Massachusetts Dealers Can’t Sue Tesla for Operating in MA

This morning, the Supreme Judicial Court (SJC) of Massachusetts held that unaffiliated automobile dealers in Massachusetts do not have standing to sue Tesla over alleged violation of Massachusetts Auto Dealer statutes.

For some background on this topic, listen to this great Planet Money story that outlines the common statutes. In a nut-shell: states have laws that prohibit automobile manufacturers from selling cars directly to consumers. Affiliated dealerships are set up in each state, and have certain agreements with the car makers. Those state laws often have protections baked in that protect the local dealerships from the car makers revoking the dealer’s right to sell that make of cars.

Tesla currently has one showroom in Massachusetts. It is not an independent dealership, nor is it licensed under Massachusetts dealership laws. The Massachusetts State Automobile Dealers Association and a few dealerships sued for injunctive relief, asking the court to shut the showroom down.

The SJC had previously held that the law did not allow dealerships to sue unaffiliated automakers. A Honda dealership can sue Honda, but a Kia dealership can’t sue Honda. There were some amendments to the law since the last time the SJC decided this issue, but the court ultimately held that the changes, like the rest of law, was meant to protect local dealership from their affiliated car makers, and not dealerships from other competition.