(Newswire.net — September 16, 2014) — Massachusetts’ highest court on Monday threw out a lawsuit seeking to block Tesla Motors Inc (TSLA.O) from selling its luxury electric cars directly to consumers in the state, enabling it to bypass traditional dealerships.
Like many states, Massachusetts has laws that ban car manufacturers from owning dealerships that compete with independent dealers.
Car dealers across the country have started tapping into those laws in an effort to stop Tesla from selling its cars directly, cutting out any dealers in the process. They’ve had mixed success as state legislators try to balance the realities of local jobs and political clout with the need to foster innovative companies, particularly ones that make cleaner cars.
However, the state’s Supreme Judicial Court unanimously concluded that the Massachusetts State Automobile Dealers Association and two major dealers lacked standing to block direct Tesla sales.
The law says car dealers can only sue a manufacturer if they’re already affiliated with that manufacturer—so, if you sell GM cars and GM decides to open its own dealership, you could take them to court.
But since Tesla doesn’t have any dealers in the state, the court said, it doesn’t have any franchise partners to undercut—so there’s no dealers who can sue it for unfair practices. Dealers who sell other kinds of cars can’t sue Tesla simply to preserve the franchise model, the court said.
“We’re disappointed,” Robert O’Koniewski, a spokesman for the group, said of the ruling. He said the group would review what steps to take with state legislators to address “the standing gap.”
Of course, officials in Tesla feel different.
“It’s a great decision,” said deputy general counsel at Tesla Todd Maron. “The statute is very similar to statutes in other states. We have battles in New Jersey and other states with similar constructs, and we hope and expect the same interpretation would carry over to those venues.”
The legal and political fight may not be over, though. Both sides have sought to get more specific protection from the state Legislature, so far with no progress.
In March, New Jersey’s Motor Vehicle Commission effectively revoked Tesla’s license to operate two stores. The General Assembly in June passed legislation that would, if enacted into law, allow sales to resume.
Tesla also cannot conduct direct sales in Arizona, Maryland and Texas, the company said.
Last week, Nevada let Tesla make direct car sales to residents, as part of an arrangement to provide $1.3 billion of tax breaks for the company to build a giant battery factory.
With today’s court loss, auto dealers may have to either give up the fight or try again to get the law changed