Massachusetts Auto Dealer Association Suit Against Tesla Dismissed

A lawsuit by the Massachusetts State Automobile Dealers Association seeking to prevent Tesla Motors, Inc. from opening and operating stores in the state was dismissed last week.

In October the association and some of its member dealers sued Tesla for allegedly violating state franchise laws by opening in September a store in a Natick, Mass., mall in the greater Boston area.

Last Monday Norfolk County Superior Court Judge Kenneth Fishman dismissed the suit for lack of standing. The judge previously denied the dealer association’s request for a preliminary injunction and temporary restraining order against Tesla in October.

“We are delighted by the outright dismissal of this case and the validation that we are operating our business in compliance with the laws and expectations of the Commonwealth of Massachusetts,” said Elon Musk, Tesla co-founder and CEO, in a statement.

“We are confident that other states will also come to this same conclusion and look forward to following through on our commitment to introduce consumers to electric vehicle technology in an open, friendly, no-pressure environment.”

In December, prior to the suit’s dismissal, Tesla was granted a Class 1 Dealer License by the Town of Natick’s Board of Selectmen. The Massachusetts dealers association has filed a separate lawsuit against the individual Selectmen that make up the Natick Board.

“We think this subsequent lawsuit is a very unfortunate action taken by the Massachusetts State Automobile Dealers Association against a group of individual citizens who thoroughly reviewed our request for a Class 1 Dealer License and thoughtfully made a decision that was both legal and in the best interests of the citizens of Natick,” said Musk. “We look forward to supporting the Board of Selectmen in this case.”

The Massachusetts suit against Tesla was one of several legal actions by dealer associations in other states attempting to stop the automaker from opening its stores.

Following the Massachusetts lawsuit, and a similar claim filed in New York state, Musk explained via the company blog that Tesla stores serve more as a venue to educate consumers about Tesla vehicles, as well as electric vehicles in general, and are nothing like a traditional dealership, and therefore are not in violation of state franchise laws.

When the Mass. suit was filed, Robert O’Koniewski, executive vice president of the Massachusetts dealers association, didn’t buy into Musk’s rationale.

“They claim they’re operating under the guise of a nonsales showroom, and we call that out as an outright scam,” O’Koniewski said earlier this year.

In the wake of the case’s recent dismissal, O’Koniewski contends that the association does have legal standing to sue.

“If you read the statute, it’s pretty clear: a factory cannot own a store, and a dealer can sue for injunctive relief if they feel the public is being harmed,” he said in Automotive News.

O’Koniewski said the association may appeal the dismissal.