MA Auto Dealers' Suit Against Tesla Dismissed By Judge

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MA Auto Dealers' Suit Against Tesla Dismissed By Judge

Antony Ingram

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Antony is an automotive obsessive: Whether it drives, sits there looking pretty or intrigues from afar, he'll talk and write about it. Automotive... More

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After opening a store in Natick Mall, Massachusetts, Tesla Motors has been embroiled in a battle to let it sell cars from the store.

Permission was granted for the store to sell vehicles back in December, and now a judge's dismissal of a dealers' lawsuit against the company has stepped a further direction in Tesla's favor.

It all centers on state regulations about the Tesla Store's legal identity.

Tesla Motors [NSDQ:TSLA] would not be allowed to sell cars itself, directly from the factory. The state requires franchisees to own dealerships, preventing companies from competing unfairly with independently-owned dealerships.

Tesla CEO Elon Musk has previously weighed in on the matter, which has reached far beyond Massachusetts. Musk feels that franchised dealers, selling gasoline cars alongside electric vehicles, may not feel incentivized to put time and effort into electric vehicles--just in case they harm the dealer's profits from regular vehicles.

Musk also says his stores offer a more pleasant, educational experience than traditional dealers.

Both the town selectmen back in December, and now Norfolk County Superior Court Judge Kenneth Fishman, have decided in Tesla's favor that its store is legally separate from Tesla Motors.

Automotive News reports that the Massachusetts State Automobile Dealers Association is currently debating whether to appeal the ruling. The Association's case hinges on dealers being able to sue for injunctive relief if they feel the public is being harmed.

It may also go to the state attorney general, which has enforcement power over state francise law.

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Comments (10)

John Briggs Posted: 1/4/2013 10:46am PST

"...being able to sue for injunctive relief if they feel the public is being harmed."

Ah, right, I don't think the public is being harmed by Tesla.

It is the dealerships that feel like they might be harmed. But the truth is, the dealerships aren't being harmed by Tesla either, at least not at this time.

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Tom Moloughney Posted: 1/4/2013 11:45am PST

Excellent!

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Russell L Posted: 1/4/2013 2:41pm PST

"The Association's case hinges on dealers being able to sue for injunctive relief if they feel the public is being harmed."

They need to sue themselves. If the public is being harmed, it's the dealers doing it to us!

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Norm Satkoski Posted: 1/4/2013 3:00pm PST

Too bad you didn't include that list of reasons why the Dealers Association wanted to stop Tesla, Antony. It was really entertaining. If you could put together a video of Gollum explaining their reasoning, I would buy a copy.

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Xiaolong Li Posted: 1/5/2013 12:42am PST

A great precedence has been set.

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Mark Phillips Posted: 1/5/2013 3:23am PST

I think that your represenation of the case is strongly misleading. The decision to grant a license to sell cars was at a 'West Central Street property', while the 'store' at Natick Mall is not a store, but a gallery for the tech. You seem to conflate these two properties and the legal judgements relating them.

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Chris O Posted: 1/5/2013 4:51am PST

For a better picture of what really transpired: the lawsuit was brought on by the Massachusetts State Automobile Dealers Association (MSADA) and dismissed because this organisation was deemed to lack standing to sue.

Not sure if this ruling really touches at the core issue, but it does indicate that the dealers can't make a case of really being harmed by Tesla's actions, which of course they are not.

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David Laur Posted: 1/5/2013 8:45am PST

it is these types of "status quos" that are preventing true advancement and adaptability in this world. This is one of a MILLION examples of great ideas stopped because they were not accepted by the establishment. The fact that Tesla is able to overcome is a much greater accomplishment than we realize. The sad part is all the innovations in other areas that were not able to get a fair chance at being successful and I am willing to be we are much worse for it

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Pat Bahn Posted: 1/5/2013 9:02am PST

sounds like the public policy of the law was to protect existing dealers from the manufacturer. So that people who bought franchises and territory aren't later driven out by the manufacturer opening company stores. Imagine if the law applied in computers, apple dealers would have been able to bar apple from opening retail stores. However, in Teslas case they have no dealer network, they run their own stores. This means they have more freedom.

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Eric P Posted: 1/7/2013 8:18pm PST