Opinion ID: 2010218
Heading Depth: 2
Heading Rank: 2

Heading: Whether the Board's Decision Was Clearly Erroneous

Text: GMC next argues that the Board's decision was either clearly erroneous or against the manifest weight of the evidence. The findings and conclusions of an administrative agency on a question of fact shall be held to be prima facie true and correct. 735 ILCS 5/3-110 (West 2004). A reviewing court does not reweigh the evidence that was before the agency. Comprehensive Community Solutions, Inc. v. Rockford School District No. 205, 216 Ill.2d 455, 471-72, 297 Ill.Dec. 221, 837 N.E.2d 1 (2005). An agency's conclusion on a question of mixed law and factthat is one that asks the legal effect of a given set of factsis reviewed for clear error. Elementary School District 159 v. Schiller, 221 Ill.2d 130, 143, 302 Ill.Dec. 557, 849 N.E.2d 349 (2006). Such review is significantly deferential to an agency's experience in construing and applying the statute that it administers. Schiller, 221 Ill.2d at 143, 302 Ill.Dec. 557, 849 N.E.2d 349. Thus, an agency's decision will only be found to be clearly erroneous where a reviewing court is left, on the entire record, with a definite and firm conviction that a mistake has been committed. Schiller, 221 Ill.2d at 143, 302 Ill.Dec. 557, 849 N.E.2d 349. The Board made findings of fact on each of the statutory factors for assessing good cause noted above, and did so with respect to each of the two dealerships at issue. The Board's findings of fact were essentially the same for each of the two dealerships. With respect to section 12(c)(1), the Board found that a new dealership was not warranted by economic and marketing conditions, including anticipated future changes. See 815 ILCS 710/12(c)(1) (West 2004). It noted that there were already three GMC dealers within a radius of less than 10 miles of both Jacobs and Loren, and that there were seven dealers within 11 miles of Jacobs. Thus, the areas were already substantially represented by GMC. Moreover, the Board found that there was little, if any, projected growth around the dealerships, that there was insufficient evidence that the dealers surrounding Jacobs and Loren were underperforming, and that there was no evidence that the answer to any perceived underperformance was to add another dealer. It also found that there was competent evidence that the dealers surrounding Jacobs and Loren suffered from a lack of product allocation and that adding a dealer would only exacerbate the problem. Regarding section 12(c)(2), the Board found that the retail sales and service business transacted by the protesting dealers and other GMC dealers in the relevant market areas, as compared to the business available to them, was reasonable and therefore favored the protesting dealers. See 815 ILCS 710/12(c)(2) (West 2004). The Board found that GMC's experts used a measure of performance that was unrealistic in the metropolitan, multiple-dealer network at issue. Furthermore, GMC presented insufficient evidence to support the argument that the local dealers around Jacobs and Loren were failing to adequately perform. With respect to sections 12(c)(3) and (c)(4), the Board found that the protesting dealers and other GMC dealers in the relevant market area had made substantial and permanent investments. See 815 ILCS 710/12(c)(3), (c)(4) (West 2004). It noted that the protesting dealers had invested millions of dollars in their facilities, particularly Grossinger, who had a $19 million state-of-the-art Autoplex. Additionally, Castle recently spent $5 million to create an exclusive GMC/Buick/Pontiac dealership and was not permitted to add any nonGMC franchises for the next 25 years. Moreover, each of the protesting dealers had shown a commitment to a long-standing and respectable presence in the community. Regarding sections 12(c)(5) and (c)(8), the Board found that the addition of a new dealer could be injurious to the public welfare and that there appeared to be little or no public benefit that would accrue. See 815 ILCS 710/12(c)(5), (c)(8) (West 2004). It noted that the public would not be served by a dealer network where the individual dealers are small and lack adequate product to sell. It would be inconvenient for consumers to have to travel to a number of GMC outlets just to be able to see the particular vehicle they are considering. The benefit of being a mile or two closer to the nearest GMC dealer would be incremental at best. Given that already scarce inventory levels would be stretched further by adding another dealer, the public would not be served by the expansion of the dealer network into areas where there were already so many dealers. With regard to section 12(c)(6), the Board found that the local dealers in the relevant market areas of the proposed Jacob and Loren dealerships were providing adequate competition and convenient care to their customers. See 815 ILCS 710/12(c)(6) (West 2004). According to the Board, Castle, Grossinger, Mitchell and Muller all provided excellent customer service and made every effort to record as many sales as possible. There was insufficient evidence to show that these dealers were failing to perform adequately, but there was competent evidence to show that their performance had been hampered by a lack of adequate product supply. With respect to section 12(c)(7), the Board found that the protesting dealers in the relevant market areas of both proposed add points had adequate sales and service facilities, equipment, vehicle parts and qualified personnel to reasonably provide for the needs of the customers in the relevant market areas. See 815 ILCS 710/12(c)(7) (West 2004). There was no evidence presented by GMC that any of the protesting dealers, or any other GMC dealers in the relevant market areas, had inadequate sales and service facilities, equipment, vehicle parts or qualified personnel to reasonably serve customers. To the contrary, the sales and service facilities ranged from adequate to state-of-the-art. The Board next found that there was no evidence of a material breach of any franchise agreement by any protesting dealer in the relevant market areas. See 815 ILCS 710/12(c)(9) (West 2004). Regarding section 12(c)(10), the Board found that there was competent evidence that the addition of Jacobs as a GMC dealer would hurt the existing dealers in the relevant market area. See 815 ILCS 710/12(c)(10) (West 2004). Similarly, the Board found that the addition of Loren would hurt the existing dealers in the relevant market area. There was insufficient evidence presented to show that there was enough additional opportunity to support another dealer in either relevant market area. But there was competent evidence to show that existing dealers suffer from inventory shortages caused by GMC's allocation system, and there was no reason to believe that the existing dealers could respond positively to the addition of a new add point without sufficient product supply. Finally, the Board found section 12(c)(11) to be inapplicable to the case. See 815 ILCS 710/12(c)(11) (West 2004). After reviewing the evidence presented, we conclude that the Board's decision to grant the existing dealers' protests was not clearly erroneous. The evidence supporting the Board's conclusions on several factors was undisputed. There was unrebutted testimony establishing that the protesting dealers had made substantial investments in their dealerships that were intended to be permanent. See 815 ILCS 710/12(c)(3), (c)(4) (West 2004). Additionally, the evidence was undisputed that the protesting dealers had adequate sales and service facilities. See 815 ILCS 710/12(c)(7) (West 2004). Finally, there was no evidence that any of the protesting dealers had materially breached their franchise agreements. See 815 ILCS 710/12(c)(9) (West 2004). The parties presented conflicting evidence about the factors that focus on public interest and welfare, the economic impact of adding dealerships, and the amount of business available to existing dealers in the relevant market area. See 815 ILCS 710/12(c)(1), (c)(2), (c)(5), (c)(8), (c)(10) (West 2004). The two experts who testified, James Anderson (GMC's expert) and Dr. John Matthews (the protesting dealers' expert), had significantly different opinions due to their difference in approaches. Anderson's method compared local GMC sales performance with adjusted national and statewide standards. Matthews compared GMC sales performance in the Jacobs relevant market area with all parts of the Chicago metropolitan area outside the Jacobs relevant market area, and he used the same method for Loren. GMC criticizes Matthews' approach as circular because he relied solely on data from the Chicago area. But Matthews' approach offered the advantage of comparing the two relevant market areas to areas that were similar in most respects, including the fact that they were urban, that dealers sold heavily into one another's territories, and that the climate was generally the same. By contrast, Anderson's adjusted national and state standards took into account data from rural areas, where there was often far less competition and where customer tastes differed from those of customers in major cities like Chicago. In light of Dr. Matthews' testimony and the other evidence, it was reasonable for the Board to conclude that Anderson's approach was not as valid a method as Dr. Matthew's for measuring dealership performance in a multidealer area in a large metropolitan region. After examining the evidence, the Board was simply not persuaded by GMC's attempt to show that GMC dealers in the two relevant market areas were performing poorly. Instead, the Board found that Dr. Matthews' approach was generally superior, and gave more weight to the testimony he presented on the economic impact of adding the dealerships and the harm this would cause to marginally profitable dealerships like Castle and Muller. GMC argues that the Board's decision relied in large part upon performance averages for GMC dealers, and assumed a static market. But, as the appellate court majority pointed out, it was GMC who introduced evidence that established average sales as the appropriate measure of performance. 361 Ill.App.3d at 279, 297 Ill.Dec. 172, 836 N.E.2d 903. GMC cannot complain of the Board's reliance upon data concerning average sales when GMC itself relied on such data in its effort to meet its burden of establishing good cause to add the dealerships. Moreover, there is nothing in the record indicating that the Board would not have been receptive to evidence indicating likely future improvement in GMC sales at the time of the administrative hearing, which took place in 2002. But the evidence presented to the Board indicated that GMC sales for dealers in the Jacobs and Loren relevant market areas were generally declining at that time. Moreover, this decline occurred even though the protesting dealerships devoted significant resources to advertising and promoting GMC sales. Evidence that GMC dealers in the two relevant market areas had considerable difficulty getting an adequate supply of product from GMC supported the Board's conclusion that adding the dealerships would not serve the public interest. Many area GMC dealers testified that they had trouble getting an adequate supply from GMC of sport utility vehicles, the vehicles that sell best in the Chicago area. Grossinger general manager Charles Settles stated that GMC makes discretionary allocations of additional vehicles to dealers, but these allocations are made in an arbitrary fashion. GMC's vehicle allocation system also had an additional problem in that there was a lapse of 90 to 120 days between the time a vehicle is ordered and its arrival. According to Dr. Matthews, adding the two dealerships would only exacerbate the existing product supply problems and cause greater inconvenience to GMC customers in the area. Dr. Matthews stated that it was not in the public interest to have small dealers with small inventories, thereby requiring buyers to visit several GMC dealers to see all the vehicles they wanted to view. Furthermore, Dr. Matthews believed that the cross-selling data showed there was adequate competition among GMC dealers in the relevant areas, and he felt that GMC should have fewer and larger dealers in the Chicago area. The evidence also showed that growth was unlikely except for a new housing development called the Glen in the Loren relevant market area. Matthews estimated that this new development would only result in an annual sales increase of five GMC vehicles at most. Under these circumstances, we find that there was sufficient evidence to support the Board's conclusion that adding the dealerships would not serve the public interest and was not warranted by existing economic conditions when balancing the interests involved. Accordingly, we conclude that the Board's findings should not be disturbed because they were not against the manifest weight of the evidence, and its ultimate conclusion to grant the protests was not clearly erroneous.