General Motors Corporation v. State of Illinois Motor Vehicle Review Board ( 2007 )

Docket Nos. 101585, 101601 cons.
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
GENERAL MOTORS CORPORATION et al., Appellants, v. THE
STATE OF ILLINOIS MOTOR VEHICLE REVIEW BOARD et al.,
Appellees.
Opinion filed January 8, 2007.
CHIEF JUSTICE THOMAS delivered the judgment of the court,
with opinion.
Justices Freeman, Fitzgerald, Kilbride, Garman, and Burke
concurred in the judgment and opinion.
Justice Karmeier dissented, with opinion.
OPINION
In this case, General Motors Corporation (GMC) sought to add
two new automobile dealerships in the greater Chicago area: one on
Chicago’s far west side at Jacobs Twin Buick (Jacobs) and the other
in Glenview, Illinois, at Loren Pontiac-Buick (Loren). Various
existing GMC dealerships challenged the newly proposed dealerships
by filing a protest with the State of Illinois Motor Vehicle Review
Board (Board) pursuant to the Motor Vehicle Franchise Act
(Franchise Act or Act) (815 ILCS 710/1 et seq. (West 2004)), which
allows an existing dealer to file a protest when a manufacturer
attempts to locate a new franchise within an existing dealer’s relevant
market area. It is undisputed that the proposed sites for the additional
franchises (add points) were within the protesting dealers’ relevant
market area. The Board granted the protests, and the circuit court of
Sangamon County confirmed that decision. GMC and Loren appealed,
arguing that the Board failed to apply the Act’s “good cause” standard
in reaching its decision to grant the protests. GMC and Loren also
argued that the Act is unconstitutional and that the Board’s decision
was against the manifest weight of the evidence. The appellate court
rejected GMC’s and Loren’s arguments, with one justice dissenting.
361 Ill. App. 3d 271. We allowed the petitions for leave to appeal
filed by GMC and Loren and have consolidated the cases. 210 Ill. 2d
R. 315. We also allowed various organizations to file amicus curiae
briefs on behalf of the respective parties. Loren has adopted the briefs
of GMC before this court.
BACKGROUND
Illinois’ Motor Vehicle Franchise Act is comparable to legislation
adopted by a number of states designed to protect existing dealers and
consumers from the negative impact of aggressive franchising
practices by automobile manufacturers whose desires to establish
excessive competing franchises are considered to be a potential threat
to the public welfare. See Fireside Nissan, Inc. v. Fanning, 30 F.3d
206, 211 (1st Cir. 1994); 2 Franchise & Distribution L. & Prac.
§14:31 (1990). Most of the states having such legislation allow
existing dealers of the same line make that are within a specified
distance of a proposed new dealership to protest. These statutes
generally provide that no new franchise may be established unless the
trier of fact, usually a motor vehicle review board, decides that the
appointment is for “good cause,” which requires the assessment of a
number of statutory factors to make that determination. See, e.g.,
Ark. Code Ann. §23–112–311 (West 2004); Cal. Vehicle Code §3062-2-
(Deering Supp. 2006); Conn. Gen. Stat. Ann. §42–133dd (West Supp.
2006); Mass. Gen. Laws Ann. 93B §6 (West 2005).1
Our Franchise Act requires a manufacturer wishing to grant an
additional franchise in the relevant market area of an existing franchise
of the same line make to give 60 days written notice to each existing
dealer of the same line make whose relevant market area includes the
proposed location. 815 ILCS 710/4(e)(8) (West 2004). The
“[r]elevant [m]arket [a]rea” for purposes of this case is defined by
statute as “the area within a radius of 10 miles from the principal
location of a franchise or dealership.” 815 ILCS 710/2(q) (West
2004). An existing franchise has 30 days from the receipt of the notice
from the manufacturer to file a protest with the Board. 815 ILCS
710/4(e)(8) (West 2004). If a protest is filed, the manufacturer has the
burden of proof to establish that “good cause” exists to allow the
grant or establishment of the additional franchise. 815 ILCS
710/4(e)(8) (West 2004).
Section 4(e)(8) of the Act provides that the determination of
whether “good cause” exists for allowing an additional franchise “shall
be made by the Board under subsection (c) of Section 12 of this Act.”
815 ILCS 710/4(e)(8), 12(c) (West 2004). Section 12(c) provides
that, in considering whether “good cause” has been established for
granting a proposed additional franchise, the Board shall consider “all
relevant circumstances” in accordance with subsection (v) of section
2 of this Act, including but not limited to, 11 statutory factors set
forth in section 12(c) (815 ILCS 710/12(c) (West 2004)). Section 2(v)
of the Act is part of the definitions section of the statute and provides
that “ ‘[g]ood cause’ means facts establishing commercial
reasonableness in lawful or privileged competition and business
practices as defined at common law.” 815 ILCS 710/2(v) (West
2004). The “relevant circumstances” that the Board is required to
consider are listed in section 12(c) as follows:
1
Thirty-two states currently have motor vehicle franchise statutes that
allow existing dealerships of the same line make within a specified distance
of a proposed new dealership to file a protest to resolve whether a new dealer
may be added, and thirty of those states have a “good cause” standard.
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“(1) whether the establishment of such additional franchise
or the relocation of such motor vehicle dealership is warranted
by economic and marketing conditions including anticipated
future changes;
(2) the retail sales and service business transacted by the
objecting motor vehicle dealer or dealers and other motor
vehicle dealers of the same line make with a place of business
in the relevant market area to be served by the additional
franchise or the relocated motor vehicle dealership during the
5 year period immediately preceding such notice as compared
to the business available to them;
(3) the investment necessarily made and obligations
incurred by the objecting motor vehicle dealer or dealers and
other motor vehicle dealers of the same line make with a place
of business in the relevant market area to be served by the
additional franchise or the relocated motor vehicle dealership
to perform their obligations under existing franchises or selling
agreements; and, the manufacturer shall give reasonable credit
for sales of factory repurchase vehicles purchased by the
objecting motor vehicle dealer or dealers and other motor
vehicle dealers of the same line make with the place of
business in the relevant market area to be served by the
additional franchise or the relocated motor vehicle dealership,
or the additional motor vehicle dealership or other facility
limited to the sale of factory repurchase or late model vehicles,
at manufacturer authorized or sponsored auctions in
determining performance of obligations under existing
franchises or selling agreements relating to total new vehicle
sales;
(4) the permanency of the investment of the objecting
motor vehicle dealer or dealers and other motor vehicle
dealers of the same line make with a place of business in the
relevant market area to be served by the additional franchise
or the relocated motor vehicle dealership;
(5) whether it is beneficial or injurious to the public
welfare for an additional franchise or relocated motor vehicle
dealership to be established;
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(6) whether the objecting motor vehicle dealer or dealers
and other motor vehicle dealers of the same line make with a
place of business in the relevant market area to be served by
the additional franchisee or relocated motor vehicle dealership
are providing adequate competition and convenient consumer
care for the motor vehicles of the same line make owned or
operated in the area to be served by the additional franchise or
relocated motor vehicle dealership;
(7) whether the objecting motor vehicle dealer or dealers
and other motor vehicle dealers of the same line make with a
place of business in the relevant market area to be served by
the additional franchisee or the relocated motor vehicle
dealership have adequate motor vehicle sales and service
facilities, equipment, vehicle parts and qualified personnel to
reasonably provide for the needs of the customer; provided,
however, that good cause shall not be shown solely by a desire
for further market penetration;
(8) whether the establishment of an additional franchise or
the relocation of a motor vehicle dealership would be in the
public interest;
(9) whether there has been a material breach by a motor
vehicle dealer of the existing franchise agreement which
creates a substantially detrimental effect upon the distribution
of the franchiser’s motor vehicles in the affected motor vehicle
dealer’s relevant market area or fraudulent claims for warranty
work, insolvency or inability to pay debts as they mature;
(10) the effect of an additional franchise or relocated
motor vehicle dealership upon the existing motor vehicle
dealers of the same line make in the relevant market area to be
served by the additional franchisee or relocated motor vehicle
dealership; and
(11) whether the manufacturer has given reasonable credit
to the objecting motor vehicle dealer or dealers and other
motor vehicle dealers of the same line make with a place of
business in the relevant market area to be served by the
additional franchise or relocated motor vehicle dealership or
additional motor vehicle dealership or other facility limited to
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the sale of factory repurchase or late model vehicles, for retail
sales of factory repurchase vehicles purchased by the motor
vehicle dealer or dealers at manufacturer authorized or
sponsored auctions.” 815 ILCS 710/12(c)(1) through (c)(11)
(West 2004).
In February and March of 2001, GMC sent notices to all existing
dealers in the relevant market area of its two proposed franchise add
points. Castle Buick-Pontiac-GMC (Castle) and Grossinger Autoplex,
Inc. (Grossinger), filed timely protests with the Board as to the Jacobs
site. With respect to the Loren site, timely protests were filed by
North Shore, Inc., doing business as Muller Pontiac/GMC Mazda
(Muller), Grossinger,2 and Joe Mitchell/GMC Truck, Inc. (Mitchell).
Castle is located five miles from the proposed Jacob’s add point.
Grossinger is 6.8 miles from the proposed Jacob’s add point, and 6.5
miles from the proposed Loren add point. Muller is 4.9 miles from the
proposed Loren add point. Within a 10-mile radius of the Jacob’s add
point, there are three existing GMC dealers, and within a 10-mile
radius of the Loren add point, there are also three existing GMC
dealerships. In addition, four GMC dealers are located just outside of
the 10-mile radius applicable to the Jacob’s add point. In all, there are
a total of 27 GMC dealerships in the Chicago area.
By agreement of the parties, the cases were consolidated. The
transcripts of the hearings are voluminous, and the parties together
presented approximately 200 exhibits. The record contains 59
volumes.
In May 2003, the hearing officer entered his findings of fact,
conclusions of law, and recommended decision. The hearing officer
recommended that the protests against both the Jacobs and Loren add
points be upheld and that the Board should not approve the additional
GMC franchises. In September 2003, the Board entered a final order
that granted the dealers’ protests and adopted and incorporated into
its final order the findings of fact, the conclusions of law and the
recommended decision of the hearing officer. The Board also awarded
2
Grossinger was located in the relevant market area of both proposed add
points and protested both of them.
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the protesting dealers attorney fees and costs to be determined at a
later hearing.
The circuit court confirmed the decision of the Board. GMC and
Loren appealed. The appellate court found that the attorney fees and
costs award should not have been entered because it was not yet ripe
for resolution and therefore vacated the award. In all other respects,
the appellate court affirmed the circuit court’s judgment, which upheld
the dealers’ protests. 361 Ill. App. 3d at 291.
ANALYSIS
I. The Good-Cause Standard
GMC first argues before this court that the Board did not apply
the Act’s “good cause” standard correctly. It points to section 2(v)’s
definition of “good cause” as “commercial reasonableness in lawful or
privileged competition and business practices as defined at common
law.” 815 ILCS 710/2(v) (West 2004). It claims that the Board
analyzed each of the 11 factors in section 12(c) untethered from
section 2(v), even though section 12(c) directs that the 11 factors be
considered in accordance with section 2(v). See 815 ILCS 710/12(c)
(West 2004). GMC further urges that the terms “good cause” and
“commercial reasonableness” should be equated with “good faith.”
According to GMC, if the evidence shows it acted without any bad
faith or malice in its decision to add the new franchises, then its
decision should not be second-guessed. GMC contends that “good
cause” should be interpreted as a minimal standard and not some
“super standard of perfection.”
GMC’s argument presents a question of statutory interpretation.
When presented with an issue of statutory construction, our role is to
ascertain and give effect to the intent of the legislature. People v.
Whitney, 188 Ill. 2d 91, 97 (1999). Legislative intent is best
determined from the language of the statute itself, which if
unambiguous, should be enforced as written. Taddeo v. Board of
Trustees of the Illinois Municipal Retirement Fund, 216 Ill. 2d 590,
595 (2005); Comprehensive Community Solutions, Inc. v. Rockford
School District No. 205, 216 Ill. 2d 455, 473 (2005). In giving effect
to the statutory intent, the court should consider, in addition to the
statutory language, the reason for the law, the problems to be
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remedied, and the objects and purposes sought. People v. Donoho,
204 Ill. 2d 159, 171-72 (2003). A statute is ambiguous if it is subject
to two or more reasonable interpretations. Donoho, 204 Ill. 2d at 172.
The construction of a statute by an agency charged with its
administration will be given deference where there is a reasonable
debate about the meaning of the statute, but that interpretation is not
ultimately binding on this court. Elementary School District 159 v.
Schiller, 221 Ill. 2d 130, 142-43 (2006); Taddeo, 216 Ill. 2d 590.
Beginning with the language of the Act, we note that it plainly
requires that the Board “shall” consider each of the 11 factors listed
in section 12(c), along with any other relevant circumstances, when
determining whether “good cause” has been established. This is
precisely what the Board did. In reaching its decision to grant the
protest of the existing dealerships, the Board set forth the definition
of “good cause” in section 2(v), analyzed each of the applicable
factors as directed by section 12(c) of the Act, and balanced the
various interests at stake. It concluded that each of the factors in
section 12(c) favored the protesting dealers, except the circumstance
listed in section 12(c)(11), which it found inapplicable to both
franchises.
We believe that in enacting the statutory scheme, the legislature
clearly intended that the Board’s assessment of the 11 factors be
equated with “good cause.” It also apparent that the legislature
intended that the Board balance the dealer’s interest in maintaining
viable businesses, the manufacturer’s interest in promoting sales, and
the public’s interest in adequate competition and convenient service.
See Fields Jeep-Eagle, Inc. v. Chrysler Corp., 163 Ill. 2d 462, 477-78
(1994). This is consistent with the Act’s declaration of purpose, which
provides as follows:
“The legislature finds and declares that the distribution and
sale of vehicles within this State vitally affects the general
economy of the State and the public interest and welfare, and
that in order to promote the public interest and welfare, and in
the exercise of its police power, it is necessary to regulate
motor vehicle manufacturers, distributors, wholesalers and
factory or distributor branches or representatives, and to
regulate dealers of motor vehicles doing business in this State
in order to prevent frauds, impositions and other abuses upon
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its citizens, to protect and preserve the investments and
properties of the citizens of this State, and to provide
adequate and sufficient service to consumers generally.” 815
ILCS 710/1.1 (West 2004).
GMC’s interpretation would create an absurd result and would
render the Act’s purpose and the Board’s consideration of the 11
statutory factors essentially meaningless. If all that was required was
subjective good faith on the part of GMC in making its business
decision, it would negate any objective “good cause” analysis. We do
not believe that this is what the legislature had in mind when it placed
the burden of proving “good cause” on the manufacturer and required
the assessment of the 11 statutory criteria.
Additionally, if GMC’s interpretation were adopted, it would
cause the Illinois Motor Vehicle Franchise Act to differ markedly from
other state’s automobile franchise acts, which simply require an
objective assessment of the statutory factors to determine “good
cause.” See, e.g., Ark. Code Ann. §23–112–311 (West 2004); Cal.
Vehicle Code §3062 (Deering Supp. 2006); Conn. Gen. Stat. Ann.
§42–133dd (West Supp. 2006); Mass. Gen. Laws Ann. 93B §6 (West
2005).
GMC emphasizes the “lawful or privileged competition” language
of the good-cause standard. 815 ILCS 710/2(v) (West 2004). The
terms “lawful competition,” “privileged competition,” “privilege of
competition” and “competitor’s privilege” appear in the case law and
all refer to the same privilege, which is an affirmative defense to the
tort of intentional interference with prospective business advantage.
See Cromeens, Holloman, Sibert, Inc. v. AB Volvo, 349 F.3d 376,
398-99 (7th Cir. 2003); International Marketing, Ltd. v. Archer-
Daniels-Midland Co., 192 F.3d 724, 731 (7th Cir. 1999); G.M. Brod
& Co. v. U.S. Home Corp., 759 F.2d 1526, 1534 (11th Cir. 1985). It
“allows one to divert business from one’s competitors generally as
well as from one’s particular competitors provided one’s intent is, at
least in part, to further one’s business and is not solely motivated by
spite or ill will.” See Soderlund Brothers, Inc. v. Carrier Corp., 278
Ill. App. 3d 606, 615 (1995).
It is not readily apparent, however, what if anything this
affirmative defense has to do with a protest under the Franchise Act.
GMC claims that by referring to “privileged competition,” the
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legislature must have been creating a standard that defers to the
manufacturer’s business decision absent any evidence of bad faith in
reaching that decision. We read the Illinois statutory scheme
differently. As the appellate court correctly observed, the standard is
not simply “lawful or privileged competition.” Instead, the standard is
“commercial reasonableness in lawful or privileged competition” and
requires that the Board “shall” consider the applicable statutory
factors listed. (Emphasis added.) 815 ILCS 710/2(v), 12(c) (West
2004).
“Commercial reasonableness” is not specifically defined by the
statute; thus, we will look to its commonly understood meaning.
Black’s Law Dictionary defines “commercially reasonable” as follows:
“(Of a property sale) conducted in good faith and in accordance with
commonly accepted commercial practice.” (Emphasis added.) Black’s
Law Dictionary 286 (8th ed. 2004). Thus, commercial reasonableness
includes something more than simply exercising good faith in a
business decision. Good faith and commercial reasonableness are not
interchangeable terms. See Original Great American Chocolate Chip
Cookie Co. v. River Valley Cookies, Ltd., 970 F.2d 273, 280 (7th Cir.
1992).
One of the clearest explanations we have found for commercial
reasonableness was provided by the California appellate court when
it attempted to determine whether notice was properly given under a
statute that required a “good faith and commercially reasonable effort”
in complying with statutory notice requirements. See Gifford v. J. &
A. Holdings, 54 Cal. App. 4th 996, 63 Cal. Rptr. 2d 253 (1997).
There, the court stated that “[c]ommercial reasonableness is not
expressly defined in the statute, but has been defined elsewhere to
include commonly accepted commercial practices of responsible
businesses which afford all parties fair treatment.” Gifford, 54 Cal.
App. 4th at 1005-06, 63 Cal. Rptr. 2d at 259. The court continued by
stating that “[g]ood faith and commercial reasonableness primarily
involve questions of fact, based on all the circumstances; the trial
court’s findings must be upheld if supported by substantial evidence.”
Gifford, 54 Cal. App. 4th at 1006, 63 Cal. Rptr. 2d at 259.
Similarly, good faith and commercial reasonableness in the present
case were questions of fact for the Board to resolve by assessing and
balancing the factors in section 12(c) with an eye toward fair
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treatment of the interests involved–the existing dealers, the
manufacturer and the consumer public. The legislature specifically
placed the burden of proof on the manufacturer to show “good cause”
(815 ILCS 710/4(e)(8) (West 2004)), and further provided that “good
cause shall not be shown solely by a desire for further market
penetration.” (Emphasis added.) 815 ILCS 710/12(c)(7) (West 2004).
GMC essentially asks this court to read this term out of the statute.
We decline to do so. Instead, we find that the Board carefully
considered the applicable factors and the relevant evidence presented
by the parties and concluded that GMC, as the manufacturer, had not
met its burden. Accordingly, GMC’s argument that the Board applied
an erroneous standard must be rejected.
II. Whether the Board’s Decision Was Clearly Erroneous
GMC next argues that the Board’s decision was either clearly
erroneous or against the manifest weight of the evidence.
The findings and conclusions of an administrative agency on a
question of fact shall be held to be prima facie true and correct. 735
ILCS 5/3–110 (West 2004). A reviewing court does not reweigh the
evidence that was before the agency. Comprehensive Community
Solutions, Inc. v. Rockford School District No. 205, 216 Ill. 2d 455,
471-72 (2005). An agency’s conclusion on a question of mixed law
and fact–that is one that asks the legal effect of a given set of facts–is
reviewed for clear error. Elementary School District 159 v. Schiller,
221 Ill. 2d 130, 143 (2006). Such review is significantly deferential to
an agency’s experience in construing and applying the statute that it
administers. Schiller, 221 Ill. 2d at 143. Thus, an agency’s decision
will only be found to be clearly erroneous where a reviewing court is
left, on the entire record, with a definite and firm conviction that a
mistake has been committed. Schiller, 221 Ill. 2d at 143.
The Board made findings of fact on each of the statutory factors
for assessing “good cause” noted above, and did so with respect to
each of the two dealerships at issue. The Board’s findings of fact were
essentially the same for each of the two dealerships. With respect to
section 12(c)(1), the Board found that a new dealership was not
warranted by economic and marketing conditions, including
anticipated future changes. See 815 ILCS 710/12(c)(1) (West 2004).
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It noted that there were already three GMC dealers within a radius of
less than 10 miles of both Jacobs and Loren, and that there were seven
dealers within 11 miles of Jacobs. Thus, the areas were already
substantially represented by GMC. Moreover, the Board found that
there was little, if any, projected growth around the dealerships, that
there was insufficient evidence that the dealers surrounding Jacobs and
Loren were underperforming, and that there was no evidence that the
answer to any perceived “underperformance” was to add another
dealer. It also found that there was competent evidence that the
dealers surrounding Jacobs and Loren suffered from a lack of product
allocation and that adding a dealer would only exacerbate the
problem.
Regarding section 12(c)(2), the Board found that the retail sales
and service business transacted by the protesting dealers and other
GMC dealers in the relevant market areas, as compared to the
business available to them, was reasonable and therefore favored the
protesting dealers. See 815 ILCS 710/12(c)(2) (West 2004). The
Board found that GMC’s experts used a measure of performance that
was unrealistic in the metropolitan, multiple-dealer network at issue.
Furthermore, GMC presented insufficient evidence to support the
argument that the local dealers around Jacobs and Loren were failing
to adequately perform.
With respect to sections 12(c)(3) and (c)(4), the Board found that
the protesting dealers and other GMC dealers in the relevant market
area had made substantial and permanent investments. See 815 ILCS
710/12(c)(3), (c)(4) (West 2004). It noted that the protesting dealers
had invested millions of dollars in their facilities, particularly
Grossinger, who had a $19 million state-of-the-art Autoplex.
Additionally, Castle recently spent $5 million to create an exclusive
GMC/Buick/Pontiac dealership and was not permitted to add any non-
GMC franchises for the next 25 years. Moreover, each of the
protesting dealers had shown a commitment to a longstanding and
respectable presence in the community.
Regarding sections 12(c)(5) and (c)(8), the Board found that the
addition of a new dealer could be injurious to the public welfare and
that there appeared to be little or no public benefit that would accrue.
See 815 ILCS 710/12(c)(5), (c)(8) (West 2004). It noted that the
public would not be served by a dealer network where the individual
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dealers are small and lack adequate product to sell. It would be
inconvenient for consumers to have to travel to a number of GMC
outlets just to be able to see the particular vehicle they are
considering. The benefit of being a mile or two closer to the nearest
GMC dealer would be incremental at best. Given that already scarce
inventory levels would be stretched further by adding another dealer,
the public would not be served by the expansion of the dealer network
into areas where there were already so many dealers.
With regard to section 12(c)(6), the Board found that the local
dealers in the relevant market areas of the proposed Jacob and Loren
dealerships were providing adequate competition and convenient care
to their customers. See 815 ILCS 710/12(c)(6) (West 2004).
According to the Board, Castle, Grossinger, Mitchell and Muller all
provided excellent customer service and made every effort to record
as many sales as possible. There was insufficient evidence to show that
these dealers were failing to perform adequately, but there was
competent evidence to show that their performance had been
hampered by a lack of adequate product supply.
With respect to section 12(c)(7), the Board found that the
protesting dealers in the relevant market areas of both proposed add
points had adequate sales and service facilities, equipment, vehicle
parts and qualified personnel to reasonably provide for the needs of
the customers in the relevant market areas. See 815 ILCS
710/12(c)(7) (West 2004). There was no evidence presented by GMC
that any of the protesting dealers, or any other GMC dealers in the
relevant market areas, had inadequate sales and service facilities,
equipment, vehicle parts or qualified personnel to reasonably serve
customers. To the contrary, the sales and service facilities ranged from
adequate to state-of-the-art.
The Board next found that there was no evidence of a material
breach of any franchise agreement by any protesting dealer in the
relevant market areas. See 815 ILCS 710/12(c)(9) (West 2004).
Regarding section 12(c)(10), the Board found that there was
competent evidence that the addition of Jacobs as a GMC dealer
would hurt the existing dealers in the relevant market area. See 815
ILCS 710/12(c)(10) (West 2004). Similarly, the Board found that the
addition of Loren would hurt the existing dealers in the relevant
market area. There was insufficient evidence presented to show that
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there was enough additional opportunity to support another dealer in
either relevant market area. But there was competent evidence to
show that existing dealers suffer from inventory shortages caused by
GMC’s allocation system, and there was no reason to believe that the
existing dealers could respond positively to the addition of a new add
point without sufficient product supply.
Finally, the Board found section 12(c)(11) to be inapplicable to the
case. See 815 ILCS 710/12(c)(11) (West 2004).
After reviewing the evidence presented, we conclude that the
Board’s decision to grant the existing dealers’ protests was not clearly
erroneous. The evidence supporting the Board’s conclusions on
several factors was undisputed. There was unrebutted testimony
establishing that the protesting dealers had made substantial
investments in their dealerships that were intended to be permanent.
See 815 ILCS 710/12(c)(3), (c)(4) (West 2004). Additionally, the
evidence was undisputed that the protesting dealers had adequate
sales and service facilities. See 815 ILCS 710/12(c)(7) (West 2004).
Finally, there was no evidence that any of the protesting dealers had
materially breached their franchise agreements. See 815 ILCS
710/12(c)(9) (West 2004). The parties presented conflicting evidence
about the factors that focus on public interest and welfare, the
economic impact of adding dealerships, and the amount of business
available to existing dealers in the relevant market area. See 815 ILCS
710/12(c)(1), (c)(2), (c)(5), (c)(8), (c)(10) (West 2004).
The two experts who testified, James Anderson (GMC’s expert)
and Dr. John Matthews (the protesting dealers’ expert), had
significantly different opinions due to their difference in approaches.
Anderson’s method compared local GMC sales performance with
adjusted national and statewide standards. Matthews compared GMC
sales performance in the Jacobs relevant market area with all parts of
the Chicago metropolitan area outside the Jacobs relevant market
area, and he used the same method for Loren.
GMC criticizes Matthews’ approach as “circular” because he
relied solely on data from the Chicago area. But Matthews’ approach
offered the advantage of comparing the two relevant market areas to
areas that were similar in most respects, including the fact that they
were urban, that dealers sold heavily into one another’s territories, and
that the climate was generally the same. By contrast, Anderson’s
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adjusted national and state standards took into account data from rural
areas, where there was often far less competition and where customer
tastes differed from those of customers in major cities like Chicago.
In light of Dr. Matthews’ testimony and the other evidence, it was
reasonable for the Board to conclude that Anderson’s approach was
not as valid a method as Dr. Matthew’s for measuring dealership
performance in a multidealer area in a large metropolitan region. After
examining the evidence, the Board was simply not persuaded by
GMC’s attempt to show that GMC dealers in the two relevant market
areas were performing poorly. Instead, the Board found that Dr.
Matthews’ approach was generally superior, and gave more weight to
the testimony he presented on the economic impact of adding the
dealerships and the harm this would cause to marginally profitable
dealerships like Castle and Muller.
GMC argues that the Board’s decision relied in large part upon
performance averages for GMC dealers, and assumed a static market.
But, as the appellate court majority pointed out, it was GMC who
introduced evidence that established average sales as the appropriate
measure of performance. 361 Ill. App. 3d at 279. GMC cannot
complain of the Board’s reliance upon data concerning average sales
when GMC itself relied on such data in its effort to meet its burden of
establishing good cause to add the dealerships. Moreover, there is
nothing in the record indicating that the Board would not have been
receptive to evidence indicating likely future improvement in GMC
sales at the time of the administrative hearing, which took place in
2002. But the evidence presented to the Board indicated that GMC
sales for dealers in the Jacobs and Loren relevant market areas were
generally declining at that time. Moreover, this decline occurred even
though the protesting dealerships devoted significant resources to
advertising and promoting GMC sales.
Evidence that GMC dealers in the two relevant market areas had
considerable difficulty getting an adequate supply of product from
GMC supported the Board’s conclusion that adding the dealerships
would not serve the public interest. Many area GMC dealers testified
that they had trouble getting an adequate supply from GMC of sport
utility vehicles, the vehicles that sell best in the Chicago area.
Grossinger general manager Charles Settles stated that GMC makes
discretionary allocations of additional vehicles to dealers, but these
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allocations are made in an arbitrary fashion. GMC’s vehicle allocation
system also had an additional problem in that there was a lapse of 90
to 120 days between the time a vehicle is ordered and its arrival.
According to Dr. Matthews, adding the two dealerships would
only exacerbate the existing product supply problems and cause
greater inconvenience to GMC customers in the area. Dr. Matthews
stated that it was not in the public interest to have small dealers with
small inventories, thereby requiring buyers to visit several GMC
dealers to see all the vehicles they wanted to view. Furthermore, Dr.
Matthews believed that the cross-selling data showed there was
adequate competition among GMC dealers in the relevant areas, and
he felt that GMC should have fewer and larger dealers in the Chicago
area. The evidence also showed that growth was unlikely except for
a new housing development called the Glen in the Loren relevant
market area. Matthews estimated that this new development would
only result in an annual sales increase of five GMC vehicles at most.
Under these circumstances, we find that there was sufficient
evidence to support the Board’s conclusion that adding the
dealerships would not serve the public interest and was not warranted
by existing economic conditions when balancing the interests involved.
Accordingly, we conclude that the Board’s findings should not be
disturbed because they were not against the manifest weight of the
evidence, and its ultimate conclusion to grant the protests was not
clearly erroneous.
III. Vagueness
GMC next argues that the Act is unconstitutionally vague because
a manufacturer cannot determine in advance when a dealership can be
added to the market. In support of its argument, GMC relies upon
Fields Jeep-Eagle, Inc. v. Chrysler Corp., 163 Ill. 2d 462 (1994),
where this court held a previous version of the Act unconstitutional on
separation of powers grounds.
In determining whether a statute has been shown to be
unconstitutional, we begin with the presumption that all statutes are
constitutional. People v. Waid, 221 Ill. 2d 464, 480 (2006). The
burden of rebutting that presumption is on the party challenging the
validity of the statute to demonstrate clearly a constitutional violation.
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People v. Greco, 204 Ill. 2d 400, 406 (2003). If reasonably possible,
a statute must be construed so as to affirm its constitutionality and
validity. Greco, 204 Ill. 2d at 406.
A statute is not unconstitutionally vague if it is explicit enough to
serve as a guide to those who must comply with it. Ardt v. Illinois
Department of Professional Regulation, 154 Ill. 2d 138, 157 (1992).
Moreover, a statute is considered unconstitutionally vague only if its
terms are so ill-defined that the ultimate decision as to its meaning
rests on the opinions and whims of the trier of fact rather than any
objective criteria or facts. People ex rel. Sherman v. Cryns, 203 Ill. 2d
264, 291 (2003); People v. Burpo, 164 Ill. 2d 261, 266 (1995).
As noted above, section 2(v) of the Act defines “good cause” and
section 12(c) sets forth 11 circumstances the court must consider in
determining “good cause.” 815 ILCS 710/2(v), 12(c) (West 2004).
Administrative agencies must often resolve similar “cause” questions
against vagueness challenges because courts understand that it is
difficult for an administrative agency to anticipate every type of
conduct that might constitute “good cause.” See Ford Motor Co. v.
Motor Vehicle Review Board, 338 Ill. App. 3d 880, 889 (2003). But
the Franchise Act is even more detailed than some statutes that have
been upheld because it contains 11 factors for the Board to assess to
guide its determination.
In Piano v. State of California ex rel. New Motor Vehicle Review
Board, 103 Cal. App. 3d 412, 163 Cal. Rptr. 41 (1980), a California
court upheld the constitutionality of an automobile franchise statute
that is analogous to the Illinois Act, having a “good cause” standard
with just five statutory circumstances to consider to aid the
determination. The court held that the standards set forth in the statute
were adequate to guide those persons to be governed by the act, as
well as the hearing officer, the agency and the courts charged with
deciding cases under it. Piano, 103 Cal. App. 3d at 418, 163 Cal.
Rptr. at 44. In so holding, the court noted that fixing any more rigid
a standard would subvert the very purpose behind the delegation of
authority to the agency–which is to leave the decision to the body with
the expertise of handling complicated decisions that depend on “ ‘the
individual and varying local conditions.’ ” Piano, 103 Cal. App. 3d at
418, 163 Cal. Rptr. at 44, quoting Jenner v. City Council of the City
of Covina, 164 Cal. App. 2d 490, 499, 331 P.2d 176, 182 (1958).
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GMC’s reliance on Fields Jeep-Eagle, Inc. v. Chrysler Corp., 163
Ill. 2d 462 (1994), is misplaced. There, this court held an earlier
version of the Franchise Act (see Ill. Rev. Stat. 1989, ch. 121½, pars.
754(e)(8), 762(c); see also 815 ILCS 710/4(e)(8), 12(c) (West 1992))
unconstitutional based on separation of powers grounds, finding that
courts are not adequately equipped to make the difficult decision of
“independently and originally appraising and determining the
appropriate location for a business.” Fields, 163 Ill. 2d at 472. In so
doing, this court commented that several of the statutory
circumstances that the court is to inquire into are “subjective and/or
speculative in nature and involve competing public and private
interests.” Fields, 163 Ill. 2d at 476. GMC seizes upon this language
to argue that the statutory scheme is unconstitutionally vague. GMC
takes this language from Fields out of context, however, because the
court was merely making its observation in the context of noting that
courts are not equipped to make the statutory determination because
it involves a legislative inquiry into the public interest, which could not
be delegated to the judiciary. Fields, 163 Ill. 2d at 478-79. Fields
observed that the majority of state statutes provide for a single
administrative agency or board to hear and to decide the merits of
protests against the establishment of an additional dealership in a
particular area. Fields, 163 Ill. 2d at 477. The reason that it is best to
have a board decide these kinds of issues in the first instance is that
“[t]he independent determination of what facts are pertinent and the
assessment of those facts as they bear upon whether a business should
be allowed to operate at a given location are not functions which
courts are generally equipped to perform or with which they should
be burdened ***.” Fields, 163 Ill. 2d at 477.
In response to the Fields decision, the legislature amended the Act
to create a Motor Vehicle Review Board to hear dealer protests under
the Act. 815 ILCS 710/1 et seq. (West 1996) (amended by Pub. Act
89–145, eff. July 14, 1995). Nothing in Fields indicates that the
language of the Act would be unconstitutionally vague if a board were
created to hear disputes under the Act. Indeed the opposite conclusion
can be drawn from the concluding paragraph of Fields, where this
court recognized the interest of the State in regulating the dealings of
motor vehicle manufacturers and dealers so as to redress the disparity
in economic and bargaining power between manufacturers and their
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franchises. Fields, 163 Ill. 2d at 479-80. The court in Fields
concluded that it was aware that numerous states have enacted
regulatory legislation requiring a determination of whether to allow
the establishment of a dealership based on the same or similar factors
as those set out in section 12(c) of the Act. Fields, 163 Ill. 2d at 480.
GMC does not cite any case holding a “good cause” standard
unconstitutionally vague where an agency’s decision was guided by a
list of statutory factors to aid its determination. Nor does GMC offer
any persuasive argument to support its position. Accordingly, we find
that the Act’s standard for making a “good cause” determination is
not unconstitutionally vague.
IV. Commerce Clause
GMC next argues that the Franchise Act violates the commerce
clause of the United States Constitution (U.S. Const., art. I, §8, cl. 3).
According to GMC, the statute improperly favors purely local
interests over interstate commerce because it contains a provision that
states that “good cause shall not be shown solely by a desire for
further market penetration.” See 815 ILCS 710/12(c)(7) (West 2004).
A state statute is valid under the commerce clause if it
evenhandedly effectuates a legitimate local public interest, the effect
on interstate commerce is only incidental, and the burden on
commerce is not clearly excessive to the local benefits. Pike v. Bruce
Church, Inc., 397 U.S. 137, 142, 25 L. Ed. 2d 174, 178, 90 S. Ct.
844, 847 (1970). If a legitimate local purpose is found, then the
question becomes one of degree: the extent of the burden that will be
tolerated will depend on the nature of the local interest involved, and
on whether it could be promoted as well with a lesser impact on
interstate activities. Pike, 397 U.S. at 142, 25 L. Ed. 2d at 178, 90 S.
Ct. at 847.
The United States Supreme Court has upheld the constitutionality
of a California automobile franchise statute that is similar to Illinois’
statute, finding a disparity of bargaining power between automobile
manufacturers and their franchisees, and holding that such laws
promote fair dealing and protect small businesses. New Motor Vehicle
Board v. Orrin W. Fox Co., 439 U.S. 96, 100-02, 58 L. Ed. 2d 361,
370-71, 99 S. Ct. 403, 407-08 (1978). Additionally, the Fourth Circuit
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Court of Appeals relied upon Orrin Fox and upheld a franchise statute
against a commerce clause challenge where the statute prohibited
establishment of an automobile franchise if the State Commissioner of
Motor Vehicles determined the market could not support all of the
dealerships. American Motor Sales Corp. v. Division of Motor
Vehicles of Commonwealth of Virginia, 592 F.2d 219 (4th Cir. 1979).
We find that our Franchise Act serves the same legitimate public
interests noted in Orrin Fox and American Motors Sales. See also
Fireside Nissan, 30 F.3d at 218 (“Certainly the state’s desire to
protect local dealers and consumers from harmful franchising practices
is a lawful legislative goal”). Thus, we find that the Franchise Act
effectuates a legitimate local interest under the Pike test.
The cases relied upon by GMC to support its commerce clause
argument are either distinguishable or unpersuasive. See General
GMC Trucks, Inc. v. General Motors Corp., 239 Ga. 373, 377, 237
S.E.2d 194, 197 (1977); H.P. Hood & Sons, Inc. v. Du Mond, 336
U.S. 525, 530-31, 93 L. Ed. 865, 870, 69 S. Ct. 657, 661 (1949);
Buck v. Kuykendall, 267 U.S. 307, 313, 69 L. Ed. 623, 625, 45 S. Ct.
324, 325 (1925). In General GMC Trucks, the Georgia Supreme
Court found its state’s automobile franchise statute unconstitutional
because it did not effectuate a public interest. General GMC Trucks,
Inc., 239 Ga. at 377, 237 S.E.2d at 197. The case was decided,
however, before the United States Supreme Court rendered its
decision in Orrin Fox, which expressly found the protection of
existing new-car dealers to be a legitimate purpose. Thus, the Georgia
Supreme Court’s decision is of limited value.
Buck is distinguishable because the Franchise Act does not
distinguish between out-of-state and in-state manufacturers and
therefore it regulates evenhandedly. In contrast, the statute in Buck
applied to common carriers engaged exclusively in interstate
commerce. Buck, 267 U.S. at 313, 69 L. Ed. at 625, 45 S. Ct. at 325.
H.P. Hood is also distinguishable. There, the avowed purpose of
a law regulating the milk industry was economic isolation and the
curtailment of the volume of interstate commerce. H.P. Hood & Sons,
Inc., 336 U.S. at 530-31, 93 L. Ed. at 870, 69 S. Ct. at 661. In the
present case, the Franchise Act has the legitimate purpose of
redressing the disparity in bargaining power between manufacturers
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and their franchisees, and there has been no showing of any decrease
in interstate commerce.
Finally, we conclude that the Franchise Act passes constitutional
muster under the Pike test because any burden that the Act places on
interstate commerce is not clearly excessive in relation to the local
benefits. As the appellate court noted,
“In finding that the Virginia statute did not impose such a
burden, the Fourth Circuit noted that even with the statute, the
manufacturer and its competitors can still supply the market
area with all the vehicles it can absorb, and the public can still
buy the manufacturer’s brand from the existing dealership or
choose to buy a competitive brand. American Motors, 592
F.2d at 223. It also noted that in addressing the antitrust issue
in New Motors, the Supreme Court recognized the California
Act did have an anticompetitive effect but noted that ‘ “ ‘if an
adverse effect on competition were, in and of itself, enough to
render a state statute invalid, the States’ power to engage in
economic regulation would be effectively destroyed.’ ” ’
American Motors, 592 F.2d at 224, quoting New Motor, 439
U.S. at 111, 58 L. Ed. 2d at 376-77, 99 S. Ct. at 412, quoting
Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 133, 57
L. Ed. 2d 91, 105, 98 S. Ct. 2207, 2218 (1978). Thus, the
Fourth Circuit noted something in addition to such a restraint
on competition must be shown to establish an unconstitutional
burden on interstate commerce, and there, no other effect than
a restriction of intrabrand competition was demonstrated.”
361 Ill. App. 3d at 286-87, quoting American Motors, 592
F.2d at 224.
We agree with the analysis of our appellate court and the Fourth
Circuit in American Motors. GMC has not demonstrated any other
effect beyond a restriction on intrabrand competition. Therefore, the
Act does not place an excessive burden on interstate commerce, and
we conclude that the it does not violate the commerce clause.
V. Equal Protection and Special Legislation
GMC’s final argument is that the Act violates the equal protection
clause of both the Illinois Constitution of 1970 (Ill. Const. 1970, art.
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I, §2), and the United States Constitution (U.S. Const., amend. XIV),
as well as the special legislation clause of the Illinois Constitution (Ill.
Const. 1970, art. IV, §13). GMC contends that there is no principled
basis for giving protection to car dealership franchises but denying the
same kind of protection to other types of franchises.
The special legislation clause prohibits the General Assembly from
conferring a special benefit or privilege upon one person or group and
excluding others that are similarly situated. Schiller, 221 Ill. 2d at 149.
A special legislation challenge is generally judged by the same
standards as an equal protection claim. Crusius v. Illinois Gaming
Board, 216 Ill. 2d 315, 325 (2005). Moreover, in applying an equal
protection analysis, we apply the same standard under both the United
States Constitution and the Illinois Constitution. Wauconda Fire
Protection District v. Stonewall Orchards, LLP, 214 Ill. 2d 417, 434
(2005).
A special legislation inquiry first involves the determination of
whether the statute discriminates in favor of a select group. Allen v.
Woodfield Chevrolet, Inc., 208 Ill. 2d 12, 22 (2003). If it does, this
court must then determine whether the classification created by the
statute is arbitrary. Allen, 208 Ill. 2d at 22. Where the statute does not
affect a fundamental right or involve a suspect classification, it will be
judged under the deferential rational basis test, and the statute will be
upheld if the legislative classification is rationally related to a
legitimate state interest. Crusius, 216 Ill. 2d at 325. Thus, if this court
can reasonably conceive of any set of facts that justify a distinction
between the class the statute benefits and the class outside its scope,
we will uphold the statute. Crusius, 216 Ill. 2d at 325. Again, we note
that a statute carries a presumption of constitutionality and the party
attacking it bears the burden of establishing its infirmity. Schiller, 221
Ill. 2d at 148.
Here, we find that the Franchise Act creates a legislative
classification by treating existing automobile dealers differently than
other kinds of franchise owners. However, the classification is related
to the legitimate government purposes of redressing the disparity in
bargaining power between automobile manufacturers and their
existing dealers and of protecting the public from the negative impact
of harmful franchise practices by automobile manufacturers.
Additionally, the means employed by the statute–requiring a
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determination by a neutral body that establishing a new dealership
satisfies the “good cause” standard by taking into account
considerations that are directly related to the purposes served by the
statute–is rationally related to the legitimate purposes of the statute.
Accordingly, we find that GMC has not met its burden of establishing
that the statute is unconstitutionally infirm.
CONCLUSION
For the foregoing reasons, we affirm the judgment of the appellate
court.
Affirmed.
JUSTICE KARMEIER, dissenting:
The majority opinion implicitly recognizes that the Act itself fails
to provide a serviceable definition of “good cause” and “commercial
reasonableness,” and it casts about in search of one (see slip op. at 9-
10), but a coherent and workable definition is never found or applied.
The court touts a definition of “commercial reasonableness” it derives,
not from a franchising context, but from a California case dealing with
bulk sales and California’s Uniform Commercial Code (slip op. at 10,
citing Gifford v. J. & A. Holdings, 54 Cal. App. 4th 996, 63 Cal. Rptr.
2d 253 (1997)), defining “commercial reasonableness” as “commonly
accepted commercial practices of responsible businesses which afford
all parties fair treatment” (see slip op. at 10, quoting Gifford, 54 Cal.
App. 4th at 1005-06, 63 Cal. Rptr. 2d at 259); however, I see no
evidence that the court has utilized even that standard in its review of
this matter.
Perhaps that is because the standard is so vague that it provides no
meaningful guidance to either the parties whom it affects, the
administrative body charged with implementing it, or courts which
must review the administrative action. Perhaps it is because the
definition has no real utility in the context of an Act whose sole
purpose is to protect only one group: motor vehicle franchisees.
With respect to the first possibility, I would acknowledge that the
legislature may delegate authority to an administrative body to
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perform certain functions, however, in order to properly delegate such
authority, the legislature must provide sufficient standards to guide the
administrative body in the exercise of its functions. See East St. Louis
Federation of Teachers, Local 1220 v. East St. Louis School District
No. 189 Financial Oversight Panel, 178 Ill. 2d 399, 423 (1997). A
law vesting discretionary power in an administrative body or officer
must properly define the terms under which the discretion is to be
exercised (In re Application for Judgment & Sale of Delinquent
Properties for the Tax Year 1989, 167 Ill. 2d 161, 176 (1995)) and
provide intelligible standards (Hoogasian v. Regional Transportation
Authority, 58 Ill. 2d 117, 130 (1974)). Similarly, in order to provide
adequate notice to those whom it affects, the statute must be explicit
enough to serve as a guide to those who must comply with it. Ardt v.
Illinois Department of Professional Regulation, 154 Ill. 2d 138, 157
(1992). A statute is considered unconstitutionally vague if its terms
are so ill-defined that the ultimate decision as to its meaning rests on
the opinions and whims of the trier of fact rather than any objective
criteria or facts. People ex rel. Sherman v. Cryns, 203 Ill. 2d 264, 291
(2003). In my opinion, the Act does not satisfy the applicable criteria.
Thus, I believe that the Act is an improper delegation of the
legislature’s authority and unconstitutionally vague. The majority’s
reliance upon the term “good cause” and the “11 circumstances” set
forth in section 12(c) of the Act (815 ILCS 710/12(c) (West 2004))
does not persuade me otherwise. With the exception of subsections
(5) and (8), those factors address only the interests of the protesting
dealers, only one of the groups whose interests are at stake. As for
subsections (5) and (8), they speak only of “the public welfare” and
the “public interest,” without providing any substantive guidance as
to what those vague concepts mean, or even who is subsumed in “the
public.” This court has previously observed that “the Act does not
state or identify what the overall or ultimate public interest is.” Fields
Jeep-Eagle, Inc. v. Chrysler Corp., 163 Ill. 2d 462, 478 (1994). As
far as I am aware, no legislative action has been taken since Fields to
remedy that deficiency.
It is that deficiency which brings the discussion to the second
possibility I previously mentioned. I believe the majority never again
discusses its imported definition of “commercial reasonableness”
because the majority at some level recognizes that the Act, and its “11
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circumstances,” display very little in the way of genuine concern for
the interests of the manufacturer, its citizen-shareholders, or
consumers generally, and it essentially provides no guidance as to how
their interests might be identified and weighed.
The disingenuously benevolent language of the Act’s “Declaration
of purpose” (815 ILCS 710/1.1 (West 2004) (purporting to promote,
inter alia, “the public interest and welfare” and that of “consumers
generally”)) rings hollow when the substantive provisions of the Act
are applied. In practice, the Act benefits neither manufacturers–and
the many citizens who have invested in them–nor consumers. This
court has acknowledged as much:
“The several statutory purposes and goals stated in this
section are consistent with neither each other nor with various
of the competing interests expressed in section 12(c).
Protecting the private economic interests of dealers in their
dealership investments and properties may, for example,
militate against the allowance of an additional dealership and
thereby frustrate the goal of protecting consumer interests by
ensuring competition and convenience for consumers.
Conversely, the allowance of an additional dealership which
has the capability of offering lower prices and better service
than an existing dealership may benefit consumers but result
in a loss of business or even the entire investment of the
existing dealer.
*** [T]he Act does not state or identify what the overall
or ultimate public interest is.” Fields Jeep-Eagle, 163 Ill. 2d
at 478.
The “standards” of the Act are inadequate to provide the guidance
necessary to achieve the purported goals of section 1.1. Thus, the
“assessment” of the administrative body becomes the “standard” itself.
See slip op. at 8.
Beyond that deficiency, and notwithstanding its seemingly lofty
purpose of protecting “the public interest and welfare” and
“consumers generally,” this Act is clearly nothing more than a
protectionist measure favoring existing motor vehicle dealerships, and
it should be acknowledged as such. In my opinion, there is no rational
basis to justify a distinction between the class the statute benefits and
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the class outside its scope. In short, it is special legislation. As Justice
Cook noted in his insightful appellate court dissent: “Motor Vehicle
Franchise Acts *** were justified on the basis of a ‘disparity in
bargaining power between automobile manufacturers and their
dealers.’ [New Motor Vehicle Board v. Orrin W. Fox Co., 439 U.S.
96, 100, 58 L. Ed. 2d 361, 370, 99 S. Ct. 403, 407 (1978).]” 361 Ill.
App. 3d at 293 (Cook, P.J., dissenting). As the Supreme Court noted
in New Motor, at the time of that decision, “ ‘there exist[ed] only 5
passenger-car manufacturers, 3 of which produce[d] in excess of 95
percent of all passenger cars sold in the United States.’ ” New Motor,
439 U.S. at 100 n.4, 58 L. Ed. 2d at 370 n.4, 99 S. Ct. at 407 n.4,
quoting S. Rep. No. 2073, 84th Cong., 2d Sess., 2 (1956). That is no
longer the case. As Justice Cook observes:
“We now live in a world of franchises. Motor vehicle dealers
are given special treatment not enjoyed by other franchisees,
who must protect themselves by the contracts they sign.
Motor vehicle manufacturers from around the world now
compete in the United States. New manufacturers can put
dealers wherever they want them. Established manufacturers,
such as General Motors, cannot.” 361 Ill. App. 3d at 293
(Cook, P.J., dissenting).
Indeed, the contract is a well-known and time-honored device
particularly suited to establishing the legal rights of parties before they
enter into agreements and governing the nature and conditions of their
relationship thereafter. If dealerships wish to limit the geographical
proximity of other franchises, that would be a matter for negotiation
before an agreement is concluded, when the parties’ expectations are
on the table. I fail to see how motor vehicle franchises differ in any
significant respect from franchises for food service, home
improvement or gas stations, just to name a few. All may have citizen
investors who believe they stand to lose business and money when
other franchises are granted in their area. Perhaps I am unaware of
franchise laws protecting them; my belief is that they protect
themselves through the contracts they sign.
As for any claimed disparity in bargaining power between
automobile manufacturers and their dealers, I agree with Justice
Cook’s observation that the world has indeed changed since the
Supreme Court’s 1978 decision in New Motor, a development of
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which GMC is no doubt well aware. Three manufacturers no longer
dominate the American market, as automobile manufacturers struggle
for market share, profitability, and in some instances survival. In such
a business climate it seems implausible that a manufacturer would
want to add dealerships that are not viable or purposefully risk
disruption in the chain of distribution by undermining its existing
dealerships. I simply fail to see how motor vehicle franchisees are in
a less favorable position, vis-á-vis their franchisers, than other
franchisees are with respect to theirs. The majority’s one-paragraph
rejection of GMC’s special legislation argument offers no explanation.
Because I believe the majority opinion offers no meaningful
standard of review, and because I believe the Motor Vehicle Franchise
Act is unconstitutional, I respectfully dissent.
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