Missouri Appeals Court Hands Win To Electric Car Maker Tesla

Dec 5, 2017

The Missouri Court of Appeals overturned a lower court decision directing the Missouri Department of Revenue not to renew Tesla’s motor vehicle dealer licenses in the state.
Credit Mariordo59 / Creative Commons-Flickr

This story was updated at 1:56 p.m. to include the comments of a Tesla spokeswoman.  

Electric car manufacturer Tesla has scored a big win after an appeals court ordered the dismissal of a lawsuit challenging its right to sell automobiles directly to Missouri consumers.

A three-judge panel of the Missouri Court of Appeals ruled Tuesday that the three plaintiffs — the Missouri Automobile Dealers Association (MADA), a trade group based in Jefferson City; Reuther Ford, an automobile dealer in Herculaneum; and Osage Industries, a motor home manufacturer in Linn — did not have standing to bring the lawsuit.

Standing refers to the legal right to bring a lawsuit. It typically requires that the plaintiff be directly harmed by the matter at issue.

The panel overturned a lower court decision, which directed the Missouri Department of Revenue not to renew Tesla’s motor vehicle dealer licenses in the state.

Tesla operates stores on the Country Club Plaza in Kansas City and in University City, a suburb of St. Louis. It also operates a repair facility on Manchester Trafficway in Kansas City.

The stores briefly closed after the lower court decision a year ago, but the Missouri Court of Appeals allowed them to reopen while Tesla’s appeal was pending.

In finding for Tesla, the appeals court ruled on narrow grounds, rejecting the plaintiffs’ arguments that, as economic competitors and taxpayers, they were entitled to challenge the issuance of licenses to Tesla.

The appeals court held that the Missouri legislature limited appeals of licensing decisions only to those denied a license or whose licenses were revoked. And it said that merely being an economic competitor was not sufficient to confer standing.

It said its ruling was “consistent with every appellate court ruling in the country that has addressed standing in similar Tesla license challenges in other states.”

Many states have franchise laws requiring new cars to be sold by independent dealers and prohibiting car manufacturers from selling directly to consumers. Tesla has tested those laws with its business model of selling its cars online and through its own stores rather than through franchised dealerships.  

Doug Smith, president of MADA, said the trade association was studying its options, including taking the case to the Missouri Supreme Court.

“We feel very strong about the merits of our argument, and we’re a little disappointed in the final decision,” Smith said. “It does have an impact on our industry.”

Smith said that MADA’s position is that if you’re an automobile manufacturer in Missouri, “you’re supposed to sell vehicles through the system that was created in the early ’80s. And until that system is modified or changed, that’s gonna be our stance.”

In a written statement, Tesla spokeswoman Gina Antonini called the decision "a victory for Missouri consumers who want the choice to learn about and purchase their Tesla in their home state."

"We have been serving customers in Missouri for almost five years and have contributed to the state economy and jobs for Missourians – something that will now continue,” Antonini said. 

Smith, of MADA, said that if the Missouri Court of Appeals decision stands, “the Chinese manufacturer, or the Indian manufacturer, when it gets to the point where it can pass emissions and safety (tests) in the U.S., this is a model that they’ll look very strongly at, and that will have an impact on small businesses across Missouri.”

Dan Margolies is a senior reporter and editor for KCUR. You can reach him on Twitter @DanMargolies.