PRESENT: Hassell, C.J., Keenan, Koontz, Kinser, Lemons, and 

Agee, JJ., and Russell, R.J. 

VOLKSWAGEN OF AMERICA, INC. 

v. Record No. 022402 OPINION BY JUSTICE BARBARA MILANO KEENAN 

 October 31, 2003 

DEMERST B. SMIT, COMMISSIONER 

OF THE VIRGINIA DEPARTMENT OF 

MOTOR VEHICLES, ET AL.

FROM THE COURT OF APPEALS OF VIRGINIA 

 In this appeal, we consider whether the Court of Appeals 

erred in affirming a circuit court judgment approving a decision 

of the Commissioner of the Department of Motor Vehicles (the 

Commissioner) that an automobile distributor violated Code 

§ 46.2-1569(7). We primarily consider whether Code § 46.2-

1569(7) requires the Commissioner to find, before holding that a 

distributor has violated the statute, that the distributor 

failed to ship to a Virginia dealer a quantity of new vehicles 

that meets the statute's requirements. 

 We will state the facts relevant to this appeal. 

Volkswagen of America, Inc. (Volkswagen), a New Jersey 

corporation, is the distributor of Volkswagen motor vehicles in 

the United States and Canada and is a subsidiary of the German 

automobile manufacturer, Volkswagen AG. Volkswagen imports a 

fixed supply of vehicles from its corporate parent and 
distributes these vehicles to about 600 dealers nationwide, 

including 17 dealers in the Commonwealth. 

 Miller Auto Sales, Inc., d/b/a Miller Volkswagen (Miller), 

is a retail dealer of Volkswagen motor vehicles in Winchester, 

Virginia. Miller is the smallest dealer by volume of Volkswagen 

sales in its assigned sales district. 

 In late 1997, Volkswagen adopted a national program for 

allocating and distributing to its dealers vehicle models often 

in short supply, such as the Beetle, the Passat, and the Jetta. 

This allocation program was designed to take shipments of 

vehicles that Volkswagen imported from its corporate parent and 

to divide those vehicles among Volkswagen's six national sales 

regions in proportion to each region's share of Volkswagen's 

national "planning volume," which reflected anticipated annual 

unit sales. 

 Each region's allotment of vehicles was subdivided further 

among the region's sales districts, with each district receiving 

a number of vehicles in proportion to its share of the region's 

annual planning volume. At the district level, an "area 

executive" was responsible for allocating vehicles to individual 

dealers based on Volkswagen's national allocation methodology. 

 Although Volkswagen's vehicle allocation methodology 

underwent several changes through October 1998, the core of that 

methodology consistently had been a "mathematical algorithm" 

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contained in a computer-generated spreadsheet that Volkswagen 

distributed electronically to its area executives. Volkswagen's 

allocation formula was based on several factors, including the 

reported inventories of all dealers within a district, 

anticipated unit sales, and actual unit sales for that year. 

Each area executive had discretion to adjust the results of the 

formula in response to local market conditions. 

 The results computed from the mathematical algorithm were 

further modified by Volkswagen's "Create an Apostle Program" 

(CAAP). Under CAAP, Volkswagen used an independent organization 

to conduct telephone surveys of recent purchasers of Volkswagen 

vehicles to evaluate customer satisfaction. From these surveys, 

a customer satisfaction index was created that measured each 

individual dealer's performance in sales, service, and customer 

relations. 

 Volkswagen then used each dealer's CAAP score to adjust the 

allocation formula's results for that particular dealer. 

Volkswagen also imposed a "minimum stocking requirement," which 

functioned as a "safety valve" authorizing the area executive to 

override the allocation formula to ensure that each dealer would 

have in its inventory at least one vehicle of every Volkswagen 

model. 

 In February 1998, Miller sent a letter to Volkswagen, with 

a copy to the Commissioner, alleging, among other things, that 

3
Volkswagen's use of a customer satisfaction index in its 

allocation of vehicles violated Code § 46.2-1569(7). That 

statute provides in relevant part: 

 Notwithstanding the terms of any franchise 

agreement, it shall be unlawful for any manufacturer, 

factory branch, distributor, or distributor branch, or 

any field representative, officer, agent, or their 

representatives: 

. . . . 

7. To fail to ship monthly to any dealer, if ordered 

by the dealer, the number of new vehicles of each 

make, series, and model needed by the dealer to 

receive a percentage of total new vehicle sales of 

each make, series, and model equitably related to the 

total new vehicle production or importation currently 

being achieved nationally by each make, series, and 

model covered under the franchise. Upon the written 

request of any dealer holding its sales or sales and 

service franchise, the manufacturer or distributor 

shall disclose to the dealer in writing the basis upon 

which new motor vehicles are allocated, scheduled, and 

delivered to the dealers of the same line-make. In 

the event that allocation is at issue in a request for 

a hearing, the dealer may demand the Commissioner to 

direct that the manufacturer or distributor provide to 

the dealer, within thirty days of such demand, all 

records of sales and all records of distribution of 

all motor vehicles to the same line-make dealers who 

compete with the dealer requesting the hearing. 

Id.

 In the letter, Miller requested that Volkswagen disclose 

"in writing the basis upon which new motor vehicles are 

allocated, scheduled, and delivered to the dealers of the same 

line-make." In April 1998, Miller's counsel sent the 

Commissioner another letter requesting a hearing under the 

statute. The Commissioner referred the case to a hearing 

4
officer to conduct the hearing and to make recommended findings 

and rulings. 

 Before the hearing, Volkswagen moved to dismiss the 

proceedings on the grounds that Code § 46.2-1569(7) was 

unconstitutionally vague and violated the Commerce Clause of the 

United States Constitution. The hearing officer denied 

Volkswagen's motion. At the hearing, much of the factual 

evidence and expert testimony received by the hearing officer 

focused on Volkswagen's vehicle allocation methodology rather 

than on the actual number of vehicles that Volkswagen had 

shipped to Miller. 

 After the hearing, the hearing officer issued a proposed 

decision in which he found that Volkswagen's allocation 

methodology was "flawed in its design and deficient in its 

operation." The hearing officer recommended that the 

Commissioner declare that Volkswagen's vehicle allocation 

methodology was unlawful and in violation of Code § 46.2-

1569(7). 

 The hearing officer found that there were two mathematical 

calculations in Volkswagen's allocation formula that worked to 

Miller's detriment. First, the hearing officer observed that 

the "algorithm truncated fractional allocations in certain 

circumstances due to peculiarities of the computerized 

spreadsheet program." Second, he noted that "the algorithm did 

5
not accumulate 'fractional vehicles' so that a small volume 

dealer, like Miller . . . was effectively frozen out on a 

repeated basis from acquiring vehicles in short supply." 

 The hearing officer further found that the results of 

Volkswagen's allocation program were monitored solely on an "ad 

hoc" basis and that "[o]nly when a dealer, such as Miller, 

complained, was there any apparent effort to verify whether or 

not allocations were fair." The hearing officer stated that 

statistical measurements were not used in such circumstances and 

that "the notion of fairness would seem to rest strictly on 

achieving quietude from the dealerships." 

 The hearing officer also found that the flaws in 

Volkswagen's allocation formula were exacerbated by Volkswagen's 

use of the CAAP program to modify the algorithm results, thus 

making the allocation of new vehicles "hostage to CAAP 

performance." In explaining this conclusion, the hearing 

officer stated: 

 [O]ne could reasonably conclude from some of the 

statistical evidence presented, both by fact witnesses 

and by expert witnesses, that the restriction of 

allocations itself created a vicious cycle of lower 

CAAP scores, as customers who were delayed in 

receiving ordered vehicles, or who could not get 

vehicles precisely as specified, might well be less 

satisfied with Miller. 

 The hearing officer further found that while Volkswagen 

presented some testimony that its minimum stocking requirement 

6
was a "hallowed and longstanding 'unwritten rule' for 

allocation," it appeared that this requirement was not applied 

in allocating vehicles to Miller until after Miller had 

requested a hearing. The hearing officer concluded that the 

evidence failed to show that the minimum stocking requirement 

functioned as an adequate "safety valve" to remedy the 

deficiencies of Volkswagen's allocation formula. 

 The Commissioner issued a "Hearing Decision" in which he 

adopted the findings of the hearing officer. The Commissioner 

determined, in relevant part, that Volkswagen's vehicle 

allocation methodology was unlawful and in violation of Code 

§ 46.2-1569(7). 

 Volkswagen appealed from the Commissioner's ruling to the 

Circuit Court of the City of Richmond. Volkswagen argued that 

Code § 46.2-1569(7) violated the Commerce Clause of the United 

States Constitution and was unconstitutionally vague. 

Volkswagen also asserted that the Commissioner misinterpreted 

Code § 46.2-1569(7) because that statute merely "regulates the 

number of vehicles that a motor vehicle manufacturer or 

distributor must ship to each of its Virginia dealers, not the 

mechanisms that a manufacturer or distributor must use to 

calculate or determine that number." 

 The circuit court affirmed the Commissioner's determination 

that Volkswagen's vehicle allocation methodology violated Code 

7
§ 46.2-1569(7), and held that the Commissioner did not exceed 

his authority in reaching this conclusion. The court stated 

that the purpose of the statute is to "ensure that Virginia 

dealers get a fair percentage of vehicles" in comparison to 

national distributions. The court concluded that, therefore, 

"the administrative body charged with the statute's enforcement 

would necessarily have to examine the allocation methodology to 

determine whether a Virginia dealer is getting its fair share." 

In addition, the circuit court rejected Volkswagen's 

constitutional arguments. 

 Volkswagen appealed to the Court of Appeals, which affirmed 

the circuit court's judgment. Volkswagen of Amer., Inc. v. 

Quillian, 39 Va. App. 35, 42, 69, 569 S.E.2d 744, 748, 761 

(2002). After rejecting Volkswagen's constitutional arguments, 

the Court of Appeals concluded, in relevant part, that the plain 

meaning of Code § 46.2-1569(7) "reflects the intention of the 

legislature to give the [C]ommissioner the flexibility necessary 

to accurately determine whether a dealer has received its fair 

share of vehicles from a distributor." Id. at 63, 569 S.E.2d at 

758. The Court further held that "in determining whether a 

distributor is in compliance with Code § 46.2-1569(7), the 

[C]ommissioner may consider and base his determination on that 

distributor's vehicle allocation methodology" and that "the 

[C]ommissioner is not confined to examining only the actual 

8
number of vehicles allocated." Id. at 64, 569 S.E.2d at 759. 

We awarded Volkswagen an appeal pursuant to Code § 17.1-410(B). 

 Volkswagen argues that the Commissioner exceeded his 

authority under the plain language of Code § 46.2-1569(7). 

Volkswagen contends that the Commissioner improperly determined 

that Volkswagen violated the statute without considering whether 

Volkswagen failed to comply with the statute's requirement that 

Miller receive from its distributor new vehicles in a number 

"equitably related" to national importation figures. 

 In response, Miller contends that Volkswagen has waived 

this argument by failing to object to the hearing officer's 

statement in a pre-hearing telephone conference that "the issue 

is this case appear[s] to be whether or not the allocation 

methodology adopted by [Volkswagen] was equitable in accord with 

the Statute." In addressing the merits of Volkswagen's 

argument, Miller argues that the statute contemplates regulation 

of a distributor's vehicle allocation methodology because the 

only way to determine whether an equitable number of vehicles 

has been allocated to a dealer is to evaluate the method by 

which that number was determined. Miller also asserts that the 

Commissioner's task was compounded by Volkswagen's failure to 

maintain adequate records concerning the number of vehicles it 

allocated to Miller before Miller's complaint. We disagree with 

Miller's arguments. 

9
 Initially, we find no merit in Miller's contention that 

Volkswagen's failure to object to the hearing officer's prehearing characterization of the controversy results in a waiver 

of the argument that Volkswagen advances in this appeal. The 

hearing officer's statement indicated that he would consider 

whether Volkswagen's allocation methodology complied with the 

terms of the statute. In view of the statute's requirements, 

such a determination could not be made without considering 

national importation figures and their relationship to the 

number of new vehicles being shipped to Miller. Thus, 

Volkswagen has not waived the argument that it advances here. 

 We resolve the substance of Volkswagen's argument by 

examining the language of Code § 46.2-1569(7). Under basic 

rules of statutory construction, we determine the General 

Assembly's intent from the words contained in the statute. 

Woods v. Mendez, 265 Va. 68, 74, 574 S.E.2d 263, 266 (2003); 

Vaughn, Inc. v. Beck, 262 Va. 673, 677, 554 S.E.2d 88, 90 

(2001); Cummings v. Fulghum, 261 Va. 73, 77, 540 S.E.2d 494, 496 

(2001). When the language of a statute is plain and 

unambiguous, courts are bound by the plain meaning of that 

language. Woods, 265 Va. at 74-75, 574 S.E.2d at 266; 

Industrial Dev. Auth. v. Board of Supervisors, 263 Va. 349, 353, 

559 S.E.2d 621, 623 (2002); Cummings, 261 Va. at 77, 540 S.E.2d 

at 496. Thus, when a statute's language is unambiguous, courts 

10
cannot give that language a construction that amounts to holding 

that the General Assembly did not mean what it actually has 

stated. Mozley v. Prestwould Bd. of Dirs., 264 Va. 549, 554, 

570 S.E.2d 817, 820 (2002); Lee County v. Town of St. Charles, 

264 Va. 344, 348, 568 S.E.2d 680, 682 (2002); Vaughn, Inc., 262 

Va. at 677, 554 S.E.2d at 90. 

 We conclude that the language of Code § 46.2-1569(7) is 

plain and unambiguous. This language required the Commissioner 

to consider the actual monthly shipments that Volkswagen made to 

Miller in relation to the number of new vehicles imported by 

Volkswagen on a national level in the particular vehicle 

categories covered under Miller's franchise agreement. The 

statute further required that the Commissioner, in conducting 

this examination, determine whether Miller obtained the number 

of such vehicles needed to receive a percentage of new vehicle 

sales "equitably related" to the number of these types of 

vehicles imported by Volkswagen nationally. 

 The Commissioner did not undertake this required analysis. 

Instead of addressing the actual number of vehicles Miller 

received from Volkswagen in relation to national importation 

numbers, the Commissioner merely examined the component parts of 

Volkswagen's vehicle allocation methodology, and adjustments 

made to that process, to determine whether they were "fair" in 

their application to small dealers such as Miller. Thus, in 

11
basing his determination on Volkswagen's vehicle allocation 

methodology, the Commissioner wholly failed to consider the 

national importation numbers for the types of vehicles covered 

under Miller's franchise agreement. This omission was followed 

by the Commissioner's failure to address whether Miller received 

the number of vehicles needed to receive a percentage of new 

vehicle sales "equitably related" to the quantity of these types 

of vehicles imported on a national level.1

 "An erroneous interpretation of a statute by those charged 

with its enforcement cannot be permitted to override [the 

statute's] clear meaning. Amendments of statutes can only be 

made by the legislature and not by the courts or administrative 

officers charged with their enforcement." Hampton Roads 

Sanitation Dist. Comm'n v. City of Chesapeake, 218 Va. 696, 702, 

240 S.E.2d 819, 823 (1978); see also Hurt v. Caldwell, 222 Va. 

91, 97, 279 S.E.2d 138, 142 (1981); City of Richmond v. County 

of Henrico, 185 Va. 176, 189, 37 S.E.2d 873, 879-80 (1946). 

 1

 We find no merit in Miller's contention that the 

Commissioner was limited to examining Volkswagen's vehicle 

allocation methodology because Volkswagen's records were 

inadequate to undertake an actual shipment analysis and Miller 

received an artificially high number of vehicles after filing 

its complaint. If the information available to the Commissioner 

was inadequate to make the required statutory determination, he 

was required to obtain the necessary information, rather than 

undertake an analysis that did not comport with the terms of the 

statute. 

12
 The Commissioner's erroneous statutory interpretation 

resulted in Volkswagen improperly being found in violation of 

the statute absent any analysis of the actual shipments received 

by Miller in relation to the relevant national importation 

numbers achieved by Volkswagen. Thus, because the 

administrative agency charged with enforcement of the statute 

failed to undertake the analysis and make the predicate finding 

required by the statute, the agency's resulting determination 

must be set aside. See Browning-Ferris Indus. of S. Atl., Inc. 

v. Residents Involved in Saving the Env't, Inc., 254 Va. 278, 

284-85, 492 S.E.2d 431, 435 (1997). 

 We also observe that the Court of Appeals, in its analysis 

of the Commissioner's decision, incorrectly held that the 

Commissioner may base his determination whether a distributor 

violated Code § 46.2-1569(7) on the distributor's vehicle 

allocation methodology. This holding was incorrect because it 

improperly focused on the business judgment of Volkswagen, 

rather than on the actual shipments to Miller, the relevant 

national importation figures, and whether there was an 

"equitable" relationship between those numbers as mandated by 

the statute. Accordingly, we hold that the Court of Appeals 

erred in affirming that portion of the circuit court judgment 

13
upholding the Commissioner's determination that Volkswagen 

violated Code § 46.2-1569(7).2

 Because our conclusion regarding the Commissioner's 

erroneous application of the statute decides the merits of this 

appeal, we do not reach the constitutional issues raised by 

Volkswagen. Our decision in this regard reflects the 

established principle of constitutional law that a court will 

not rule upon the constitutionality of a statute unless such a 

determination is absolutely necessary to decide the merits of 

the case. Klarfeld v. Salsbury, 233 Va. 277, 286, 355 S.E.2d 

319, 324 (1987); Keller v. Denny, 232 Va. 512, 516, 352 S.E.2d 

327, 329 (1987); see also Tran v. Gwinn, 262 Va. 572, 583, 554 

S.E.2d 63, 69 (2001). The fact that the present case will be 

remanded and that the constitutional issues may arise again does 

not affect our obligation to adhere strictly to this principle. 

Klarfeld, 233 Va. at 286, 355 S.E.2d at 324. Therefore, we will 

vacate that portion of the Court of Appeals' judgment holding 

that Code § 46.2-1569(7) does not violate the Commerce Clause of 

the United States Constitution and is not unconstitutionally 

vague. 

 For these reasons, we will reverse in part, and vacate in 

part, the judgment of the Court of Appeals and remand the case 

 2

 Based on our resolution of the merits of this appeal, we 

need not consider the various procedural issues raised by 

14
to the Court of Appeals for ultimate remand to the Commissioner 

for further proceedings consistent with the principles expressed 

in this opinion. 

Reversed in part,

 vacated in part,

 and remanded.

 

Volkswagen. 

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