A federal appeals panel has reinstated a stalled lawsuit by electric car maker Tesla against Louisiana auto dealers and the state commission that regulates them.
A change in state law by the legislature in 2017 prevented Tesla from selling or leasing its vehicles directly to buyers in Louisiana. Customers are now forced to leave the state if they want to purchase a vehicle. In August 2022, the company sued the Louisiana Motor Vehicle Commission and the Louisiana Automobile Dealers Association, whose members hold the majority of seats on the commission.
The case was dismissed by the U.S. District Court for Eastern Louisiana last year. But in a 2-1 decision announced Monday, the judges of the U.S. Court of Appeals for the 5th Circuit sent the case back to the lower court, saying the Louisiana Motor Vehicle Commission was biased against Tesla because the deck was stacked in favor of dealers.
In their original complaint, Tesla’s lawyers cited email exchanges between members of the auto dealers association and the Department of Motor Vehicles showing that they worked together to prevent the electric car brand from selling directly in Louisiana.
“…(T)he bias is predictable. The Commission will always have an incentive to exclude new business models from entering the market,” Judge Jerry E. Smith of the 5th Circuit wrote in his opinion.
Smith, a federal judge appointed by President Ronald Reagan, decided in the majority opinion with Judge Catherina Hayes, who was President George W. Bush’s pick for the court. Judge Dana Douglas, a pick of President Joe Biden, dissented.
“We disagree with the opinion and expect further appeals to follow,” Attorney General Liz Murrill said in a text message through her spokesperson. Her agency represents the Louisiana Motor Vehicle Commission.
Claude Reynaud Jr., an attorney for the auto dealers association, declined to comment on the 5th Circuit ruling or a possible appeal.
Mark Beebe, a New Orleans-based attorney representing Tesla, also declined to comment, citing company policy not to discuss ongoing litigation.
