Court of Appeals revives Tesla’s challenge to Louisiana law banning direct-to-consumer sales

NEW ORLEANS (AP) — Tesla’s federal court challenge to a Louisiana law barring automakers 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 larger effort in several states to circumvent laws that prohibit vehicle manufacturers from also being retailers. The effort includes court challenges and, in some cases, opening showrooms on Native American tribal sovereign property where state laws do not apply.

The 5th U.S. Circuit Court of Appeals, in a 2-1 ruling, reversed a lower court ruling rejecting a Tesla claim that it was denied constitutional due process. The appeals court said Tesla made a plausible case that the Louisiana Motor Vehicle Commission, which governs car sales in the state, was biased against Tesla, noting that it is dominated by licensed third-party dealers.

“The Commission will always have an incentive to exclude new business models from entering the market,” Judge Jerry Smith wrote for the majority in Monday’s ruling.

The ruling sends the case back to federal court in New Orleans.

Smith was appointed to the court by former Republican President Ronald Reagan. Judge Catharina Haynes, appointed by former Republican President George W. Bush, agreed with the result. The dissent was Judge Dana Douglas, appointed by Democratic President Joe Biden.

“The Supreme Court has made clear that regulatory boards are not unconstitutional merely because they are composed of competitors of the entities they regulate,” Douglas wrote.

Copyright 2024 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

TOPICS
Louisiana Tesla