A federal judge in Louisiana has pulled the plug on Tesla Inc.’s legal arguments that allege the state’s restriction on direct car sales to consumers violates constitutional protections and state law.
Judge Sarah Vance of the Eastern District of Louisiana issued the order against Tesla’s lawsuit on June 16. The electric car manufacturer had argued that the state’s recently enacted ban on direct car sale to consumers singled out Tesla’s sales model and violated antitrust policies, the Louisiana Unfair Trade Practices Act and constitutional due-process protections.
Vance’s order dismisses Tesla’s lawsuit with prejudice, meaning it can’t be refiled.
Among the defendants in the litigation were members of the Louisiana Motor Vehicle Commission and the Louisiana Automobile Dealers Association (LADA). The commission is not a neutral arbiter, Tesla argued, in its duties to regulate thousands of licensees involved in the sale, lease, rental or distribution of motor vehicles.
“Tesla’s argument that the commission should be enjoined from regulating Tesla merely because the commission includes Tesla’s direct competitors is meritless,” Vance said in her 86-page opinion.
Tesla argued that if the defendants prevailed in the lawsuit, Tesla would be forced out of the Louisiana car market, that competition within the market would be discouraged and consumers would be harmed.
LADA’s president, Will Green, said the organization was pleased with the judge’s order and that the ruling reinforces LADA’s arguments that the Tesla suit lacked merit.
Louisiana auto dealers provide value to consumers through their expertise in both new and used cars, LADA said in a statement emailed to the Louisiana Record. The dealers benefit the state’s economy by providing more than 30,000 well-paying jobs in auto sales, service and management, LADA said.
“Built into our independent franchise system are robust protections for consumers in Louisiana that include everything from stipulating dealers undergo formal educational training to become licensed to forbidding misleading advertising,” Green said in a statement. “Among other requirements, the laws make sure dealers have a permanent, insured facility where consumers can buy and repair vehicles and where dealers keep meticulous records of inventory, purchases and service."
Tesla has attempted to bypass the traditional franchise dealership model in other states and sell its vehicles online or at company-owned stores.