### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03-0 6 -00 357 -CV

G r ubbs N iss an M id- Ci ti e s, Lt d. , A ppe lla nt

v. Ni ssa n No r th Am e r ic a, Inc .; Br e tt Br ay , in his O ffici al C apa c it y a s Di r e c to r of t he M ot or Ve hic le Di vis ion of t he Te xa s D e par tm e ntof Tr ans por ta ti on;

and Don Davis Nissan Grapevine, Inc. , Appellees

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 250TH JUDICIAL DISTRICT NO. D-1- GN-06- 0019 33, H ONO RAB LE JOH N K. DIETZ, JUDGE PRESI DING

M E M O R

A N D U M O P I N I O N

Gr ub bs Ni ssa

n M id- Citi e s, L td. , a

pp e a ls fr om a fin a l ord e r iss ue d by B re tt B ra y , in his officia l c a

p a c it y a s D ir e c to r

o f th e M o to r

V e h ic le D iv is io no f

th e T e xa s D e p artm e n t of Tr ans po rt a tio n, de nyingGr ub bs ’s pr ote st o f D on

Da vis Ni ssa n G ra pe vin e , Inc .’ s a

pp licati on

to establish a new

Nissan dea lership in Gra

pevine, Texas. On appea l, G rubbs complains the fina l order

was a rbitrar y and ca pricious and violates due proce ss and equa l protection bec ause the Direc tor (1) f ailed to follow ag ency

prec edent without explanation; (2) improperly place d the burde n of proof on Grubbs; and (3) failed t o consider and weigh a ll statutory fac tors and wa s not based on a r ational

connec tion between the finding s and the de cision. Grubbs al s o co m p lains that the administrative law judge err ed in de nying Grubbs’s motions to exclude expert testimony . Be cause we c onclude theT h e le g is latu r e a b o li s h e d th e M o to r V e h ic le B o ar d in 2 0 0 5 an d r e p la c e d it with a 1 single direc tor of the motor ve hicle division of the Texas Depa rtment of Tra

nsportation. SeeAct of May 30, 2005, 79th L eg ., R.S., ch. 281, § 7.01, sec. 2301.002( 2), (10) , 2005 Tex. Gen. L aws 778, 839. Br ett Br ay

curr ently serve s as division director. A n e w c ar de a le r may pr ote st a manu fa c tur e r’ s de c isi on to e sta bli sha ne w c ar d e a le rs hip 2 of the same line-make within a fiftee n mile r adius of the exis ting deale rship. Tex. Oc c. Code Ann. § 2301.652(b)( 2) (W est 2004). There was no dispute that Grubbs satisfied this statutory require ment and, ther efor e, had sta

nding to pr otest Don Davis’s a pplication. 2 Direc tor did not act in an a rbitrar y and ca pricious manner an d t h at his final order is supported by substantial evidence , we a ffirm the D irec tor’s final or der. 1

F ACTUAL AND P ROCEDURAL BACK GR OUND Whe n N iss an N or

th Am e ri c a , I nc ., ann ounc e d its int e nt to e sta bli sha ne w d e a le rs hip in Grape vine, two competingdeale rs—Don Davis and G r u b bs—sought the ma

nufac turer’ s approva l to apply for the new dealership li cense . SeeTex. Occ. Code Ann. § 2301.652 ( West 2004). Nissan selec ted Don Davis to apply for the new dealer ship location. Don Davis filed a n application for

a new motor vehicle deale r license on May 5, 2003, for a

Nissan dea lership to be located in Gra pevine. Gr ub bs fi le d a

tim e ly pr ote st, and Nissan inter vened in support of

Don Davis’s a

pplication. I n the 2 fa c e of Gr ub bs ’s pr ote st, the Di re c tor c on ve ne d a

he ari ngbe fo re an a dmi nis tr a tiv e law j ud g e to deter mine whether

there was g ood cause to establish a new N issan deale rs h i p i n Gra pevine. Id. § 2301.652(a)

. I n the contested- case proce eding , Don Davis had the burden to showg ood cause for the establishment of the ne w Nissan dealership in Gra pevine as set forth in sec tion 2301.652(a) of the oc c up a tio ns c od e , w hic h p ro vid e s,T h e h ea ri n g wa s co n d u ct edo v er

t en co n s ec u t i v e w o rk i n g d ay s , fr o m S ep t em b er 2 7 t h ro u gh 3 October 8, 2004. The he aringwas re cesse d by ag ree ment of the pa

rties and r ec o n v en ed for an additional five da

y s, from Nove mber 29 throug h Dec ember 3, 2004. 3 The [Direc tor] may

deny an application for a lice nse to establish a de aler ship if, following a prote st, the applicant fa ils to establish good ca use for establishing the deale rship. I n deter

mining g ood cause , the [Director] shall consider: (1) whether

the manufa cture r or distributor of the same line- make of new motor vehicle is be ing a dequate ly repr esente d as to sales a

nd service ; (2) whether

the protesting fra

nchised de aler

repr esentingthe same line- make of ne w moto r ve hic le is in sub sta nti a l com pli anc e wi th t

he de a le r’ s f

ra nc his e to the extent that the franc hise is not in conflict with this chapter; (3) the desira

bility of a c ompetitive marketplac e; (4) any

harm to the prote sting fr anchise d deale r; and (5 ) the pu

bli c int e re st.

See id. I n this case, the se cond fa ctor was not in dispute, but the ot her f our fa ctors we re c ontested. The AL J conducte d a fifte en-da y hear ing and hea

rd evide nce fr o m all parties 3 reg ardingthe four c ontested fa ctors. Don Da vis and Nissan pre sented e vidence in the form of

e mpi ri c a l data

and e xpe rt te sti mony sh ow ing that th e mark e t w ou ld s up po rt a ne w N iss an d e a le rs hip in Grape vine, and Gr

ubbs prese nted evidenc e that it would not. Dr. Ber nard L . Weinstein testified on behalf of Don Davis that, from 1990 throug h 2002, the Dallas/F ortWorth reg ion, which includes the City of Gra pevine, ha s been the fastest g rowingmetro p o l i t an re g ion in the country with a population gr owth of 34% a nd employ

ment g rowth of almost 28%. Dr. W einstein furthe r testified that he expe c te d

th e s e gr o w th

tr e n ds to continue in Grape vine, Coppell, Southl ake, Westlake , Trophy Club, and other communities along the Highway 114 corr idor for the fore seea ble future . Nissan’s4

expert witness, J ames Ander son, founder and pre sident of Urba

n Science Applications, I nc. (“ USA I ” ), te sti fi e d re g ard ing the a de qu a c y of re pr e se ntatio n pr ov ide d by e xistin g Ni ssa

n d e a le rs in the Gra pevine a rea and the impact of the proposed Gra pevine dealer ship on exis ting de aler s. More sp e c if ic a lly , M r. An de rs on

te sti fi e d th a t th e a dd iti on of a ne w Nis sa n d e a le rs hip in G ra

pe vin e wo uld benef it consumers by

incre asing intrabra

nd competition, i.e. , c omp e tit ion be tw e e n N iss an d e a le rs . The re cord r efle cts that, prior to the he aring , Grubb s fi led motions to ex clude the testimony and expert re ports of Dr. Weinstein and Mr . Ander son on the g rounds that their testimony

was unre liable and failed to mee t the admissibili ty standard f

or expert testimony

established by

the Supreme Court in Daubert v. Merre ll Dow Pharmaceuticals, Inc

. , 509 U.S. 579, 592 n.10 (1993),

an d a d o p te d b y th e T e xa s Su

p r e me Co u rt i n E

. I. d

u Pont de Nemours &Co. v. Robinson , 923 S.W .2d 549, 556-57 (Te x . 1995). Althoug h the AL J denied Gr ubbs ’s m o t i o n s , he allowe d Grubbs a “ running ” objection to the t estimony of Dr. Weinst ein and Mr. A nderson throug hout the

co n t es t ed -c as e h ea ri n g.

I n co ntr a st to the te sti mony of fe re d b y Do n D a vis ’s and

Ni ssa n’ s e xpe rt wi tne sse s, Dr. Er nest H. Manu el and Dr . Marlin Ray Perry man testified on beha lf of Gr ubbs. Dr. Manue l disag ree d with the t estimony of Nissan’s e x pert, Mr. A nderson, in two re spects. F irst, Dr. Manue l questioned the mar

ket assumptions and ana ly sis perfor med by Mr. Ander son and testified that the rele vant marke t a

rea for this c ase w as the e ntire Da llas/Fort Worth metro ar ea a s defined by Nissan in their dea ler fr anchise ag ree ments, as well as the 2002 Nissan audit. Second, Dr . Manuel testified that the benc hmark c hosen by Mr. Ander son was too hig h and, ther efor e, g ave the false impre ssion that N iss an w a s in a de qu a te ly re pr e se nte d by its e xistin g fr anc his e de a le rs . B a se d on his e c on omi cI n addition to the live testimony prese nted by

the par ties, Grubbs also pre sented de position 4 testimony from thre e witnesses—William Tate, Mayor of the City of Gra pev i n e, Ron Kutz, an employ ee of

Group One Automotive Company , and Jef f Ru ble, Dea ler Ope rations Mana g er of N i s s anN o rt h A m e r i c a

— w h i c h w a s a l s o c o n s i d e r e d b y t h e A L J. 5 experience and tra ining, Dr . Perry man also cha lleng ed Mr. Ande rson’s mar ket assum p t i o n s and testified that employ

ment losses at the near

by Dallas/F ort Worth Airport would have a detrimental eff ect on short- term ec onomic g rowth and de velopment in Gra pevine. I n addition to this e x pert testimony , the AL J hear d testimony from sever al o t h er witnesses. He rald Thomas H ardy , the direc tor of De velopmental Service s for the City of Gra pevine, and Robert B ry an Ho wa rd , president of the Don Davis Auto Group, testified on beha lf of the applicant Don D avis. Nissan pre sented testimony from John S poon, the re gi o n al vice- president for the N issan south centra l reg ion, and Eric K . Grubbs, pre sident of Grubbs Mid-Cities, L td. Grubbs also presented te stimony from David L ever , the assistant reg ional manag er f or the Nissan south centra l reg ion. 4

After the close of

the conteste d-ca se hea

ring , the AL J issued a proposa l for dec ision (“PF D”) finding that Don Davis ha d dem o n s t rated g ood cause for the a ddition of a new N issan de a le rs hip in G ra

pe vin e and

re c omm e nd ing that the Di re c tor dis mis s Gr ub bs ’s pr ote st and

pr oc e ss the application of Don Davis to c ompletion. The parties then ha d an opportunity to file exceptions to the PFD. Upon r eview of the parties’ exceptions, the Direc tor rende red a fina l order a dopting the PFD with fe w cha

ng es. I n his f

inal order , the Direc tor adopted the AL J ’s rec ommendation finding g oo d c a us e to e sta

bli sha ne w N iss an d e a le rs hip in G ra pe vin e and

dis mi ss ed Gru bb s’ s p ro te st. Grubbs filed a

motion for rehe aring , which t h e Di rec tor overr uled. Grubbs then soug ht judicial6

revie w of the D irec tor’s final or der in district cour t, and Don Davis removed the suit to this Court pursuant to sec tion 2301.751(b) of the oc cup at ions code. Te x . Occ . Code Ann. § 2301.751(b) (West 2004).

AN AL YSI S The Cont ro v e rsy The c rux of this dispute cente rs on Grubbs’s dissatis fac tion at two levels: first, that Nissan c h o s e D o nD av is o v e r G r u b b s to b e th e a

p p li c an t f o r a n e w c ar d e a le r s h ip in

G r a p e v in e; and sec ond, that the Dire ctor de nied Grubbs’ s protest of Don Da vis’s application. In g ener al, Grubbs complains that the Dire ctor’s f inal order was a rbitrar y and ca pricious and violated G rub b s ’s due pr oc e ss a nd e qu a l pr ote c tio n r ig hts . M or e sp e c if ic a lly , Gr ubbs argue s th a t th e Di re c tor fa ile d to consider a ll of the statutory fac tors when de termining whether g ood cause exis t ed t o es t ablish a new Nissan de aler ship in Grapevine , failed to follow a g ency prec edent, r ender ed a de cision that

wa s n ot r a tio na lly

c onne c te d to the fi nd ing s, and imp ro pe rl y pla c e d the burd e n o f p ro of on Gr ub bs

. I n addition, Grub b s complains that the AL J err ed in deny ing G rubbs’s motions to ex clude

e x p e rtt e s t i m o n y.

The Dire ctor, Don D avis and Nissan r espond t h at there was no e rror in the AL J ’s denial o f G rub b s ’s m o t i o n s t o ex cl u d e e x p er tt es t i m o n y , t h e D i re ct o r p ro p er l y co n s idere d all require d statutory fac tors, the final orde r wa s supported by substantial evidence , and ther e wa s no violation of Gr ub bs ’s c on sti tut ion a l r ig hts

.7

Stan dard of Revie w We review the Director’s final order under the substantial evidenc e rule. Id. § 2301.751(a) ; Te x. Go v’ t Cod e Ann. § 2 00 1. 17 4 ( Wes t 20 00 ); Subaru of Am., Inc. v . David Mc David Nissan, Inc. , 84 S.W. 3d 21 2, 22 4 (T e x. 20 02 ). Th e su bs tanti a l e vid e nc e ru le is a me tho d o f r e vie w d e sig ne d to “‘ke ep the c ourts out of the business of a dminist eringregulatory statu t es en acted by

the L eg islature.’” Board of Regents v. M artine , 607 S.W .2d 638, 641 (Tex. Civ. App.—Austin 1980,

wr i tre f’ d

n . r. e. ) ( qu o t i n g Lewis v. Metropolitan Savs. & Loan Ass’n , 550 S .W.2d 11, 13 (Tex. 1977)). Notwithstanding this defer ential standar d of re view, “‘it rema ins the bus iness of the courts to see that justice is administered to competingparties by g overnme ntal ag encie s.’” Id. Under subs t an t i al evidenc e re view, we presume the Boa rd’s orde r is supported by substantial evidence , and the appellant has the burden of overc oming this presumption. Graff Chevrolet Co., Inc. v . Texas Motor Vehic le Bd. , 60 S.W .3d 154, 159 (Tex. A pp.

— Au s t i n 2 0 0 1, pet. denied)

. When a court revie ws an ag ency decision under the substantial evidenc e rule , the issue for th e r e v ie w in g c o u rt i s n o t wh e th e r th e a g e n c y ’ s d e c is io nw a s c o r r e c t, b u t wh e th e r

th e r e cord demonstrates some rea sonable basis for the a g ency ’s ac tion. Ce ntral Po we r &Lig ht C o. v . P ub lic Util. Comm’n , 3 6 S. W.3 d 5 47 , 5 61 (T e x. Ap p. —Aus tin 20 00 , p e t. d e nie d) . We may no t su bs tit ute our judg ment for that of

the ag ency

on matters committed to ag ency discretion. Te x . Gov ’t Code Ann . § 20 01 .1 74 ; H.G. Sledge , Inc. v . ProspectiveInv. &Trading Co., Ltd. , 36 S.W .3d 597, 602 (Tex. App.—Austin 2000, pet. denied). T he ag ency is the sole judge of the weig ht of the evide nce and the c redibility

of the witnesse s. Central Power & Light , 36 S.W .3d at 561.Th e re is n o d isp ute tha t G ru bb s w a s in

su bs tanti a l c omp lia

nc e wi th i ts f

ra nc his e a g re e me nt. 5 T h e r e f o r e , w e w i l l l i m i to u r

d i s c u s s i o na c c o r d i n g l y.

8 We reviewthe AL J ’s dec ision to admit or excl u d e evidence f or abuse of discretion—the same standa rd we ap p l y to trial courts. City of Amarill o v. Railroad Comm’n , 894 S.W .2d 491, 495 (Tex. App.—Austin 1995, writ denied)

. An age ncy has broa d discretion whe n deciding whether to a dmit expert testimony in a n administrative hear ing, and its de cision will not be disturbed a

bsent an a

buse of discr etion. Fay-R a y Co r p. v. Texas Alc oholic Bev . Comm’n , 959 S.W .2d 362, 367 (Tex. App.—Austin 1998, no pet.).

De te rminat

ion of Go od Caus e The sing le rel ev an t i ssue in a prote st procee ding is “ g ood cause .” Te x . Occ . Code Ann. § 2 30 1. 65 2( a ); GeneHamon Ford, Inc . v. Dav id McDav id Niss an, Inc. , 997 S.W .2d 298, 306 (Tex. App.—Austin 1999, pet. denied). T he burde n of provingg ood cause to establish the new deale rship is on the applicant—in this case Don Davis. SeeTex. Oc c. C ode Ann. § 2301.652( a). I n d e te rm ini ngwh e the r g oo d c a us e e xists , the statut e re qu ir e s the Di re c tor to c on sid e r f

ive fa c tor s: (1) whe ther the ma

nufa ct u re r i s adequately

repr esente d as to sales a nd service ; (2) whe ther the prot e sti ngde a le r i s in

su bs tanti a l c omp lia

nc e wi th i ts f

ra nc his e a g re e me nt; ( 3 ) th e d e s ir a bility of 5 a compe titiv e m ar k et p l ac e; (4) any harm to the prote sting de aler ; and (5) the public interest. Id. § 2301.652(a) (1)- (5). Althoug h the Dire ctor must consider a ll five fac tors, the statute does not place any emphasis on one f

actor over a n o ther. Id. Be cause the leg islature has g iven the Dire ctor exclusive jurisdiction t o deter mine the issue of g ood cause , the question of how best to resolve the issue, including the weig ht to be g iven each st atutory fac tor, is a matter committed to the Direc tor’s9

discretion. Austin Chev rolet, Inc. v . Motor VehicleBd. , 2 12 S.W. 3d 42 5, 43 2 ( Te x. Ap p. —Aus tin 2006, pet. denied)

. This Court has previously rec og nized that we may not substit ute our judg ment for that of t he Director on the weight to be given each of the required st atutory fac tors. See M eier Infinity Co. v. Motor VehicleBd. , 918 S.W .2d 95, 100 (Tex. App.—Austin 1996, writ denied).

Fai lure to F oll ow A ge nc y Pre c e de nt I n Grubbs’s f

irst issue on appea l, Grubbs arg ues t hat the fina l order is a rbitrar y and capr icious and violates due proce ss and equal protec tion because the Dire ctor fa iled to follow ag ency prec edent. At the c ore of Grubbs’s c omplai n t s i s the notion that the Direc tor has depa rted fr om pr ior a g e nc y de c isi on s r e g ard inga de qu a te re pr e se ntatio n, ha rm , c omp e tit ion , a

nd pu bli c int e re st. Rely ing on this Court’s dec ision in Austin C h evrolet , Grubbs ar g ues that the Dire ctor a cted arbitra rily and ca priciously when he failed to follow a g ency prec edent by

reje cting the lack of untapped mar

ket potential—or lost opportunity available to the applicant—a s g rounds for de nying Grubbs’s pr otest. We disagr ee.

As this Court re cog nized in Austin Chevrolet , “ ‘a n a g e nc y is n ot b ound

to f oll owits decisions in contested case s in the same wa y that a cour

t is bound by

prec edent.’ ” 212 S.W.3d at 438 (q u o t i n g Fl or es v . E

mp loy e es R e t. S

y s. , 7 4 S. W. 3 d

5 3 2 , 5 3 3

- 3 4 ( T e x. Ap p . — A u s ti n2 0 0 3, pet. denied)). Rather, an ag ency need only “explain its reasoning when it ‘a ppear s to the review ing court that a

n ag ency has depar

ted from its ea

rlier a dminist rative policy or there exis ts an appa

rent inconsistency

in ag ency

deter minations.’” Id. (q u o t i n g Flores , 74 S.W .3d at 544-45). Rely ing on this Court’s opinion in Austin Chevrolet , Grubbs urg es that the Dire ctor’s decision fa ils to follow age ncy prec eden t

. Bu t Grubbs’s r eliance is mispl ace d. Although G rubbs10

is corre ct that in both case s the ag ency found that t h e re co rd failed to de monstrate that the manufa cture r wa s inadequately repr esente d, that i s wher e the f actua l simi larity

ends. In Au sti n C h ev rolet , th e B o a

r d f o u n d th a t th e le v e l o f o p p o rtu n it y w a s s o lo w in th e H o u s to n ma r k e t a t the time of the initial protest in 1993 that adding another Chevrolet deale rship to the marke t would lead to “ca nnibalization of [ the new deale r’s] closest i ntrabra nd competitors i n order

to merely survive.” 2 1 2 S.W .3d at 433. Moreove r, the re cord in Austin Chevrolet s h o w e d th a t th e p r o te s ti n g deale r

a lr e a dy su ff e re d f ro m lo w p ro fi ta

bil ity and the a dd iti on of ano the r de a le r o nly te n mi le s awa

y “ wo uld have decr ease d [t he prote sting de aler ’s] low profitability acr oss all depar

tments, and ca

used it and other deale rships in the marke t to c hang e their ope rations in a wa y that would have r esulted in poorer service to the public.” Id.

The e vidence prese nted in Austin Chevrolet re ve a le d th a t th e Hou sto n ma rk e t in 1993 was suff

eringfrom an e x tended d ecline and that the state of the Houston ec onomy

was “slug g ish and stag nant.” Id. at 434. Dr. Per ry man testified in Austin Chevrolet that the over

riding climate in the Houston are a during this period was one of “une mploy ment and job insecur ity .” Id. Dr. Perr y man’s expert re port furthe r conc luded t hat the mar ket was c hara cter ized by

“a de cade of slu g g ishne ss, a

de c lin ingtr e nd

in n e w a uto mob ile sa le s, sta g na

nt w a g e s, su

bs tanti a l la

y o f f s , a n d on ly modest g rowth projec tions.” Id. The prote sting de aler in Austin Chevrolet also prese nted evidenc e that its new car reta il sa les would decline 15% to 30% if the ag ency g rante d the application at issue. Id. Given the strug g ling f inancial c ondition of the protesting deale r and the stag nant condition of the Houston marke t in 1993, the Boa rd conc luded that g ood cause did not ex ist t o ad d a new Chevrolet deale r at the time. Id. Th e B oa rd no te d, ho we ve r, that ha d th e pr ote sti ngde a le r b e e n in11

a fl ouri sh ingmark e t, t

he B oa rd wo uld have e xpe c te d th e de a le r t o a dju st i ts b us ine ss strate g y to captur e untappe d opportunity

. Id.

The e vidence in Austin Chevrolet stands in stark contrast to the evidence prese nted in this case. He re, the Direc tor found that the potential for future g rowth in the Gra pevine mar

ket

was more than suffic ient to sustain a new Nissan deale rship. Both Dr. Perry man, who testified on be ha lf of Gr ub bs , a nd Mr . A nd e rs on , w ho te sti fi e d o n b e ha lf of Ni ss an, a g re e d th a t th e e c on omi c future f or the Ta rra nt County

are a, inclu d ing G rape vine, was ve ry optimis tic. For

example, Dr. Perry man projec ted a For

t-Worth-Arling ton population incr ease of more tha n 150,000 by

2007

and a job inc re a se of

a pp ro xima te ly

70 ,0 00 . D r. Pe rr

y man a g re e d w ithMr . A nd ers on that w hil e automotive reta il sales g o throug h up and down fluctuations, he expected 2004 to be the start of a n

“ up ” pe ri od . A dd iti on a lly , D r. Pe rr y man te sti fi e d th a t he e xpe c te d th e re ta il a uto mot ive mark e t to g row more rapidly

in Texas than in the United States, and more rapidly in Dallas/For

t Worth t han in T e xas s tate wi de . T he ir e xpe rt te sti mony

was fu rt he r s up po rt e d b y

Gr ub bs ’s ow n a c tio ns in applying f

or the ne w Nissan dea lership in Gra pevine an d proposing to build a fac ility that was a s la r g e a s it s e xis ti n g f

a c il it y in B e d f o r d , an d f o u r ti me s th e s iz e N is s an w a s r e qu ir in g f o r th e new deale rship. I n addition, E ric Grubbs testified on cross-e x amination that it wa s acc eptable for Gr ubbs to ge t the new de aler ship, but it was not ac cepta ble for a ny one else : Q (by Don Davis ’s co unsel): Do I corr ectly understand, sir, that from y our ea rlier testimony w it h M r . K r ak o w , th a t i t w o u ld

b e o k ay f o r y o uto h a v e a

d e a le r s h ip f

or Nissan in Gra

pevine but not for a

ny one else ? A: Ithink that would be true. I don’t think Iwould protest my self.12

Thus, the evidenc e showe d that Grubbs re co gn i z ed the ec onomic g rowth potential for a new deale rship in Grape vine.

Another important distinction between this case and Austin Chevrolet is that G ru

bb s, unlike the protesting deale r in Austin Chevrolet , wa s fi n an ci al l y h ea l t h y . I n2 0 0 3 , al t h o u gh described as an “ off- y ear ” by Grubbs’s expert, Grubbs’s net profit was $197,704, afte r pay ment of salar ies, rent and other compensation to members of the Gr ub b s family . I n 2004, Grubbs’s c ompetitive perf ormanc e improved, a

nd its annualized net profit, based on the first six months of the y ear , was projec ted to be more than $800,000. Given the f lourishing mar

ket conditions in Tarra

nt County , the Direc tor could have rea sonably expected Gr

ubbs to continue to adjust its busi ness strategy to capture the bene fits of projec ted ec onomic g rowth. See id.

No tw ith sta

nd ingGr ub bs ’s a lle g a tio ns , we ho ld t hat th e Di re c tor ’s de c isi on in t his

case is consistent with, not contrary to, ag ency

prec edent. As the Direc tor expl ai n ed i n t h e order de nyingGr

ub bs ’s mot ion

fo r r e he ari ng , G ru

bb s’ s r e lia

nc e on a numbe r o f p ri or

a g e nc y de c isi on s is mis pla c e d b e c a

us e tho se de c isi on s we re ma de re g ard ing “ sp e c if ic pr op os a ls at sp e c if

ic g e og ra ph ic po int s in spe c if

ic mark e ts at sp e c if

ic tim e s. ” I n co ntr a st, “ [t]he AL J’s re a so nin g [in this c a se wa s] that the public intere st in a vigor ous co m p et i t i v e mar ketplace along with the scope a nd long te rm viability of the Gr apevine -ar ea ma rket outwe igh[ed] the minimal harm that may or m ay not ensue.” Stated differ ently , the Dire ctor itera ted that ea ch ca se must be dec i d ed o n the fa cts and e vidence prese nted there in. This is c o n s i s t en t wi th this C ourt’s holdingin Austin Chevrolet in which we

rec og nized that “[t ]he standard em p l o y ed b y the [Director] varie s based on the f acts a nd circ umstances in ea ch ca se.” Id. a t 43 5. B a se d o n the e vid e nc e pr e se nte d duri ng the he ari ngpr oc e ss13

reg ardingthe fa cts and circ umstances of this c ase, we conclude that the Direc tor proper ly deter mined that Don Davis met its burden to de monstrate g ood cause to establish a new de aler ship in Grapevine

.

I n fu rt he r su pp or t of its c la im that the Di re c tor fa ile d to fo llo w a gency prec ede nt, Grubbs ar g ues that in light of the Direc tor’s findingreg arding a d eq u ac y of re prese ntation, the Di re c tor wa s c omp e lle d to fi nd in fa vo r of the pr ote sta

nt on the re ma ini ngstatut or

y fa c tor s o f h arm , de sir abi li ty

of a c omp e tit ive mark e tpl a c e , a nd the pu bli c int e re st. I n o the r w or ds , a c c or din g to Grubbs, once the Dire ctor finds that the m an u fa ct u rer is adequately

repr esente d, the re maining statutory fac tors are irrele vant and c ompel the Direc tor to grant the protest and de ny the application for a new de aler ship license.

We rejec t Grubbs’s theor y beca use it rea ds the other four fac tors out of the statute. As this Court held in Me ie r I nfi nit y , the Dire ctor, not the prote sting de aler , “is re s p o n s i ble for d e te r mi n in g w h ic h f

a c to r s to c o n s id e r , h o w mu c hw e igh t e a c hf a c to r s h o u ld r e c e iv e , an d

w h e th er in light of these fac tors there is ‘g ood cause ’ for licensing a new deale rship.” 918 S.W.2d at 100. We may not substit ute our judg ment for that of the Dire ctor on whic h fac tors are considere d to be the most important, n o r m ay we c onduct a de novo revie w of the D irec tor’s “g ood cause ” deter mination. See id. We conclude that the Direc tor’s d ec i s i o n d o es not depar t from ag ency prec edent a

nd that the final orde r is supported by s u b s t an t i al evidenc e. We over rule Gr ubbs’s fi rs t is su e on

a pp e a l. Burden of Proof

I n its second issue on appe al, Grubbs contends that the Direc tor improperly shifted the burd e n o f p ro of

to t he pr ote sti ng de a le r. Gr

ub bs ba se s it s c omp la int

up on a sin g le se nte nc e in14

the P FD , wh i ch states “[t] here is acc ording ly enoug h evidenc e in this case to support e ither the outcome soug ht by

Don Davis a

nd Nissan or the outc ome soug ht by Grubbs,” and findi ng of fa ct 45, wh ic h s tate s “ [a] p re po nd e ra nc e of e vid e nc e fa ils to jus tif

y a fi nd ing that G ru

bb s w ou ld b e mate ri a lly harme d by

the proposed G rape vine dea lership.”

1. Statement in PFD Wit h reg ard to the state ment in the opening of t he P FD that there is enoug h evidenc e to su pp or t e ith e r t he outc ome so ug ht b y

Do n D a vis and

Ni ssa n o r t he outc ome so ug ht b y

Gr ub bs , the AL J was not, as Gr

ubbs sugges ts, commenting on the burden of proof or the weig ht of the evidenc e. Instead, the A L J was simply commenting on the s heer volume of evide nce in the r ecor d of this p ro ceeding . Nowher e in the stateme nt highlig hted by Grubbs does the AL J mention the weig ht or cre dibilit y

to be g iven such e vidence . Nor doe s the statement express that the AL J was somehow shifting the burde n of proof from the applicant to G rubbs. Acc ording ly , we conclude that Gr ub bs sim ply re a ds thi s st a te me nt o ut o f c on te xt an d g ive s it un du e we ig ht.

2. Finding of Fact 45 I n further support of its claim that the Dire ctor improper ly shifted the burde n of proof , Grubbs points to finding of fac t 45. Ba sed on this finding, G rubbs ar gu es t hat the Dire ctor improperly

shifted the applica

nt’s burden of

proof on the issue of

harm to Grubbs. But Gr ubbs’s argument ignor es the statutory fra mework in sec tion 2301.652. The statute require s the applica nt for a ne w dea lership license to demonstrate g ood

cause for establishing the deale rship. See Te x. Oc c . Cod e Ann. § 2 30 1. 65 2( a ). Al tho ug h th e statut eI n support of i t s co ntention that Don Davis wa s require d to demonstrate a lack of harm 6 to G rubbs as the pr otesting de aler , Grubbs re lies on this C ourt’s statement in Austin Chevrolet, Inc

. v . M oto r V e hic le Bo ar

d , 212 S.W .3d 425, 432 -3 3 (Tex. App.—Austin 2006, pet. denied), which provided that “ [i ]n demonstrating g ood ca u s e fo r the e stablishment of a new deale rship, [t he applicant] w[as] require d to show th at t h e [ n ew] deale rship would not ‘harm’ the protesting fra nchised de aler .” Grubbs’s relianc e on this statement is mi splace d. Be cause the applica nt need only demonstrate good cause to establish a new de aler ship, see Tex. Oc c. Code Ann. § 2301.652( a) (West 2004), this state ment overstate s the applicant’ s burden of proof under the statute. Thus, we re je c t G rubbs ’s c on te nti on that D on Da vis wa s r e qu ir e d to de mon str a te a tot a l la c k o f h arm

to Grubbs in orde r to demonstrate g ood cause within the statutory framework. 15 require s the Dire ctor to consider “ any harm to the protesting fra nchised de aler ” whe n deter mining wh e the r t he a pp lic ant h a s d e mon str a te d g oo d c a us e, th e st atu te do e s n ot r e qu ir e the a pp lic ant t o demonstrate a complete lac k of har m to the protesting de aler

. See id. § 2 30 1. 65 2( a )( 4) (e mph a sis 6 added) . The leg islature’s use of the wor d “any” in sec tion 2301.652(a) (4) contemplates that there may be some ha

rm, and the statute simply require s the Direc tor to c onsider the extent and eff ects of any harm when making a g ood cause deter mination. W e believe that is precise ly what the Dir ector has done in this case

.

Finding of fact 45 states onl y that there is not a preponde ranc e of e vidence “to justify a findingthat Grubbs would be materially h ar m ed by

the proposed G rape vine dea lership.” The re is nothing in the plain languag e of this finding that demonstrates a shift in the burden of proof. A s the Dire ctor e x plained, he unde rstood this finding “to mea n that, as one of five elements listed in the rele vant [c]ode section, the [a] pplicant did prove a lack of not ab l e h ar m to the [p] rotestant and [p] rotestant did not succe ssfully rebut same .” W e agr ee . Be cause the level of harm will vary dep end ing on

the c ir c ums tanc e s in

e a c h c a se and

is m e re ly

on e of fi ve fa c tor s to be take n in to

a c c ount whe n d e te rm ini ng g oo d c a us e , we c on c lud e that the Di re c tor a c te d wi thi n his dis c re tio n in16

consideringthe evidenc e of ha rm within the overa l l d et ermination of good c ause in this case

. Acc ording ly , we hold that the Dir ector did not improperly

shift the burden of

proof to Gr

ubbs, and

we ov e rr ule Gr ub bs ’s se c on d is su e on

a pp e a l.

Fai lure to C ons ider Re qui

re d St atu tor y Fac tor s I n its thi rd issue on appe al, Grubbs a rgues that the Dire ctor fa iled to consider a nd weig h all of the require d statutory fac tors and that the Direc tor’s decision is not based on a rational

c onne c tio n b e tw e e n th e fi nd ing s and the de c isi on . T he re c or d d oe s n ot s up po rt Gr ub bs ’s c la ims

. I nstead, the r ec o rd re flec ts that the AL J considere d all of the re quired statutory fac tors in his proposal for de cision and re commended that the Direc tor find “good cause” to gr ant the application and deny

Grubbs’s pr otest. Wi th minor c h anges, the Direc tor adopted the PFD, including the AL J ’s discussion and finding s on eac h of the re quired statutory fac tors and the AL J ’s “g ood cause ” reco m m en d at ion. This Court has previously held that the Dire ctor ne ed not make finding s on issues that the Director did not find persua sive or on which he did not rely for support of his ultimate determination. Se e Me ie r I nfi nit y , 9 1 8 S

. W

. 2 d

at 9 9 (c i t i n g State Banking Bd. v. Valley Nat’l Bank, 604 S.W .2d 415, 419 (Tex. Civ. App.—Austin 1980, writ ref’d n.r .e.))

.

The statute only require s an ult imate findi ng on g ood cause . To the ex tent Grubbs arg ues th a t th e D ir e c to r w a s r e q u ir e d to ma

k e s p e c if ic f in d in g s o f f

a c t a s to e a c h o f the statutory fac tors in se ction 2301.652(a) , this Court reje cted the sa me ar g ument in Me ie r I

nfi nit y , 918 S.W .2d at 100. L ike the protestingdeale r in Me ie r I nfi nit y , Grubbs relies on City

of E l P as o v . P ub lic Ut ili ty Commission of T

exas , 883 S.W .2d 179, 184 (Tex. 1994). As this Court explained, howeve r, City of E l P as o mere ly re q u i res an ag ency to consider a ll of the statutory criter ia; it does not stand forTh e fr anc his e c omp lia nc e fa c tor

wa s und isp ute d. To the e xten t G ru bb s argue s th a t a 7 specific finding on fra

nchise c ompliance wa s require d, we a ddress that issue be low. 17 the pr op os iti on

that th e Di re c tor

mus t make ult imate fi nd ing s a s to e a c h o f th e st atut or y fa c tor s. Se e Me ie r I

nfi nit y , 918 S.W .2d at 100. Stated di ff er en t ly , an ag ency ’s final orde r must refle ct that the ag ency

considere d the statutory

fac tors, and its underlying f indings must be stated in such

a wa y that a re viewing court c an re asonabl y ev al u at e whether the unde rlying f indings support the statutory criter ia. Id. (c i t i n g Texas He alth Faciliti es Comm’n v

. C h a r t er Me d.-Dallas, Inc. , 665 S.W .2d 446, 451 (Tex. 1984) ). I n this c ase, the underly ing finding s must re flec t th at t he Direc tor considere d adequa cy of repr esentation, the desirability of a c ompetitive marketplac e, har m to the pr ote sti ngde a le r, and the pu bli c int e re st. We believe that the underly ing fac ts as found by

7 the AL J and a do pte d by the Di re c tor de mon str a te tha

t th e Di re c tor

pr op e rl y c on sid e re d e a c h o f t

he se statutory criter ia. For simil ar rea sons, w e also reje ct Grubbs’s contention that the Direc tor’s final orde r violates section 2301.711(a)(1) of t he occupations code beca use i t does not contain a spe cific f inding

re gar d ing G rubbs’s complianc e with its franc hise dea ler a g ree ment. SeeTex. Occ. Code Ann. § 2301.711(a) (1) ( West 2004). I n a similar context, the s upreme court held that a final orde r of the P u b l i c U t i l i t y

C o m m i s s i o nre fl ec t ed t h e age n cy ’s co n s i d er at i o n o f t h e s t at u t o ry cr i t er i a e v en t h o u gh the orde r lac ked a spe cific f inding c o u ch ed i n the languag e of the statute. See G oekev. Houston Lighti ng & Power , 797 S.W .2d 12, 14 (Tex. 1990) . Upon re viewingthe entire order to determine whether the ag ency

considere d the statutory

fac tors, the cour

t observed that the age n cy n eed not make “ultimate finding s” on eac h fac tor. Id. ; se e als o M e ie r I nfi nit y , 918 S.W .2d at 99 (finding s areWe not e that G ru bb s n e ith e r a

rgue s n or de mon str a te s p re

jud ic e to i ts s ub sta

nti a l r ig hts wi th 8 reg ard to it s ch al l eng es to these spe cific f indings. In the abse nce of any prejudice to Grubbs’s substantial rig hts, we may not reve rse the D irec tor’s final or der. SeeTex. Gov’t Code Ann. § 2001.174 (West 2000). 18 no t r e qu ir e d o n matte rs a g e nc y do e s n ot f

ind pe rs ua siv e or

do e s n ot re ly up on to sup po rt its ult imate decision). In this case, the te x tual discussion o f t he PFD r efle cts that the AL J considere d the fra nchise c omplia n ce fac tor and c oncluded that it was not in dispute. The D irec tor adopted the PFD with no cha

ng es to the textual discussion. Therefor e, eve n though the final orde r does not include a spe cific f

inding with re spect to Grubbs’ s fra nchise c ompliance, we conclude there was no vio latio n o f s e c tio n 2 30 1. 71 1( a )( 1) be c a us e the fi na l or de r refl ect s that the Di re c tor

pr op e rl y considere d and we ighe d all of the require d statutory fac tors. Were we to find a violation of sec tion 230 1

. 7 1 1 , w e w o u ld

n o t b e o b li g a te d

to r e v e r s e th e D ir e c to r ’ s o r d e r u n le s s G r

u b b s d e mo n s trated p r e ju d ic e to it s s u

b s ta n ti a l r ig h ts a s a r e s u lt o f th e a ll e g e d v iola tion. SeeTex. Gov’t Code Ann. § 200 1. 17 4( 2) (We st 200 0)

. Gi ve n that it wa s und isp ute d th a t G ru bb s w a s in

c omp lia nc e wi th i ts fra nchise a g ree ment, and Gr

ubbs does not argue on appe al that i ts substantial rights we re pr ejudiced by the la c k o f a

sp e c if ic fi nd ingon

fr anc his e c omp lia

nc e in the Di re c tor ’s fi na l or de r, we ov e rr ule Gr ub bs ’s c omp la int

.

To the extent Grubbs rais e s a d d it io n a l c h a ll eng es to specif ic finding s in the Direc tor’s final orde r, we reje ct those cha lleng es bec ause G rubbs has failed to de monstrate that the f inal order is not supported by substantial evidence . Essentially , Grubbs complains that the e vidence does not

su pp or t th e c ha lle ng e d f

ind ing s. But e ven if the e vidence preponde rate s ag ainst the Direc tor’s

8 decision, we may not substitute our judgme nt f or that of the Dire ctor on que stions commit ted to theSee D aubert v. Me rrell Dow Pharms., Inc. , 509 U.S. 579, 592 n.10 (1993). 9 These statements are included in that portion of the PFD discussing Mr. Ander son’s theory 10 that, based on the marke t studies con d ucted by USAI , Nissan was, a s a g ener al rule, unde rre pr e se nte d in

a lmo st a ll T e xas mark e ts. Thus , a c c or din g to M r. An de rs on , it wa s a pp ro pr iate to u se the hig he st mark e t pe ne tr a tio n s tand ard wh e n e va luatin g the a de qu a c y of Ni ssa n’ s r e pr e se ntatio n in the Gra pevine marke t. As explained in the PFD, howeve r, the AL J reje cted what he c al l ed Mr. Ander son’s “theor

y of embe dded inade quacy .”

19 Direc tor’s di scre tion. See Charter Me d. , 6 65 S.W. 2d a t 45 2- 53 ; Austin Chevrolet , 212 S.W .3d at 431. S o l o n g as the evidenc e is such that re asonable minds could have re ache d the conc lusion

rea ched by the age ncy , a reviewing court must uphold the age ncy ’s final order

. Charter Med. , 665 S.W. 2d a t 45 2- 53 ; see also Suburban Util. Corp. v. Public Util. Comm’n , 652 S.W .2d 358, 364 (T e x. 19 83 ). Ha

vin g re vie we d the re c or d, we c on c lud e that th e e vid e nc e de mon str a te s a re a so na ble b as i s fo r the a ction taken by the Dire ctor, see Charter Me d. , 6 6 5 S. W. 2 d a t 4 5 2 , an d w e re ject Grubbs’s contention that there is no rational connec tion be tween the finding s an d t h e D i rec tor’s de c isi on . We ov e rr

ule Gr ub bs ’s thi rd

iss ue on a pp e a l. Evidentiary Ru lings

I n i t s f o u rt h i s s u e o n a

p p e a l , G r u b b s c o mp l a i n s t h a t t h e A L J i mp r o p e r l y d e nie d it s motions t o exclude expert testimony offe red by

Don Davis’s e x pert, Dr

. W ei nstein, and Nissan’s expert, Mr. Ander son. Argui ng th at Mr. An de rs on ’s e nti re te sti mony wa s unr e lia

ble and sh ou ld 9 have be en excluded, Gr u b b s s eizes upon the following statements in the PFD: “T he cr edibility of USAI ’s study

unrave ls on this t heory

of imbedded inadequa cy ,” and “the reliability of this standard [proposed by Mr. Ander son] i s further underc ut . . . .” Al tho ug h the re is n o s imi lar s tate me nt i n 1020

the P FD regardingDr . We ins te in’ s te sti mony , G ru bb s argue s th a t hi s te sti mony wa s li ke wi se unreliable and should have been e x cluded.

We reviewthe ag ency ’s ruling s on the admissibili ty of evidenc e under the abuse of discretion standard we apply to trial courts. City

of A ma ril lo , 894 S.W .2d at 495. Althoug h Grubbs is c or re c t th a t th e ru le s o f e vid e nc e a pp ly in a dmi nis tr a tiv e he ari ng s, the sta nd ard fo r a dmi ssi bil ity of evide nce is broa der f

o r ad m i n i strative proc eeding s than it is in t he trial c ourt. SeeTex. Gov’t Cod e Ann. § 2 00 1. 08 1 ( Wes t 2000 ) (a llo wi ng a dmi ssi bil ity of oth e rw ise ina dmi ssi ble e vid e nc e if (1) ne cessa

ry to asce rtain fa cts not rea sonably susceptible to proof unde r the rule s of evidenc e; (2) not prec luded by

statute; and (3) of a ty

pe re asonably

relied upon by

a prude nt person). The ag ency has broa d discretion in dec iding whe ther to admit expert testimony in an adminis trative he aring , and its decision will not b e o v er t urned on a ppeal a bsent an a

buse of discr etion. Id. ; Fay-R ay Corp. , 959 S.W .2d at 367.

As this Court ex plained in Austin Chevrolet , t h e legislature has g iven the Dire ctor “exclusive jurisdiction to determine the issue of g ood cause , based on its expertise and e x perie nce in making this dete rmination.” 212 S.W.3d at 432

. T h u s , as a matter of law, the Direc tor was

“ un iqu e ly and e xclu siv e ly qu a lif ie d to make that de te rm inatio n, ” and “ [t]he qu e sti on

of ho w b e st t o resolve the issue was a

matter for

the [Director’ s] di scre tion.” See id. Th e Te xas R

ule s o f E vid e nc e a

uth or ize the a dmi ssi on

of e xpe rt te sti mony

wh e re it will assist t he trier

of fa ct in understandingthe evidenc e or in deter mining a fa ct issue. Tex. R. Evid. 70 2; see Story Se rvs., Inc . v. Ramirez , 863 S.W .2d 491, 499 (Tex. App.—El Paso 1993, writ denied). I n addition, it is well established that the a g ency is the sole judg e of the weig ht to be acc orded the21

testimony of ea ch witness. Central Power &Light , 36 S.W .3d at 561. When weig hing the evidenc e, the ag ency

may acc ept or r ej ec t t he testimony of witnesses or

may acc ept par

t of a witness’s testimony and disreg ard the rema inder. Id. The re cord in this case demonstrates the AL J acc epted s ome portions of Mr . A nd e rs on ’s te sti mony and re je c te d o the rs . L ike wi se , th e re c or d sh ow s th e AL J ac c e pte d s ome portions of Dr. Weinstein’s testimony and rejecte d others. To the ex tent the P FD makes re fer ence t o t h o s e p o rt i o n s o f

M r . A n d e r s o n ’ s t e s t i m o n y t h a tt h e A L J f o u n d u n r e l i a

b l e o r l a c k i n g i nc r e d i b i l i t y,

we c onclude that the AL J was sim ply pointing out t hose portions of the testimony that he re jected. Ac c or din g ly , w e ho ld t

he re wa s no a

bu se of dis c re tio n in the AL J’s de nia l of Gr ub bs ’s mot ion s to exclude expert testimony . We overrule Grubbs’s f ourth issue.

Due Proce

ss/Equ al Protection Subsumed within various issues raised by Grubbs on appe al is the argume nt that the Dire ctor’s de cision violates Grubbs’s due proce ss and equal p rot ection rig hts. See U.S. Const. amend. XIV, § 1 (e qual protec tion, due proce ss); Tex. C onst. art. I , §§ 3, 19 (equa l protec tion, due proce ss). I n administrative proce eding s, due proce ss r equire s that parties be aff orded a full and fair hearing on disputed fac t issues. Office of P ub. Util. Counsel v. Public Util. Comm’n , 185 S.W .3d 555, 576 (Tex. App.—Austin 2006, pet. denied). At a minimum , due proc ess re quires that the “r

udiments of fair pla

y ” be obse rved. Id. ; see also S t a t e v. C rank , 666 S.W .2d 91, 94 (Tex. 1984). Equal prote ction simply require s that administrative age ncies treat similarly situated parties the same. BMW of N. Am. v. M otor Vehicle Bd. , 1 15 S.W. 3d 72 2, 72 6 ( Te x. Ap p. —Aus tin 2003, pet. denied)

.22 Th e re c or d in

thi s c a se re fl e c ts that th e a g e nc y held a fi ft e e n- da

y c on te ste d c a se hear ing in which Grubbs was permitted to pr esent testimony on all disputed fac t issues. The re cord fu rt he r r e fl e c ts that th e Di re c tor ’s fi na l ord e r c omp or ts w itha g e nc y

pr e c e de nt. Mo re ov e r, de sp ite Grubbs’s a ll e g a

ti o n s to th e contr ary , we have pre viously conclude d that there wer e sig nificant fa ctual differ ence s betwee n Grubbs and the protesting deale r in Austin Chevrolet ; thus, Grubbs cannot show that it wa s a sim ila rl y sit uate d p art

y . A c c or din g ly , w e c on c lud e that G ru bb s has fa ile d to demonstrate e ither a due proce ss or equa l protection violation.

CO NC LU SION Be cause we f

ind that the Direc tor did not act in an a rbitrar y and ca pricious manner and that his order

is supported by

substantial evidence , we a ffirm the D irec tor’s final or der.

__________________________________________ J an P. Patterson, J ustice Be fore Chief J ustice L aw, Justi ces Patter son and Pury ear Affir med Filed: May

23, 2007