5th Circuit rules for Tesla in its fight to sell electric vehicles directly in Louisiana

A three-judge panel U.S. Court of Appeal for the Fifth Circuit has revived a lawsuit Tesla filed against Louisiana auto dealers and the state board that regulates auto sales. The electric vehicle maker contends dealers have conspired to prevent them from selecting their vehicles directly to buyers in Louisiana. (Tesla photo)

A federal appellate panel has jump-started what had been a stalled lawsuit from electric automaker Tesla against Louisiana auto dealers and the state commission that regulates them.

A change the Legislature made to state law in 2017 has prevented Tesla from selling or leasing its vehicles directly to buyers in Louisiana, forcing customers to go out of state if they want to purchase one. In August 2022, the company sued the Louisiana Motor Vehicle Commission and the Louisiana Automobile Dealers Association, whose members hold a majority of the seats on the commission.

The case was dismissed last year in the U.S. District Court for Eastern Louisiana. But in a 2-1 decision issued Monday, judges from the U.S. Court of Appeals for the Fifth Circuit sent the case back to the lower court. Its decision found that the Louisiana Motor Vehicle Commission, with the deck stacked in favor of dealers, is biased against Tesla.

In its original court complaint, Tesla’s attorneys cited email correspondence between members of the auto dealers’ association and the Motor Vehicle Commission that revealed they have collaborated to keep the EV brand from conducting direct sales in Louisiana.

“… [T]he bias is predictable. The Commission will always be incentivized to exclude new business models from entering the market,” Judge Jerry E. Smith wrote in his opinion.

Smith, a federal court appointee of President Ronald Reagan, ruled in the majority with Judge Catherina Hayes, who President George W. Bush selected for the court. Judge Dana Douglas, a selection 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 spokesman. Her agency represents the Louisiana Motor Vehicle Commission.

Claude Reynaud Jr., attorney for the auto dealer’s association, declined to comment on the ruling or a possible appeal.

Mark Beebe, a New Orleans-based attorney representing Tesla, also declined to comment, citing the company’s policy for not discussing ongoing litigation.

This story first appeared in the Louisiana Illuminator, a member with the Phoenix in the nonprofit States Newsroom.

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