- The Tesla lawsuit is part of a broader effort to circumvent laws in various states that prevent automakers from also being retailers.
Tesla's challenge in federal court to a Louisiana law that bars automobile manufacturers from selling directly to consumers has been revived by an appeals court.
The lawsuit filed by the electric car company owned by billionaire Elon Musk is part of a broader effort to circumvent laws in several states that bar automakers from also being retailers. The effort has included court challenges and, in some cases, opening showrooms on sovereign Native American tribal properties where state laws don't apply.
The 5th U.S. Circuit Court of Appeals, in a 2-1 decision, overturned a lower court ruling that rejected Tesla's claim that it was being denied constitutional due process. The appeals court said Tesla had a reasonable claim that the Louisiana Motor Vehicle Commission, which regulates car sales in the state, was biased against Tesla, given that it is dominated by licensed third-party dealers.
“The Commission will always be incentivized to prevent new business models from entering the market,” Judge Jerry Smith wrote for the majority in a decision issued Monday.
The ruling sends the case back to federal District Court in New Orleans.
Smith was appointed to the court by former Republican President Ronald Reagan. Judge Katharina Haines, appointed by former Republican President George W. Bush, concurred with the outcome. Judge Dana Douglas, appointed by Democratic President Joe Biden, dissented.
“The Supreme Court has made clear that regulatory boards are not unconstitutional simply because they are composed of competitors of the entities they regulate,” Douglas wrote.
First Publication Date: 28 August 2024, 07:40 AM IST