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Automotive News: Tesla wins first round in Massachusetts dealers lawsuit

ckessel

Active Member
Jan 15, 2011
4,455
405
Yay for common sense. This quote amuses me:
"Tesla may not yet recognize the value of the independent, franchised dealer system, but as its sales increase, NADA is confident it will re-examine its business model," Montana dealer and NADA Chairman Bill Underriner said in the statement.
They're so confident in the value, you see, that they're doing Tesla a favor here by suing them so that Tesla doesn't make a mistake. No, it's not about NADA, this is just NADA being concerned for Tesla. Honest.

Concerned-300x300.jpg
 
Massachusetts Judge Denies Dealers Request for An Injunction on Tesla Store

Here's the text:

A Massachusetts judge has denied a request by dealers for a preliminary injunction against Tesla Motors Inc., which will allow the automaker to operate its store in suburban Boston as the dealers' lawsuit against the company proceeds.

The ruling, filed Friday, is an early setback for the Massachusetts State Automobile Dealers Association and individual dealerships that sued Tesla on Oct. 16, claiming the electric-vehicle maker has violated Massachusetts' licensing, consumer protection and franchise laws. The lawsuit poses a challenge to Tesla's strategy of owning and operating its own retail stores, rather than granting franchises to dealers as other automakers do.

The dealers asked the Massachusetts Superior Court for a restraining order and injunction that would stop the Tesla-owned showroom in Natick, Mass., which opened Sept. 28, from doing "anything other than an unstaffed display of a locked automobile." To get an injunction in Massachusetts, as in federal court, plaintiffs must show they are likely to prevail in the case and will otherwise suffer irreparable harm.

Here is the link to the Automotive News article about the denied injunction:


http://www.autonews.com/apps/pbcs.dll/article?AID=/20121120/RETAIL07/121129989/mass-judge-denies-dealers-request-for-injunction-on-tesla-store&source=email_rt_mc_body&ifp=0
 
"Tesla may not yet recognize the value of the independent, franchised dealer system, but as its sales increase, NADA is confident it will re-examine its business model," Montana dealer and NADA Chairman Bill Underriner said in the statement. "Other companies such as Daewoo did. All companies should be complying with existing laws in the same way dealers are required to."

This was clearly spoken by someone with a solid footing in the previous century.
 
Last edited:
Very good news. This means that they feel the store is not blatantly breaking the law enough to justify preventing them from doing business as usual. I'd say this is actually a "soft" win for now.
If the decision only said "denied", I'd agree with you, but I think the text of the decision reads a bit stronger than a "well, they're not blatantly breaking the law enough".

“There is nothing in American Honda to suggest that the legislative purpose to protect the public expands standing under 15(a) to allow any unaffiliated motor vehicle dealer to sue any manufacturer”.
So the motion was denied because the plaintiffs had no standing to bring suit. and if they have no standing to bring suit, then how will they win the lawsuit?

and the rationale that the plaintiffs don't have standing makes sense to me: they're not being directly wronged, and there's no public interest in allowing a Fisker dealer to sue Tesla motors for the way Tesla Motors treats its [nonexistent] dealers.
 
+1 ckessel. saved.

Dealers trying to be tough, already planning to appeal:

Robert O'Koniewski, executive vice president of the Massachusetts association, says the group is considering an appeal and other judicial remedies, but it hasn't made a decision on which path to take.

- - - Updated - - -

“There is nothing in American Honda to suggest that the legislative purpose to protect the public expands standing under 15(a) to allow any unaffiliated motor vehicle dealer to sue any manufacturer”.
So the motion was denied because the plaintiffs had no standing to bring suit. and if they have no standing to bring suit, then how will they win the lawsuit?

Thanks for the quote, as the link is hard to discover:
http://www.autonews.com/assets/PDF/CA840581120.PDF

and the rationale that the plaintiffs don't have standing makes sense to me: they're not being directly wronged, and there's no public interest in allowing a Fisker dealer to sue Tesla motors for the way Tesla Motors treats its [nonexistent] dealers.

In my naive, non-lawyer, non-expert reading, 93B seemed to apply to the two parties of a franchise agreement, but there is not any such agreement between Tesla and anyone else.
 

Grendal

SpaceX Moderator
Moderator
Jan 31, 2012
6,887
9,760
Santa Fe, New Mexico
If the decision only said "denied", I'd agree with you, but I think the text of the decision reads a bit stronger than a "well, they're not blatantly breaking the law enough".

“There is nothing in American Honda to suggest that the legislative purpose to protect the public expands standing under 15(a) to allow any unaffiliated motor vehicle dealer to sue any manufacturer”.
So the motion was denied because the plaintiffs had no standing to bring suit. and if they have no standing to bring suit, then how will they win the lawsuit?

and the rationale that the plaintiffs don't have standing makes sense to me: they're not being directly wronged, and there's no public interest in allowing a Fisker dealer to sue Tesla motors for the way Tesla Motors treats its [nonexistent] dealers.

The judge threw out the injuction, but didn't just throw out the case. So as far as he is concerned there is at least a basis for the case. Like I wrote, I consider this a "soft" win.

The quote you cited does imply that the suit is probably going to fail.

Yeah, for our side.
 

v12 to 12v

Active Member
Jul 10, 2012
1,070
26
The judge threw out the injuction, but didn't just throw out the case. So as far as he is concerned there is at least a basis for the case. Like I wrote, I consider this a "soft" win.

The quote you cited does imply that the suit is probably going to fail.

Yeah, for our side.

Sometimes cases will continue in order to get the facts heard and the opinion on the record. That can do a better job of "nipping it in the bud" for the long haul than just throwing it out. Attorneys and justices would then have something to reference in the future if this crops up again.
 

woof

Fluffy Member
Supporting Member
Apr 30, 2009
1,602
2,060
Some questions for the legally minded:

If there really is a Mass. law that is being broken, doesn't that mean the state has to bring charges against Tesla, not dealers?

If the above is true, and the state is allowing it anyway, then wouldn't the dealer's beef be with the state for allowing it? The dealers could sue the state to get them to enforce the law, but not sue Tesla directly.

Wasn't there a complaint to the town of Natick selectmen for allowing the Tesla store in the mall (zoning or somesuch). Whatever happened to that?
 

Grendal

SpaceX Moderator
Moderator
Jan 31, 2012
6,887
9,760
Santa Fe, New Mexico
Here is a section of the Massachusetts law that NADA is saying Tesla is breaking:

“Sale” or “sell”, the issuance, transfer, agreement for transfer, exchange, pledge, hypothecation, mortgage in any form, whether by transfer in trust or otherwise, or lease of any motor vehicle or interest therein or of any franchise related thereto; and any option, subscription or other contract, or solicitation, looking to a sale, offer or attempt to sell, or lease in any form, whether spoken or written."

"(c) It shall be deemed a violation of subsection (a) of section 3 for a manufacturer, distributor or franchisor representative:

(10) to own or operate, either directly or indirectly through any subsidiary, parent company or firm, a motor vehicle dealership located in the commonwealth of the same line make as any of the vehicles manufactured, assembled or distributed by the manufacturer or distributor."

And here is a link to the appropriate law in full:

General Laws: CHAPTER 93B, Section 4
 
Here is a section of the Massachusetts law that NADA is saying Tesla is breaking:

As far as I can tell, that section needs to be seen in context:

Chapter 93B as a whole is a "REGULATION OF BUSINESS PRACTICES BETWEEN MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS AND DEALERS"

And in Section 1, a dealer is defined as:

“Dealer”, “motor vehicle dealer” or “dealership”, any person who, in the ordinary course of its business, is engaged in the business of selling new motor vehicles to consumers or other end users pursuant to a franchise agreement and who has obtained a class 1 license pursuant to the provisions of section 58 and 59 of chapter 140. It shall not include: (1) receivers, trustees, administrators, executors, guardians, or other persons appointed by or acting under judgment, decree or order of any court, or (2) public officers while performing their duties as such officers.

- - - Updated - - -

In other words, operating a dealership would be a violation of the business practices between a manufacturer and a franchised dealer, however there isn't any franchised dealer in this business. And not even a business (the practices of which could be regulated).

In my naive understanding.
 
As far as I can tell, that section needs to be seen in context:

Chapter 93B as a whole is a "REGULATION OF BUSINESS PRACTICES BETWEEN MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS AND DEALERS"

And in Section 1, a dealer is defined as:



- - - Updated - - -

In other words, operating a dealership would be a violation of the business practices between a manufacturer and a franchised dealer, however there isn't any franchised dealer in this business. And not even a business (the practices of which could be regulated).

In my naive understanding.

Yes, that was my reading as well after plowing through the website. It looks to me like the whole law is about regulating the relationship between franchisees and manufacturers. I didn't see anything that prohibited a manufacturer from setting up a dealership beyond the issue of competing with franchisees.

Can anyone reference something in the law that says otherwise?
 

stopcrazypp

Well-Known Member
Dec 8, 2007
13,545
10,111
The judge threw out the injuction, but didn't just throw out the case. So as far as he is concerned there is at least a basis for the case. Like I wrote, I consider this a "soft" win.

The quote you cited does imply that the suit is probably going to fail.

Yeah, for our side.
I read through the whole decision and I agree more with derekt75. The judge seems to be saying the plaintiffs don't even have a standing to bring this suit at all (perhaps the state does). Plus the article says the plaintiffs are considering appeal (so they are clearly on the losing side right now).
 

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