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Discussion in 'Tesla, Inc.' started by Curt Renz, Mar 28, 2016.
The Wall Street Journal: Tesla Weighs New Challenge to State Direct-Sales Bans: Link to WSJ Article
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Key excerpts from the WSJ article[Fair Use]
The Palo Alto, Calif., auto maker’s direct-to-consumer sales are prohibited by law in six states that represent about 18% of the U.S. new-car market. Barring a change of heart by those states, Tesla is preparing to make a federal case out of the direct-sales bans.
The auto maker’s legal staff has been studying a 2013 federal appeals court ruling in New Orleans that determined St. Joseph Abbey could sell monk-made coffins to customers without having a funeral director’s license. The case emerged amid a casket shortage after Hurricane Katrina. The abbey had tried to sell coffins, only to find state laws restricted such sales to those licensed by the Louisiana Board of Funeral Directors.
Louisiana’s coffin cases could come in handy if Michigan sides with dealers. And Tesla’s use of it as a precedent could breathe life into the economic liberty fight that to date has involved smaller issues, such as selling gravestones or providing flowers to a funeral home.
“Until now, these decisions have been in niche areas of the economy,” Mr. McGinnis, the professor, said. “With Tesla behind it, it would go into something as economically important as the structure of the industry for retailing cars.”
Auto dealers are battle-tested and have notched a series of victories along the way. Earlier this year, the Second Circuit Court of Appeals refused to hear a case brought by auto makers that wanted to change laws using a similar constitutional challenge and involving warranty reimbursement levels.
Tesla could find powerful allies. The Federal Trade Commission has repeatedly said franchise laws are anti-competitive. Other organizations agree.
“There is no legitimate competitive interest in having consumers purchase cars through an independent dealership,” Greg Reed, an attorney with Washington D.C.-based Institute for Justice, a libertarian-leaning law firm, said. He calls Michigan’s laws “anti-competitive protectionism.”