Barber Grp., Inc. v. New Motor Vehicle Bd.

93 Cal.App.5th 1025

311 Cal.Rptr.3d 476

BARBER GROUP, INC., Plaintiff and Appellant,

v.NEW MOTOR VEHICLE BOARD, Defendant and Respondent,American Honda Motor Co., Inc. et al. Real Parties in Interest.

C095058

Court of Appeal, Third District, California.

Filed July 24, 2023

Certified for Partial Publication.^*

Law Offices of Gavin M. Hughes, Gavin M. Hughes, Robert A. Mayville, Jr., Sacramento; Clyde & Co. and Douglas J. Collodel, Los Angeles, for Plaintiff and Appellant.

Rob Bonta, Attorney General, Chris A. Knudsen, Assistant Attorney General, Kelsey Linnett and John T. McGlothlin, Deputy Attorneys General, for Defendant and Respondent.

Nelson Mullins Riley & Scarborough, Shawtina F. Lewis, Torrance, S. Keith Hutto and Steven McFarland for Real Party in Interest American Honda Motor Co., Inc.

Alan Skobin, North Hills, for Real Party in Interest Galpinsfield Automotive, LLC.

BOULWARE EURIE, J.

Before a car manufacturer may establish a new car dealership in California, it must notify all its existing brand dealers within 10 miles of the proposed new dealership. An existing brand dealer that receives this notice may challenge the proposed establishment of the new dealership in a "protest" before California's New Motor Vehicle Board (Board). In that hearing, the protesting dealer has the burden of proof to establish good cause for the Board to disallow establishment of the new dealership.

( Veh. Code, § 3066, subd. (b).)¹ But in "any proceeding in which the reasonableness of a performance standard ... is an issue, the manufacturer ... shall have the burden of proof." (§ 11713.13, subd. (g)(2).) Which rule governs when a dealer challenges the reasonableness of manufacturer performance standards in an "establishment" protest? This case calls upon us to answer that question.

Here, Barber Group, Inc., doing business as Barber Honda (Barber)—a car dealer in Bakersfield, California—brought an establishment protest, challenging a decision by American Honda Motor Co., Inc. (Honda) to open a new dealership about nine miles away. The Board overruled Barber's protest, and the trial court denied Barber's petition for administrative mandate challenging the Board's decision. On appeal, Barber argues the Board prejudicially erred when it: (1) relied on Honda's dealer performance standards at the protest hearing without first deciding whether those standards were reasonable (with Honda bearing the burden of proof on that question), contrary to section 11713.13, subdivision (g) ; (2) permitted the proposed new dealership to exercise a peremptory challenge to an administrative law judge initially assigned to the protest hearing, contrary to notions of fairness and the Board's own order in the matter; and (3) denied Barber's request that it take official notice of the effects of the COVID-19 pandemic. We affirm.

BACKGROUND

Barber, the sole Honda dealer in the Bakersfield area for over 45 years, sits in an "auto mall" where most major brands are represented, including Toyota, Honda's primary competitor. The nearest Honda dealership is approximately 67 miles away.

In October 2017, Honda informed Barber it intended to establish a new dealership north of the City of Bakersfield, about 9.1 miles away from Barber, and 0.5 miles from a second Toyota dealership in the area. Most people in the greater Bakersfield area live in the space between the proposed site and Barber.

After Barber filed its protest to the establishment of the new dealership, an administrative law judge (ALJ) heard evidence from 15 witnesses over 16 days between September 2019 and January 2020. In June 2020, the ALJ issued a 43-page proposed decision, concluding Barber failed to demonstrate good cause to disallow establishment of the new Honda dealership.

Pertinent here, the ALJ found the proposed new dealership would "not materially impact Barber," because "sales will increase." This was a reasonable inference, the ALJ explained in part, because on three prior occasions in other parts of the country, after Honda added a new dealership where there already were existing dealerships in a market, five of the six prior existing dealerships had increased sales. Further, the ALJ reasoned, the proposed new dealership would lead to "more advertising promoting the ... Honda brand in the market area" and "provide another option for customers to have their vehicles serviced," potentially influencing Toyota buyers to buy a Honda instead.

The ALJ also found that "Honda's brand [was] not adequately represented in the Bakersfield Metro" area. Barber was "not capturing the available opportunity" to sell Hondas, making the dealership "one of ... Honda's worst performers in California." The ALJ rejected any suggestion by Barber that Honda had the burden to prove the reasonableness of any performance standards ostensibly undergirding these findings, explaining that "the burden is on Barber ... and [s]ection 11713.13[, subdivision] (g) is inapplicable here because that section applies" when "measuring the performance of an individual dealer, which is not an issue in this case."

After the Board adopted the ALJ's proposed decision as its own ruling, Barber challenged the decision in a petition for writ of administrative mandate, which the trial court denied. Barber timely appealed. Barber's opening brief was filed on October 7, 2022. The case became fully briefed on February 6, 2023, and was assigned to this panel shortly thereafter.

DISCUSSION

I

Dealer Protests & Performance Standards

Barber argues the Board erred when it relied on Honda's dealer performance standards in rejecting Barber's establishment protest without first determining the reasonableness of the standards, with Honda bearing the burden of proof on that question. The Board does not dispute it considered Honda's dealer performance standards. Rather, it contends section 11713.13, subdivision (g) did not apply to Barber's establishment protest. We agree with the Board.

When analyzing the respective texts of relevant statutes, the " ‘ "court must, where reasonably possible, harmonize statutes, reconcile seeming inconsistencies in them, and construe them to give force and effect to all of their provisions." ’ " ( State Dept. of Public Health v. Superior Court (2015) 60 Cal.4th 940, 955, 184 Cal.Rptr.3d 60, 342 P.3d 1217 ( Public Health ).) The statutory considerations found within section 3066, subdivision (b) and the considerations found within section 11713.13, subdivision (g) conflict in the context of establishment protests. We must harmonize the conflicting statutes to the extent we can "and thus one must be interpreted as providing an exception to the other." ( Public Health, at p. 956, 184 Cal.Rptr.3d 60, 342 P.3d 1217.) Here, the more specific establishment protest statutory scheme provides an exception to the performance standards statutory scheme.

A. Standard of Review

The parties agree this mandamus appeal is governed by Code of Civil Procedure section 1094.5, subdivision (b), which frames the relevant inquiry as whether the Board "has proceeded without, or in excess of, jurisdiction; whether there was a fair trial; and whether there was any prejudicial abuse of discretion. Abuse of discretion is established if the [Board] has not proceeded in the manner required by law, the order or decision is not supported by the findings, or the findings are not supported by the evidence." ( Code Civ. Proc., § 1094.5, subd. (b).)

Where, as here, the relevant facts are undisputed, and the appellant's claim an agency failed to proceed in a manner required by law concerns the interpretation of a statute, the standard of review is de novo. ( Christensen v. Lightbourne (2017) 15 Cal.App.5th 1239, 1251, 223 Cal.Rptr.3d 779.) We review without reference to the trial court's decision. ( McGill v. Regents of University of California (1996) 44 Cal.App.4th 1776, 1786, 52 Cal.Rptr.2d 466.)

B. Legislative Background

1. Existing Car Dealer Protests

Concerns about the disparity in bargaining power between car manufacturers and car dealers in California prompted the Legislature " ‘ "to enact legislation to protect retail car dealers from perceived abusive and oppressive acts by the manufacturers." ’ " ( Subaru of America, Inc. v. Putnam Automotive, Inc . (2021) 60 Cal.App.5th 829, 836, 275 Cal.Rptr.3d 120.) In that regard, and in order to prevent "undue control" of car dealers by manufacturers, section 3000 et seq. and section 11700 et seq. " ‘establish a statutory scheme regulating’ " this relationship. ( Subaru , at p. 843, 275 Cal.Rptr.3d 120 ; § 3000, as amended by Stats. 1973, ch. 996, § 1 [legislation "necessary ... to avoid undue control of the independent new motor vehicle dealer by the vehicle manufacturer"].)

In 1973, the Legislature empowered the Board to adjudicate certain disputes between manufacturers and dealers, including disputes regarding the establishment of new dealerships in California. ( Mazda Motor of America, Inc. v. New Motor Vehicle Bd . (2003) 110 Cal.App.4th 1451, 1458, 2 Cal.Rptr.3d 866.) Now, before a manufacturer may establish a new dealership in California, it must notify the Board and each existing dealer of the "same line-make" (i.e., the same brand) within 10 miles of the potential new dealership. ( § 3062, subd. (a)(1) ; § 507 ["The ‘relevant market area’ is any area within a radius of 10 miles from the site of a potential new dealership"].) An existing dealer that receives this notice "may file with the board a protest to the proposed dealership establishment." ( § 3062, subd. (a)(1).)

If a protest is filed, there must be an evidentiary hearing to determine whether "there is good cause for not permitting the establishment of the proposed dealership." ( § 3062, subd. (a)(1).) In that hearing, the Board must consider "existing circumstances, including, but not limited to": (a) the permanency of the existing dealer's investment; (b) the effect "on the retail motor vehicle business and the consuming public in the relevant market...