Volkswagen of America, Inc. v. Quillian

COURT OF APPEALS OF VIRGINIA

Present: Judges Benton, Clements and Senior Judge Coleman
Argued at Richmond, Virginia

VOLKSWAGEN OF AMERICA, INC.
OPINION BY
v. Record No. 1947-01-2 JUDGE JEAN HARRISON CLEMENTS
SEPTEMBER 17, 2002
ASBURY W. QUILLIAN, COMMISSIONER
OF THE VIRGINIA DEPARTMENT OF
MOTOR VEHICLES AND
MILLER AUTO SALES, INC.

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Melvin R. Hughes, Jr., Judge

James R. Vogler, pro hac vice (Randall L.
Oyler; Steven J. Yatvin; Douglas M. Palais;
Brian L. Buniva; Patricia A. Collins; Barack
Ferrazzano Kirschbaum Perlman & Nagelberg;
McCandlish Kaine, P.C, on briefs), for
appellant.

Richard L. Walton, Jr., Senior Assistant
Attorney General (Randolph A. Beales,
Attorney General; Richard B. Campbell, Deputy
Attorney General, on brief) for appellee
Asbury W. Quillian, Commissioner of the
Department of Motor Vehicles.

Brad D. Weiss (C. Michael Deese; Michael C.
Gartner; Charapp, Deise & Weiss, LLP, on
brief), for appellee Miller Auto Sales, Inc.

This appeal arises from a decree of the Circuit Court of the

City of Richmond (circuit court) affirming the ruling by Richard

D. Holcomb, former Commissioner of the Virginia Department of

Motor Vehicles (commissioner), that the method used by Volkswagen

of America, Inc. (Volkswagen) to allocate its newly manufactured

motor vehicles to Miller Auto Sales, Inc. (Miller) was in
violation of Code § 46.2-1569(7), and finding that the

commissioner exceeded his authority in requiring Volkswagen, in

remedy of that violation, to implement a new method of vehicle

allocation that complied with Code § 46.2-1569(7). On appeal,

Volkswagen challenges the circuit court's affirmance of the

commissioner's determination that Volkswagen violated Code

§ 46.2-1569(7), contending the circuit court erred in rejecting

Volkswagen's claims that (1) Code § 46.2-1569(7) is

unconstitutionally vague, (2) Code § 46.2-1569(7) violates the

Commerce Clause of the United States Constitution, (3) the

commissioner's determination exceeded the scope of his authority

under Code § 46.2-1569(7) because it was based on Volkswagen's

method of vehicle allocation rather than the specific numbers of

vehicles allocated by Volkswagen; and (4) the commissioner failed

to provide Volkswagen adequate procedural protections and

wrongfully placed the burden of proving compliance with Code

§ 46.2-1569(7) on Volkswagen. On cross-appeal, Miller contends

the circuit court erred in ruling that the remedy imposed by the

commissioner exceeded the commissioner's statutory authority. In

addition, the commissioner challenges the jurisdiction of this

Court to decide this appeal, contending in his motion to dismiss

that the decree appealed from was not a final decision of the

circuit court, as required by Code § 17.1-405.
For the reasons that follow, we deny the commissioner's

motion to dismiss the appeal as to the commissioner's

determination that Volkswagen violated Code § 46.2-1569(7) and

grant it as to the unresolved issue of what remedy the

commissioner may impose. Accordingly, we dismiss Miller's

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cross-appeal regarding the issue of remedy. Additionally, we

affirm the circuit court's judgment that the commissioner

correctly determined that Volkswagen violated Code

§ 46.2-1569(7).

I. BACKGROUND

The record reveals that, on February 9, 1998, Miller, a

retail dealer of Volkswagen-brand motor vehicles in Winchester,

Virginia, filed a complaint with the Department of Motor Vehicles

challenging Volkswagen's allocation of newly manufactured

vehicles. Miller maintained that Volkswagen's allocation of

vehicles violated Code § 46.2-1569(7) 1 to Miller's detriment.

1
Code § 46.2-1569(7) provides:

Notwithstanding the terms of any
franchise agreement, it shall be unlawful for
any manufacturer, factory branch,
distributor, or distributor branch, or any
field representative, officer, agent, or
their representatives:

* * * * * * *

7. To fail to ship monthly to any
dealer, if ordered by the dealer, the number
of new vehicles of each make, series, and
model needed by the dealer to receive a
percentage of total new vehicle sales of
each make, series, and model equitably
related to the total new vehicle production
or importation currently being achieved
nationally by each make, series, and model
covered under the franchise. Upon the
written request of any dealer holding its
sales or sales and service franchise, the
manufacturer or distributor shall disclose
to the dealer in writing the basis upon
which new motor vehicles are allocated,
scheduled, and delivered to the dealers of
the same line-make. In the event that
allocation is at issue in a request for a
hearing, the dealer may demand the
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 Following the appointment of a hearing officer to preside

over the proceedings on Miller's complaint, Volkswagen, the

distributor of Volkswagen-brand motor vehicles in the United

States and Canada, filed a motion to dismiss the proceedings on

constitutional grounds. The hearing officer overruled the motion

and subsequently conducted a formal evidentiary hearing on

Volkswagen's alleged failure to provide to Miller an equitable

number of vehicles in violation of Code § 46.2-1569(7). The

hearing officer received factual and expert evidence, much of

which focused on Volkswagen's vehicle allocation system and

methodology rather than on the actual number of vehicles shipped

by Volkswagen to Miller.
Following the hearing, the hearing officer issued a proposed

decision dated May 25, 1999. In that decision, the hearing

officer stated that, throughout the period of time covered by

Miller's complaint, starting in 1997, Volkswagen's vehicle

allocation system was based on a mathematical formula that

calculated the allocation of new vehicles to the dealers in

Miller's sales area on the basis of the inventory of those

dealers and their anticipated and actual vehicle sales. The

hearing officer found that, while equitably "designed with the

logic that vehicles should be allocated where they were likely to

be sold [and] where they were needed because of low inventory,"

Commissioner to direct that the manufacturer
or distributor provide to the dealer, within
thirty days of such demand, all records of
sales and all records of distribution of all
motor vehicles to the same line-make dealers
who compete with the dealer requesting the
hearing.
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Volkswagen's allocation formula unfairly penalized small-volume

dealers like Miller in practice. The hearing officer stated

that, because it truncated, i.e., rounded down, fractional

vehicle allocations and did not allow fractional vehicle

allocations to accumulate, the allocation formula used by

Volkswagen effectively prevented Miller, which was the

smallest-volume dealer in its sales area, from acquiring vehicles

in short supply, such as the newly released Passat and Beetle

models.
The hearing officer also observed that the inequities in the

allocation formula were compounded by Volkswagen's adoption of

the practice of adjusting vehicle allocations to its dealers

based on customer satisfaction survey scores. That practice, the

hearing officer found, inequitably punished Miller, "whose scores

were generally lower than those of other dealers in Miller's

[sales] area." The hearing officer stated that "one could

reasonably conclude from some of the statistical evidence

presented . . . that the restriction of allocations itself

created a vicious cycle of lower [customer satisfaction] scores,

as customers who were delayed in receiving ordered vehicles, or

who could not get vehicles precisely as specified, might well be

less satisfied with Miller." The hearing officer added that

Volkswagen's "own witnesses seemed to recognize that [the

practice of using customer satisfaction scores as a basis of

allocating vehicles] was punitive and inequitable." Accordingly,

the hearing officer found that Volkswagen failed to "show that

utilization of [customer satisfaction scores] as a governor on

the allocation system was fair and equitable."

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 The hearing officer also found that Volkswagen failed to

show that its purported policy of overriding the allocation

formula to assure that each dealer had at least one vehicle in

stock of each model was adequate to remedy the inequities in the

allocation methodology and make it compliant with Code

§ 46.2-1569(7). The hearing officer added that, despite

Volkswagen's testimony that this policy was a "hallowed and

long-standing 'unwritten rule' for allocation," it appeared to be

a rule that was honored in this case only after Miller requested

a hearing before the Department of Motor Vehicles.
Finding Volkswagen's allocation methodology "flawed in its

design and deficient in its operation," the hearing officer

concluded that Volkswagen was in violation of Code § 46.2-1569(7)

and recommended, inter alia, that the commissioner require

Volkswagen to replace its vehicle allocation methodology with a

new, compliant one and prohibit Volkswagen from "utilizing

allocations or vehicle supply as an incentive or disincentive in

support of any [Volkswagen] program, unless explicitly permitted

under [an] . . . approved Franchise Agreement."

On July 12, 1999, the commissioner issued a "Hearing

Decision," adopting the hearing officer's findings and most of

his recommendations. The commissioner concluded that

Volkswagen's "allocation methodology [did] not conform to and

[was] in violation of Code § 46.2-1569(7)." The commissioner

ordered Volkswagen to replace its "current vehicle allocation

methodology with a new methodology that complies with the

provisions of . . . Code § 46.2-1569(7)" and prohibited

Volkswagen from "utilizing allocations or vehicle supply as an

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incentive or disincentive in support of any [Volkswagen] program,

unless explicitly permitted under a[n] . . . approved Franchise

Agreement."

Volkswagen appealed the commissioner's decision to the

circuit court, contending that the commissioner erred in finding

Volkswagen had violated Code § 46.2-1569(7) and that the

commissioner lacked the authority to order Volkswagen to change

its allocation system. In its letter opinion dated March 15,

2001, the circuit court concluded that the commissioner's

determination that Volkswagen's vehicle allocation system

violated Code § 46.2-1569(7) was consistent with law and

supported by the record. The court also determined, however,

that the commissioner exceeded his authority in ordering

Volkswagen to adopt a new vehicle allocation system because such

a remedy was not expressly authorized by the motor vehicle code.

The only remedies available to the commissioner in this case, the

court observed, were to declare Volkswagen in violation of the

statute and to revoke Volkswagen's license to do business in

Virginia.
The circuit court entered a "Final Decree and Order of

Dismissal" on June 29, 2001. In that decree, which incorporated

the court's letter opinion, the court concluded that there was "a

sufficient basis in the administrative record to support the

. . . [c]ommissioner's determination that [Volkswagen's] vehicle

allocation system in effect at the time of the proceedings below

violated . . . Code § 46.2-1569(7)." The court also concluded

that "the [c]ommissioner exceeded his statutory authority with

respect to the remedies imposed and the relief granted against

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[Volkswagen]." Accordingly, the court, acting pursuant to Code

§ 9-6.14:19, suspended and set aside the commissioner's decision

and remanded the matter to the commissioner with instructions to

modify the "remedy to be imposed consistent with law."

On July 26, 2001, while the remand to the commissioner for a

modification of the remedy was pending, Volkswagen noted an

appeal to this Court, assigning error on several grounds to the

circuit court's affirmance of the commissioner's ruling that

Volkswagen had violated Code § 46.2-1569(7). In its response,

Miller assigned cross-error to the circuit court's determination

that the commissioner exceeded his statutory authority in

requiring Volkswagen to remedy its violation by modifying its

vehicle allocation method. Relying on Muse v. Virginia Alcoholic

Beverage Control Board, 9 Va. App. 74, 78-79, 384 S.E.2d 110,

112-13 (1989), Miller argues the commissioner's imposition of

such a remedy is necessarily inherent in the commissioner's

express power to revoke a distributor's right to distribute

vehicles in Virginia for a violation of Code § 46.2-1569(7).

Acting on the circuit court's remand, the commissioner

issued a "Final Hearing Decision (On Remand)," dated November 13,
2
2001. In that decision, the commissioner concluded that the

only remedy consistent with law that he could impose in this case

was a declaration that Volkswagen had violated Code

§ 46.2-1569(7). According to counsel, both Miller and Volkswagen

appealed the commissioner's decision to the circuit court. On

2
Although not a part of our official record in this case,
Volkswagen included this decision in its response to the
commissioner's motion to dismiss.

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February 1, 2002, the commissioner filed a motion in this Court

to dismiss the instant appeal for lack of appellate jurisdiction.

II. MOTION TO DISMISS

Initially, we address the commissioner's motion to dismiss

this appeal. The commissioner contends the circuit court's June

29, 2001 "Final Decree and Order of Dismissal" appealed from by

Volkswagen is not a "final" decision because the circuit court

remanded the matter to the commissioner for modification of the

remedy and because the commissioner's subsequent decision based

on that remand is now back before the circuit court on appeal.

Consequently, the commissioner argues, this Court lacks

jurisdiction over these proceedings and should dismiss the

appeal.
"The Court of Appeals of Virginia is a court of limited

jurisdiction. Unless a statute confers jurisdiction in this

Court, we are without power to review an appeal." Canova Elec.

Contracting, Inc. v. LMI Ins. Co., 22 Va. App. 595, 600, 471

S.E.2d 827, 830 (1996) (citation omitted). Code § 17.1-405(1)

grants us appellate jurisdiction over "[a]ny final decision of a

circuit court on appeal from a decision of an administrative

agency." Code § 17.1-405(4) grants us appellate jurisdiction

over "[a]ny interlocutory decree or order entered in [such a

case] granting, dissolving, or denying an injunction or . . .

adjudicating the principles of a cause."

"A final decree is one '"which disposes of the whole

subject, gives all the relief that is contemplated, and leaves

nothing to be done by the court."'" Erikson v. Erikson, 19 Va.

App. 389, 390, 451 S.E.2d 711, 712 (1994) (quoting Southwest

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Virginia Hosps. v. Lipps, 193 Va. 191, 193, 68 S.E.2d 82, 83-84

(1951) (quoting Ryan v. McLeod, 73 Va. (32 Gratt.) 367, 376

(1879))). Here, the circuit court's June 29, 2001 "Final Decree

and Order of Dismissal" does not meet this standard. In filing

the complaint that commenced these proceedings, Miller sought a

determination by the commissioner that Volkswagen's vehicle

allocation system violated Code § 46.2-1569(7) and a remedy for

that violation. The decree entered by the circuit court affirmed

the commissioner's determination that Volkswagen's allocation

methodology violated Code § 46.2-1569(7) but also held that the

remedy imposed by the commissioner exceeded his statutory

authority and remanded the matter to the commissioner for

modification of the remedy. The circuit court's decree,

therefore, is not a final decree "which disposes of the whole

subject [and] gives all the relief that is contemplated."
Thus, the circuit court's decree is an interlocutory decree,

but clearly not one that grants, dissolves, or denies an

injunction. Hence, unless the circuit court's decree

"adjudicates the principles of the cause," we lack jurisdiction

to consider this appeal. Erikson, 19 Va. App. at 391, 451 S.E.2d

at 712.

In order to adjudicate the principles of
a cause, a decree must decide an issue which
"would of necessity affect the final order in
the case." [Pinkard v. Pinkard, 12 Va. App.
848, 851, 407 S.E.2d 339, 341 (1991)]. The
decree must "determine the rules by which the
court will determine the rights of the
parties." Id. It must "respond to the chief
object of the suit . . . ." Id. at 852, 407
S.E.2d at 341-42 (emphasis added). However,
"[t]he mere possibility" that an
interlocutory decree "may affect the final
decision in the trial does not necessitate an

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 immediate appeal." Id. at 853, 407 S.E.2d at
342.

Polumbo v. Polumbo, 13 Va. App. 306, 307, 411 S.E.2d 229, 229

(1991).

In this case, the circuit court's ruling affirming the

commissioner's determination that Volkswagen's vehicle allocation

methodology violated Code § 46.2-1569(7) would of necessity

affect the final order in the case. Additionally, that

affirmance responded to the chief object of the case and

established the rules by which the rights of the parties would be

determined. We find, therefore, that the circuit court's decree

is an interlocutory decree that adjudicated the principles of the

cause with regard to the issue of whether Volkswagen violated

Code § 46.2-1569(7). Application of the same analysis with

regard to the issue of the remedy that may be imposed, however,

leads to the converse result. Consequently, we find that,

because the circuit court remanded the issue of remedy to the

commissioner for further resolution, its decree did not

adjudicate the principles of the cause with regard to the remedy

issue.
Hence, we conclude, on the particular circumstances of this

case, that the circuit court's "Final Decree and Order of

Dismissal" is an interlocutory decree subject to appellate review

under Code § 17.1-405(4) as to the commissioner's determination

that Volkswagen violated Code § 46.2-1569(7), but is neither an

appealable final decree nor an appealable interlocutory decree as

to the unresolved remaining issue of what remedy may be imposed

by the commissioner. Accordingly, we deny the commissioner's

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motion to dismiss this appeal for lack of jurisdiction as it

relates to Volkswagen's breach of Code

§ 46.2-1569(7) and grant it as it relates to the remedy to be

imposed for that breach.

We turn, therefore, to the merits of Volkswagen's appeal.

III. STANDARD OF REVIEW

On appeal of an administrative agency's decision, "[t]he

party complaining of an agency action has the burden of

demonstrating an error of law subject to review." Hilliards v.
Jackson, 28 Va. App. 475, 479, 506 S.E.2d 547, 549 (1998). The

reviewing court must view the facts "in the light most favorable

to the agency." Id. "The sole determination as to factual

issues is whether substantial evidence exists in the agency

record to support the agency's decision." Johnston-Willis, Ltd.

v. Kenley, 6 Va. App. 231, 242, 369 S.E.2d 1, 7 (1988). In

making that determination, "the reviewing court shall take due

account of the presumption of official regularity, the experience

and specialized competence of the agency, and the purposes of the

basic law under which the agency has acted." Id. "The reviewing

court may reject the agency's findings of fact only if,

considering the record as a whole, a reasonable mind necessarily

would come to a different conclusion." Id.

With regard to an agency's decision on legal issues, the

standard of review to be applied on appeal depends upon the

nature of the legal question involved. Id. at 243, 369 S.E.2d at

8. "'"If the issue falls outside the area generally entrusted to

the agency, and is one in which the courts have special

competence, [e.g.], the common law or constitutional law,"' the

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court need not defer to the agency's interpretation." Chippenham

& Johnston-Willis Hosps., Inc. v. Peterson, 36

Va. App. 469, 475, 553 S.E.2d 133, 136 (2001) (quoting Kenley, 6

Va. App. at 243-44, 369 S.E.2d at 8 (quoting Hi-Craft Clothing

Co. v. NLRB, 660 F.2d 910, 914-15 (3d Cir. 1981))); see also

Browning-Ferris Indus. v. Residents Involved in Saving the Env't,

Inc., 254 Va. 278, 284, 492 S.E.2d 431, 434 (1997) (noting that,

when reviewing issues "purely . . . of law, . . . we do not apply

a presumption of official regularity or take account of the

experience and specialized competence of the administrative

agency"). Hence, where the issues to be reviewed on appeal

involve, for example, the constitutionality of a statute, pure

statutory interpretation, or the question of "whether an agency

has . . . accorded constitutional rights, failed to comply with

statutory authority, or failed to observe required procedures,

less deference is required and the reviewing courts should not

abdicate their judicial function and merely rubber-stamp an

agency determination." Kenley, 6 Va. App. at 243, 369 S.E.2d at

7-8.

"However, where the question involves an interpretation

which is within the specialized competence of the agency and the

agency has been entrusted with wide discretion by the General

Assembly, the agency's decision is entitled to special weight in

the courts." Id. at 244, 369 S.E.2d at 8. In such an instance,

"'"judicial interference is permissible only for relief against

the arbitrary or capricious action that constitutes a clear abuse

of delegated discretion."'" Id. (quoting Va. Alcoholic Beverage

Control Comm'n v. York St. Inn, Inc., 220 Va. 310, 315, 257

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S.E.2d 851, 855 (1979) (quoting Schmidt v. Bd. of Adjustment, 88

A.2d 607, 615-16 (N.J. 1952))).

IV. VOID FOR VAGUENESS

Code § 46.2-1569(7) requires, in pertinent part, that a

distributor

ship monthly to any dealer, if ordered by the
dealer, the number of new vehicles of each
make, series, and model needed by the dealer
to receive a percentage of total new vehicle
sales of each make, series, and model
equitably related to the total new vehicle
production or importation currently being
achieved nationally by each make, series, and
model covered under the franchise.
Volkswagen contends the trial court, in affirming the

commissioner's determination that Volkswagen violated Code

§ 46.2-1569(7), erred in ruling that Code § 46.2-1569(7) is not

unconstitutionally vague. Volkswagen maintains Code

§ 46.2-1569(7) is unconstitutionally vague because it fails to

provide standards or guidance for determining how many new

vehicles a distributor must ship to a particular dealer in order

to achieve the number of new vehicles that is "equitably related

to the total new vehicle production or importation currently

being achieved nationally." Volkswagen argues that, because the

term "equitably" is not defined in the statute and provides no

guidance as to what conduct is lawful or what is prohibited and

effectively delegates sole authority to the commissioner to

determine what number of new vehicles shipped to a dealer

satisfies the statute, Code § 46.2-1569(7) is void for vagueness.

We disagree.

"Every law enacted by the General Assembly carries a strong

presumption of validity. Unless a statute clearly violates a

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provision of the United States or Virginia Constitutions, we will

not invalidate it." City Council v. Newsome, 226 Va. 518, 523,

311 S.E.2d 761, 764 (1984). "The burden is on the challenger to

prove the alleged constitutional defect." Perkins v.

Commonwealth, 12 Va. App. 7, 14, 402 S.E.2d 229, 233 (1991).

We are guided in our consideration of this issue by Village

of Hoffman Estates v. The Flipside, Hoffman Estates, Inc., 455

U.S. 489 (1982). In that case, the Supreme Court stated that

"'[[v]agueness] challenges to statutes which do not involve First

Amendment freedoms must be examined in the light of the facts of

the case at hand.'" Id. at 495 n.7. The Court further stated

that laws must not only "'give the person of ordinary

intelligence a reasonable opportunity to know what is prohibited,

so that he may act accordingly,'" but also "'provide explicit

standards for those who apply them'" in order to prevent

"'arbitrary and discriminatory enforcement.'" Id. at 498

(quoting Grayned v. City of Rockford, 408 U.S. 104, 108-09

(1972)). The Court added, however, that

[t]he degree of vagueness that the
Constitution tolerates—as well as the
relative importance of fair notice and fair
enforcement—depends in part on the nature of
the enactment. Thus, economic regulation is
subject to a less strict vagueness test
because its subject matter is often more
narrow, and because businesses, which face
economic demands to plan behavior carefully,
can be expected to consult relevant
legislation in advance of action. Indeed,
the regulated enterprise may have the ability
to clarify the meaning of the regulation by
its own inquiry, or by resort to an
administrative process. The Court has also
expressed greater tolerance of enactments
with civil rather than criminal penalties
because the consequences of imprecision are
qualitatively less severe. . . .

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 Finally, perhaps the most important
factor affecting the clarity that the
Constitution demands of a law is whether it
threatens to inhibit the exercise of
constitutionally protected rights. If, for
example, the law interferes with the right of
free speech or of association, a more
stringent vagueness test should apply.

Id. at 498-99 (footnotes omitted).

Applying these standards for evaluating whether a statute is

impermissibly vague to the present case, we find no merit in

Volkswagen's vagueness argument. See also Fallon Florist v. City
of Roanoke, 190 Va. 564, 590, 58 S.E.2d 316, 329 (1950) (holding

that "a statute is not fatally indefinite because questions may

arise as to its applicability, or opinions may differ with

respect to what falls within its terms, or because it is

difficult to enforce"). Code § 46.2-1569(7) regulates only

economic conduct 3 and does not threaten any constitutionally

protected rights. In addition, knowing it was immediately

relevant to its allocation of newly manufactured vehicles,

Volkswagen had the opportunity to consult the statute and clarify

its meaning by inquiry. Moreover, the statute subjected

Volkswagen solely to civil penalties in the event of a violation.

Thus, to sustain its void for vagueness challenge,

Volkswagen had to show that Code § 46.2-1569(7) was vague, "'"not

in the sense that it require[d] a person to conform his conduct

to an imprecise but comprehensible normative standard, but rather

in the sense that no standard of conduct [was] specified at

all."'" Village of Hoffman Estates, 455 U.S. at 495 n.7 (quoting

3
Volkswagen concedes on appeal that Code § 46.2-1569(7) is
an economic regulation.
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Smith v. Goguen, 415 U.S. 566, 578 (1974) (quoting Coates v. City

of Cincinnati, 402 U.S. 611, 614 (1971))). Volkswagen, we

conclude, failed to meet this burden.

Volkswagen knew, as a distributor of motor vehicles to

dealers in Virginia, it was required under Code § 46.2-1569(7) to

provide Miller with "the number of new vehicles . . . needed by

the dealer to receive a percentage of total new vehicle sales

. . . equitably related to the total new vehicle production or

importation currently being achieved nationally." As the circuit

court stated in its letter opinion, the purpose of the statute is

to ensure that dealers located in Virginia "get their fair share

of cars, regardless of the [vehicle allocation] method[] a

manufacturer [or distributor] chooses" to employ. The language

challenged—"equitably"—is in "everyday usage and is commonly

understood." Southern Ry. Co. v. Commonwealth, 205 Va. 114, 117,

135 S.E.2d 160, 164 (1964). The term "equitably" means "in an

equitable manner." Webster's Third New International Dictionary

769 (1993). "Equitable" means "fair to all concerned . . . :

without prejudice, favor, or rigor entailing undue hardship."
Id. Clearly, then, read naturally, Code § 46.2-1569(7) provided

Volkswagen with notice that, in employing a vehicle allocation

formula that inherently penalized small-volume dealers by

preventing them, unlike larger-volume dealers, from acquiring

vehicles in short supply, it was engaging in conduct that was not

"fair to all concerned" and not "without prejudice" and, thus,

was prohibited by the statute.

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 Furthermore, as the Supreme Court said in Boyce Motor Lines,

Inc. v. United States, 342 U.S. 337, 340 (1952),

few words possess the precision of
mathematical symbols, most statutes must deal
with untold and unforeseen variations in
factual situations, and the practical
necessities of discharging the business of
government inevitably limit the specificity
with which legislators can spell out
prohibitions. Consequently, no more than a
reasonable degree of certainty can be
demanded. Nor is it unfair to require that
one who deliberately goes perilously close to
an area of proscribed conduct shall take the
risk that he may cross the line.
In that same vein, the Supreme Court has distinguished between

those statutes that are impermissibly vague and those that simply

provide a flexible standard by which conduct is to be judged.

See, e.g., Grayned, 408 U.S. at 110 (observing that the words of

an anti-noise statute that was not impermissibly vague were

marked by "flexibility and reasonable breadth, rather than

meticulous specificity").

Guided by these principles, we conclude, on the

circumstances of this case, that Code § 46.2-1569(7) specifies a

standard of conduct that, while necessarily flexible, was

sufficiently definite and clear to give Volkswagen fair warning

that its conduct was unlawful. Accordingly, we affirm the

circuit court's ruling that Code § 46.2-1569(7) is not

unconstitutionally vague as applied to Volkswagen's conduct.

V. COMMERCE CLAUSE

Volkswagen contends the trial court, in affirming the

commissioner's determination that Volkswagen violated Code

§ 46.2-1569(7), erred in ruling that Code § 46.2-1569(7) does not

violate the Commerce Clause of the United States Constitution.

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Volkswagen argues Code § 46.2-1569(7) violates the Commerce

Clause because it impermissibly regulates interstate commerce.

We disagree.

The Supreme Court "has adopted a two-tiered approach to

analyzing state economic regulation under the Commerce Clause."

Healy v. Beer Institute, 491 U.S. 324, 337 n.14 (1989).

"When a state statute directly regulates or
discriminates against interstate commerce,
or when its effect is to favor in-state
economic interests over out-of-state
interests, we have generally struck down the
statute without further inquiry. When,
however, a statute has only indirect effects
on interstate commerce and regulates
evenhandedly, we have examined whether the
State's interest is legitimate and whether
the burden on interstate commerce clearly
exceeds the local benefits."

Id. (quoting Brown-Forman Distillers Corp. v. New York State

Liquor Auth., 476 U.S. 573, 579 (1986)).

In this case, Volkswagen does not argue that Code

§ 46.2-1569(7) discriminates against interstate commerce or that

it favors in-state interests over out-of-state interests.
Likewise, Volkswagen does not dispute that Code § 46.2-1569(7)

regulates all distributors of motor vehicles evenhandedly or that

the statute's asserted interest—to assure that the dealers in

Virginia get their fair share of new vehicles—is legitimate.

Rather, Volkswagen contends solely that Code § 46.2-1569(7) is

per se invalid because it directly regulates interstate

commerce. 4 Volkswagen argues that, by requiring distributors to

4
Accordingly, we need concern ourselves only with the first
part of the first tier of the test set forth in Healy. Indeed,
in its reply brief on appeal, Volkswagen chides the other
- 19 -
ship motor vehicles to its Virginia dealers in accordance with

production or importation levels "being achieved nationally,"

Code § 46.2-1569(7) has the effect of forcing distributors "to

apply an allocation methodology in all other states that comports

with Virginia's standards." This, Volkswagen maintains,

constitutes direct regulation of interstate commerce, in

violation of the Commerce Clause.

The Supreme Court set forth in Healy, 491 U.S. at 336-37,

the governing principles for determining whether a statute has an

impermissible extraterritorial effect, as follows:
First, the "Commerce Clause . . . precludes
the application of a state statute to
commerce that takes place wholly outside of
the State's borders, whether or not the
commerce has effects within the State[.]"
Edgar v. MITE Corp., 457 U.S. 624, 642-43
(1982) (plurality opinion); see also
Brown-Forman Distillers Corp., 476 U.S. at
581-83[.] . . . Second, a statute that
directly controls commerce occurring wholly
outside the boundaries of a State exceeds the
inherent limits of the enacting State's
authority and is invalid regardless of
whether the statute's extraterritorial reach
was intended by the legislature. The
critical inquiry is whether the practical
effect of the regulation is to control
conduct beyond the boundaries of the State.
Brown-Forman Distillers Corp., 476 U.S. at
579. Third, the practical effect of the
statute must be evaluated not only by
considering the consequences of the statute
itself, but also by considering how the
challenged statute may interact with the
legitimate regulatory regimes of other States
and what effect would arise if not one, but
many or every, State adopted similar
legislation. Generally speaking, the
Commerce Clause protects against inconsistent

parties for including in their appellate briefs sweeping
Commerce Clause analyses that, in Volkswagen's opinion, focused
too much on the inapposite aspects of Healy's two-tiered
approach and too little on Volkswagen's single, narrow point of
contention.
- 20 -
 legislation arising from the projection of
one state regulatory regime into the
jurisdiction of another State. Cf. CTS Corp.
v. Dynamics Corp. of America, 481 U.S. 69,
88-89 (1987).

The question before us, then, is whether Code § 46.2-1569(7)

has the practical effect of controlling commercial activity

wholly beyond Virginia's borders. If so, it is per se invalid.

See Cotto Waxo Co. v. Williams, 46 F.3d 790, 793 (8th Cir. 1995)

(holding that a state statute is per se invalid under the

Commerce Clause when it has an extraterritorial effect, "that is,

when the statute has the practical effect of controlling conduct

beyond the boundaries of the state" (citing Healy, 491 U.S. at
336)).

For example, in Brown-Forman Distillers Corp., the Supreme

Court held that a New York statute requiring liquor distillers to

affirm that their posted in-state prices for the coming month

were no higher than the prices that would be charged for the same

products in other states during the same month was per se invalid

under the Commerce Clause. 476 U.S. at 582-84. The Court found

that the statute effectively controlled prices in other states

because, once the prices had been posted in New York, a distiller

could not lower its prices in any other state. Id.

Similarly, in Healy, the Supreme Court struck down a

Connecticut statute that required out-of-state beer shippers to

affirm that the prices they charged in Connecticut were no higher

than the lowest prices they charged for the same products in

bordering states. 491 U.S. at 343. The Court held the statute

to be unconstitutional because it had the impermissible practical

effect of "controlling commercial activity wholly outside of"

- 21 -
Connecticut. Id. at 337. The Court not only found that the

statute controlled prices in neighboring states and interfered

with the regulatory schemes in those states, but also observed

that the enactment of similar legislation by several or all

states would result in a "price gridlock." Id. at 340. Such

regional or national regulation of commercial activity, the Court

noted, is "reserved by the Commerce Clause to the Federal

Government and may not be accomplished piecemeal through the

extraterritorial reach of individual state statutes." Id.
The principles set forth in Healy and Brown-Forman

Distillers Corp. are not limited to price-affirmation statutes.

For instance, in NCAA v. Miller, 10 F.3d 633 (9th Cir. 1993),

cert. denied, 511 U.S. 1033 (1994), the United States Court of

Appeals for the Ninth Circuit held that a Nevada statute that

required the NCAA to provide different "procedural due process

protections" in Nevada enforcement proceedings than it provided

in enforcement proceedings in other states violated the Commerce

Clause per se because it directly regulated interstate commerce.
Id. at 640. Noting that the NCAA required uniform enforcement

procedures to operate effectively, the Ninth Circuit held that

the practical effect of the Nevada statute was to require the

NCAA "to apply Nevada's procedures to enforcement proceedings

throughout the country." Id. at 639. "In this way," the court

noted, the Nevada statute "could control the regulation of the

integrity of a product in interstate commerce that occurs wholly

outside Nevada's borders." Id. The court further observed that

other states had and could enact legislation establishing rules

for NCAA proceedings. Id. This, the court found, put the NCAA

- 22 -
"in jeopardy of being subjected to inconsistent legislation

arising from the injection of Nevada's regulatory scheme into the

jurisdiction of other states." Id. at 640.

In this case, Volkswagen relies on Healy, Brown-Forman

Distillers Corp., and NCAA to support its claim that Code

§ 46.2-1569(7) is per se invalid under the Commerce Clause

because it has an impermissible extraterritorial effect. In our

view, however, the cases cited are inapposite to our

consideration of the instant statute because, unlike the statutes

under consideration in those cases, Code § 46.2-1569(7) does not

have a direct practical effect on interstate commerce.
First, Code § 46.2-1569(7) does not have the practical

effect of imposing direct controls on out-of-state commercial

transactions, as did the price-control statutes in Brown-Forman

Distillers Corp. and Healy. Nothing in the statute ties the

number of vehicles allocated to dealers in Virginia to the number

of vehicles allocated to dealers in other states. Nor does the

statutue otherwise regulate the number of vehicles a distributor

may allocate in any other state. Moreover, the statute contains

no directive, or even suggestion, that vehicle allocations in

other states are to be conducted in accordance with Virginia's

requirements. Indeed, it references no other states and imposes

no mandates or restrictions on them.

Likewise, Code § 46.2-1569(7) does not have the practical

effect of directly interfering with regulatory procedures or

schemes in other states, as did the statute in NCAA. In essence,

Code § 46.2-1569(7) merely requires that a distributor provide to

a dealer in Virginia a number of new vehicles that is "equitably

- 23 -
related" to that distributor's national inventory and sales. It

places no restrictions, either expressly or by its practical

effect, on how a distributor may allocate vehicles in other

states. Indeed, aside from requiring a just result, Code

§ 46.2-1569(7) mandates no particular procedures or schemes for

allocating new vehicles in Virginia. Thus, it cannot be said

that the instant statute would force Volkswagen "to apply

[Virginia's allocation] procedures . . . throughout the country."

NCAA, 10 F.3d at 639.
Furthermore, despite Volkswagen's assertion to the contrary,

the effect of similar statutes being enacted in other states

would appear to be negligible. Certainly, the passage of

statutes that were truly similar to Code § 46.2-1569(7), in that

they required a distributor's allocation of vehicles within the

state to be "equitably" related to the distributor's national

inventory and sales or simply to be "reasonable" or "fair,"

without mandating specific allocation requirements or procedures,

would not result in distributors being subjected to inconsistent

obligations to states, as in NCAA, or "price gridlock," as in
Brown-Forman Distillers Corp. and Healy. We find nothing in the

record that convinces us otherwise. Specifically, we find no

evidence that the adverse effects on interstate commerce asserted

by Volkswagen would occur if similar legislation were passed in

other states. 5

5
This is not to say, of course, that all statutes
regulating the allocation of vehicles would have, if passed in
several or all states, as inconsequential an effect on
interstate commerce as the instant statute would. Indeed, we
can imagine any number of possible allocation statutes whose
cumulative effect on interstate commerce would, like the
- 24 -
 Moreover, we are guided by the Supreme Court's rejection of

a similar assertion in Exxon Corp. v. Maryland, 437 U.S. 117,

128-29 (1978). In that case, the Court considered the validity

of a Maryland statute prohibiting producers of petroleum from

operating retail service stations within the state. Id. at

119-20. Exxon and the other oil companies involved in the suit

argued, inter alia, that the cumulative effect of other states

passing legislation similar to Maryland's law would have serious

implications on their national operations. Id. at 128. The

Court responded to the appellants' argument as follows:
While this concern is a significant one, we
do not find that the Commerce Clause, by its
own force, pre-empts the field of retail gas
marketing. To be sure, "the Commerce Clause
acts as a limitation upon state power even
without congressional implementation." Hunt
v. Washington Apple Advertising Comm'n, 432
U.S. 333, 350 (1977). But this Court has
only rarely held that the Commerce Clause
itself pre-empts an entire field from state
regulation, and then only when a lack of
national uniformity would impede the flow of
interstate goods. See Wabash, St. Louis &
Pacific Ry. Co. v. Illinois, 118 U.S. 557
(1886); see also Cooley v. Board of Wardens,
53 U.S. 299, 319 (1851). The evil that
appellants perceive in this litigation is not
that the several States will enact differing
regulations, but rather that they will all
conclude that divestiture provisions are
warranted. The problem thus is not one of
national uniformity. In the absence of a
relevant congressional declaration of policy,
or a showing of a specific discrimination
against, or burdening of, interstate
commerce, we cannot conclude that the States
are without power to regulate in this area.
Id. at 128-29.

cumulative effects of the statues in NCAA, Brown-Forman
Distillers Corp., and Healy, be problematic under the Commerce
Clause. That is not the case before us, however.

- 25 -
 Here, we are aware of, and Volkswagen offers, no relevant

congressional declaration of policy that persuades us the

Commerce Clause preempts a state from regulating the allocation

of motor vehicles to the dealers in that state, particularly

where, as here, that regulation would have only a negligible

effect on interstate commerce if adopted by other states. 6 Nor

has Volkswagen made a showing of a specific discrimination

against, or burdening of, interstate commerce.

Thus, we conclude that Code § 46.2-1569(7) does not have the

practical effect of controlling commercial activity wholly beyond

Virginia's borders. We hold, therefore, that Volkswagen's claim

that the statute is per se invalid under the Commerce Clause
because it directly regulates interstate commerce is without

merit. Accordingly, we affirm the circuit court's ruling that

Code § 46.2-1569(7) does not violate the Commerce Clause of the

United States Constitution.

VI. SCOPE OF COMMISSIONER'S AUTHORITY

6
To the contrary, the congressional declaration of policy
that most closely relates to Code § 46.2-1569(7) would seem to
suggest otherwise. In enacting the Automobile Dealers' Day in
Court Act, 15 U.S.C. §§ 1221-25, in 1956, Congress clearly
recognized the need for government to "redress the economic
imbalance and unequal bargaining power between large automobile
manufacturers and local dealerships, protecting dealers from
unfair termination and other retaliatory and coercive practices."
Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78, 92
(3d Cir. 2000). The Act allows motor vehicle dealers to sue
manufacturers or distributors with whom it has a franchise
agreement for "failure to act in good faith in performing or
complying with the franchise terms or in canceling, not renewing,
or terminating the franchise." 15 U.S.C. § 1222. "The Act,
however, does not protect dealers against all unfair practices,
but only against those breaches of good faith 'evidenced by acts
of coercion or intimidation.'" Northview Motors, Inc., 227 F.3d
at 93 (quoting Salco Corp. v. General Motors Corp., 517 F.2d 567,
573 (10th Cir. 1975)). Limited thus, the Act cannot be read as
preempting the distribution of motor vehicles within a state from

- 26 -
 Volkswagen contends the trial court, in affirming the

commissioner's determination that Volkswagen violated Code

§ 46.2-1569(7), erred in ruling the commissioner did not exceed

the scope of his authority in making that determination.

Volkswagen maintains that, given Code § 46.2-1569(7)'s plain

language, the determination of whether a distributor has violated

the statute must be based, under the plain meaning rule

of statutory construction, on the actual number of vehicles

shipped by the distributor, rather than on the method of vehicle

allocation used by the distributor. In other words, Volkswagen

state regulation.
- 27 -
continues, Code § 46.2-1569(7) regulates solely "the actual

shipment of motor vehicles by a distributor, [not] how the

distributor decides to allocate vehicles." Consequently,

Volkswagen claims, the commissioner may consider and evaluate

only the number of vehicles received by a dealer, not the program

used to allocate those vehicles. Hence, Volkswagen concludes,

because the commissioner based his determination in this case on

Volkswagen's vehicle allocation methodology rather than the

specific numbers of vehicles Volkswagen allocated to Miller, he

exceeded the scope of his statutory authority. We disagree.
It would appear, at first glance, that Volkswagen's

contention is correct. The first sentence of Code § 46.2-1569(7)

does indeed require that a distributor ship to a dealer "the

number of new vehicles . . . needed by the dealer to receive a

percentage of total new vehicle sales . . . equitably related to

the total new vehicle production or importation currently being

achieved nationally." (Emphasis added.) However, as the circuit

court correctly pointed out, Volkswagen's argument fails to take

into account the plain meaning of the language of Code

§ 46.2-1569(7) that immediately follows the sentence quoted above

upon which Volkswagen relies. The second sentence of Code

§ 46.2-1569(7) reads, "Upon the written request of any dealer

holding its sales or sales and service franchise, the

manufacturer or distributor shall disclose to the dealer in

writing the basis upon which new motor vehicles are allocated,
scheduled, and delivered to the dealers of the same line-make."

(Emphasis added.) Plainly, the language "basis upon which new

- 28 -
motor vehicles are allocated" is intended to mean a distributor's

method or system of vehicle allocation.

In construing a statute, we are guided by the following well

established principles:

While in the construction of statutes
the constant endeavor of the courts is to
ascertain and give effect to the intention of
the legislature, that intention must be
gathered from the words used, unless a
literal construction would involve a manifest
absurdity. Where the legislature has used
words of a plain and definite import the
courts cannot put upon them a construction
which amounts to holding the legislature did
not mean what it has actually expressed.
Floyd, Trustee v. Harding & als., 69 Va. (28 Gratt.) 401, 405

(1877). "If, in the application of these principles, the

judiciary misconstrues legislative intent, the General Assembly

can correct the error." Fairfax Hosp. Sys. v. Nevitt, 249 Va.

591, 597-98, 457 S.E.2d 10, 14 (1995).

Applying these principles to the matter at hand, we conclude

that, taken together, the plain meaning of the first two

sentences of Code § 46.2-1569(7) reflects the intention of the

legislature to give the commissioner the flexibility necessary to

accurately determine whether a dealer has received its fair share

of vehicles from a distributor. Such flexibility, we believe, is
7
in keeping with the statute's remedial purpose and the
commissioner's stated powers in this area, 8 and would allow the

7
As previously noted, Code § 46.2-1569(7)'s purpose is to
assure that the dealers in Virginia get their fair share of new
vehicles.
8
"The Commissioner shall promote the interest of the retail
buyers of motor vehicles and endeavor to prevent unfair methods
of competition and unfair or deceptive acts or practices." Code
- 29 -
commissioner to "deal with [the] untold and unforeseen variations

in factual situations" that might present themselves. 9 Boyce

Motor Lines, Inc., 342 U.S. at 340. We hold, therefore, that, in

determining whether a distributor is in compliance with Code

§ 46.2-1569(7), the commissioner may consider and base his

determination on that

§ 46.2-1501. Clearly, ensuring the fair allocation of new
vehicles to dealers in Virginia promotes the interest of new-car
buyers in Virginia. As we have previously held, "a state
agency, 'in addition to its statutorily granted powers . . . has
incidental powers which are reasonably implied as a necessary
incident to its expressly granted powers for accomplishing [its]
purposes." Jackson v. W., 14 Va. App. 391, 399, 419 S.E.2d 385,
390 (1992) (quoting Bader v. Norfolk Redev. & Hous. Auth., 10
Va. App. 697, 702, 396 S.E.2d 141, 144 (1990)).
9
For example, such flexibility might be necessary in cases
where, for whatever reason, accurate vehicle distribution data
is unavailable and the commissioner must rely on the
distributor's allocation formula to determine the number of
vehicles allocated to a dealer. It might also be required in a
case such as this where the commissioner finds a distributor has
apparently increased its allocation of vehicles to a dealer only
after learning the dealer has filed a request for a hearing
before the commissioner. In such a case, the distributor's
allocation methodology may be a more accurate reflection of
whether the dealer truly received its fair share of vehicles.

- 30 -
distributor's vehicle allocation methodology. Hence, contrary to

Volkswagen's claim, the commissioner is not confined to examining

only the actual number of vehicles allocated.

Here, the hearing officer, after receiving evidence from the

parties, much of which focused on Volkswagen's vehicle allocation

system, found that Volkswagen's allocation method did not comply

with Code § 46.2-1569(7) because it was based on a mathematical

formula that unfairly penalized small-volume dealers like Miller.

The hearing officer further found that Volkswagen was unable to

show that its practice of adjusting vehicle allocations based on

customer satisfaction scores or its policy of allowing the area

executive to override the allocation formula was adequate to

counter the formula's inherent flaw. Adopting the hearing

officer's findings, the commissioner concluded that Volkswagen

had violated Code § 46.2-1569(7).
Having concluded that, in determining whether a distributor

has complied with Code § 46.2-1569(7), the commissioner may

consider the distributor's method of allocation, we cannot say

the commissioner exceeded the scope of his authority in this

case, even though his determination that Volkswagen had violated

Code § 46.2-1569(7) was based on Volkswagen's vehicle allocation

methodology rather than the specific numbers of vehicles

Volkswagen allocated to Miller. Accordingly, we affirm the

circuit court's ruling that the commissioner did not exceed the

scope of his authority.

VII. PROCEDURAL MATTERS AND BURDEN OF PROOF

Volkswagen contends the trial court, in affirming the

commissioner's determination that Volkswagen violated Code

- 31 -
§ 46.2-1569(7), erred in rejecting Volkswagen's claims regarding

three procedural errors alleged to have occurred before and

during the formal evidentiary hearing conducted by the hearing

officer. We hold that the trial court did not so err and briefly

address each claim below.

A. Failure to Conduct an Informal Hearing

Volkswagen contends the commissioner violated its due

process rights when he failed to conduct an informal hearing or

conference prior to the formal evidentiary hearing, as required

by Code § 9-6.14:11 of the Virginia Administrative Process Act.

Code § 9-6.14:11 provides that "agencies shall ascertain the fact

basis for their decisions of cases through informal conference or

consultation proceedings unless the named party and the agency

consent to waive such a conference or proceeding to go directly

to a formal hearing."
Assuming, without deciding, that the Virginia Administrative

Process Act is applicable to proceedings arising under Code

§ 46.2-1569(7), as Volkswagen claims, 10 we hold that Volkswagen

is barred from asserting this challenge on appeal because it was

not preserved below.

As the circuit court observed, nothing in the record of this

case indicates that Volkswagen requested such a hearing or raised

an objection before the commissioner. "An appellant, under the

provisions of the [Virginia Administrative Process Act], may not

raise issues on appeal from an administrative agency to the

10
The commissioner and Miller argue at length in their
respective briefs that such proceedings are not subject to the
Virginia Administrative Process Act. Given our decision in this
matter, we need not decide that issue here.
- 32 -
circuit court that it did not submit to the agency for the

agency's consideration." Pence Holdings, Inc. v. Auto Center,

Inc., 19 Va. App. 703, 707, 454 S.E.2d 732, 734 (1995); see Rule

5A:18.

Thus, having failed to raise this issue before the

commissioner, Volkswagen is precluded from raising it on appeal.

Moreover, the record reflects no reason to invoke the good cause

or ends of justice exceptions to Rule 5A:18.

B. Lack of Notice
Volkswagen contends the hearing officer and, thus, the

commissioner, violated its due process rights by (1) failing to

provide notice of the factual or legal basis of the charges

against it, (2) allowing Miller to alter the basis of its

complaint after the hearing had commenced, and (3) changing his

interpretation of Code § 46.2-1569(7) during the course of the

evidentiary hearing. Volkswagen argues that, because of these

procedural defects, it "was forced to defend itself with no

notice of the claims which could be advanced." We disagree.

"'Due process is flexible and calls for such procedural

protections as the particular situation demands.'" Duncan v. ABF

Freight System, Inc., 20 Va. App. 418, 422, 457 S.E.2d 424, 426

(1995) (quoting Mathews v. Eldridge, 424 U.S. 319, 334 (1976)).

"'[T]he fundamental requisite of due process of law is the

opportunity to be heard.'" Id. at 423, 457 S.E.2d at 426

(quoting Goldberg v. Kelly, 397 U.S. 254, 267 (1970)).
"An elementary and fundamental requirement of
due process in any proceeding which is to be
accorded finality is notice reasonably
calculated, under all the circumstances, to
apprise interested parties of the pendency of

- 33 -
 the action and afford them an opportunity to
present their objections. The notice must be
of such nature as reasonably to convey the
required information, and it must afford a
reasonable time for those interested to make
their appearance. But if with due regard for
the practicalities and peculiarities of the
case these conditions are reasonably met, the
constitutional requirements are satisfied."

Oak Hill Nursing Home, Inc. v. Back, 221 Va. 411, 417, 270 S.E.2d

723, 726 (1980) (quoting Mullane v. Central Hanover Bank & Trust

Co., 339 U.S. 306, 314-15 (1950) (citations omitted)).

Here, the hearing in this matter was convened at Miller's

request pursuant to its complaint to the commissioner dated

February 9, 1998, specifically alleging that Volkswagen had

violated Code § 46.2-1569(7). The complaint, which was also sent

to Volkswagen, referenced Volkswagen's allocation of vehicles on

the basis of customer satisfaction surveys as being a violation

of that statute and requested that Volkswagen disclose to the

dealer the "basis upon which new vehicles [were] allocated."

Following unsuccessful mediation, Miller notified the

commissioner and Volkswagen, by letter dated April 2, 1998, that

it had yet to receive a Passat or Beetle from Volkswagen and that

Volkswagen would also need to disclose its "formula for

allocation used since 1993."
On these facts, we conclude that Volkswagen was given notice

that was "reasonably calculated, under all the circumstances, to

apprise [Volkswagen] of the pendency of the action and afford

[it] an opportunity to present [its] objections." We hold,

therefore, that Volkswagen had adequate notice of the factual and

legal basis of the charges against which it had to defend itself

and was not denied its rights of due process with regard to

- 34 -
notice. With regard to Volkswagen's other due process claims, we

find no evidence in the record that Miller altered the basis of

its complaint after the hearing had commenced or that the hearing

officer changed his interpretation of Code § 46.2-1569(7) during

the course of the hearing. Accordingly, Volkswagen's due process

challenge must fail.

C. Misplacement of Burden of Proof

Volkswagen contends the hearing officer and, thus, the

commissioner, erred by improperly placing the burden of proving

compliance with Code § 46.2-1569(7) on Volkswagen. We disagree.
Clearly, as indicated in his proposed decision, the hearing

officer placed a "burden of proof" on Volkswagen. That "burden,"

however, was not the burden, as Volkswagen characterizes it, of

proving compliance with Code § 46.2-1569(7). Rather, it was, as

initially referred to by the hearing officer, the "opportunity to

rebut" Miller's evidence, which established that the formula used

by Volkswagen to allocate vehicles violated Code § 46.2-1569(7)

because it unfairly penalized small-volume dealers.

After addressing the formula's inherent bias against

small-volume dealers, the hearing officer turned his attention to

the two programs purportedly implemented by Volkswagen to offset

the formula's inequities. Finding that Volkswagen's program

allowing for the adjustment of vehicle allocations based on

customer satisfaction survey scores only added to the adverse

effect of the formula, the hearing officer concluded that

Volkswagen "did not carry its burden of proof to show that

utilization of [the customer satisfaction survey program] as a

governor on the allocation system was fair and equitable."

- 35 -
 Turning then to Volkswagen's other purportedly remedial

program—assuring that each dealer had in stock at least one

vehicle of every model (referred to as a "safety valve")—the

hearing officer stated as follows:

Nevertheless, even if this "safety
valve" was shown to be an integral part of
the allocation methodology, [Volkswagen] has
not carried its burden to show that the
change relying on this "safety valve" is
adequate to remedy the allocation
shortcomings. Specifically, there was
insufficient evidence presented by
[Volkswagen] to show that its allocation
methodology was in compliance with [Code
§] 46.2-1569(7) . . . ."

Volkswagen misapprehends the hearing officer's statements

regarding Volkswagen's burden of proof. We find that, read in

their proper context, the statements plainly indicate that the

hearing officer, having determined that Volkswagen's core

allocation formula did not comply with Code § 46.2-1569(7), gave

Volkswagen the opportunity to show that its supplemental

allocation programs cured the formula's defects. Finding

Volkswagen's evidence and arguments lacking, the hearing officer

concluded that Volkswagen did not carry its burden on rebuttal.

Such a burden, we hold, was properly placed.

Moreover, the hearing officer pointed out in his decision

that he conducted a pre-hearing telephone conference with counsel

for the parties, during which the format of the hearing and the

parties' respective burdens of proof were discussed. During that

discussion, it was agreed that Volkswagen would be given the

opportunity at the hearing "to rebut" following Miller's

presentation of evidence and argument on the noncompliance of

Volkswagen's allocation methodology. All counsel, the hearing

- 36 -
officer noted, agreed to the proposed format, and that format was

followed at the hearing. Thus, having agreed to the format that

was followed at the hearing, Volkswagen cannot now be heard to

complain of such alleged defects in that proceeding. See Manns

v. Commonwealth, 13

Va. App. 677, 680, 414 S.E.2d 613, 615 (1992) (holding that a

party may not take advantage of an error it invited).

VIII. CONCLUSION

For these reasons, we affirm the circuit court's ruling that

Volkswagen's method of allocating its newly manufactured motor

vehicles to Miller violated Code § 46.2-1569(7). Accordingly,

with respect to Volkswagen's appeal, we affirm the judgment of

the circuit court.
Additionally, having granted the commissioner's motion to

dismiss this appeal for lack of jurisdiction as to the unresolved

issue of the remedy to be imposed, we dismiss Miller's

cross-appeal.

Affirmed in part,
dismissed in part.

- 37 -
Benton, J., concurring.

I concur in the majority opinion; however, I write

separately to state my understanding that Part VI of the majority

opinion interprets Code § 46.2-1569(7) in a fashion that clearly

renders it immune from an attack that it is unconstitutionally

vague and violates the Commerce Clause.

Although, as the majority opinion notes, Code

§ 46.2-1569(7) facially suggests that a determination of "the

number of new vehicles" drives the analysis, when read as a

whole, the statute reflects a policy that a dealer is to receive

a fair share of vehicles being produced or imported nationally by

the manufacturer. The statute provides as follows:

Notwithstanding the terms of any
franchise agreement, it shall be unlawful
for any manufacturer, factory branch,
distributor, or distributor branch, or any
field representative, officer, agent, or
their representatives:

* * * * * * *

7. To fail to ship monthly to any
dealer, if ordered by the dealer, the number
of new vehicles of each make, series, and
model needed by the dealer to receive a
percentage of total new vehicle sales of
each make, series, and model equitably
related to the total new vehicle production
or importation currently being achieved
nationally by each make, series, and model
covered under the franchise. Upon the
written request of any dealer holding its
sales or sales and service franchise, the
manufacturer or distributor shall disclose
to the dealer in writing the basis upon
which new motor vehicles are allocated,
scheduled, and delivered to the dealers of
the same line-make. In the event that
allocation is at issue in a request for a
hearing, the dealer may demand the
- 38 -
 Commissioner to direct that the manufacturer
or distributor provide to the dealer, within
thirty days of such demand, all records of
sales and all records of distribution of all
motor vehicles to the same line-make dealers
who compete with the dealer requesting the
hearing.

Code § 46.2-1569(7).

As I read the statute, it requires that the allocation of

vehicles within Virginia be based on a methodology which

considers new vehicle sales and equitably relates in some manner

the dealer's percentage of those sales to the manufacturer's

national production or importation. Thus, as the majority

opinion "hold[s], . . . in determining whether a distributor is

in compliance with Code § 46.2-1569(7), the commissioner may

consider and base his determination on the distributor's vehicle

allocation methodology." If that allocation methodology

rationally takes into account new vehicle sales and results in a

dealer receiving a fair share of new vehicles, the statutory

mandate has been satisfied. This reading of the statute resolves

what appears to me to be an ambiguity in connecting in a rational

manner the various phrases in the statute.

The record establishes that Volkswagen's area executive

often made allocations as frequently as each week and, thus,

applied Miller's sales percentage factor to a smaller number of

vehicles than would have been used if done monthly. The record

supports the commissioner's finding that by making allocations as

frequently as each week, Volkswagen's formula determined that the

percentage of the pool of available new vehicles representing

Miller's potential allocation was a "fractional vehicle" of less

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than one. Because those fractional values were rounded down and

not cumulated, Miller "was effectively frozen out on a repeated

basis from acquiring vehicles in short supply." The commissioner

also found that Volkswagen's allocation methodology was skewed by

the use of a customer satisfaction program that impacted the

vehicle allocation in a "punitive and inequitable" manner. The

commissioner further found that Volkswagen's decision to allow

its area executive the discretion to override the allocation

methodology to remedy these deficiencies was "a rule honored only

when Miller requested [an administrative] hearing." The record

supports these findings and the commissioner's decision that

Volkswagen's methodology of allocation failed to provide Miller

with an equitable and fair number of those vehicles that were in

short supply.
For these reasons, I concur in the majority opinion's

holding and in the judgment.

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