NEW ORLEANS — Tesla’s lawsuit in federal court challenging a Louisiana law that prohibits automakers from selling directly to consumers has been revived by an appeals court.
Billionaire Elon Musk’s electric car company’s lawsuit is part of a broader effort in several states to circumvent laws that prohibit automakers from also being retailers. The effort includes litigation and, in some cases, opening showrooms on Native American sovereign tribal traits where state laws do not apply.
The 5th U.S. Court of Appeals in a 2-1 ruling overturned a lower court ruling that rejected a Tesla claim that it was denied constitutional due process. The appeals court said Tesla had made a plausible claim that the Louisiana Motor Vehicle Commission, which regulates auto sales in the state, was biased against Tesla, noting that it is dominated by authorized third-party dealers.
“The Commission will always have an interest in excluding new business models from the market,” Justice Jerry Smith wrote for the majority in the ruling delivered on Monday.
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 Catherine Haynes, appointed by former Republican President George W. Bush, concurred in the ruling. Judge Dana Douglas, appointed by Democratic President Joe Biden, dissented.
“The Supreme Court has clarified that regulatory boards are not unconstitutional merely because they are composed of competitors of the entities they regulate,” Douglas wrote.