The state's highest court will hear arguments tomorrow in a case pitting Massachusetts auto dealers against electric carmaker Tesla, that could upend how cars are sold in the state.
The Supreme Judicial Court will hear oral arguments from Tesla and the Massachusetts State Automobile Dealers Association (MSADA) and several dealership owners, who are appealing the dismissal of a lawsuit that sought to ban the California company from operating its own dealerships in Massachusetts. The dealers' suit claims direct manufacturer sales aren't legal in Massachusetts.
"We totally disagreed with the technical ruling of the Superior Court," said Robert O'Koniewski, executive vice president of MSADA, referring to a 2012 decision by a Norfolk County judge who found the state's auto franchise law only allowed for injunctive relief for dealerships directly connected to car companies.
O'Koniewski said the franchise law was amended in 2002, and now does not prohibit lawsuits between dealers and unaffiliated manufacturers. In its brief to the SJC, Tesla said the law "was not intended to protect dealers from potential competition from unaffiliated manufacturers."
Even if the SJC rules in favor of the MSADA, the actual lawsuit would have to be heard by a lower court, meaning a resolution is not imminent.
"We would still have to then go back to the superior court," O'Koniewski said.
Also in the works is a bill filed by state Rep. David Linsky of Natick that would explicitly legalize manufacturer-owned dealerships for automakers without a presence in the state. It was recently ordered for further study, a designation that often — but not always — means a slow death for a bill.
Founded by billionaire Elon Musk, Telsa argues that its cars need to be sold directly to consumers, and not in traditional dealerships, because the company is in the best position to describe the new technologies in its cars and justify the starting price of nearly $70,000. The auto dealers say dealerships offer increased competition, and are good for consumers.
Tesla's direct-selling approach has been challenged around the country, most recently in states including Ohio and New York. Dealers argue that the franchise approach is an entrenched system of selling cars, and letting Tesla sell directly could set a precedent for other automakers to sidestep independent franchises. Tesla has been selling in Massachusetts since December 2012.
Tesla did not respond to requests for comment.
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