In a significant legal development, the 5th U.S. Circuit Court of Appeals in New Orleans has revived Tesla's lawsuit challenging Louisiana's ban on direct vehicle sales to consumers. The appeals court delivered a 2-1 ruling, reversing a lower court's dismissal of Tesla's constitutional due process claim and vacating the dismissal of its antitrust claim. However, it upheld the dismissal of Tesla's equal protection claim.Tesla, led by CEO Elon Musk, initiated the lawsuit in August 2022 against members of the Louisiana Motor Vehicle Commission, individual dealerships, and the Louisiana Automobile Dealers Association.
The company alleged that these entities exploited their control over the motor vehicle commission to drive Tesla out of the Louisiana market by targeting its direct sales model, which bypasses traditional franchised dealerships. Since 2017, Tesla claims, Louisiana officials have illegally banned direct sales and restricted the leasing and servicing of its vehicles within the state.
Circuit Judge Jerry Smith, who authored the majority opinion, noted that Tesla sufficiently demonstrated "plausible actual bias" from the defendants, citing emails from the commission's executive director reassuring Tesla's competitors that their complaints would be addressed.
In contrast, the dissenting judge, Dana Douglas, argued that Tesla's attempt to challenge the composition of a state regulatory commission over a disagreement with state law was an inappropriate use of the court.
The case has been remanded to U.S. District Judge Sarah Vance in New Orleans for further proceedings. This ruling marks a critical step in Tesla's ongoing efforts to expand its direct-to-consumer sales model in states with restrictive dealership laws.
The legal battle continues under the case name Tesla Inc et al v. Louisiana Automobile Dealers Association et al, 5th U.S. Circuit Court of Appeals, No. 23-30480.