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Sims v. Nissan North America, Inc.

Court of Appeals of Ohio, Tenth District

June 25, 2013

William R. Sims et al., Appellants-Appellants,
Nissan North America, Inc., Appellee-Appellee. Nissan North America, Inc., Appellant-Appellant,
William R. Sims et al., Appellees-Appellees.

APPEAL from the Franklin County Court of Common Pleas (C.P.C. Nos. 12CVF-04-4310, 12CVF-04-4683)

Morganstern, MacAdams & DeVito Co., L.P.A., and Christopher M. DeVito, for appellants William R. Sims and Buick-GMC Truck, Inc.

Taft, Stettinius & Hollister LLP, Joseph C. Pickens and Steven C. Fitch; Dorsey & Whitney LLP, Steven J. Wells and Rebecca Weisenberger, for appellee Nissan North America, Inc.

Stockamp & Brown, LLC, David A. Brown, Deanna L. Stockcamp and John C. Camillus, for Amicus Curiae.



{¶ 1} This consolidated appeal originated as an administrative protest by Sims Buick GMC Nissan and William R. Sims ("Sims") against Nissan North America, Inc. ("Nissan") because Nissan sought to terminate Sims' new car dealership. Sims filed a protest with the Ohio Motor Vehicle Dealers Board ("Board") and prevailed at the administrative level. Sims was awarded attorney fees and costs, but in an amount less than requested by Sims' counsel.

{¶ 2} The Franklin County Court of Common Pleas affirmed the order of the Board sustaining the protest of Sims, affirmed the order not to award expert witness fees, affirmed the award of costs in the amount of $8, 447.80, and remanded the matter for an evidentiary hearing to support and justify the attorney fees of Sims' counsel.

{¶ 3} Sims has appealed the fee award, while Nissan has appealed the merits of the protest. Both the common pleas court and this court consolidated the appeals. In addition, the Ohio Automobile Dealers Association and the National Automobile Dealers Association conditionally filed a friend of the court brief and moved for leave to do so. We grant the motion.


{¶ 4} After Nissan provided notice to Sims that Nissan intended to terminate Sims' dealer agreement, Sims filed a protest with the Board under R.C. 4517.54(C) challenging Nissan's proposed termination. Nissan's reason for termination was Sims' failure to achieve Nissan's standard benchmark for sales performance, known as the regional sales effectiveness ("RSE"). Sims protested that the RSE formula was unreasonable and discriminatory under the unique circumstances of the case.

{¶ 5} The protest was heard by the Board's hearing examiner from October 18 through October 21, 2010. The primary issue in the protest was whether Nissan's use of the RSE sales penetration standard was reasonable under the unique circumstances of this case. The hearing examiner recommended that the Board sustain the protest, finding that Nissan had not met its burden of showing good cause for the termination. The Board approved the report and recommendation, and later granted in part Sims' request for attorney fees and costs.


{¶ 6} In its appeal on the merits of the protest action, Nissan assigns the following as error:

I. The Board and the Court erred as a matter of law by concluding that Nissan's sales performance standard, which Nissan uniformly applies to all of its dealers in Ohio and nationwide, was "unreasonable" pursuant to R.C. §§ 4517.55(A)(1), (7) and (B)(5) because it was not uniquely tailored to Sims' market, and by requiring Nissan to evaluate Sims using a sales performance standard different from that applied to all other Ohio Nissan dealers.
II. The Board erred as a matter of law by concluding that the statutory "good cause" factors set forth in R.C. §§ 4517.55(A)(1) and (7) weighed in favor of Sims, and the Court erred as a matter of law by upholding those Board conclusions.
III. The Board erred as a matter of law when it filed to make any factual findings pursuant to R.C. §§ 4517.55(A)(1) and (7) regarding whether additional sales were available to Sims, despite its "conclusions of law" that these factors weighed in favor of Sims, and the Court erred as a matter of law by excusing the Board's failure.
IV. The Court abused its discretion when it upheld the Board's conclusion that the "good cause" factors set forth in R.C. §§ 4517.55(A)(1) and (7) weighed in favor of Sims and that Nissan's sales performance standard was unreasonable.
V. The Court erred by upholding the Board's conclusion that Sims' Protest should be sustained.


{¶ 7} As an initial matter, we address the appropriate standard of review. A party adversely affected by an order of an agency may appeal that order to the court of common pleas. That court must affirm the order of the agency if "it finds, upon consideration of the entire record and any additional evidence the court has admitted, that the order is supported by reliable, probative, and substantial evidence and is in accordance with law." R.C. 119.12; Pons v. Ohio State Med. Bd., 66 Ohio St.3d 619, 621 (1993). The court of common pleas' "review of the administrative record is neither a trial de novo nor an appeal on questions of law only, but a hybrid review in which the court 'must appraise all the evidence as to the credibility of the witnesses, the probative character of the evidence, and the weight thereof.' " Lies v. Veterinary Med. Bd., 2 Ohio App.3d 204, 207 (1st Dist.1981), quoting Andrews v. Bd. of Liquor Control, 164 Ohio St. 275, 280 (1955).

{¶ 8} The standard of review for a court of appeals in an administrative appeal is more limited than that of the court of common pleas. The court of appeals' review is limited to determining whether the court of common pleas abused its discretion. Scheidler v. Ohio Bur. of Workers' Comp., 10th Dist. No. 04AP-584, 2005-Ohio-105, ¶ 10. " 'The term "abuse of discretion" connotes more than an error of law or judgment; it implies that the court's attitude is unreasonable, arbitrary or unconscionable.' " Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983), quoting State v. Adams, 62 Ohio St.2d 151, 157 (1980). On questions of whether the agency's order was in accordance with the law, this court's review is plenary. Gralewski v. Ohio Bur. of Workers' Comp., 167 Ohio App.3d 468, 2006-Ohio-1529, ¶ 17.

{¶ 9} Here, a transcript of the proceedings was not part of the official record transmitted electronically to the court of common pleas on June 1, 2012. Although Nissan characterizes its arguments as questions of law, the failure to provide a transcript of the testimony of lay or expert witnesses does not allow us to review the factual determinations made on the basis of the testimony. We do not view selected excerpts submitted as part of an appendix as a substitute for a transcript. Therefore, we accept all factual determinations as true.


{¶ 10} Nissan argues that the Board erred as a matter of law by requiring it to apply different sales performance criteria in a discriminatory manner contrary to statute. The Ohio Motor Vehicle Dealer Act, R.C. 4517.01 et seq., governs the termination of new motor vehicle franchises. R.C. 4517.54(A) requires that "good cause" be established before a franchisor can terminate a new motor vehicle franchise. In addition, R.C. 4517.55(A) states, in pertinent part: "In determining whether good cause has been established by the franchisor for terminating * * * a franchise, the motor vehicle dealers board shall take into consideration the existing circumstances, including, but not limited to, " and then the statute lists nine non-exclusive factors that may weigh for or against termination. One factor, in and of itself, can serve as a sufficient basis to establish good cause. If the Board does not find good cause, the franchisor may not terminate the franchise agreement. R.C. 4517.54(D). Moreover, R.C. 4517.55(B)(5) provides that "[f]ailure of the franchisee to achieve any unreasonable or discriminatory performance criteria" specifically does not constitute good cause to terminate a franchise. Here, the Board concluded that the performance criteria were unreasonable as applied to Sims.

{¶ 11} In addition, manufacturers are prohibited from "discriminating against a franchisee, as compared to a same line-make franchisee, with regard to * * * motor vehicle sales expectations, [and] motor vehicle market penetration. R.C. 4517.59(A)(15).

{¶ 12} According to the dealer agreement between Sims and Nissan, it is permissible for Nissan to measure the dealer's sales penetration in relation to the dealer's assigned primary market area ("PMA"). The hearing examiner found that:

Sales penetration calculates a dealer's new vehicle sales (regardless of where they are registered) as a percentage of the registrations of all competitive makes in the dealer's PMA. To gauge sales penetration effectiveness, a dealer's sales penetration is then compared as a ratio to [Nissan's] sales penetration throughout the dealer's assigned region to determine whether the dealer being analyzed is penetrating its PMA below, at or above the average for all Nissan dealers in the region. * * * ...

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