market presence, improved market penetration, and greater overall sales for all dealerships.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED That the Department of Motor Vehicles and Highway Safety enter a final order approving the new point dealership sought by Mazda Motor of America on behalf of J.S. Imports, Inc. DONE AND ENTERED this 1st day of May, 1997, in Tallahassee, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 1st day of May, 1997. COPIES FURNISHED: Dean Bunch, Esquire Sutherland, Asbill & Brennan, L.L.P. 909 East Park Avenue Tallahassee, Florida 32301 James D. Adams, Esquire Adams & Quinton 7300 West Camino Real Camino Real Centre Boca Raton, Florida 33433 Douglas E. Thompson Post Office Box 16480 West Palm Beach, Florida 33416 Dean J. Rosenbach Lewis, Vegosen, Rosenbach & Silber, P.A. Post Office Box 4388 West Palm Beach, Florida 33402-4388 Michael J. Alderman, Esquire Division of Motor Vehicles Neil Kirkman Building, Room A-432 Tallahassee, Florida 32399-0504 Charles J. Brantley, Director Division of Motor Vehicles Neil Kirkman Building, Room B439 Tallahassee, Florida 32399-0500 Enoch Jon Whitney, General Counsel Division of Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500
