A federal court in Louisiana recently filed a lawsuit against Tesla against the Louisiana Automobile Dealers Association (LADA) and other affiliated dealers and commissioners, citing various competition and constitutional claims arising from Louisiana’s ban on direct sales of automobiles. The suit filed was dismissed. Tesla Inc. v. Louisiana Automobile Dealers Association, 2023 WL 4053438 (ED La. June 16, 2023). Tesla argued that Louisiana’s direct sales ban was intended to remove Tesla from the auto market because Tesla’s business model involves directly engaging end customers rather than selling through franchised dealers. Tesla’s lawsuit targets LADA for antitrust and constitutional violations; LADA’s lobbying efforts against the Louisiana Motor Vehicle Commission aim to exclude Tesla from competition in Louisiana and strip it of its constitutional rights. It alleges that it is part of an anti-competitive and commercially discriminatory scheme.
In a lengthy opinion resolving seven separate motions to dismiss, the court dismissed Tesla’s suit with prejudice. The court reasoned that Tesla’s antitrust claims were barred by the court. Noah Pennington This is because the defendant’s group activities are “not regulated” by the Sherman Act and are merely “acts of private individuals seeking anticompetitive measures from the government.” The court also held that membership in an association alone is not sufficient for incorporation. Participation in a conspiracy, and that Tesla had otherwise alleged insufficient facts to plausibly allege such a conspiracy between the defendants. Regarding constitutional claims, the court concluded that Tesla had no “constitutional right to be regulated” by a commission “that is ‘sympathetic’ to its business model.” The court also concluded that Tesla’s rights under the Equal Protection Clause were not violated because the ban on direct car sales was based on a rational basis. Similarly, Tesla’s Commerce Clause claim failed because it could not plausibly argue that the ban on direct sales had a discriminatory effect.
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