The Massachusetts State Automobile Dealer Association v. Tesla Motors, Inc. and Tesla Motors MA, Inc.
In late October, 2012 (on the eve of a scheduled hearing before the Board of Selectmen for the Town of Natick, Massachusetts regarding the issuance of a Class 1 license to sell new motor vehicles) the Massachusetts State Automobile Dealer Association brought a lawsuit against our clients Tesla Motors, Inc. and Tesla Motors MA, Inc. claiming that the innovative electric vehicle manufacturer’s high-end Gallery at the Natick Mall violated state franchise dealer statutes and that Tesla’s direct sales and distribution strategy through its own retail stores was illegal. Tesla maintained that its facility at the Natick Mall was an upscale Gallery where visitors could see the Tesla S model, learn about electric vehicles, and purchase accessories. Tesla was applying for a Class 1 license to sell new Tesla S models at a separate facility located in a different part of Natick where it would faithfully comply with all Massachusetts laws governing the sale of new vehicles.
The Massachusetts State Automobile Dealers Association asked the Massachusetts Superior Court for a temporary restraining order and preliminary injunction that (if granted) would have effectively shut down the Natick Mall Gallery which opened in September 2012, by prohibiting Tesla from doing “anything other than an unstaffed display of a locked automobile.” The injunction was denied. The Superior Court held that the franchise dealer statutes at the core of the Dealers Association’s claims applied only to automobile manufacturers and their affiliated dealers and not to unrelated manufacturers like Tesla. As such, the Court ruled that the Massachusetts Automobile Dealers Association lacked standing to bring the lawsuit. Tesla Motors, Inc. and Tesla Motors MA, Inc. thereafter moved to dismiss the lawsuit with prejudice.
In a second victory for the company, the Natick Board of Selectmen voted on December 10, 2012 to issue a Class 1 license to Tesla. Thereafter, Massachusetts consumers (like consumers all over the United States) began gobbling up Tesla S models.
On New Year’s Eve, Campbell Trial Lawyers secured another win for Tesla Motors, this time with the dismissal of all counts brought against the innovative car company. Judge Kenneth Fishman of the Superior Court granted Tesla Motor’s 12(b) motion to dismiss with prejudice, finding that the plaintiffs lacked standing and failed to state a claim upon which relief may be granted. Importantly, the Court refused to read the relevant statute as “intending to protect a motor vehicle dealer from an unaffiliated manufacturer.” MSADA has appealed this decision.
MSADA also filed a separate lawsuit in Middlesex County against the Natick Board of Selectmen following their issuance of a Class 1 License to Tesla. Campbell Trial Lawyers moved to intervene and to dismiss that lawsuit.
The Superior Court, having earlier allowed Tesla to intervene, delivered its Memorandum of Decision and Order dismissing MSADA’s complaint. Judge Bruce Henry found that the MSADA failed to demonstrate any injury from the Natick Board of Selectmen’s issuance of the Class 1 license to Tesla. Judge Henry flatly rejected MSADA’s bald assertion “that allowing Tesla to sell vehicles under the proposed plan will destroy the franchise system.” And he adopted Judge Fishman’s “well-articulated rationale” rejecting MSADA’s claim that G.L. c. 93B prohibited Tesla from selling motor vehicles from its Natick site.”
Campbell Campbell Edwards & Conroy served as lead trial counsel for Tesla Motors MA, Inc. and Tesla Motors, Inc. in this case.