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Appeals court rejects anti-Tesla lawsuit

Appeals court rejects anti-Tesla lawsuit

December 6th, 2017 by Bob Watson in News

This undated image provided by Tesla Motors shows the Tesla Model 3 sedan. Its $35,000 starting price and 215-mile range could bring hundreds of thousands of customers into Tesla's fold, taking it from a niche luxury brand to the mainstream. (Courtesy of Tesla Motors via AP)

Photo by Associated Press /Fulton Sun.

Cole County Circuit Judge Dan Green should have denied a lawsuit filed against Tesla Motors by the Missouri Auto Dealers Association, Linn-based Osage Industries and a St. Louis area car dealership, the state appeals court in Kansas City ruled Tuesday, because none of the plaintiffs had the right to file the lawsuit.

"Consistent with every appellate court ruling in the country that has addressed standing in similar Tesla license challenges in other states," Chief Judge Mark D. Pfeiffer wrote, "(we direct) the trial court (to) dismiss Plaintiffs' petition for lack of standing."

However, MADA Executive Director Doug Smith told the News Tribune the appeals court decision ignores a number of Missouri Supreme Court cases rulings "that Missouri taxpayers have legal standing to challenge government actions, in the spirit of holding government accountable though proper checks and balances."

MADA, Osage Industries and Reuther Ford challenged the state Revenue Department's decision to issue — and later renew — dealer's licenses for Tesla Motors in University City and Kansas City.

After initial arguments about standing, Green on Aug. 31, 2016, agreed with the dealers and prohibited the Revenue Department from renewing Tesla's new motor vehicle dealer licenses, issuing any new motor vehicle dealer license to Tesla, and issuing or renewing any new motor vehicle dealer license to any entity that is not a franchisee or does not file a valid franchise agreement with the department.

The appeals court Tuesday told Green to dismiss the lawsuit.

In a 12-page opinion written by Pfeiffer — and citing two previous Western District rulings in 2007 and 1998 — the three-judge appeals court panel said: "By the express wording of the statute, the legislature has limited appeals of licensing decisions by the Department to persons who have been aggrieved by the Department's decision refusing to issue a license or revoking a license already issued. The statute does not authorize appeals from the Department's decision to grant a license."

The ruling noted the auto dealers' counter argument the Revenue Department's "decision to issue and renew new motor vehicle dealer licenses to Tesla created a 'non-level playing field.'"

The court also reported the dealers' claim "they will be at a disadvantage competing with Tesla because they are required to establish a bona fide place of business and sell vehicles through a properly licensed dealer holding a valid franchise agreement with its manufacturer, while Tesla is permitted to sell directly to the public."

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However, the appeals court found, "While franchisors are prohibited from engaging in business in Missouri without being licensed, as provided in (state law), the MVFP (Motor Vehicle Franchise Practices) Act does not regulate motor vehicle dealer licensing procedures."

The court also rejected the dealers' argument they had an automatic right as taxpayers to challenge the Revenue Department's actions.

MADA's Smith said: "We believe that today's Appeals Court decision does not hold the government accountable but rather enables a system where the Department of Revenue can arbitrarily issue a license to anybody for any reason, without an appropriate and necessary mechanism for Missouri taxpayers to challenge those decisions."

The appeals court wrote that argument was rejected in a 1982 Eastern District case, where the court observed: "Our system of government leaves many crucial decisions to the political processes. The assumption that if a given plaintiff has no standing to sue, no one would have standing, is not a reason to find standing."

Smith said: "The Missouri Auto Dealers Association will continue to explore the legal avenues available to support our position as we continue to champion the experts and small business owners that constitute the auto dealers industry — an industry that's a critical linchpin to the economic engine of communities of all sizes across the state of Missouri."

The dealers' options include asking the full appeals court for a rehearing or asking the state Supreme Court to hear the case.

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