A Massachusetts judge has upheld a decision by Subaru of New England Inc. to let a suburban Boston dealership move over objections by another local dealership.
There will be no further appeal, according to an attorney for the unsuccessful protester, Subaru of Wakefield Inc.
In 1996, Subaru of New England approved the sale of the assets of Gauthier Motors Inc., a poorly performing store in Salem, to David Rosenberg, who intended to rename the dealership as Ira Subaru and move it to Auto Row in Danvers, where his family held other franchises.
Gauthier was 8.9 miles 'as the crow flies' from Wakefield's store, while the Danvers site is about seven miles from it, according to the judge.
Subaru of New England is an independent Subaru of America distributor with the authority to appoint or move franchises in its territory, subject to consent of Subaru of America Inc.
Before granting approval, Subaru of New Eng land updated its market study and concluded that the move would not introduce a new franchisee within Wakefield's relevant market area.
Wakefield unsuccessfully pro-tested to Subaru of New England under a state law that lets affec ted dealers challenge the appointment of an 'additional franchisee' in their market area. Subaru of New England then sued Wakefield for court approval to proceed with the transaction.
The relocation took effect in 1997, while the case was pending.
After a nonjury trial, Norfolk County Superior Court Justice Patrick Brady rejected the challenge, saying Wakefield didn't have legal standing to protest because the relocation was not the appointment of an 'a dditional franchisee' under the dealer law.
In addition, Subaru of New England's decision was not arbitrary, he held.
'The relocation of Ira Subaru to Danvers was warranted by economic and marketing conditions, including antic ipated future changes,' Brady said. For example, the distributor's market analysis showed there was room for more business north of Boston in the mid-1990s, and 'the presence of intrabrand competition is not necessarily harmful and can increase business for all due to heavier promotion and visibility of the product.'
And the relocation proved good for Wakefield as well, according to the judge: 'By all relevant financial measures, Wakefield has been very successful since the Ira move. Wakefield's new-vehicle unit sales substantially increased after the relocation. Likewise, its gross revenue on new-vehicle sales substantially increased.'
Howard Cooper, the Boston lawyer who represents Subaru of New England in the case, said the decision has two major implications:
'First, it makes very clear that a distributor which gathers relevant market information in good faith, attempts to share it with an objectin g dealer and then goes forward with the move does not act arbitrarily,' he said.
Beyond that, Cooper said the decision shows that judges are 'perfectly capable' of handling dealer protests and that a legislative proposal to establish a state motor vehicle industry board is unnecessary.
That proposal, now pending in the Massachusetts Senate, would create an administrative board to handle franchisee-franchiser disputes and allow an automatic injunction until a matter is resolved, he said. In the Wakefield case, an automatic injunction would have blocked Ira Subaru's relocation for the three years the dispute had been going on.