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Massachusetts auto dealers are not taking "no" for an answer when it comes to Tesla Motors. On Tuesday, the Massachusetts State Automobile Dealers Association and other dealer plaintiffs filed an appeal after a court dismissed their lawsuit against Tesla's factory-owned stores on December 31, 2012.

The lawsuit was initially filed by MSADA in October, and by year's end, Norfolk County Superior Court Judge Kenneth Fishman ruled that the plaintiffs lacked standing to sue. This suit followed a similar lawsuit filed in October where the MSADA requested the court block an opening of a store by Tesla in a suburban Boston mall. Tesla won approval to open the store in Natick, MA, which fueled the second lawsuit.

Dealers are pointing to a 2002 Massachusetts statue that gives dealers and their association the right to sue to prevent manufacturer-owned stores, Robert O'Koniewski, executive vice president of the dealers association, told Automotive News in an email. "Tesla is spending considerable sums of money across the country in an effort to exploit what they see to be gaps in states' franchise laws," O'Koniewski wrote. "The law is the law. Follow it."

Tesla didn't respond to a request for comment. Tesla previously has said that it's being very careful about complying with state laws. The stores are there to educate the public, and when it comes time to selling the car, it's all being done online.

"People will be walking down the mall and they'll see a car and they're drawn in by that...," said George Blankenship, Tesla's vice president of sales and ownership experience, in an interview with SmartPlanet. "We're educating, not selling. It's two different things." So far, so good for Tesla Motors. But the jury – as it were – could still be out.


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  • 40 Comments
      Grendal
      • 2 Years Ago
      Automotive News in an email. "Tesla is spending considerable sums of money across the country in an effort to exploit what they see to be gaps in states' franchise laws," O'Koniewski wrote. "The law is the law. Follow it." And the Dealers Association is spending considerable sums of money across the country in an effort to prevent a business from doing business. The judge said that they lacked a standing to sue. The judge said that is the law. The MSADA is choosing not to follow it but fight it instead. And no I'm not saying that Tesla is above the law, I'm just pointing out that spin happens both ways. MSADA is trying to paint Tesla as the villian. Tesla will try and paint MSADA as the villian too. As we have seen, everyone seems to have an opinion on this.
        Marcopolo
        • 2 Years Ago
        @Grendal
        @ Grendal " the Dealers Association is spending considerable sums of money across the country in an effort to prevent a business from doing business" That's a little biased. To be fair, the Dealers Association is not against Tesla doing business, just insisting that Tesla do business in the conventional format proscribed by law. Simply because a lower Court Judge rules the Dealers Association has no standing, doesn't mean that such a judgement will not be reversed by a superior court. But it's evident that the proper place for the issue to be decided, is the legislature. Leaving obsolete, ambiguous, or even just plain confusing laws to be interpreted by judges, is a failure by the legislators who were elected to ensure such regulations remain effective, and necessary. Laws which have outlived the original purpose need to be reformed by elected lawmakers, not courts.
      Marcopolo
      • 2 Years Ago
      @ Grendal I don't expect that may ABG readers will appreciate the position of the dealers. Car dealer's are not the most popular of businesses, and the original purpose of these laws has been long overlooked. i appreciate that your post attempted to be fair, and not simply a prejudiced rant. Tesla's marketing model, is a new concept. The original laws could not have envisaged the growth of the internet, or such a radically different manufacturer. To the dealers, they have invested heavily in the business model that exists. If Tesla can dispense with franchise dealers, why can't Nissan, or GM ? My point is that the courts are not places to make law, that's the responsibility of the legislature. The correct place to argue the virtues of retaining a law to prevent manufacturers from directly controlling the retailing of their product is the legislature. I can advantages and disadvantages for moving away from the franchise dealer model. But that's a matter of for public debate. My main concern is that the law should be clear and definitive ! The MSADA is not opposed to Tesla as a manufacturer, not are they opposed to Tesla selling vehicles, the simply want Tesla to establish franchise dealers. Personally, I think the internet has pretty much made the the dealer only model, (at least for specialist manufacturers), obsolete. The dealers would argue that if, say, Ford Motors could sell directly,Ford HQ, could unfairly pressure dealers, and control price competition on all Ford products.
      Val
      • 2 Years Ago
      The model of "car company sells to dealers at 20% off MSRP, dealer then battles with a customer until the generous price of 10% off MSRP is reached" is what they are trying to protect here. Oh, and servicing fees. No other business has such ridiculous laws for selling their own manufactured goods. Only cars do. And of you are thinking "well yeah, but a car is an expensive item, not an ipod", boeing doesn't sell the 787 through a dealership, does it? And factory owned stores by ferrari in italy and many other countries are somehow not igniting the fury of the locals. Ford is competing with 20 other multinational manufacturers, that's how prices should be determined, not by a dealer cartel. If ford could unfairly pressure dealers, this means the CUSTOMER will be getting a cheaper ford... which seems to be a bad thing. Capitalism was the thing that was supposed to give the customer the best product at the best price, good thing america got rid of that long time ago, ironically, for the "benefit" of the customer.
      kEiThZ
      • 2 Years Ago
      I'm willing to be real money that the ruling won't be reversed.
      Val
      • 2 Years Ago
      Since the dealers are the ones who lobbied for franchise laws to protect their business in the first place, they seem pretty mad that somebody is finding a way to bypass them. That much is clear. The "conventional format prescribed by law" is their way, which they got into legislature by lobbying and contributing to campaigns. "If Tesla can dispense with franchise dealers, why can't Nissan, or GM ?" Because the law the dealers got themselves states that no manufacturer can be in competition with an EXISTING dealer. Which member of ANY dealer association exactly is a tesla dealer again? That's right, none. They are already protected from GM or nissan opening a dealership, maybe even from selling cars online, suing tesla can't possibly get them any more protection, as they are not competing with them for sales of tesla vehicles.
      wtrmlnjuc
      • 2 Years Ago
      What they don't know is that they don't actually sell cars at Tesla stores, they just inform customers. Good try, but they aren't dealerships.
      Dave D
      • 2 Years Ago
      Hopefully, the dealers suing Tesla need to will end up losing not only this case, but also lose the right to try to enforce these BS laws everywhere.
      pmpjunkie01
      • 2 Years Ago
      Tesla will appreciate the free publicity. Thank you MSADA!
      Levine Levine
      • 2 Years Ago
      More evidence of dirty rotten auto dealers. They twist the law and then accuse Tesla of violating it, despite the trial court had already ruled against their intereptation of the law. When they can't scam the consumers enough , they'll go after Tesla. When you shop at any department store or grocery store, your purchase price is not dependent on your bargaining skill. Car dealers like to prey on the unwary, the unsophisticated shopper. Immediately after WW2 in response to the car shortage, the auto dealers began to "float " prices to scam naive consumers. With the law preventing auto manufacturers selling directly to consumers( you can guess who bribed the politicians to pass these laws) the auto dealers were able to rip-off the consumers with impunity. And as the evil practice has become institutionalized, auto dealers who face difficulty rip-ing off consumers resort to lawsuit to enforce their vice.
        Letstakeawalk
        • 2 Years Ago
        @Levine Levine
        "...despite the trial court had already ruled against their intereptation of the law." The court did no such thing.
          D-Livs
          • 2 Years Ago
          @Letstakeawalk
          The court dismissed the lawsuit in which Massachusetts auto dealers asserted their interpretation of the law. Are we splitting hairs here or what?
      brotherkenny4
      • 2 Years Ago
      This is why our economy struggles. We have built numerous barriers to real competition. This has been done to protect the markets that exist from being overthrown by new and better technologies. Large and bloated corportations have political access and use that to protect themselves from better technologies. This massechusetts law is obviously there to prevent competition. It's the kind of cronyism america has come to expect from it's leaders. Leaders on both sides of the aisles claim they care but are just minions of the wealthy elite. Thanks dems, thanks GOP, for fn' us.
        mikeybyte1
        • 2 Years Ago
        @brotherkenny4
        Actually I thought the history behind the law was the opposite. It used to be that big companies would squash the little independent dealer from ever having a shot. They controlled all of the prices so there was no competition. Sort of like Apple setting and mandating the prices on their products. It is next to impossible to get a good deal on one, whereas with a car dealer today you can get them to bid against one another. I am not saying it is right. I support Tesla's approach. I am just saying that the laws were put in for one thing and are now being used for something else.
          Marco Polo
          • 2 Years Ago
          @mikeybyte1
          @ mikeybyte1 You are absolutely correct. As I said elsewhere, these laws were passed to encourage competition. The same laws were used to force the major Movie studio's to sell of their huge chains of cinema's. In any lawsuit, both sides usually have some merit. Those who hate car dealers, will just never be open-minded enough to see the wider implications. Most car dealers, are local businesses, employing local people in a variety of positions, buying local goods and services. They pay local taxes, and support local communities. The growth of huge shopping malls, has provided some benefits to giant retailers. But, do they help to promote individual initiative, or cultural diversity and competition ? Likewise the local car dealer would argue that you are better of buying from a local dealer, who is in competition with other local dealers, especially when it comes to trade-ins, than trying to negotiate with a Manufacturer on the internet, or a call centre in India ! As I say, if all the prejudice is set aside, both of the litigants cases have some merit. Both also, have risks. If Tesla loses, or like Colarado the laws are strengthened against them, they lose a business model which is a major marketing strategy. If the dealers lose, and the laws are declared obsolete, the major manufacturers will rationalise dealerships to just a few large company owned sites, designed to maximise profits, and shift most business to the internet. At the moment Tesla, like Apple prior to i-phone I pad, occupies so little of the market, it's of no concern. But, the dealers can see a time coming when Tesla is grows, and can be used as justification for the other manufacturers.
      mikeybyte1
      • 2 Years Ago
      I think Tesla is going to win this one. It is a new and innovative approach. Over time many rules and regulations are deemed outdated and no longer relevant. The whole franchise vs. direct sell is one of them.
      wtrmlnjuc
      • 2 Years Ago
      They're going to have service stations installed within 100 miles of customers by the end of the year or two I believe.
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