Court Opinion

ID: 195528
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:41:53+00
Date Added: 2024-06-11T12:38:19.997066
License: Public Domain

August 3, 1994    UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

                                           

No. 93-1977

                      FIRESIDE NISSAN, INC.,
                       Plaintiff-Appellant,

                                v.

                   DANIEL P. FANNING, DIRECTOR,
                   DEPARTMENT OF TRANSPORTATION
                FOR STATE OF RHODE ISLAND, ET AL.
                      Defendants-Appellees.

                                           

                           ERRATA SHEET

     The opinion of this court issued on July 20, 1994 is amended

as follows:

     Page 26, line 6 should  read ". . . flow are .  . ." instead

of ". . . flows is . . ."

                  UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CURCUIT
                                           

No. 93-1977

                      FIRESIDE NISSAN, INC.,

                       Plaintiff-Appellant,

                                v.

                   DANIEL P. FANNING, DIRECTOR,
                   DEPARTMENT OF TRANSPORTATION
                FOR STATE OF RHODE ISLAND, ET AL.

                      Defendants-Appellees.

                                           

           APPEAL FROM THE UNITED STATES DISTRICT COURT

                 FOR THE DISTRICT OF RHODE ISLAND

           [Hon. Francis J. Boyle, U.S. District Judge]
                                                      

                                           

                              Before

                    Torruella, Circuit Judge,
                                            
                  Coffin, Senior Circuit Judge,
                                              
                    and Boudin, Circuit Judge.
                                             

                                           

     Ronald W. Del Sesto, with whom Peter P. D. Leach and Updike,
                                                                 
Kelly, Spellacy & Del Sesto were on brief for appellant.
                           
     John J. Igliozzi,  Office of the Legal Counsel, Rhode Island
                     
Department   of  Transportation   for   appellee  Department   of
Transportation for State of Rhode Island.
     Gerald  C.  DeMaria, with  whom  Lawrence  P. McCarthy  III,
                                                                
Patrick B. Landers and Higgins,  Cavanagh & Cooney were on  brief
                                                  
for appellee Nissan Motor Corporation in U.S.A.
     John  D. Biafore, with whom  Goldman & Biafore  was on brief
                                                   
for appellee Nissan of Smithfield, Inc.

                                           
                          July 20, 1994
                                           

          TORRUELLA,  Circuit Judge.   Rhode  Island's automobile
                                   

dealership  law  allows  existing dealers  within  a  twenty-mile

radius of a proposed new dealership to protest  the establishment

of  the new dealership.  The issue raised by this appeal concerns

situations  in which, by reason  of a proposed  new dealership in

proximity  to the state border, a part of that twenty-mile radius

falls  outside of Rhode Island.   State officials  have taken the

position that within the  twenty-mile area surrounding a proposed

new dealership,  only the  dealers who  are located  inside Rhode

Island's borders are  covered by  Rhode Island law  and thus  are

entitled to protest the  establishment of the new dealership.   A

Massachusetts car  dealer who  is located within  the twenty-mile

radius  of a  proposed dealership,  but in  Massachusetts, claims

that  this interpretation of Rhode  Island law runs  afoul of the

Commerce  Clause because  it  burdens  and discriminates  against

interstate commerce.  Because Rhode Island is merely applying its

law to those  subject to its jurisdiction and  regulation, rather

than  extraterritorially,  and  because  it  neither burdens  nor

discriminates  against interstate  commerce  in the  process,  we

agree with Rhode Island and affirm.

                          I.  BACKGROUND

          Plaintiff-appellant Fireside Nissan, Inc. ("Fireside"),

a Massachusetts  automobile dealer,  brought this  action against

the  Rhode  Island Department  of Transportation  ("RIDOT") after

RIDOT excluded Fireside from participating in  hearings regarding

a proposed Nissan  dealership in Rhode Island.   Fireside claimed

                               -2-

that RIDOT's application of Rhode Island's new dealership law  to

exclude  Fireside merely  because  it was  not  located in  Rhode

Island was unconstitutional.

          Rhode  Island  General Laws,  Section  31-5.1-4.21 sets

out  certain  procedural  requirements  for  establishing  a  new

automobile  dealership  in  the  state.   First,  a  manufacturer

desiring  an additional  dealership must  notify dealers  "in the

relevant market  area" of its intentions.   R.I. Gen. Laws    31-

5.1-4.2(a).   "Relevant  market  area" is  defined  as "the  area

within a radius of twenty (20) miles around an existing dealer or

the area of responsibility defined in the franchise, whichever is

greater."   R.I Gen. Laws   31-5.1-1(J).  Existing retail dealers

in the "relevant  market area" may then protest the establishment

                    

1  R.I. Gen. Laws   31-5.1-4.2 provides in relevant part:

            (a)  In  the  event  that  a manufacturer
            seeks   to   enter   into   a   franchise
            establishing  an   additional  new  motor
            vehicle dealership . . . within or into a
            relevant  market area where the same line
            make  is  then  represented,  .  . .  the
            manufacturer   shall    in   writing   by
            certified    mail   first    notify   the
            department  .  .  . and  each  new  motor
            vehicle dealer in  such line make  in the
            relevant market area . . .  .  [A]ny such
            new  motor  vehicle  dealership may  file
            with  the  department  a  protest  to the
            establishing  or  relocating  of the  new
            motor vehicle  dealership .  . . .   When
            such  a  protest  is  filed, .  .  .  the
            manufacturer   shall  not   establish  or
            relocate the proposed  new motor  vehicle
            dealership .  . .   until the  department
            has held a hearing, nor thereafter, until
            the  department has  determined [whether]
            there  is good  cause for  not permitting
            such new motor vehicle dealership.

                               -3-

of the new dealership in which case RIDOT must hold  a hearing to

determine  if  "there  is  good cause  for  not  permitting"  the

additional  franchise.   R.I.  Gen. Laws     31-5.1-4.2(a).   The

statute  does not explicitly state whether or not the dealers who

may  protest the establishment  of a dealership  in the "relevant

market area"  must be located  in Rhode Island  or be  a licensed

Rhode Island dealership.2

          In March  of 1991,  Nissan Motor Corporation  in U.S.A.

("Nissan USA"), gave notice to  RIDOT, Fireside, and other Nissan

dealers of its intention to establish a dealership in Smithfield,

Rhode  Island.    Fireside,   which  sells  and  services  Nissan

                    

2   Throughout Title  31  of the  Motor  Vehicle Code,  the  term
"dealer" is defined as: 

            Every  person engaged in  the business of
            buying,  selling, or  exchanging vehicles
            of  a  type  required  to  be  registered
            hereunder  and  who  has  an  established
            place  of  business for  such  purpose in
                                                     
            this state.
                      

R.I. Gen. Laws   31-1-19 (emphasis added).

For purposes of the provision regarding the  establishment of new
car dealerships, R.I. Gen. Laws   31-5.1-4.2, however, the  right
to protest at a hearing applies to any "new motor vehicle dealer"
which is defined as:

            [A]ny person  engaged in the  business of
            selling, offering to sell,  soliciting or
            advertising   the   sale  of   new  motor
            vehicles and  who holds, or  held at  the
            time a cause of action under this chapter
            accrued,  a  valid   sales  and   service
            agreement, franchise or contract, granted
            by  the  manufacturer or  distributor for
            the retail sale of said manufacturer's or
            distributor's new motor vehicles.

R.I. Gen. Laws   31-5.1-1(C).

                               -4-

automobiles,   is  located  in  North  Attleboro,  Massachusetts,

approximately two miles  from the Rhode Island  border and within

twenty  miles  of Smithfield.    Fireside  is therefore  squarely

within the  "relevant market area" of  the Smithfield dealership.

Fireside  is not a licensed automobile dealer in Rhode Island but

instead holds a Massachusetts dealership license.

          In response  to Nissan  USA's notice, Fireside  filed a

protest with RIDOT on April 12, 1991.  Three Rhode Island dealers

of Nissan automobiles, who were  also within the "relevant market

area," filed protests  with RIDOT as well.  On February 13, 1992,

RIDOT issued a notice  to Fireside and the other  dealers stating

that  it  was  scheduling  a  hearing  regarding  the  Smithfield

dealership on April 2, 1992.

          At the  hearing, Nissan  USA moved to  exclude Fireside

because it was an out-of state dealer.  RIDOT, acting through the

Rhode Island Dealer's License  and Regulations Office, determined

that Fireside lacked  standing to participate in the  hearing and

excluded Fireside  from presenting  witnesses or evidence  at the

hearing.  The three  Rhode Island dealers did participate  at the

hearing and presented evidence on their own behalf.

          Fireside  was  prepared  to  present  evidence  at  the

hearing  showing  that 48%  of Fireside's  sales  and 45%  of its

service  business went to  Rhode Island residents.   In addition,

Fireside would have established that 100% of its cable television

advertising and 75%  of its  print advertising is  done in  Rhode

Island.

                               -5-

          After  the hearing,  RIDOT determined  that good  cause

existed  for  the  establishment of  the  Smithfield  dealership.

According  to R.I. Gen. Laws   31-5.1-4.2(b), RIDOT must base its

determination of  "good  cause" on  the "existing  circumstances,

including, but not limited to:"

            (1)   Permanency of the investment of the
            existing new motor  vehicle dealer(s)  in
            the community;

            (2)    Whether  the  new   motor  vehicle
            dealers  of the  same  line make  in that
            relevant   market   area  are   providing
            adequate  consumer care . . . which shall
            include  the  adequacy  of motor  vehicle
            sales and  service facilities, equipment,
            supply  of  motor   vehicle  parts,   and
            qualified service personnel;

            (3)  Whether there is reasonable evidence
            that  after the granting of the new motor
            vehicle dealership, that [sic] the market
            would  support all of  the dealerships of
            that  line  make in  the  relevant market
            area;

            (4)      Consequently,   whether  it   is
            injurious  to the  public welfare  for an
            additional  new motor  vehicle dealership
            to be established.

R.I. Gen. Laws   31-5.1-4.2(b).

Upon consideration of these factors, RIDOT found cause to issue a

license  to  the Smithfield  dealership,  which is  now  known as

Nissan of Smithfield, Inc. ("Smithfield Nissan").

          Fireside commenced this action on April 9, 1992, naming

Daniel  Fanning, Director  of RIDOT as  the defendant.   Fireside

sought a  declaration that RIDOT's interpretation  of Section 31-

5.1-4.2  as excluding  Fireside from  the new  dealership hearing

violated  the  Commerce  Clause, the  Privileges  and  Immunities

                               -6-

Clause, the Due Process Clause and the Equal Protection Clause of

the  United  States  Constitution.     Fireside  also  sought  an

injunction  restraining  RIDOT   from  precluding  Fireside  from

participating  in   future  hearings  as  well   as  a  temporary

restraining order  and a preliminary  injunction enjoining  RIDOT

from granting  a dealership license to Smithfield Nissan.  Nissan

USA and Smithfield Nissan intervened in the action.

          The district court denied Fireside's  requested relief.

The  court  found  that  the   exclusion  of  Fireside  from  the

dealership  hearings  did  not  violate the  Commerce  Clause  or

otherwise violate Fireside's constitutional rights.  As a result,

Fireside could not show the irreparable harm or the likelihood of

success on the merits necessary for the granting of a preliminary

injunction.   The  court also  denied  Fireside's request  for  a

declaratory  judgment and  a permanent  injunction and  entered a

final  judgment  in favor  of RIDOT,  Nissan USA,  and Smithfield

Nissan.

                          II.  ANALYSIS

          Fireside's right to its requested relief, including the

preliminary   and  permanent  injunctions   and  the  declaratory

judgment, depends primarily on  whether the exclusion of Fireside

from RIDOT's  new dealership hearings violates  the Constitution.

Before the  court will  grant a preliminary  injunction, Fireside

must establish, among other things, that it faces a likelihood of

success on the merits and that it will suffer irreparable harm if

the injunction  is  not issued.    Planned Parenthood  League  v.
                                                             

                               -7-

Bellotti,  641 F.2d 1006, 1009 (1st Cir. 1981).  Fireside alleges
        

that it will suffer irreparable  injury from RIDOT's violation of

Fireside's constitutional rights.   See National People's  Action
                                                                 

v.  Village of  Wilmette, 914  F.2d 1008,  1013 (7th  Cir. 1990),
                        

cert.  denied,  499  U.S.  921  (1991)  (finding   constitutional
             

violation sufficient  to establish irreparable  injury); Mitchell
                                                                 

v. Cuomo, 748 F.2d 804, 806 (2d Cir. 1984) (same).  Likewise, the
        

merits of  the permanent injunction and  the declaratory judgment

also turn on  the constitutionality of RIDOT's  actions.  Because

we uphold the district court's finding that RIDOT did not violate

the Commerce  Clause or any of  Fireside's constitutional rights,

we affirm the final judgment in favor of the defendants.

          As  a preliminary matter, we  find it beneficial to our

constitutional inquiry to clarify the  nature and purpose of  the

Rhode Island new dealership statute, R.I. Gen. Laws   31-5.1-4.2.

Title 31 of Rhode Island General Laws governs state regulation of

motor  and other vehicles.   Chapter 5.1 of  that title regulates

business practices among motor vehicle manufacturers, dealers and

distributors.   The provision  covering the establishment  of new

automobile dealerships, R.I. Gen.  Laws   31-5.1-4.2, is designed

to protect  existing dealers  and consumers from  the detrimental

effects  of aggressive  franchising practices  by the  automobile

manufacturers  whose  efforts  to  establish  excessive competing

franchises  are considered  to be  potentially "injurious  to the

public welfare" if not properly regulated.  R.I.  Gen. Laws   31-

5.1-4.2(b).

                               -8-

          The district court found that the statute targeted only

activities which occur within the state of Rhode Island performed

by  businesses  seeking   or  holding  Rhode  Island   dealership

licenses.   According to the  court, R.I. Gen.  Laws   31-5.1-4.2

was designed  to  safeguard the  interests of  those dealers  and

consumers located  in Rhode Island; the  Rhode Island legislature

did not  intend for the statute  to apply to, or  for the benefit

of,  out-of-state dealers  such as  Fireside.   As a  result, the

court  concluded  that  RIDOT  properly applied  the  statute  by

excluding Fireside from the new dealership hearings.

          We  agree with  the  district court's  finding on  this

issue.   Taking its cue from the Sixth Circuit, which interpreted

a similar Kentucky statute as excluding out-of-state dealers from

new  dealership hearings, BMW  Stores, Inc. v.  Peugeot Motors of
                                                                 

Am., Inc., 860 F.2d 212 (6th Cir. 1988), the district court based
         

its  analysis on the stated purposes and language of the statute,

the  interpretation of  the statute  by  state regulators  and on

general principles  of statutory  construction.  Because  we find

the  first  two factors  to  be the  relevant  considerations, we

discuss them below.

          Although  R.I.   Gen.  Laws      31-5.1-4.2  does   not

explicitly include or exclude  out-of-state dealers, the declared

policy  of the statute  indicates a  concern for  protecting only

Rhode Island dealers and  residents.  As in  BMW Stores, the  new
                                                       

dealership  licensing  provision  is  aimed  at  protecting  "the

investment of  the existing  new motor vehicle  dealer[s] in  the

                               -9-

community" and safeguarding the "public welfare."  R.I. Gen. Laws

  31-5.1-4.2(b).  BMW  Stores, 860 F.2d at  215 (noting that  the
                             

declared  policy of  the  Kentucky statute  was to  "preserve the

investments  and properties  of  the citizens  of this  state").3

The new dealership  provision is one part of a  set of provisions

concerning the duties, obligations, liabilities and privileges of

licensed   dealers  in   Rhode   Island   and   their   supplying

manufacturers.   R.I. Gen.  Laws.    31-5.1-1  through 31-5.1-20.

None of these duties and obligations apply to Fireside because it

is  not licensed  in Rhode Island.   Accordingly,  the privileges

that  correspond to such duties  and obligations do  not apply to

Fireside  either.    The   new  dealership  provision,  with  its

procedure for  hearings,  is  simply part  and  parcel  of  Rhode

Island's regulation and licensing of local dealerships.  It makes

no  sense,  therefore,  to  apply  Rhode  Island's  comprehensive

regulatory scheme for the benefit of out-of-state dealers.

          Furthermore,   as  in  BMW   Stores,  state  regulatory
                                             

officials have interpreted the  state's new dealership statute as

                    

3   We do not attach  any significance, as does  Fireside, to the
use  of the word "community" in Rhode Island's statute instead of
the words "citizens of this state" in the Kentucky statute.  Both
terms  evidence the legislature's concern with the welfare of the
public  which  it is  charged  with protecting.    Also, Fireside
incorrectly  claims that  the Kentucky  statute differs  from the
Rhode Island  statute  because Kentucky's  does  not state  as  a
purpose  the safeguarding  of the general  public interest.   The
Kentucky  statute  explicitly  states  that its  purpose  is  the
promotion  of  "the  public  interest  and  public  welfare"  and
mentions  as  one of  its concerns  the provision  of "convenient
consumer  care," which  clearly  indicates the  same concern  for
consumers and the public  as the Rhode Island statute.   Ky. Rev.
Stat. Ann.    190.015; 190.047(7)(b).

                               -10-

applying  only  to  in-state   dealers,  an  interpretation  that

deserves some measure of deference.  BMW Stores, 860 F.2d at 215;
                                               

Gallison  v. Bristol School Comm., 493 A.2d 164, 166 (R.I. 1985).
                                 

We disagree with Fireside's claim that RIDOT has not conclusively

determined whether R.I. Gen. Laws   31-5.1-4.2 applies to out-of-

state dealers.   Fireside points  to the fact that,  prior to the

hearing for Smithfield Nissan,  RIDOT promulgated proposed  rules

and  regulations  that included  a  provision,  Section XI,  that

explicitly  excluded  out-of-state  dealers from  protesting  new

dealerships and  participating in hearings.  The  final rules and

regulations,  however, were issued  without adopting  Section XI.

Fireside argues that the failure to adopt Section XI indicates an

intent  to  include out-of-state  dealers  in the  hearings.   We

disagree.

          First of all, the proposed Section XI, while precluding

out-of-state dealers from cross-examining witnesses or presenting

evidence, did allow  for out-of-state dealers to offer  verbal or

written statements  at the hearings  at RIDOT's discretion.   The

proposal thus could be interpreted as granting more participation

rights to  out-of-state dealers than they  would otherwise enjoy.

As a result, we do not  know if the proposal was rejected because

it  was too permissive or  because it was  too restrictive, i.e.,

because it  removed out-of-state participation rights  that RIDOT

thought out-of-state  dealers should  have or because  it granted

new  rights that  RIDOT thought  out-of-state dealers  should not

have.     RIDOT's  failure  to  promulgate  Section  XI  is  thus

                               -11-

inconclusive.  Secondly, RIDOT's current regulations for R.I. 31-

5.1 state that their purpose is:

            (a) . . . to protect the interests of the
            public  when  dealing with  motor vehicle
            dealers in Rhode Island . . . .
                                   

            (b) . . .  to implement the provisions of
            Sections  31-5  and 31-5.1  regarding the
            issuance, suspension and/or revocation of
            such  licenses as well  as the regulation
            of    business   practices    among   the
                                                     
            businesses   seeking  or   holding  those
                                                     
            licenses. (emphasis added)
                    

This  demonstrates RIDOT's intent to  apply R.I. Gen.  Laws   31-

5.1-4.2 only to Rhode Island dealerships.  In any event, the only

evidence we have of RIDOT actually taking a stand on the specific

issue before us is RIDOT's actions in this case.  RIDOT  excluded

Fireside  from the  hearings and thereby  affirmatively expressed

its interpretation  of  R.I. Gen.  Laws    31-5.1-4.2 as  barring

participation of out-of-state dealers in new dealership hearings.

          Fireside maintains that certain language in the statute

expresses an  intent to  include Fireside in  the new  dealership

hearings.    Fireside notes  that  it  falls within  the  literal

definition of  a "new motor vehicle dealer"  inside the "relevant

market area" for purposes of R.I. Gen. Laws   31-5.1-4.2, because

the  definition  of  "new  motor vehicle  dealer"  includes  "any

person"  selling  cars, R.I.  Gen.  Laws    31-5.1-1(C),  and the

"relevant  market area" is the  area within a  twenty mile radius

around an existing  dealer, R.I.  Gen. Laws    31-5.1-1(J).   The

lack of an  explicit statement  that the  "relevant market  area"

stops  at the state border  does not, however,  indicate that the

                               -12-

state affirmatively  intended to include out-of-state  dealers in

licensing hearings.  On the  contrary, the definition of "dealer"

for all of Title 31 of  Rhode Island's General Laws is limited to

persons who  have  an  established place  of  business  "in  this

state."  R.I.  Gen. Laws   31-1-19(a).  Fireside  is correct that

the  definition  of "new  motor vehicle  dealer"  as used  in the

licensing section at  issue here,  R.I. Gen.  Laws    31-5.1-4.2,

does  not contain this limitation.  R.I. Gen. Laws   31-5.1-1(C).

However, the term "relevant  market area," the other key  term in

R.I. Gen. Laws   31-5.1-4.2, is  defined as a twenty mile  radius

"around an existing dealer,"  employing the general term "dealer"
                          

from 31-1-19(a) and not "new motor vehicle dealer" from   31-5.1-

1(C).  One could  thus interpret R.I. Gen.  Laws   31-5.1-4.2  as

granting protest rights only  to Rhode Island dealerships because

only Rhode Island dealers can be in a "relevant market area."

          Fireside also points to  R.I. Gen. Laws    31-5.1-2 for

evidence  that  the licensing  provision applies  to out-of-state

dealers.  R.I. Gen. Laws   31-5.1-2 states:

            Any  person  who   engages  directly   or
            indirectly in  purposeful contacts within
            this   state   in  connection   with  the
            offering or advertising  for sale or  has
            business dealings with respect to a motor
            vehicle within the state shall be subject
            to  the  provisions of  this  chapter and
            shall be  subject to the  jurisdiction of
            the courts of this state, upon service of
            process in accordance with the provisions
            of the general laws.

This provision is not a general  grant of extraterritoriality but

rather an affirmation that parties who are covered by the various

                               -13-

substantive  provisions  in  Chapter   5.1  of  Title  31,  which

regulates manufacturers, dealers and distributors,  cannot escape

enforcement   of   those   provisions   by  claiming   they   are

nonresidents.   If  Fireside's interpretation  were adopted,  the

substantive regulatory provisions in  Chapter 5.1 -- for example,

those  regarding fraud and breach  of warranty --  would apply to

Fireside  and  any other  dealer in  any  other state,  an absurd

result.   Notwithstanding  R.I. Gen.  Laws    31-5.1-2,  one must

still look to the specific  substantive provisions of Chapter 5.1

to see who is covered.  Doing so reveals that   31-5.2 was mainly

directed  toward  out-of-state  automobile manufacturers,  rather
                                                        

than dealers.  A majority of the provisions in chapter 5.1 impose

explicit duties and  obligations on manufacturers, all or most of

whom, presumably,  are,  like Nissan  USA,  from outside  of  the

state.   E.g.,  R.I.  Gen. Laws      31-5.1-4 through  31-5.1-11.
             

Unlike  the  definition  of  "new  motor  vehicle  dealer"  which

includes  generally "any person"  selling cars, R.I.  Gen. Laws  

31-5.1-1(C),  the  definition   of  "manufacturer"   specifically

includes any  person, "resident or nonresident,"  who makes cars.

R.I. Gen. Laws   31-5.1-1(B).  Thus, the Rhode Island legislature

has  clearly  expressed  an   intent  to  regulate   out-of-state

manufacturers when they  do business  in Rhode Island.   No  such

expression  exists with  regard to  out-of-state dealers  selling

cars in another  state.   The absence of  any specification  that

"new  motor vehicle dealers"  can include "nonresidents" confirms

RIDOT's  interpretation  of  R.I.   Gen.  Laws     31-5.1-4.2  as

                               -14-

excluding Fireside from the new dealership hearings.

          Now  that we  have determined  that Rhode  Island's new

dealership  law applies only to in-state  dealers, we can proceed

to the task  of determining whether  RIDOT's action of  excluding

Fireside from  the new  dealership hearings was  a constitutional

exercise of state power.

          A.  Commerce Clause
                             

          The Commerce  Clause, while literally a  grant of power

to  Congress,  also  restricts  states  from  passing  laws  that

interfere with interstate commerce.  Wyoming v. Oklahoma, 112  S.
                                                        

Ct. 789, 800 (1992); New Energy Co. v. Limbach, 486 U.S. 269, 273
                                              

(1988).  "This 'negative' aspect of the Commerce Clause prohibits

economic protectionism --  that is, regulatory  measures designed

to benefit  in-state economic interests by burdening out-of-state

competitors."  New Energy, 486 U.S. at 273-74; see also Hyde Park
                                                                 

Partners, L.P. v. Connolly, 839 F.2d 837, 843 (1st Cir. 1988).
                          

          Laws  that  have  either   the  purpose  or  effect  of
                                                             

discriminating against interstate commerce will be struck down as

unconstitutional unless the state can establish that there is  no

reasonable  alternative method of safeguarding a legitimate local

interest.  Wyoming  v. Oklahoma, 112 S.  Ct. at 800;  New Energy,
                                                                

486  U.S.  at 274;  Maine  v. Taylor,  477 U.S.  131,  138 (1986)
                                    

(citing Hughes v.  Oklahoma, 441  U.S. 322, 336  (1979)).   State
                           

laws  which have  as  their  primary  or  exclusive  purpose  the

promotion of local interests by burdening  out-of-state commerce,

that is, economic protectionism, are subject to a virtual "per se

                               -15-

rule of  invalidity."   Wyoming v. Oklahoma,  112 S.  Ct. at  800
                                           

(quoting Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978)).
                                   

          In  the  absence of  discrimination, state  action that

interferes  with or  burdens interstate  commerce will  be struck

down if  the local  interest is  not very  substantial or  if the

burdens imposed on interstate  commerce are excessive in relation

to the putative benefits of the state's action.  Maine v. Taylor,
                                                                

477  U.S. at 138; Brown-Forman Distillers Corp. v. New York State
                                                                 

Liquor Auth., 476  U.S. 573,  579 (1986); Pike  v. Bruce  Church,
                                                                 

Inc., 397 U.S.  137, 142 (1970); Hyde  Park, 839 F.2d  at 844-45.
                                           

Thus,  when  a  state  law regulates  in-state  and  out-of-state

businesses  evenhandedly,   courts  should  apply   "less  strict

scrutiny"  or a more lenient balancing test than they would apply

in  the  case  of  discrimination  against  interstate  commerce.

Wyoming  v. Oklahoma, 112 S.  Ct. at 800  n.12; Brown-Forman, 476
                                                            

U.S. at 579; Philadelphia v. New Jersey, 437 U.S. at 624.
                                       

            1.  Discrimination Against Interstate Commerce
                                                          

          R.I. Gen. Laws    31-5.1-4.2 does not  have the purpose

of  discriminating against  interstate  commerce.   As  discussed

above, R.I. Gen. Laws   31-5.1 is designed to regulate automobile

dealerships in the  state of Rhode Island,  and R.I. Gen.  Laws  

31-5.1-4.2,  in particular,  is designed  to insure  that certain

conditions  are met before  a new dealership  license is granted.

Rhode Island's  intent is to  protect Rhode Island  consumers and

Rhode  Island  dealers  from  certain  franchising  practices  of

automobile manufacturers  which are  perceived as harmful  to the

                               -16-

local community.  R.I. Gen. Laws   31-5.1-4.2 is not designed  to

promote local dealers at the  expense of out-of-state dealers nor

to  alter the terms at which dealers sell, or consumers purchase,

cars within or outside of Rhode Island.

          In addition,  the exclusion from  licensing hearings of

out-of-state  but not in-state dealers within a given area is not

facially discriminatory against interstate commerce such that "on

its  face [it]  appears to  violate  the cardinal  requirement of

nondiscrimination."   New Energy, 486  U.S. at 274;  Healy v. The
                                                                 

Beer Institute, 491  U.S. 324, 340-41 (1989).   R.I. Gen.  Laws  
              

31-5.1-4.2  is strictly concerned  with licensing  dealerships in

Rhode Island; it does  not, on its  face, regulate any aspect  of

interstate commerce such as the flow of goods across borders, the

sale  of out-of-state goods,  the comparative  cost of  making or

selling  those  goods,  or any  other  aspect  of  the commercial

activity of out-of-state businesses.  Exxon  Corp. v. Governor of
                                                                 

Maryland,  437 U.S. 117, 126  (1978) (noting that  a Maryland law
        

prohibiting producers  and  refiners of  petroleum products  from

operating   retail  service   stations   within  the   state  was

distinguishable  from  laws  discriminating   against  interstate

commerce because the law  "creates no barriers whatsoever against

interstate independent dealers;  it does not prohibit the flow of

interstate  goods, place  added costs  upon them,  or distinguish

between  in-state  and  out-of-state  companies   in  the  retail

market").  Because Rhode Island's new car dealership law does not

facially  apply  to  interstate  commerce,  it  cannot   facially

                               -17-

discriminate against interstate commerce.

          We therefore turn to  the alleged discriminatory effect
                                                                 

of Rhode Island's new dealership  law.  R.I. Gen. Laws    31-5.1-

4.2 does not place burdens on goods or services from out-of-state

or on the out-of-state businesses that produce them.  The statute

concerns  the rights  and  obligations of  licensed Rhode  Island

dealerships, a group that  does not include Fireside.   It simply

has no application whatsoever to Fireside.  The statute in no way

hinders Fireside's ability  to sell cars to  Rhode Islanders; nor

does  it increase  Fireside's cost of  doing business  with Rhode

Island.   These  facts  distinguish Rhode  Island's statute  from

those  statutes which the Supreme Court  has commonly struck down

because  of their discriminatory effects.   See, e.g., Healy, 491
                                                            

U.S. at 337-40 (striking  down Connecticut statute requiring beer

shippers to affirm that their prices are no higher than prices in

bordering states  because the statute affected  prices outside of

the state);  Hughes  v. Oklahoma,  441  U.S. 322,  336-38  (1979)
                                

(striking down  Oklahoma statute prohibiting the  sale of minnows

outside  of the  state because  it blocked  the flow  of commerce

through state borders);  Philadelphia v. New Jersey,  437 U.S. at
                                                   

625-28 (striking down New Jersey law prohibiting the  shipment of

garbage into the state  for the same reason); Hunt  v. Washington
                                                                 

State  Apple Advertising  Comm'n,  432 U.S.  333, 349-352  (1977)
                                

(striking  down  North   Carolina  law   that  restricted   grade

identifications  on  closed   apple  containers,  including   the

favorable grade for Washington apples, because the law raised the

                               -18-

cost  of doing  business in North  Carolina for  Washington apple

growers  and  stripped  away  the competitive  advantage  of  the

Washington apple industry).  Rhode Island's law clearly  does not

have the effect of burdening out-of-state businesses.

          Instead, this  case falls  into the "local  benefit" or

"subsidy"  category of cases -- that is, cases dealing with state

laws that confer a  benefit on businesses within the  state while

withholding  the  benefit  from  similarly  situated out-of-state

businesses.   Fireside claims  that R.I.  Gen. Laws    31-5.1-4.2

grants to  Rhode Island  dealerships the privilege  of protesting

the establishment  of new car  dealerships at locations  close to

their existing dealerships, thus  allowing them an opportunity to

limit their competition.  At the same time, Fireside argues, R.I.

Gen. Laws   31-5.1-4.2 denies the same  privilege to out-of-state

dealers  in  the  same competitive  area.    The  result of  such

discriminatory  effects,  Fireside  alleges,   is  to  drive  the

establishment of  new car dealerships out  towards Rhode Island's

borders  where  they  can   divert  businesses  from  dealers  in

neighboring  states   who  have   no  standing  to   protest  the

establishment of such dealerships at a good-cause hearing.

          Supreme    Court   jurisprudence    on   discriminatory

privileges for  in-state business  under the Commerce  Clause is,

unfortunately, somewhat  inconsistent.  On the  one hand, several

state laws  designed to promote  local industry have  been struck

down by the Court.  E.g., Wyoming v. Oklahoma, 112  S. Ct. at 800
                                             

(striking down Oklahoma  law reserving a segment of  the Oklahoma

                               -19-

coal  market for  Oklahoma-mined coal); New  Energy, 486  U.S. at
                                                   

273-80 (striking down Ohio tax credit for ethanol produced in the

state); Bacchus  Imports,  Ltd.  v.  Dias, 468  U.S.  263  (1984)
                                         

(striking down Hawaiian law  exempting local producers of certain

liquors from general  liquor tax).  On the other  hand, the Court

has  repeatedly  affirmed  the long-recognized  proposition  that

states may directly subsidize  local industry as long as  they do

so  without burdening  the ability  of interstate  competitors to

sell their products  in the state.  New Energy,  486 U.S. at 278;
                                              

Bacchus, 468 U.S. at  271; Hughes v. Alexandria Scrap  Corp., 426
                                                            

U.S.  794, 814-17  (1976) (Stevens.,  J., concurring);4  see also
                                                                 

West Lynn Creamery, Inc.  v. Healy, 62 U.S.L.W. 4518,  4525 (June
                                  

17,  1994) (Scalia, J., concurring)  (describing this area of the

Court's  Commerce  Clause jurisprudence  as  a  "quagmire").   As

Justice Scalia stated in New Energy:
                                   

            The Commerce Clause does not prohibit all
            state   action   designed  to   give  its
            residents    an    advantage    in    the
            marketplace,  but  only  action  of  that
            description   in   connection  with   the
                                                     
            State's    regulation    of    interstate
                                                     
            commerce.      Direct  subsidization   of
                    
            domestic industry does not ordinarily run
            afoul of that prohibition; discriminatory
            taxation  of  out-of-state  manufacturers

                    

4  Although  the majority decided  Alexandria Scrap according  to
                                                   
what has  become known  as the  "market participant"  doctrine --
i.e.,  normal Commerce Clause  scrutiny does  not apply  when the
state enters  the market as a buyer, seller, or employer to favor
local  citizens,   Alexandria Scrap,  426 U.S.  at 805-10  -- the
                                   
majority also  placed some emphasis  on the fact  that Maryland's
beneficial treatment of only in-state businesses, while affecting
the flow  of interstate commerce,  did not "interfere[]  with the
natural  functioning  of  the  interstate  market  either through
prohibition or through burdensome regulation."  Id. at 806.
                                                  

                               -20-

            does.

New Energy, 486 U.S. at 278 (emphasis in original).
          

          Although we see no practical difference between the tax

break offered to  local liquor producers in Bacchus, for example,
                                                   

and  a  "direct"  cash  subsidy to  those  same  industries (thus

blurring  the imaginary  line  between discriminatory  privileges

that  burden  interstate commerce  and  those that  do  not), the

Court's  focus on laws "in connection with the State's regulation

of  interstate commerce"  appears to  invoke the  Commerce Clause

only  where the challenged law  relates to taxes,  prices, or the

conditions  and  costs  imposed  on  an out-state-business  doing

business in  the state.  See  Exxon Corp., 437 U.S.  at 126; West
                                                                 

Lynn Creamery, 62 U.S.L.W. at 4520-22.
             

          R.I. Gen. Laws   31-5.1-4.2 does bestow  the benefit of

protesting new  dealerships on existing Rhode Island dealers in a

competitive area which is not simultaneously extended to Fireside

or other  out-of-state dealers  who are also  in the  competitive

area.  This "advantage  in the marketplace," however, is  not one

"in  connection   with  the  state's   regulation  of  interstate

commerce."  New Energy, 486 U.S. at 278.  The creation of new car
                      

dealerships in Rhode Island does not  relate to the price of  the

automobiles being sold, the taxes paid for them, or the costs and

conditions of  selling them.  Moreover,  Rhode Island's procedure

for   protesting   new   dealerships   does  not   diminish   the

opportunities  for Massachusetts  dealers to  sell cars  to Rhode

Island customers.  Rhode Island's efforts to license and regulate

                               -21-

in-state dealers is thus far afield from protectionist laws  that

serve  to  enhance  economic  prosperity  of  local  citizens  by

hindering the  free flow of  products or by  affording privileges

provided at the expense of out-of-state businesses.

          Fireside claims  that denying it  the protest privilege

provided  by R.I. Gen. Laws   31-5.1-4.2 will have a differential

effect on the number  of competitors a given car  dealership will

face,  ultimately reducing the number of Rhode Islanders who will

travel  to Massachusetts to buy  shiny new Nissan  380-Z's.  This

diversionary effect is  present in all  subsidy cases and,  thus,

cannot by  itself establish a  violation of the  Commerce Clause.

In this case, the  diversion of business  does not result from  a

comparative   advantage  in   the  marketplace  created   by  the

challenged state action that  would not normally exist in  a free

market  for  new car  sales.   Consequently,  this case  does not

involve a  practice that even comes  close to the types  of local

subsidies that  raise  Commerce Clause  concerns.   See  Hunt  v.
                                                             

Washington State Apple,  432 U.S. at 351-52  (striking down North
                      

Carolina  law because  it stripped  away advantages  that out-of-

state competitor  would normally have  in the free  market); Hyde
                                                                 

Park, 839 F.2d  at 843  ("state action must  not 'neutralize  the
    

economic consequences of free  trade among the states'") (quoting

Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511, 526 (1935)).
                              

          The  mere act  of  granting a  dealership license  that

might  not otherwise  be  granted had  out-of-state dealers  been

allowed  to protest  at the  hearing does not  mean that  the new

                               -22-

dealership will have  some preferential ability  to sell cars  to

Rhode Island customers.   Similarly, nothing in R.I. Gen.  Laws  

31-5.1-4.2 affects Fireside's ability to sell a shinier Nissan at

a  better price, and a Rhode Islander's ability to take advantage

of  such bargains.  The  effect of the law  is not to dictate the

terms of competition between  businesses, but rather, to regulate

the  existence of  competitors.   Given these  circumstances, the

fact that some theoretical  group of Rhode Island dealers  in the

interior of the state face  less competition from new dealerships

allegedly  concentrated  on the  border  is  not significant  for

purposes of a  Commerce Clause analysis.   The alleged beneficial

effect of R.I. Gen. Laws    31-5.1-4.2 is too far afield from the

protectionism that the Commerce Clause prohibits.

          This  case is  distinguishable  from  the  Bendix  case
                                                           

relied on by Fireside for the proposition that the withholding of

"legal defenses or like  privileges" from out-of-state businesses

discriminates against interstate commerce.  Bendix Autolite Corp.
                                                                 

v. Midwesco  Enters., Inc., 486 U.S. 888, 893 (1988).  In Bendix,
                                                                

the Supreme Court  struck down  an Ohio statute  that tolled  the

statute of  limitations (i.e. suspended  the running of  time) on

fraud and  breach of contract  actions for  any foreign  business

that was not  "present" in the  state and  had not designated  an

agent for  service of process.   Id.  To begin  with, the Supreme
                                   

Court  never   determined  whether   or  not  the   Ohio  statute

discriminated against interstate commerce.  Id. at 891.  Instead,
                                              

the Court  based its finding on a balancing of the burdens of the

                               -23-

law  with the  justifications for the  law.   Id.   In any event,
                                                

Bendix is  not applicable  to the  present case  for a number  of
      

reasons.

          First,  the Bendix  Court found  that the  Ohio statute
                            

places a "significant burden" on out-of-state businesses  because

it "forces  a foreign corporation  to choose between  exposure to

the  general  jurisdiction of  Ohio courts  or forfeiture  of the

limitations  defense,  remaining  subject  to  suit  in  Ohio  in

perpetuity."  Id.  at 893.   The statute thus affected  the costs
                

and conditions of doing  business in the state relative  to local

businesses.

          As  already noted, that is not the case here.  Fireside

does not face any increased liability, or other burden that would

increase its cost of  doing business, by virtue of  its exclusion

from the licensing hearings.   The only effect of  R.I. Gen. Laws

  31-5.1-4.2 on Fireside is a relative  limitation on its ability

to restrict the number  of competitors it will face,  an interest

beyond the purview  of the  Commerce Clause.   Legal defenses  in

contract  or   fraud  actions   are  simply  not   comparable  to

participation  in a  local hearing  for the  granting of  a state

dealership  license to a completely different  party.  The former

involves "an integral part of the legal system . .  . relied upon

to project the liabilities of persons and  corporations active in

the commercial sphere."  Id.  The latter involves local licensing
                           

proceedings  that  have  nothing  to  do  with  the  out-of-state

business beyond its concern over the creation of a competitor.

                               -24-

          Furthermore, the  alleged protest  right in  this case,

unlike  the statute of limitations defense in Bendix, is not part
                                                    

of a  statutory scheme  that applies to  out-of-state businesses.

As discussed above, R.I. Gen. Laws   31-5.1-4.2 is concerned with

local  licenses and simply has  no application to  Fireside.  The

statute of limitations defense, however, is a part of the general

scheme  of  civil  commercial   liability  that  applies  to  all

companies with minimum contacts  to the state.  The  Ohio statute

was  thus purposefully  directed  to  out-of-state businesses  to

revoke  a procedural defense they  would normally enjoy.   In the

present case,  no benefit  was revoked  or withheld  from out-of-

state  parties because R.I. Gen. Laws    31-5.1-4.2 was concerned

solely with local  dealership licensing and was never intended to

afford any benefits to out-of-state dealers in the first place.

            2.  Impermissible Burdening of Interstate Commerce
                                                              

          Because we find no  discriminatory purpose or effect on

interstate commerce  from R.I.  Gen. Laws    31-5.1-4.2, we  must

apply the more  lenient Pike balancing test  to determine whether
                            

the law  imposes an  unreasonable burden on  interstate commerce.

Laws that have  only an incidental impact  on interstate commerce

will  be upheld  so  long as  the  burden imposed  on  interstate

commerce is  not clearly  excessive in  relation to the  putative

benefits.   Brown-Forman, 476  U.S. at  579; Philadelphia  v. New
                                                                 

Jersey, 437 U.S. at 623-24; Pike,  397 U.S. at 142.  "'[T]here is
                                

a residuum of power in  the state to make laws governing  matters

of  local  concern  which  nevertheless in  some  measure  affect

                               -25-

interstate  commerce  or even,  to  some  extent, regulate  it.'"

Kassel  v.  Consolidated Freightways  Corp.,  450  U.S. 662,  669
                                           

(1981) (quoting  Southern Pacific Co.  v. Arizona, 325  U.S. 761,
                                                 

767 (1945)).

          R.I. Gen. Laws   31-5.1-4.2 burdens interstate commerce

only minimally,  if at all.   As discussed above,  no burdens are

placed  on an out-of-state dealer's ability to sell cars to Rhode

Islanders.  The only effect on interstate commerce, theoretically

anyway, appears to  be a decrease  in the number of  Rhode Island

customers who go to Massachusetts to buy Nissans because  out-of-

state  dealers are not able  to protest the  establishment of new

Rhode  Island dealerships  near  the border.   This  diversionary

effect,  however,  attributable  to  increased  competition  from

competitors who  gain no  special competitive advantage  from the

state action, does not  implicate the Commerce Clause.   The free

flow of goods remains  unaffected by R.I. Gen. Laws    31-5.1-4.2

and  any changes in that flow  are due solely to consumers acting

within  the free market.   See Minnesota v.  Clover Leaf Creamery
                                                                 

Co., 449 U.S. 456, 473-74 (1981) (upholding Minnesota law banning
   

the  use  of plastic  milk  containers  even though  the  statute

benefitted  the  predominantly  local pulpwood  producers  at the

expense  of  the predominantly  out-of-state  plastics industry);

Exxon  Corp.,  437 U.S.  at  126-28  (upholding Maryland  statute
            

prohibiting  producers  and refiners  of petroleum  products from

operating retail service stations within the state partly because

"in-state independent dealers will have no competitive  advantage

                               -26-

over out-of-state dealers").

          Given the lack of  any significant burden on interstate

commerce  in  this  case,  we  find  Rhode  Island's interest  in

excluding out-of-state parties from  participating in a matter of

strictly  local   concern  --  the  licensing   of  Rhode  Island

dealerships -- more than sufficient to pass Constitutional muster

under the Pike balancing  test.  Certainly the state's  desire to
              

protect  local dealers  and  consumers  from harmful  franchising

practices is  a lawful legislative goal.   Even if we confine our

analysis  to  state  interests  that  are  directly  tied  to the

restriction  on who  can  participate in  hearings, however,  the

statute survives the balancing test.  Rhode Island's concerns for

administrative convenience and  the reasonable belief  that state

citizens  are  best  qualified   to  represent  local   interests

sufficiently  justify  the   state's  exclusion  of  out-of-state

dealers from the new dealership hearings.

          B.  Other Constitutional Claims
                                         

            1.  Due Process
                           

          Fireside claims that RIDOT's exclusion of Fireside from

new  dealership  hearings deprived  it  of  a protected  property

interest  without procedural  due  process.   The district  court

rejected  this claim,  finding that  Fireside had  no protectable

interest in  pursuing  its business  free from  competition.   On

appeal, Fireside argues that it has a protected property interest

in the form of a legitimate claim of entitlement to  be free from

"excessive intrabrand competition" in the market for new Nissans.

                               -27-

Fireside maintains that R.I. Gen. Laws   31-5.1-4.2 granted  this

interest  to Fireside  when  it bestowed  protest  rights on  all

dealers within  the "relevant market  area" and  that RIDOT  then

deprived Fireside of  this right when  it excluded Fireside  from

the hearings.

          The protections  of  procedural  due  process  are  not

triggered  unless Fireside  can show  it has  been deprived  of a

protectable liberty or property interest.  Cleveland Bd. of Educ.
                                                                 

v.  Loudermill, 470  U.S. 532,  538 (1985);  Board of  Regents v.
                                                              

Roth, 408 U.S. 564, 569 (1972).  Property interests "'are created
    

and   their  dimensions   are  defined   by  existing   rules  or

understandings that stem from an independent source such as state

law.'"  Loudermill, 470  U.S. at 538 (quoting  Roth, 408 U.S.  at
                                                   

577).

          Fireside does not have  a protectable property interest

in  being  free from  excessive  intrabrand  competition or  from

participating in Rhode  Island's new dealership hearings  because

R.I.  Gen. Laws   31-5.1-4.2  does not confer  any protections or

rights of  participation on  out-of-state  dealers.   As we  have

already found, Rhode  Island's dealership licensing  statute only

applies  to dealerships within the state of Rhode Island and does

not  have, nor has it  ever had, any  application to out-of-state

dealers  like  Fireside.   Consequently,  RIDOT  did not  deprive

Fireside  of  any existing  property  interest  when it  excluded

Fireside  from its  hearing  on the  establishment of  Smithfield

Nissan.    The district  court  correctly  found  no due  process

                               -28-

violation in this case.

            2.  Equal Protection
                                

          Fireside  finally  claims  that  RIDOT's  exclusion  of

similarly  situated  out-of-state  dealers  from  new  dealership

hearings  is  an  impermissible  classification  under  the Equal

Protection Clause of the Constitution.

          Absent a suspect classification or a fundamental right,

courts  will   uphold  economic   and  social   legislation  that

distinguishes between  two similarly  situated groups as  long as

the  classification  is   rationally  related  to  a   legitimate

government objective.  Nordlinger v. Hahn, 112 S. Ct. 2326, 2331-
                                         

32  (1992);  Schweiker  v.  Wilson,  450  U.S.  221, 230  (1981);
                                  

Dandridge v. Williams, 397 U.S. 471, 485 (1970); LCM Enterprises,
                                                                 

Inc. v. Town of Dartmouth,  14 F.3d 675, 678-79 (1st Cir.  1994).
                         

A state statute will survive this "rational basis" scrutiny under

the  Equal Protection  Clause  as long  as  "any state  of  facts

reasonably  may be conceived to justify it."  Dandridge, 397 U.S.
                                                       

at 485 (quoting McGowan  v. Maryland, 366 U.S. 420,  426 (1961));
                                    

accord LCM Enters., 14 F.3d at 679 (collecting cases).  A state's
                  

classification is not unconstitutional simply because it "'is not

made  with mathematical nicety or because  in practice it results

in some  inequality.'"    Dandridge, 397  U.S.  at  485  (quoting
                                   

Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78 (1911)).
                                    

          Fireside claims that  RIDOT's application of R.I.  Gen.

Laws   31-5.1-4.2 is not rationally related to the stated goal of

protecting Rhode  Island consumers and  Rhode Island  dealerships

                               -29-

from certain franchising  practices of automobile  manufacturers.

Fireside  argues that  excluding  out-of-state  dealers from  the

good-cause hearings  not  only  fails  to further  the  goals  of

protecting  consumers and dealers  but actually  undermines those

goals.   According to  Fireside, its exclusion  from the hearings

gives Rhode Island regulators  a distorted view of the  "relevant

market  area" by  understating  the  existing  competition  among

automobile franchises, resulting in  licensing decisions that are

detrimental  to Rhode  Island consumers  and dealers.   The  only

purpose for excluding  out-of-state dealers, Fireside posits,  is

the illegitimate one of economic protectionism.

          We  disagree with  Fireside's  contention that  RIDOT's

exclusion of Fireside  bears no rational relationship to the goal

of protecting Rhode Island consumers and car  dealers.  Excluding

out-of-state parties  from hearings on matters  of strictly local

concern  is  a  reasonable  way  to  conduct  state  governmental

business.  We  find it  reasonable for Rhode  Island to  believe,

rightly  or wrongly, that members  of its own  community are best

qualified  to  represent   community  interests  to   regulators,

including interests  concerning the  effect  of a  manufacturer's

efforts to  establish a new  dealership on  existing dealers  and

consumers.    Out-of-state parties  may  be more  likely  to have

interests  that conflict  with local  interests.   Further, Rhode

Island's interest in  administrative convenience may justify  its

decision to cut off  the number of people participating  in state

decisionmaking  at  the  logical  point  of  state   citizenship.

                               -30-

Whether  more information  concerning out-of-state  dealers would

better  serve Rhode  Island's  goal of  protecting consumers  and

dealers  is irrelevant  for purposes  of rational  basis analysis

under  the Equal  Protection  Clause.    In  any  event,  we  are

skeptical  of the  proposition  that Rhode  Island consumers  and

dealers  are unable to fully  represent their own  interests at a

hearing without the participation of out-of-state dealers.  If an

existing  Rhode Island  dealer or  a consumer  group finds  it in

their interest  to present  information about  other out-of-state

dealerships, nothing in the law prevents them from doing so.

          Finally, we find that Rhode Island did not purposefully

discriminate against Fireside by excluding it from new dealership

hearings for the sole purpose of furthering the illegitimate goal

of economic protectionism.  See Snowden v. Hughes,  321 U.S. 1, 8
                                                 

(1944).   As already discussed above, R.I. Gen. Laws   31-5.1-4.2

was designed and  intended to regulate  and protect licensed  car

dealerships  in Rhode Island and was not intended nor designed to

benefit   local  businesses  at   the  expense   of  out-of-state

competitors.   We therefore  uphold the district  court's holding

that RIDOT did not violate Fireside's constitutional rights.

          Affirmed.
                  

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