Mass. Superior Court Denies Injunction Request Against Tesla by Dealers’ Association


On November 16, Tesla opened its first “new design” retail store in Toronto, Canada. It’s located in the Yorkdale Shopping Center and features large touchscreens on which customers can design their own Model S and then view it on a massive 85-inch video wall.

The same day that Tesla Motors was opening its 24th store in North America a Massachusetts Superior Court judge was denying a request by the Massachusetts State Automobile Dealers Association and individual dealerships for a preliminary injunction against the automaker’s store in suburban Boston.

Tesla’s strategy of eschewing the traditional dealership model in favor of factory-owned stores located in shopping malls has been met with anger by dealers nationwide. They claim it violates state regulations and are manning their battle stations against Tesla setting a precedent that may render the current franchise model obsolete.

The association and dealers, who sued on October 16, claimed that the company was violating the state’s licensing, consumer protection and franchise law. To get an injunction, plaintiffs must show that they are likely to prevail in the case and will otherwise suffer irreparable harm, which as the ruling proves they failed to do so the case will go on trial.

“Tesla looks forward to continuing to focus on advancing the knowledge of EVs in a convenient, accessible environment”, company spokeswoman Shanna Hendricks told Automotive News in an email, adding that “we remain hopeful for a positive outcome of this case”.

Executive vice president of the Massachusetts association Robert O'Koniewski commented that the group is considering an appeal and other judicial remedies but still hasn't made a decision on its exact course of action.

"Dropping the lawsuit is not an option at this point", he said. "We feel very strongly that Tesla is operating a factory store outside parameters of our franchise law and our license law, and they are operating that store illegally."

By Andrew Tsaousis

Story References: Automotive News




Groagun said... »November 22, 2012

At this particular time in history, with the rise politically of far right wing, neo-cons and tea party sympathies, I think it's a ripe moment for organizations to tear down old infatructure that they do not like, such as franchises and unions.

My fear is that the pendulum will swing to far that way and a harmonious balance will be lost, not that we have had or have one now. I simply do not believe that a new company like Tesla should be mandated to sell their product like everyone else before them.

The Franchise laws were enacted to protect an existing dealer network against heavy handed tactics and unreasonable demands made on retailers by conglomerate, enormous auto manufacturers.

The problem for the various dealer associations is this: Tesla is a brand new company and has no franchises to protect. Essentially what the DA's are asking the courts to do is force Tesla, and any other new entrant in the auto business to sell their products in one particular model.

I would hope that alarm bells are going off for you if you are American, Dem or Rep alike. Tesla is following the Apple retail model and as a new company should be free to do so. I believe that current franchisee's should be protected from the old manufacturers and that those laws should be re-evaluated over the next decade but as they are primed to take this fight forward they make get the fight, and lose, in the next 12-36 months.

Sometimes it's best to retreat in the face of consequences or an outcome or answer that can take down your entire organization.

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