04-004108 American Honda Motor Co., Inc., And B.O.O., Inc., D/B/A Acura Of South Florida vs. Rick Case Auto Inc., D/B/A Rick Case Acura Status: Closed Recommended Order on Wednesday, October 25, 2006.

Summary: Recommend that American Honda`s application to relocate Acura of South Florida be granted.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AMERICAN HONDA MOTOR CO., INC., )

AND B.O.O., INC., d/b/a ACURA )

OF SOUTH FLORIDA, )

)

Petitioner, )

)

vs. ) Case No. 04-4108

)

RICK CASE AUTO INC., d/b/a RICK )

CASE ACURA, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case

on March 12-17, 2006, March 21-24, 2006, and April 7, 2006, in

Tallahassee, Florida, before Florence Snyder Rivas, a duly-

designated Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner American Honda Motor Co., Inc.

Dean Bunch, Esquire

Melissa Fletcher Allaman, Esquire

Sutherland Asbill & Brennan LLP

3600 Maclay Boulevard South, Suite 202

Tallahassee, Florida 32312

For Petitioner B.O.O., Inc., d/b/a Acura of South Florida

Alan N. Jockers, Esquire

2300 North State Road 7

Hollywood, Florida 33021

For Respondent Rick Case Auto, Inc., d/b/a Rick Case Acura

James D. Adams, Esquire

A. Edward Quinton, III, Esquire

Adams, Quinton & Paretti, P.A.

80 Southwest 8th Street, Suite 2150

Miami, Florida 33130

STATEMENT OF 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.

PRELIMINARY STATEMENT

By notice of intent published in the October 15, 2004,

Florida Administrative Weekly, American Honda Motor Company,

Inc. (American Honda, manufacturer, or licensee) provided public

notice of its intention to relocate Acura of South Florida from

its current location in Hollywood, Broward County, Florida,

(Hollywood) to a proposed new location in Pembroke Pines, in

Broward County, Florida (Pembroke Pines). Respondent, Rick Case

Auto, Inc., d/b/a Rick Case Acura (Case Acura or protesting

dealer), timely lodged a formal protest and asserted its right

to an administrative hearing.

The case was forwarded to the Division of Administrative

Hearings for formal proceedings on November 12, 2004. Following

extensive discovery and motion practice, the case came on for

hearing on December 12, 2005. At the start of the hearing, Case

Acura sought a continuance based upon an alleged discovery

violation by American Honda. In an abundance of caution, a

continuance was granted, and the hearing thereafter went forward

on the earliest date the parties and witnesses were available.

The identity of witnesses, exhibits, and attendant rulings

is contained in the 18-volume transcript filed with the Division

of Administrative Hearings on April 10, 2006, and April 24,

2006. The parties made timely post-hearing submissions,

including memorandums of law, written final argument, and

proposed recommended orders. The parties' submissions and the

voluminous record have all been carefully considered in the

preparation of this Recommended Order. The parties have made

certain stipulations noted in and supported by the record in

this case; to the extent relevant, such stipulations are

reported in this Recommended Order and are accepted as true.

Statutory references herein are to the Florida Statutes (2004)

except where otherwise noted.

FINDINGS OF FACT

Parties

1. American Honda is a licensee and manufacturer as

defined by Section 320.60(8) and (9), Florida Statutes.

2. Acura of South Florida and Case Acura are motor vehicle

dealers as defined by Section 320.60(11)(a)1., Florida Statutes.

3. 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

4. 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

5. 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

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

11. 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

12. 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.

13. 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.

14. 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.

15. 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.

16. 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.

17. 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.

18. 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.

19. 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.

20. 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.

21. 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.

22. 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.

23. 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

24. 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.

25. 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

26. 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

27. 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

28. Case Acura is at all relevant times in compliance with

the terms of its dealer agreement.

Distance and Accessibility

29. 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

30. 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

31. 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

32. 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

33. 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.

CONCLUSIONS OF LAW

34. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter of this

proceeding pursuant to Sections 120.569 and 120.57 and

Subsection 320.642(2)(a), Florida Statutes (2006).

35. Section 320.642, Florida Statutes, governs requests to

relocate a dealership and provides in pertinent part:

(2)(a) An application for a motor vehicle

dealer license in any community or territory

shall be denied when:

1. A timely protest is filed by a

presently existing franchised motor vehicle

dealer with standing to protest as defined

in subsection (3); and

2. The licensee fails to show that the

existing franchised dealer or dealers who

register new motor vehicle retail sales or

retail leases of the same line-make in the

community or territory of the proposed

dealership are not providing adequate

representation of such line-make motor

vehicles in such community or territory.

The burden of proof in establishing

inadequate representation shall be on the

licensee.

* * *

(3) An existing franchised motor vehicle

dealer or dealers shall have standing to

protest a proposed additional or relocated

motor vehicle dealer where the existing

motor vehicle dealer or dealers have a

franchise agreement for the same line-make

vehicle to be sold or serviced by the

proposed additional or relocated motor

vehicle dealer and are physically located so

as to meet or satisfy any of the following

requirements or conditions:

* * *

(b) If the proposed additional or

relocated motor vehicle dealer is to be

located in a county with a population of

more than 300,000 according to the most

recent data of the United States Census

Bureau or the data of the Bureau of Economic

and Business Research of the University of

Florida:

1. Any existing motor vehicle dealer or

dealers of the same line-make have a

licensed franchise location within a radius

of 12.5 miles of the location of the

proposed additional or relocated motor

vehicle dealer; or

2. Any existing motor vehicle dealer or

dealers of the same line-make can establish

that during any 12-month period of the 36-

month period preceding the filing of the

licensee's application for the proposed

dealership, such dealer or its predecessor

made 25 percent of its retail sales of new

motor vehicles to persons whose registered

household addresses were located within a

radius of 12.5 miles of the location of the

proposed additional or relocated motor

vehicle dealer; provided such existing

dealer is located in the same county or any

county contiguous to the county where the

additional or relocated dealer is proposed

to be located.

36. Case Acura has standing to protest the proposed

relocation and has timely filed its protest.

37. American Honda, as the licensee, has the burden of

proof in this proceeding. See Section 320.642(2)(a)2., Florida

Statutes. To prevail, American Honda must establish by a

preponderance of evidence that the existing franchised dealers

for Acura are not providing adequate representation in the

Pembroke Pines comm/terr.

38. The scope of inquiry to determine whether existing

dealers are providing adequate representation is set forth in

Subsection 320.642(2)(b), Florida Statutes. The subsection

identifies 11 factors which may be considered and states:

(b) In determining whether the existing

franchised motor vehicle dealer or dealers

are providing adequate representation in the

community or territory for the line-make,

the department may consider evidence which

may include, but is not limited to:

1. The impact of the establishment of the

proposed or relocated dealer on the

consumers, public interest, existing

dealers, and the licensee; provided,

however, that financial impact may only be

considered with respect to the protesting

dealer or dealers.

2. The size and permanency of investment

reasonably made and reasonable obligations

incurred by the existing dealer or dealers

to perform their obligations under the

dealer agreement.

3. The reasonably expected market

penetration of the line-make motor vehicle

for the community or territory involved,

after consideration of all factors which may

affect said penetration, including, but not

limited to, demographic factors such as age,

income, education, size class preference,

product popularity, retail lease

transactions, or other factors affecting

sales to consumers of the community or

territory.

4. Any actions by the licensees in

denying its existing dealer or dealers of

the same line-make the opportunity for

reasonable growth, market expansion, or

relocation, including the availability of

line-make vehicles in keeping with the

reasonable expectations of the licensee in

providing an adequate number of dealers in

the community or territory.

5. Any attempts by the licensee to coerce

the existing dealer or dealers into

consenting to additional or relocated

franchises of the same line-make in the

community or territory.

6. Distance, travel time, traffic

patterns, and accessibility between the

existing dealer or dealers of the same line-

make and the location of the proposed

additional or relocated dealer.

7. Whether benefits to consumers will

likely occur from the establishment or

relocation of the dealership which cannot be

obtained by other geographic or demographic

changes or expected changes in the community

or territory.

8. Whether the protesting dealer or

dealers are in substantial compliance with

their dealer agreement.

9. Whether there is adequate interbrand

and intrabrand competition with respect to

said line-make in the community or territory

and adequately convenient consumer care for

the motor vehicles of the line-make,

including the adequacy of sales and service

facilities.

10. Whether the establishment or

relocation of the proposed dealership

appears to be warranted and justified based

on economic and marketing conditions

pertinent to dealers competing in the

community or territory, including

anticipated future changes.

11. The volume of registrations and

service business transacted by the existing

dealer or dealers of the same line-make in

the relevant community or territory of the

proposed dealership.

39. Factor 1 addresses the impact a relocated dealership

will have on consumers, the public interest, existing dealers and

the licensee. See Section 320.642(2)(b)1., Florida Statutes.

With reference to Factor 1, the evidence established that the

proposed relocation will benefit consumers, existing dealers and

the licensee, and will serve the public interest. Consumers will

benefit from the presence of an updated Acura of South Florida

with improved service facilities and adequate space. Consumers

benefit, too, from Acura's new owner, who is experienced and

committed to the success of the dealership at its new location.

Additionally, the proposed relocation will stimulate both inter-

brand and intra-brand competition, which is in the public

interest. The Acura brand will benefit through increased

exposure, market penetration, and sales and service capacity in

the comm/terr, where the brand is not, at present, adequately

represented. It is not likely there will be a negative impact to

existing dealerships, including the protesting dealer. There is

a significant and growing untapped market potential opportunity

in the comm/terr. If the protesting dealer and other dealers in

the network respond positively and offer competitive value, they

will capture some of the increased sales opportunity generated by

Acura of South Florida's relocation, and will fare well under the

reconstituted dealer network.

40. Another element of Factor 1 which may be considered is

the financial impact on the protesting dealer, which impact must

be analyzed as it relates to determining adequacy of

representation. Here, the evidence established that there is no

reason to expect the existing dealership to lose sales as a

result of the implementation of the proposed relocation. Case

Acura is highly profitable. It has substantial capital and cash

assets with which to compete in the marketplace. However, even

if some sales are lost, the manufacturer is not statutorily

required to prove an absence of any financial impact on the

protesting dealer. See Chevrolet Motor Division, General Motors

Corporation, et al. v. Fred Bondesen Chevrolet , DOAH Case No. 98-

1559 (DOAH February 1, 1999); and Kawasaki Motors Corp., et al.

v. Cycle Sports Center, Inc. , Case No. 95-3852 (DOAH January 5,

1996).

41. Factor 2 relates to the size and permanency of the

dealers' investments and obligations they have incurred to comply

with their respective dealer agreements. See

Section 320.642(2)(b)2., Florida Statutes. Here, there is no

dispute that the Cases have made substantial financial and

personal investments in their Acura dealership. Such investments

will not be impaired if the proposed relocation is approved.

42. Factor 3 relates to the reasonably expected market

penetration of the line-make motor vehicle for the comm/terr.

See Section 320.642(2)(b)3., Florida Statutes. In this case,

the reasonably expected market penetration is the national

average, after adjustments for segment popularity and demographic

factors in the comm/terr.

43. Factor 4 relates to the actions of the licensee to deny

existing dealer opportunities for growth, expansion, or

relocation. See Section 320.642(2)(b)4., Florida Statutes.

Here, there is no persuasive evidence that American Honda

prevented the protesting dealer from expanding or relocating to

meet the needs of the territory or community.

44. Factor 5 addresses attempts of the licensee to coerce

existing dealers into consenting to the proposed relocation.

See Section 320.642(2)(b)5., Florida Statutes. Here, there is no

evidence that American Honda made attempts to coerce the

protesting dealer into consenting to the proposed relocation.

45. Factor 6 addresses accessibility of existing dealer(s)

relative to the proposed dealership location. See

Section 320.642(2)(b)6., Florida Statutes. The evidence is

sufficient to establish that the proposed new dealership site

will improve accessibility for consumers within the comm/terr.

46. Factor 7 addresses benefits to consumers from the

proposed relocation which cannot be obtained by other geographic

or demographic changes or expected changes within the comm/terr.

See Section 320.642(2)(b)7., Florida Statutes. The evidence is

sufficient to establish that the proposed relocation will benefit

consumers by providing adequate levels of convenience, access and

service to Acura customers and prospective customers in the

comm/terr; and that such benefits cannot be obtained by other

geographic or demographic changes or expected changes in the

comm/terr.

47. Factor 8 concerns the compliance of the protesting

dealer with h/er dealer agreement. See Section 320.642(2)(b)8.,

Florida Statutes. Here, there is no evidence that the Cases are

not in compliance with their dealer agreement.

48. Factor 9 addresses the issue of adequacy of inter-brand

and intra-brand competition with respect to the subject line-make

in the comm/terr, including adequacy of convenience of consumer

care. See Section 320.642(2)(b)9., Florida Statutes. The

evidence established that the performance of Acura is sub-par,

reflecting, among other things, inadequate inter-brand and intra-

brand competition. With reference to consumer convenience, the

western part of the comm/terr lacks adequate sales and service

facilities.

49. Factor 10 considers the justification of the proposed

relocation based on the economic and marketing conditions

pertinent to dealers competing in the comm/terr. See Section

320.642(2)(b)10., Florida Statutes. 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,

i.e. rapid growth in terms of affluent population and households,

which presents increased sales and service opportunity for

dealers.

50. Factor 11 considers the volume of registrations and

service business transacted by the existing dealers of the same

line-make in the comm/terr. See Section 320.642(2)(b)11.,

Florida Statutes. The evidence was sufficient to establish that

statistics relevant to volume of registrations and service

business transacted by the existing Acura dealers in the

comm/terr will improve if the proposed relocation goes forward.

51. Having weighed the statutory criteria enumerated in

Subsection 320.642(2)(b), Florida Statutes, and in light of the

facts found herein, it is concluded that American Honda has met

the burden to prove by a preponderance of the evidence that the

existing dealer network is not providing adequate representation.

A balancing of the statutory factors supports the conclusion that

the benefits of approving the proposed relocation outweigh any

negative impact on the existing dealerships, including Case

Acura.

52. The Legislature expressed its intent when it enacted

the 1988 version of Section 320.642, Florida Statutes. The goals

established therein include protecting the welfare of Florida

citizens by (1) maintaining competition and (2) providing

consumer protection and fair trade. See Section 320.605, Florida

Statutes. In light of these goals, the proposed relocation is

consistent with the purposes of Section 320.642, Florida

Statutes.

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

[phone] SUNCOM 278-9675

Fax Filing [phone]

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

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15

days from the date of this Recommended Order. Any exceptions to

this Recommended Order should be filed with the agency that will

issue the Final Order in this case.