13-000338 The Collection, Llc, D/B/A The Collection vs. Jaguar Land Rover North America, Llc, And Warren Henry Jaguar, Llc, D/B/A Warren Henry Jaguar Status: Closed Recommended Order on Friday, May 22, 2015.

Summary: JLRNA proved that its dealers in the CommTerr underrepresented the line-make, so the protest of one of those dealers to the relocation of another such dealer should be dismissed.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

THE COLLECTION, LLC, d/b/a THE

COLLECTION,

Petitioner,

CASE NO . 13 - 0 338

vs.

JAGUAR LAND ROVER NORTH AMERICA ,

LLC , AND WARREN HENRY JAGUAR ,

LLC, d/b/a WARREN HENRY JAGUAR,

Respondents.

_______________________________/

THE COLLECTION, LLC

Petitioner,

vs. CASE NO. 13 - 4967

WARREN HENRY JAGUAR , LLC, d/b/a

WARREN HENRY JAGUAR,

Respondent.

_______________________________/

THE COLLECTION, LLC, d/b/a THE

COLLECTION,

Petitioner,

CASE NO. 14 - 0 157

vs.

JAGUAR LAND ROVER NORTH AMERICA ,

LLC AND WARREN HENRY JAGUAR ,

LLC, d/b/a WARREN HENRY JAGUAR,

Respondents.

_______________________________/

RECOMMENDED ORDER

On October 27 through 3 1 and November 3 through 4, 2014 ,

Robert E. Meale, Administrative Law Judge of the Division of

Administrative Hearings (DOAH), conducted the final hearing in

Miami, Florida.

APPEARANCES

For Petitioner: Brad D. Weiss, Esquire

Kimberly S. MacCumbee, Esquire

Barrett R. Charapp, Esquire

Charapp & Weiss, LLC

8180 Greensboro Drive, Suite 1000

M cLean, Virginia 22102

For Respondent Jaguar Land Rover North America , LLC:

John J. Sullivan, Esquire

Ryan L. Ford, Esquire

Stephanie L. Carman, Esq uire

Hogan Lovells US LLP

875 3 rd Avenue

New York, New York 10022

For Respondent Warren Henry Jaguar , LLC:

J. Martin Hayes, Esq uire

Akerman Senterfitt

106 East College Avenue, Suite 1200

Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

The issue is whether , pursuant to section 320.642, Florida

Statutes (2013), Respondent Jaguar Land Rover North

America LLC (JLRNA) may reloc ate the dealership of Respondent

Warren Henry J aguar from 20800 Northwest Second Avenue, Miami,

to the east side of Biscayne Boulevard, about 306.45 feet sou th

of Northeast 151st Street, in North Miami .

PRELIMINARY STATEMENT

On January 18, 2013, The Collection filed a Petition or

Complaint Pr otesting the Establishment of [the Warren Henry

Jaguar ] Dealership, which, after tran smittal to DOAH, commenced

Case No. 13 - 0 338. On December 17 , 2013, The Collection filed a

letter protesting the relocation of [ the Warren Henry Jaguar ]

D ealership, which, after transmittal to DOAH, co mmenced Case

No. 13 - 4967. On January 7, 2014, The Collection filed a

Petition or Complai nt P rotesting the Establishment of [ the

Warren Henry Jaguar ] D ealership, which, after transmi ttal to

DOAH, commenced Case No. 14 - 0 157.

The three cases involve the same proposed relocation of the

Warren Henry Jaguar dealership. In the first case, the not ice

contain ed an incorrect street address. In the second case,

JLRNA corrected the mistake in the first notice, but The

Collection protested the proposed relocation prior to the

publication of formal notice . In the third case, JLRNA

published the correct ed notice, and The Collection protested the

proposed relocation .

The three cases were consolidated by orders entered on

January 16 and February 24, 2014. On March 3, 2014, The

Collection filed a notice of stay issued by the Third District

Court of Appeal in connection with Case No. 3D14 - 338. On June

18, 2014, the appellate court dismissed the petition for a writ

of certiorari. The administrative hearing was reset for the

two - week period set forth above .

Although the principal of Warren Henry Jaguar, Warr en Henry

Zinn, was present for part of the final hearing, its counsel did

not participate in the final hearing. Warren Henry Jaguar did

not offer any evidence, but Mr. Zinn testified as a witness

called by JLRNA.

At the hearing, The Collection called five witnesses and

offered into evidence 51 exhibits: Petitioner Exhibits 1 - 2, 4,

6 - 7, 12 - 18 (including 13a), 20 - 28, 32 - 35, 37 - 44, 46, 49 - 55,

59 - 61, 63, and 65 - 69. JLRNA called six witnesses and offered

into evidence 68 exhibits: Respondent Exhi bits 1 - 7, 10 - 15,

18 - 55 (including 43a) , 58 - 59, 61, 64, 67 - 68, 72 - 75 , and 77 - 82.

All exhibits were admitted except for the following: Petitioner

Exhibits 2 (tab 26 withdrawn), 16 (not for truth), 32, 35 (page

one only), 41 - 42, 55, and 67 (not for truth) a nd Respondent

Exhibits 58 - 59 (not for truth) and 61 (not for truth). A ll

excluded exhibits were proffe red.

At the request of The Collection and JLRNA, the parties

filed their exhibits by electronic media. Upon agreement of the

parties during the hearing, the Administrative Law Judge sealed

certain exhibits to prevent the disclosure of proprietary

financial and sales information. Because the parties did not

file these sealed exhibits by separate electronic media, the

Administrative Law Judge has sealed al l of the exhibits.

The court reporter filed the transcript on February 23,

2015. Petitioner and JLRNA filed proposed recommended orders on

April 9, 2015.

FINDINGS OF FACT

1. Warren Henry Jaguar is an authorized Jaguar dealer

located at 20800 Northwe st Second Avenue in Miami Gardens .

Warren Henry Jaguar has occupied this location since 1985.

2. 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 W arren 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 .

3 . 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 intersectio n 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.

4 . O n December 9, DHSMV published notice to this effect in

the Florida Administrative Register. D espite an incorrect

proposed street address, The Collection's principal, Kenneth

Gorin, knew the proposed location of the relocated Jaguar

dealership and timely p rotested the proposed relocation.

5 . 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 .

6 . 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.

7. 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.

8 . 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.

9 . Within Warren Henry Jaguar's AOR for its current

location, t he new location would be about 7.2 road miles and

less than five air miles to the southeast of the current

location. T he proposed location would be d irectly west of Oleta

River State Park, which is separated from Haulover Park on the

ocean by a narrow finger of the northernmost portion of Biscay ne

Bay . T he proposed location is in an area that is economically

vibrant.

10 . 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 Jaguar s

to persons who registered those vehicles within a radius of 12.5

miles of the proposed relocation site.

11 . Warren Henry Jaguar's present location is about 16.3

air miles from The Collection's dealership. The proposed

lo cation is about 2.4 air miles an d 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 location s , o n the other hand, would be

almost unchanged.

12 . 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.

13 . 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.

14 . 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

dealer s in the CommTerr. See § 320.642(2)(b)3. and 11.

15 . The assessment of the performance of the CommTerr

requires the establishment of a benchmark again st 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 b enchmark .

16 . 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 sel ections are reasonable.

17 . 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 s election 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.

18 . To addre ss 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, J LRNA replace d the XK

model with the F model -- first a convertible and then a coupe;

the F model is in the premium sport segment.

1 9 . Segmentation analysis applies more objective filters,

such as body type (e.g., sedan vs. coupe) and body length, plus

mor e 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

fo r 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.

20 . For instance, in 2012, for the medium premium, large

premi um, 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 actua l penetration was only 6.06%; this

translates to a retail registration effectiv e ness of 72.8%.

21. 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 an alyst showed that

the CommTerr underperform ed in 2013 and 2014 (thro ugh 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.

22 . 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 He nry Jaguar and

The Collection, whose ret ail registration performance fell below

that of the West Palm Beach AOR benchmark each year from 2009

through June 2014.

23 . The CommTerr performed no better when compared to the

alternative benchmark of Florida less the CommTerr. Here, the

CommTerr achieved retail registration ef fectiveness 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 effective ness exceeded

that of Florida less the CommTerr in 2009, 2010, 2011, and 2013.

24 . 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 receiv ed

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.

25 . T wo of th e 11 statutory factors are: a) whether there

is adequat e interbrand and intra brand 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 CommTe rr. See § 320.642(2)(b)9. and 10.

26 . 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.

27 . For the most part, the period in question covers the

recovery of the auto industry from the Great Recession of 2008.

However, t here is some eviden ce 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 s upport more luxury

vehicle sales supports the finding that Jaguar sales in the

CommTerr are inadequate .

28 . 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 intra brand competition.

29 . T wo 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 thei r dealer agreements. See

§ 320.642(2)(b)1. and 2.

30 . 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 competi tors' 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.

31 . If the CommTerr dealers achieved the retail

registration effect iveness 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.

32 . By some measures, The Collection had, at 103 units,

the largest shortfall in sales, when m easured 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 Al pine Motors -- was

below his Florida benchmark e very year. (Pet. Ex. 2, Tab 11,

p. 4.)

33 . 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.

34 . 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 .

35. 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% fro m 2010 to 2012 while its vehicle sales

decreased by 9.2%.

36 . Less dramatically, i n attempting to demonstrate that

The Collection's Jaguar - based financial performance was

precarious, The Collection's accountant imputed excessive rent

based on an overly ge nerous value assigned to the facility and

an excessive allocation to Jaguar of a share of the facility and

facility costs . The accountant also distor t ed The Collection's

Jaguar - based financial performance by including one - time legal

expenses paid or incur red in 2013 in connection with this

dealer - relocation litigation.

37 . 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 litt le risk posed to The Collection's investment and

obligations in connection with its dealer agreement with JLRNA.

38 . Moreover, there is little, if any, evidence as to the

size or permanency of investment or obligations incurred by The

Collection to perf orm 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 Col lection's accountant.

39. 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 ser vice of the other seven brands. As

framed, this argument is irrelevant because it imper missibly

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.

40 . Based on the foregoing, the relocation of Warren Henry

Jaguar would not have an adverse impact on existing deal ers, 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.

41 . Another factor of the 11 statutory factors is any

action by JL R NA 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 J L RNA in providing

an adequate number of dealers in the CommTerr. See

§ 320.642(2)(b)4.

42 . 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

fac tor. At some point, Mr. Gorin and Mr. Zinn negotiate d the

sale of Land Rover of South Dade to Mr. Gorin, The Collection,

or an affili ate of either of them. But these negotiation s 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 , s o 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 .

43 . The corporate policy of JLRNA is t o 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.

44 . However, Jaguar s 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 model s 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 alloc ations, even of the

F model, during the period in question , further underscoring the

free - supply status of all Jaguar models during the relevant

period .

45 . 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.

46 . Another factor of the 11 statutory factors is any

attemp t by JLRNA to coerce The Collection into consenting to the

relocation of Warren Henry Jaguar. See § 320.642(2)(b)5.

47 . On one occasion, JLRNA 's Vice Presiden t of Dealer

Network Development warned Mr. Gorin that he would be "crossing

a line" if The Colle ction 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

wit h 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.

48 . The Vice President of Dealer Network Development has

considerable power over Jaguar dealers. He was and is in charge

o f 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

m argin 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.

49 . 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.

H ad there been such evidence, the weight that would have be e n

assigned to this factor would have been considera ble and

possibly jeopardized the proposed relocation.

50 . 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.

51 . 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 dist ance 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 t han 15 miles from the non -

relocating dealer. The proposed relocation meets the first

criterion and, b y 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 sh ort 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.

52 . In terms of travel time, the existing and new

location s 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 Henr y Jaguar's AOR.

53 . 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 .

54 . 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.

55 . The MSRPs of the Jaguar models at issue range from

about $50,000 to over $100,000. Any foreseeable change s in the

demographics of the immediate vicinity of Warren He nry Jaguar's

present location are not going to be of any benefit to t he

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,

m ore of Jaguar's potential customers would be able to examine

JLRNA's offerings in clo ser proximity to their homes, a nd all of

Jaguar's potential customers would be able to examine Jaguar's

offerings in a safer setting that hosts other luxury brands for

com parison 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.

56 . 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.

57 . The final factor of the 11 statutory factors is

whether The Collections is in substant ial compliance with its

dealer agreement with JLRNA. It is.

58 . Balancing the se 11 statutory factors, JLRNA has proved

that its existing dealers in the CommTerr -- particularly, The

Collection and Warren Henry Jaguar -- have provided inadequate

representatio n. No other factors persuade otherwise.

CONCLUSIONS OF LAW

59 . DOAH has jurisdiction of the subject matter.

§§ 120.569, 120.57(1), and 320.699 .

60 . A licensee, such as JLRNA, that intends to permit the

relocation of an existing dealer within the community or

territory where the same line - make vehicle is represented by

another franchised dealer must provide written notice to DHSMV.

§ 320.642(1). T he notice must include the "specific location"

of the relocated dealer, and DHSMV must publish the notice in

the Florida Administrative Register. Id. For the reasons

stated above, JLRNA and DHSMV materially met these requirements

with the first published notice and met them with the second

published notice .

61 . An existing dealer has standing to challenge a

proposed relocation if the dealer has a franchise agreement for

the same line - make vehicle, and, during any 12 - month period over

the past 36 months, it made 25% of its retail sales of new motor

vehicles to persons whose registered household addresses were

located within 12.5 miles of the proposed new location, provided

that the existing dealer is in the same county or in a county

contiguous to the coun ty of the relocating dealer.

§ 320.642(3)(b)2. For the reasons stated above, The Collection

meets this standing requirement.

62 . If an existing dealer with standing files a timely

protest of the proposed location, the licensee has the burden of

proving 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 ve hicles in such community or territory ."

§ 320.642(2)(a)2. The standard of proof is a preponderance of

the evidence. § 120.57(1)(j).

63 . Section 320.642(2)(b) identifies 11 non - exclusive

factors that DHSMV may consider in determining the adequacy of

the representation of Jaguar by existing dealers in the

CommTerr. This statute provides:

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 a greement.

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 accessibi lity 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

o btained 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

int rabrand 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.

64 . For the reasons noted above, JLRNA has proved by a

preponderance of the evidence inadequate repres entation in the

CommTerr.

65 . At the hearing and in its posthearing memorandum of

law, citing section 90.702 , The Collection argued that the

Administrative Law Judge should exclude testimony and exhibits

of JRLNA's dealer network analyst. At the hearing, the focus of

the argument was on the analyst's failure to provide a basis for

the segmentation determinations that underlie his analysis and

his failure to subject his hypothesis of underperformance to

scientific testing. In the memorandum, the focus of the

argument was on the analyst's conclusions that Jaguar was

under - represented in the CommTerr and that increased sales could

come through conquest sales, rather than at the expense of other

dealers in the CommTerr -- namely, The Collection.

66. In its present form, section 90.702 authorizes opinion

testimony imparting "scientific, technical, or other specialized

knowledge" from a witness "qualified as an expert by knowledge,

skill, experience, training, or education," if the testimony is

"ba sed upon sufficient facts or data," the testimony is "the

product of reliable principles and methods," and the witness

"has applied the principles and methods reliably to the facts of

the case."

67. Preliminarily, the requirements of section 90.702 do

n ot apply to these cases for two reasons. First, section

120.569(2)(g) provides that, other than "[i]rrelevant,

immaterial, or unduly repetitious evidence," "all other evidence

of a type commonly relied upon by reasonably prudent persons in

the conduct of their affairs shall be admissible, whether or not

such evidence would be admissible in a trial in the courts of

Florida." These specific provisions governing administrative

hearings would have no meaning if they did not override the

evidentiary provisions of chapter 90, including section 90.702.

68. Second, there is some doubt whether the requirements

of section 90.702 should even apply in a nonjury trial. Compare

United HealthCare Ins. Co. v. AdvancePCS , 2002 U.S. Dist. LEXIS

28262 (D. Minn. 2002) (no) with Giaimo v. Fla. Autosport, Inc. ,

154 So. 3d 385 (Fla. 1st DCA 2014) (per curiam) (court applied

section 90.702 to administrative proceeding without considering

the issue). At the very least, even in a jury trial, the trial

judge's ruling as to the adm issibility of expert evidence based

on this reliability objection may be overturned on appeal only

if the ruling was an abuse of discretion. Kumho Tire Co. v.

Carmichael , 526 U.S. 137, 142 (1999).

69. Even if section 90.702 applies to an administrative

h earing, The Collection invites a misapplication of this statute

to the testimony identified above. Section 90.702 assumed its

present form as a result of legislative am endments enacted in

2013. The l egislature revised section 90.702 "to adopt the

standar ds for expert testimony . . . as provided in Daubert v.

Merrell Dow Pharmaceuticals, Inc. , 509 U.S. 579 (1993) [and]

Kumho Tire Co. v. Carmichael , 526 U.S. 137 (1999) and to no

longer apply the standard of Frye v. United States , 293 F.2d

1013 (D.C. Cir. 19 23)." Ch. 2013 - 107, Laws of Florida.

70. In Daubert , the U.S. Supreme Court held that

scientific testimony was admissible only if it was reliable, as

well as relevant. 509 U.S. at 589. If constituting an

assertion or inference, for an expert's opinion to come within

the realm of scientific knowledge, the opinion must be derived

from the scientific method. Id. at 590. The scientific method

consists of stating and testing hypotheses. Id. at 593.

71. In Kumho Tire , the U.S. Supreme Court extended Dau bert

to technical testimony from experts, such as engineers, who are

not scientists. In extending its Daubert holding, the Court

stressed the flexibility of the reliability test to b e imposed

by the trial court. Admissible e ngineering testimony in some

c ases might rest upon "scientific foundations," but in other

cases might represent "personal knowledge or experience." 526

U.S. at 150 .

72. The Kumho Tire opinion concedes that rigorous

reliability requirements may not apply equally for all experts

and all areas of expertise. Subjects of expertise where a

scientific method may not be applicable might include " drug

terms, handwriting analysis, criminal modus operandi, land

valuation, agricultural practices, railroad procedures, [and]

attorney's fee valua tion ." Id. Accord , In re T. A. , 663 N.W.

2d 225, 234 - 35 (S.D. 2003) (in some cases, reliability must

focus on "knowledge and experience"; there is no requirement

that the medical profession devise a test to determine how and

why a child bruises to warrant the admissibility of testimony

from a medical professional that a child's injuries are

consistent with abuse).

73. Two Florida opinions rejecting "pure opinion

testimony" under section 90.702 in its present form seem to

leave little room for "pers onal knowledge or experience" as a

basis for a scientific expert's assertion or inference. In

Giaimo , supra , the court excluded the testimony of a treating

neurosurgeon because he could not explain how he arrived at his

finding apportioning a claimant's i njuries between two

conditions. In Perez v. Bell South Telecommunications , Inc. 138

So. 3d 492 (Fla. 3d DCA 2014), the court excluded the testimony

of a treating obstetrician that workplace stress caused a

placental abruption because he had no studies to support this

opinion. The Perez opinion requires expert testimony in the

form of inference or assertion to be supported by the scientific

method. Id. at 498.

74. However, at least one trial court declined to apply

Daubert rigorously to the testimony o f a treating physician.

Flowers v. Wal - Mart Stores, Inc. , 2005 U.S. Dist. LEXIS 25578

(M.D. Ga. 2005) (court dispensed with an "extensive analysis

under Daubert and Kumho Tire " where a neurosurgeon who testified

that a fall exacerbated a pre - existing back injury was applying

"routine and accepted medical practices to the diagnosis and

treatment of a patient").

75. The Collection's Daubert - based objections fail for

several reasons. The main thrust of these objections is

directed to the dealer network anal yst's testimony that Jaguar

is under - represented in the CommTerr. This testimony is a

description of existing conditions. It is not a hypothesis, nor

is it a prediction that can be validated or invalidated. The

expertise demonstrated by the analyst in s o concluding is not

scientific; it is technical. There is thus no basis to require

that he adhere to a scientific method in arriving at this

conclusion. It is sufficient under section 90.702 that the

analyst's testimony is based on sufficient facts, the testimony

is the product of reliable principles and methods, and the

analyst applies the principles and methods reliably to the

facts. This testimony has met all of these requirements and

conforms to Kumho Tire .

76. The Collection's objection to the fail ure of the

analyst to provide a basis for his segmentation analysis is a

reformulation of its argument that JLRNA failed to produce in

discovery adequate information concerning its segmentation

analysis. But the main underpinnings of the analyst's testimo ny

of under - representation are his identification of the CommTerr --

to which the parties agreed -- and his identification of the

benchmark , both of which are amply supported by the evidence.

77. La stly, The Collection's objects to the analyst's

opinion that post - relocation sales growth for Warren Henry

Jaguar could be derived from conquest sales (and displaced pump -

3 2

in sales from Jaguar dealers outside of the CommTerr), rather

than necessarily coming a t the expense of The Collect ion. The

point of the analyst's testimony is that there is no reason why

the two Dade County Jaguar dealers could not both in crease their

sales of Jaguars, and the evidence amply supports this

conclusion.

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

Northeas t 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, A gency 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 Ave nue , Suite 2700

Miami, Florida 33131

(eSe rved)

John J. Sullivan, Esquire

Hogan Lovells US LLP

875 3 rd 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

Mc Lean, 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, Nor thwest

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 - 050 0

(eServed)

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 o rder should be filed with the agency that

will issue the final o rder in this case.