Court Opinion

ID: 6346576
Source: CourtListenerOpinion
Date Created: 2022-06-03 14:05:47.024691+00
Date Added: 2024-06-11T09:18:11.690047
License: Public Domain

IN THE SUPREME COURT OF IOWA

                                 No. 20–0837

              Submitted February 23, 2022—Filed June 3, 2022

SIOUX CITY TRUCK SALES, INC.,

      Appellant,

vs.

IOWA DEPARTMENT OF TRANSPORTATION and PETERBILT MOTORS
COMPANY,

      Appellees,

and

ALLSTATE PETERBILT OF CLEAR LAKE,

      Intervenor.

      On review from the Iowa Court of Appeals.

      Appeal from the Iowa District Court for Polk County, William P. Kelly,

Judge.

      A franchisee appeals from a district court ruling that affirmed on judicial

review the Iowa Department of Transportation’s decision approving the

franchiser’s application for a new dealership franchise. DECISION OF COURT

OF APPEALS VACATED; DISTRICT COURT JUDGMENT AFFIRMED.
                                         2

      Appel, J., delivered the opinion of the court, in which Christensen, C.J.,

and Waterman and Mansfield, JJ., joined. McDonald, J., filed a dissenting

opinion, in which Oxley and McDermott, JJ., joined.

      Jeffrey M. Goldstein (argued) of Goldstein Law Firm, PLLC, Washington,

D.C., pro hac vice, and Anthony P. Lamb (until withdrawal) and Ryland Deinert

of Klass Law Firm, L.L.P., Sioux City, for appellant.

      Thomas J. Miller, Attorney General, and Michelle E. Rabe (argued),

Assistant Attorney General, for appellee Iowa Department of Transportation.

      Stephen E. Doohen of Whitfield & Eddy, P.L.C., Des Moines, and Mark T.

Clouatre (argued), John P. Streelman, and Jacob F. Fischer of Nelson Mullins

Riley & Scarborough LLP, Denver, Colorado, pro hac vice, for appellee Peterbilt

Motors Company.

      Joseph G. Gamble of Duncan Green, P.C., Des Moines, and John N.

Bisanz, Jr., of Henson & Efron, P.A., Minneapolis, Minnesota, pro hac vice, for

intervenor Allstate Peterbilt of Clear Lake.
                                       3

APPEL, Justice.

      In this case, we consider the scope of the term “community” when the Iowa

Department of Transportation (DOT) considers whether “good cause” exists to

permit a franchiser to create dueling franchises in a geographic area under Iowa

Code section 322A.4 (2021). The question boils down to this: in considering

whether the establishment of an additional franchisee in a geographic area is in

the public interest, is the DOT required to consider the investments made by the

existing franchisee and the impact of the action on retail motor sales solely in

the areas where the existing franchisee and the additional franchisee would

compete, or must the DOT consider the investment and impacts across the entire

geographic area of the existing franchisee?

      The question turns on the meaning of the term “that community” in Iowa

Code sections 322A.4 and 322A.16. The franchiser in this case argues that the

phrase “that community” must mean the twenty-three-county geographic area

in which the existing franchisee and the proposed additional franchisee would

compete. The existing franchisee, however, claims that the phrase “that

community” means the entire seventy-one-county area in which the existing

franchise conducts business, even though the existing franchisee and the

proposed new franchisee would compete only in twenty-three of the seventy-one

counties.

      The existing franchisee’s argument is based upon Iowa Code section

322A.1(2), which provides that the term “community” in the statute means “the

franchisee’s area of responsibility as stipulated in the franchise.” Iowa Code
                                          4

§ 322A.1(2). But the franchiser notes that the statutory definition does not apply

where “the context otherwise requires.”

      Both the Administrative Law Judge (ALJ) and the DOT ruled in favor of the

franchiser’s interpretation, concluding that the twenty-three-county area where

the additional franchisee would compete with the existing franchisee was the

relevant geographic area to consider when determining the presence of “good

cause” under Iowa Code section 322A.4. Using the smaller geographic area, the

ALJ and the DOT found that good cause existed for the additional franchisee.

      The existing franchisee sought judicial review of the agency action, which

was affirmed by the district court. The court of appeals reversed the district

court, holding that the DOT should have applied the statutory definition of

community and that, as a result, the DOT erred in considering the impacts of

the additional franchise only in the twenty-three counties where the new

franchisee would compete with the existing franchisee.

      We granted further review. For the reasons expressed below, we vacate the

decision of the court of appeals and affirm the judgment of the district court.

      I. Background Facts and Proceedings.

      A. Overview of the Facts. Peterbilt Motors Company (Peterbilt) is a truck

manufacturer that distributes its products through a network of fifty-five

dealership groups. Sioux City Truck Sales (SCTS) is one of Peterbilt’s dealership

groups—operating in Sioux City, Altoona, and Council Bluffs, Iowa, and in

Lincoln and Norfolk, Nebraska.
                                        5

      Under Peterbilt and SCTS’s dealer agreement, Peterbilt is the franchiser

and SCTS is the franchisee. Pursuant to the agreement, SCTS agrees to sell and

provide service for Peterbilt’s products in its assigned, nonexclusive area of

responsibility (AOR). Under the agreement, Peterbilt, in its sole discretion, may

appoint additional dealers in the area upon providing SCTS with a 180-day

notice.

      SCTS’s AOR includes counties in Nebraska and seventy-one counties in

Iowa. Included in SCTS’s Iowa AOR are twenty-three counties in the Clear Lake

area. The Clear Lake area is located in close proximity to Interstate 35 and

experiences heavy truck traffic. Further, the Clear Lake area is more than 100

miles from any other Peterbilt dealer location.

      Peterbilt later developed a proprietary engine that it believed would require

additional service locations within SCTS’s AOR. Beginning in 2010, Peterbilt

recommended that SCTS develop dealership locations in both Lincoln, Nebraska

and Clear Lake, Iowa to ensure an adequate dealer network to service Peterbilt’s

engines. SCTS responded to Peterbilt’s request by opening a dealership in

Lincoln, but not in the Clear Lake area.

      On December 12, 2012, Peterbilt sent a letter to SCTS identifying Clear

Lake as an area that needed a dealership and asked SCTS to take action.

Peterbilt subsequently made repeated requests related to opening a dealership

in the Clear Lake market but SCTS remained noncommittal. Peterbilt then

prepared what it called a “White Spot” report with various metrics to show that

a full-service dealership would be profitable and welcome by the Clear Lake area
                                         6

market. Again, SCTS’s response in April 2015, showed that it had not made any

decisions about Clear Lake.

      In June of 2016, Peterbilt met with SCTS and indicated that the need for

a dealership in Clear Lake was urgent enough that if SCTS did not want to open

a dealership there, another party would be found to do so. Eventually, Peterbilt

sent a letter of dual assignment on November 1. In response, SCTS proposed to

open a parts-only store in Clear Lake, noting in its email to Peterbilt: “[W]e could

not find an existing facility in the Clear Lake area with service bays.” SCTS’s

attempt to salvage the situation, however, did not succeed as Peterbilt was not

interested in a parts-only store that did not include services on Peterbilt

equipment. Despite not having Peterbilt’s approval as required under the

agreement, SCTS opened a parts-only store in Clear Lake.

      On August 18, 2017, after the contractual 180-day notice of intent to dual

assignment had passed, Peterbilt sought approval from the DOT under Iowa

Code section 322A.4 to appoint Allstate as a dealer in the Clear Lake area.

      B. Department of Inspection and Appeals ALJ Finding. After a

three-day hearing and canvassing the extensive record, an ALJ found that as of

November 1, 2016, good cause existed for an additional franchise in the Clear

Lake area under Iowa Code sections 322A.4 and 322A.16. See Iowa Code

§§ 322A.4, .16. The ALJ further found that good cause was not affected by

SCTS’s later-expressed willingness to add a parts-and-service dealership

because Peterbilt had a legitimate business concern that SCTS’s willingness was

only nominal in nature. Notably, the ALJ considered the impacts of the additional
                                         7

franchisee only in the twenty-three counties in which the new franchisee would

be competing with the existing franchisee, not the larger seventy-one-county

area in Iowa and additional territory in Nebraska that was within SCTS’s AOR.

      C. Appeal to the Iowa DOT. On appeal, SCTS argues that the ALJ erred

in using an incorrect definition of “community” in its analysis under sections

322A.4 and 322A.16. SCTS claimed that based on the definition in Iowa Code

section 322A.1(2), the community in question should be the entire seventy-one-

Iowa-county portion of SCTS’s AOR, not the Clear Lake community which only

encompassed twenty-three counties as the ALJ understood it.

      The DOT agreed with the ALJ’s interpretation of community as limited to

those counties within SCTS’s AOR that were subject to dual assignment.

Specifically, the DOT found that there was no dispute that SCTS’s entire AOR,

including the areas in Nebraska and seventy-one Iowa counties, was not being

subject to dual assignment. Rather, only twenty-three counties were included in

the Clear Lake area where Peterbilt sought approval for new a franchisee.

      Further, the DOT reasoned that consideration of the good cause factors

could only be meaningful if community was defined in the same way for both

entities, as SCTS’s entire AOR was not subject to dual assignment. As a result,

the DOT concluded that the only logical community to be used for analysis would

be the area subject to dual assignment, meaning the twenty-three-county Clear

Lake area. As a result, the DOT affirmed the ALJ’s decision in favor of Peterbilt.

      D. District Court Ruling on Judicial Review of Agency Action. Upon

judicial review, the district court affirmed the DOT’s decision granting Peterbilt’s
                                        8

request. On the issue of the correct legal interpretation of community under Iowa

Code sections 322A.4 and 322A.16, the district court held that the phrase “that

community” in Iowa Code section 322A.16 referred to the twenty-three-county

Clear Lake area. The district court reasoned that the legislature used modifiers

such as “any” and “that” before “community” to qualify the meaning of

community from the entire AOR to the narrower area subject to dual assignment.

See Iowa Code §§ 322A.4, .16. The district court found the agency’s reading of

chapter 322A “properly capture[d] the public interest in establishing and

maintaining for consumers continued and adequate access to dealer services in

all relevant and appropriate areas,” and was not “irrational, illogical, or wholly

unjustifiable.”

      E. Decision of the Court of Appeals. On appeal, the court of appeals

focused solely on the correct statutory interpretation of the word “community”

under chapter 322A. The court of appeals held that the agency erred by not

applying the statutory definition of community in determining good cause under

Iowa Code section 322A.4. The court of appeals reasoned that the agency as well

as the district court’s context-based and fact-driven approach would “render the

definitional section meaningless.” As a result, the court of appeals held that the

agency erred in not considering the implications of the additional franchise over

the entire seventy-one counties of SCTS’s AOR.

      F. Issues on Appeal. The only issue raised by SCTS in this appeal is

whether the DOT used the proper definition of “community” in evaluating

Peterbilt’s application under Iowa Code section 322A.4. SCTS contends that,
                                        9

under the statute, community is specifically defined as “the franchisee’s area of

responsibility as stipulated in the franchise.” Id. § 322A.1(2). SCTS argues that

the statute compels that the community in question should be the entire

seventy-one-county AOR, and not just the twenty-three-county Clear Lake area.

Specifically, SCTS points out that the word “community” is mentioned multiple

times in the entire chapter 322A, and that courts should give identical words

identical meaning when used in several places in a chapter. SCTS further asserts

that the district court erred in overemphasizing the terms “any” and “that” in

construing sections 322A.4 and 322A.16.

      Peterbilt responds by noting that SCTS fails to recognize that the statutory

definition of community applies “unless the context otherwise requires.” Id.

§ 322A.1. Further, Peterbilt asserts that there is no showing that the relevant

community under Iowa Code section 322A.1(2) is that of the existing franchisee

and not the proposed franchisee. Peterbilt argues that consideration of good

cause and public interest by focusing on the area of competition makes the most

sense. According to Peterbilt, it would make no sense for the DOT to consider

investments or markets in Nebraska in determining whether there is good cause

to open an additional franchisee in the twenty-three Iowa counties surrounding

Clear Lake.

      II. Standard of Review.

      Decisions of the DOT are subject to judicial review under Iowa Code

chapter 17A. Midwest Auto. III, LLC v. Iowa Dep’t of Transp., 646 N.W.2d 417,

421 (Iowa 2002) (citing Peterson v. Iowa Dep’t of Transp., 508 N.W.2d 689, 691
                                        10

(Iowa 1993)). No party has suggested that the legislature has vested

interpretation of law in the discretion of the agency. Iowa Code § 17A.19(10)(c).

Therefore, we review the agency’s interpretation for errors at law. Id.

      III. Discussion.

      A. Overview of the Statutory Framework. As we observed thirty-five

years ago in Beckman v. Carson, the Iowa legislature passed the Motor Vehicle

Franchisers Act, codified in chapter 322A, “to provide for fair trade practices by

motor vehicle franchisers.” 372 N.W.2d 203, 207 (Iowa 1985) (quoting 1970 Iowa

Acts ch. 1160, preamble).

      A reading of the preamble of the Motor Vehicle Franchisers Act shows that

the promotion of fair trade practices is consumer protection oriented. See 1970

Iowa Acts. ch. 1160, preamble. The preamble begins by declaring that public

interests affect the sale and distribution of motor vehicles. Id. Buyers of motor

vehicles need to be able to trust and have confidence that services will continue

to be available even after the purchase. Id. It further emphasizes that access to

motor vehicle service is important to highway safety. Id. At the same time, the

act recognizes that allowing an additional dealership of the same brand in a

community may hinder the dealerships from providing efficient and proper

service. Id. As such, motor vehicle manufacturers and distributors have an

obligation to establish good cause before terminating a franchise agreement or

adding additional dealerships that may impact locally available services. Id.

      The parties agree that Peterbilt’s proposed action is to add an additional

franchise for the purpose of establishing an additional motor vehicle dealership
                                        11

in the Clear Lake area. Where additional franchisees are added to an area served

by an existing franchisee, the relevant provisions are Iowa Code section 322A.4

and Iowa Code section 322A.16.

      Iowa Code section 322A.4 provides a franchiser seeking to add an

additional franchisee in a geographic area where there is already an existing

franchisee establish that the action is supported by “good cause” and is in “the

public interest.” Specifically, Iowa Code section 322A.4 provides:

              No franchiser shall enter into any franchise for the purpose of
      establishing an additional motor vehicle dealership in any
      community in which the same line-make is then represented, unless
      the franchiser has first established in a hearing held under the
      provisions of this chapter that there is good cause for such
      additional motor vehicle dealership under such franchise, and that
      it is in the public interest.

(Emphasis added.)

      In considering whether good cause exists for entering into an additional

franchise for the same line-make, Iowa Code section 322A.16 requires the

department of inspections and appeals to take into account several factors,

including but not limited to:

           1. Amount of business transacted by other franchisees of the
      same line-make in that community.

            2. Investment necessarily made and obligations incurred by
      other franchisees of the same line-make, in that community, in the
      performance of their part of their franchises.

            3. Permanency of the investment.

             4. Effect on the retail motor vehicle business as a whole in
      that community.

            5. Whether it is injurious to the public welfare for an
      additional franchise to be established.
                                      12

           6. Whether the franchisees of the same line-make in that
     community are providing adequate consumer care for the motor
     vehicles of the line-make which shall include the adequacy of motor
     vehicle service facilities, equipment, supply of parts and qualified
     service personnel.

(Emphasis added.)

     Additionally, Iowa Code section 322A.11 provides that certain factors

cannot be considered in determining good cause for establishing an additional

dealership in a community for the same line-make:

          1. The sole fact that franchiser desires further penetration of
     the market.

           2. The change of ownership of the franchisee’s dealership or
     the change of executive management of the franchisee’s dealership,
     unless the franchiser, having the burden of proof, proves that such
     change of ownership or executive management will be substantially
     detrimental to the distribution of the franchiser’s motor vehicles in
     the community and that good cause for the termination or
     noncontinuation of the franchise or for the establishment of an
     additional dealership otherwise exists.

            3. The fact that the franchisee refused to purchase or accept
     delivery of any motor vehicle or vehicles, parts, accessories or any
     other commodity or service not ordered by the franchisee.

            4. The fact that the dealership moved to another facility and
     location within the dealership’s community which are equal to or
     superior to the dealership’s former location and facility or the fact
     that the dealership added an additional line-make to the dealership
     if the dealership’s facility is adequate to accommodate the additional
     line-make.

           5. The fact that the dealership does not meet an index or
     standard established by the franchiser, unless the franchiser proves
     that the failure of the dealership to meet the index or standard will
     be substantially detrimental to the distribution of the franchiser’s
     motor vehicles in the community and that good cause for the
     termination or noncontinuation of the franchise or for the
     establishment of an additional dealership otherwise exists.
                                        13

      Finally, the legislature provided a series of definitions in Iowa Code chapter

322A. Specifically, Iowa Code section 322A.1(2) provides that “ ‘[c]ommunity’

means the franchisee’s area of responsibility as stipulated in the franchise.” Yet,

the legislature declared that the definitions in the chapter should be used “unless

the context otherwise requires.” Id. § 322A.1.

      B. Proper Approach to “Community” In Cases Involving Approval of

Additional Franchisees. Is the “community” at issue here referring to SCTS’s

entire AOR, or the twenty-three-county Clear Lake area specifically? In other

words, which “community” should we consider under the statute?

      We begin with the language of the statute. Rolfe State Bank v. Gunderson,

794 N.W.2d 561, 564 (Iowa 2011). Here, Iowa Code subsection 322A.1(2) defines

“community” as “the franchisee’s area of responsibility as stipulated in the

franchise.” Applying a literal application of this definition, the community in

question would be SCTS’s entire AOR, which includes counties in Nebraska and

seventy-one counties in Iowa.

      And yet our inquiry does not end there. While the legislature provided a

statutory definition of “community,” it also included a “context clause” in the

legislation. See Iowa Code § 322A.1. Specifically, Iowa Code section 322A.1

provides that the definitions included are to be used “unless the context

otherwise requires.” Id. The context clause sets an important qualification

limiting the application of the definitions. Ruefenacht v. O’Halloran, 737 F.2d

320, 326 (3d Cir. 1984) (holding that the “context clause” provided “important

qualifications” to limit the definitions provided in the Securities Act of 1933),
                                         14

aff’d sub nom. Gould v. Ruefenacht, 471 U.S. 701 (1985). The “context” here does

not refer to the peculiar factual circumstances presented by a case, but the

context in which a defined term is used within the statute’s substantive

provisions. Heiden v. Norris, 912 N.W.2d 758, 763 (Neb. 2018). In other words,

a statutory provision “may require the application of a modified definition of the

pertinent statutory terms to carry out the legislature’s intent regarding the

statutory scheme.” Necanicum Inv. Co. v. Emp. Dep’t, 190 P.3d 368, 370 (Or.

2008) (en banc). The court, in interpreting the context clause, must consider

whether, given the factual context and the entire statutory scheme, a particular

statutory definition would conflict with one or more aspects of the legislature’s

goal. Id. (citing Astleford v. SAIF Corp. (In re Comp. of Wells), 874 P.2d 1329, 1333

(Or. 1994) (en banc)).

      As stated earlier, the public policies and interests of the act are to establish

and maintain for consumers adequate access to dealer services. Craig Foster

Ford, Inc. v. Iowa Dep’t of Transp., 562 N.W.2d 618, 622 (Iowa 1997) (citing to

the preamble of the Motor Vehicle Franchisers Act and noting its focus on

ensuring access to motor vehicle services). Included in the public policy of

consumer protection is the fair competition between franchisers. See New

England Cable Television Ass’n v. Dep’t of Pub. Util. Control, 717 A.2d 1276, 1293

(Conn. 1998). Ensuring an unstifled competition is in the best interest of the

public. Id. In light of the statutory purpose, we agree with the district court in

finding that the context of adding an additional franchise or dealership under

sections 322A.4 and 322A.16 requires a modified definition of “community.” The
                                       15

DOT and the district court were correct in interpreting community as only the

portion that is subject to dual assignment, instead of the entire area assigned to

SCTS in the dealer agreement.

      In contexts other than the addition of another franchisee to a market, the

statutory definition works comfortably. For example, if Peterbilt sought to

terminate the franchise, the consumers throughout the entire AOR would be

impacted by the decision.

      The same analysis does not apply, however, when a franchiser seeks to

add an additional franchise to a community. When a franchiser seeks to add a

new dealership to an area with an existing franchisee, the impact on the

consumer is limited to the area of dual competition. Indeed, a number of the

factors listed in Iowa Code section 322A.16 are relevant only to the extent there

is competition between the existing franchisee and the proposed new franchise,

See, e.g., Iowa Code § 322A.16 (1) (amount of business transacted in that

community by other franchisees of the same line-make), (4) (effect on motor

vehicle business as a whole), (6) (adequate consumer care). The legislature

contemplated both the interests of consumer protection and the benefits of

competitive services. Cf. S. New England Tel. Co. v. Conn. Dep’t of Pub. Util.

Controls, No. CV074033448S, 2007 WL 3318257, at *6 (Conn. Super. Ct.

Oct. 31, 2007) (“There is an obvious policy tension and in some ways an inverse

relationship between a highly regulated system insuring consumer protection

and a competitive system affording the benefits of competitive services. The

balancing of those interests and the design of the system which affords the best
                                       16

mix of consumer protection and competition is a policy issue for the legislature

and the executive agencies.”). Under this context, the proper focus, therefore, is

the area in which the existing franchisee and the proposed new franchisee would

be in direct competition. It would not be logical to consider investments and

markets in far-off Lincoln, Nebraska, on the question of whether there is good

cause to add a franchisee in the distant Clear Lake, Iowa area. As a result, the

agency correctly interpreted the relevant community to be the twenty-three-

county Clear Lake area where the existing franchisee and the proposed

additional franchisee would engage in competition.

        IV. Conclusion.

        In sum, for the above reasons, we vacate the decision of the court of

appeals and affirm the judgment of the district court.

        DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT

JUDGMENT AFFIRMED.

        Christensen, C.J., and Waterman and Mansfield, JJ., join this opinion.

McDonald, J., files a dissenting opinion, in which Oxley and McDermott, JJ.,

join.
                                        17

                        #20–0837, Sioux City Truck Sales v. Iowa Dep’t of Transp.

McDONALD, Justice (dissenting).

      Iowa Code section 322A.1(2) (2021) defines the term “community” within

the meaning of the Motor Vehicle Franchisers Act as “the franchisee’s area of

responsibility as stipulated in the franchise.” The majority disregards the

legislature’s definition of “community” and substitutes its own “modified

definition” of “community.” Without irony, the majority concludes that its

modified definition of the term better implements the legislature’s purpose than

the legislature’s own definition of the same term. The majority’s purposivist

rewriting of statutory text breaks with our precedents regarding statutory

interpretation. Further, the fact that the majority actually misidentifies the

purpose of the statute reveals the shortcomings of its purposivist approach. I

respectfully dissent.

      Statutory interpretation “is necessarily a textual inquiry as only the text of

a piece of legislation is enacted into law.” Doe v. State, 943 N.W.2d 608, 610

(Iowa 2020). Interpretation thus “begins with the language of the statute at

issue.” Id. “Using traditional interpretive tools, we seek to determine the ordinary

and fair meaning of the statutory language at issue.” Id. “If the ‘text of a statute

is plain and its meaning clear, we will not search for a meaning beyond the

express terms of the statute or resort to rules of construction.’ ” Com. Bank v.

McGowen, 956 N.W.2d 128, 133 (Iowa 2021) (quoting Voss v. State (In re Est. of

Voss), 553 N.W.2d 878, 880 (Iowa 1996)).
                                        18

      Because the legislature has already defined the term at issue in this case,

the text of the statute could not be more clear. The legislature defined

“community” to mean “the franchisee’s area of responsibility as stipulated in the

franchise.” Iowa Code § 322A.1(2). When the legislature chooses to define a term

in a statute, this court is bound to apply that definition. State v. Shorter, 945

N.W.2d 1, 7 (Iowa 2020) (“When interpreting a particular term, we are bound by

any definition provided by the legislature.”); State v. Mathias, 936 N.W.2d 222,

227 (Iowa 2019) (“If the legislature chooses to define the term in a statute, that

definition ordinarily binds us.”); P.M. v. T.B., 907 N.W.2d 522, 540 (Iowa 2018)

(“When the legislature has defined words in a statute—that is, when the

legislature has opted to ‘act as its own lexicographer’—those definitions bind us.”

(quoting In re J.C., 857 N.W.2d 495, 500 (Iowa 2014))). Definitions that do “not

coincide with the legislative definition must yield to the language of the

legislature.” Sherwin–Williams Co. v. Iowa Dep’t of Revenue, 789 N.W.2d 417,

425 (Iowa 2010) (quoting Hornby v. State, 559 N.W.2d 23, 25 (Iowa 1997)).

      Nothing about the legislature’s definition of “community” is ambiguous or

vague. This is true whether the term is considered in isolation, in context, or as

applied. The term “that community” in section 322A.16, detailing the factors to

be considered in determining “good cause” to allow additional franchises, simply

refers to the specific area of responsibility of a franchisee as stipulated in the

particular franchise at issue. Nothing in the text of section 322A.16 requires this

court to apply a different definition of “community” than the one the legislature

supplied. See Iowa Code § 322A.1 (stating the definitions supplied by the statute
                                         19

apply “unless the context otherwise requires”). And nothing in the text of section

322A.16 suggests the definition of “community” urged by Peterbilt Motors

Company—“the portion of the franchisee’s community that the franchiser is

seeking to appoint an additional dealer in”—is more appropriate than the

legislature’s chosen definition.

        The majority simply disregards the legislature’s definition of “community”

and our precedents requiring adherence to the legislature’s chosen definition. In

lieu of the legislature’s definition, the majority substitutes a purportedly

purposivist definition of “community.” In the majority’s view, the statute “is

consumer protection oriented.” Specifically, the majority states the legislature’s

primary motivation in enacting chapter 322A was to facilitate consumer

protection in the form of “adequate access to dealer services.” In the majority’s

view, “unstifled competition is in the best interest of the public” and accomplishing

this “statutory purpose . . . requires a modified definition of ‘community.’ ”

        The majority’s purposivist rewriting of the statute demonstrates the

primary failure of this method of interpretation: to the extent this statute has a

purpose, the majority misidentifies it. Iowa is not alone in enacting legislation to

regulate motor vehicle franchises. Numerous other states have enacted identical

or substantially identical statutes. See Gen. Motors Corp. v. O’Daniel Oldsmobile,

Inc. (In re Application of Gen. Motors Corp.), 439 N.W.2d 453, 456 (Neb. 1989)

(stating at least twenty-three states have such a statute). The unequal bargaining

power    between    franchisees    and   franchisers   prompted   numerous       state

legislatures to allow franchisees to object to a franchiser’s attempt to establish
                                         20

additional franchises within the franchisee’s bargained-for area of responsibility.

See Rimrock Chrysler, Inc. v. State Dep’t of Just., Motor Vehicle Div., 411 P.3d

1278, 1282 (Mont. 2018) (stating the purpose of the act is to protect a

“franchisee-dealer from the unequal bargaining power of an automobile

franchisor”); see also New Motor Vehicle Bd. v. Orrin W. Fox Co., 439 U.S. 96, 102

(1978) (stating a similar law in California “protects the equities of existing dealers

by prohibiting automobile manufacturers from adding dealerships to the market

areas of its existing franchisees where the effect of such intrabrand competition

would be injurious to the existing franchisees and to the public interest”); Dave

Zinn Toyota, Inc. v. Dep’t of Highway Safety & Motor Vehicles, 432 So. 2d 1320,

1322 (Fla. Dist. Ct. App. 1983) (stating the purpose of the law “is to prevent

powerful manufacturers from taking unfair advantage of their dealers” (quoting

Bill Kelley Chevrolet, Inc. v. Calvin, 322 So. 2d 50, 52 (Fla. Dist. Ct. App. 1975)));

Gen. Motors Corp., 439 N.W.2d at 456; Forest Home Dodge, Inc. v. Karns, 138

N.W.2d 214, 218 (Wis. 1965) (“The whole framework of the law shows that the

manufacturer, with his superior bargaining power, is not to be unsupervised in

his dealings with the small independent dealer . . . .”). The purpose of these

statutes is “to protect retail car dealers from perceived abusive and oppressive

acts by the manufacturers.” New Motor Vehicle Bd., 439 U.S. at 101; see also

Gen. Motors Corp., 439 N.W.2d at 456. These statutes are not intended to

promote “unstifled competition” or incorporate principles of antitrust into

franchise law. The Arizona Court of Appeals specifically rejected an attempt to

redefine “community” to incorporate principles of market competition and
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antitrust law. See Sanderson Lincoln Mercury, Inc. v. Ford Motor Co., 68 P.3d 428,

432 (Ariz. Ct. App. 2003) (rejecting argument that “community” should mean

“relevant market area” and explaining “nothing in the statutory language

supports Sanderson’s position that principles of antitrust law should be

superimposed on the statutory scheme to alter the express articulation of the

legislature”). Chapter 322A is protectionist, but not in favor of consumers.

Instead, it is protectionist in favor of franchisees as against franchisers. See New

Motor Vehicle Bd., 439 U.S. at 101–02; Dave Zinn Toyota, 432 So. 2d at 1322;

Rimrock Chrysler, 411 P.3d at 1282; Gen. Motors Corp., 439 N.W.2d at 456;

Forest Home Dodge, 138 N.W.2d at 218.

      By ignoring the legislature’s own definition of “community,” the majority

actually undermines the purpose of the statute—to protect a franchisee against

franchiser infringement in the “franchisee’s area of responsibility as stipulated

in the franchise.” Iowa Code § 322A.1(2). In this case, the franchisee’s area of

responsibility is the parties’ bargained-for seventy-one county “community”

within the meaning of Iowa law. The court now allows Peterbilt to carve out a

subset of twenty-three counties within that community to make it easier to

develop a new franchise within the bargained-for community. Later, under the

court’s precedent, Peterbilt will be able to carve out a subset of counties from the

twenty-three county community with its new franchisee to make it easier to

develop yet another franchise within that bargained-for community, ad infinitum.

The majority’s approach undermines franchisee protection, contrary to the plain

text of the statute and the purpose of the law.
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      Peterbilt and the Iowa Department of Transportation raise concerns

regarding the practical effect of deciding in favor of Sioux City Truck Sales, since

applying the legislature’s chosen definition of “community” might prevent

Peterbilt from making a dual assignment in Cerro Gordo County. I am

unsympathetic to this argument. Peterbilt is a sophisticated party that entered

into an arms-length deal and acceded to a seventy-one-county franchise

agreement with Sioux City Truck. Peterbilt could have contracted for a smaller

franchise area. Peterbilt could also have included certain triggers in its franchise

agreement to require Sioux City Truck to develop new dealerships in underserved

areas within the contracted-for area of responsibility. Peterbilt could offer other

carrots or sticks to encourage development of new dealerships by Sioux City

Truck. Even then, the statute gives Peterbilt other options, including altering

Sioux City Truck’s community, see Iowa Code § 322A.3A, or choosing not to

renew its franchise with Sioux City Truck, see Iowa Code § 322A.2. Peterbilt

should not now be permitted to avoid its contracted-for obligations and the clear

policy decision made by the legislature. But the majority allows precisely this

outcome.

      The court of appeals correctly applied the plain text of the statute in accord

with our precedents that require deference to legislative definitions of statutory

terms. I would affirm that court’s thorough and well-reasoned opinion.

      For these reasons, I respectfully dissent.

      Oxley and McDermott, JJ., join this dissent.