Tesla’s federal court challenge to a Louisiana law that prohibits automobile manufacturers from selling directly to consumers has been revived by an appeals court.
The lawsuit by the electric car company owned by billionaire Elon Musk is part of a broader effort in multiple states to circumvent laws that bar vehicle manufacturers from also being retailers. The effort includes court challenges and, in some cases, opening showrooms on sovereign Native American tribal properties where state laws don’t apply.
The 5th U.S. Circuit Court of Appeals, in a 2-1 ruling, reversed a lower court ruling dismissing a Tesla claim that it was being denied constitutional due process of law. The appeals court said Tesla had made a plausible claim that the Louisiana Motor Vehicle Commission, which governs car sales in the state, was biased against Tesla, noting that it’s dominated by licensed third-party dealers.
“The Commission will always be incentivized to exclude new business models from entering the market,” Judge Jerry Smith wrote for the majority in the ruling issued Monday.
The ruling sends the case back to the federal district court in New Orleans.
