"Trouble in Missouri" part 3

Jan 22, 2015

TexasEV

For all the auto dealers talk about competition, they sure are afraid of it, aren't they?

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Jan 22, 2015

breser

Seems like MADA is executing a different tactic since modifying the law directly hasn't been successful for them.

Missouri car dealers sue state over Teslas direct sales - SFGate
Auto dealers sue Missouri over Tesla car sales : Business

The second link is a better write up but unfortunately has a terribly survey in order to see the story, my appologies for that.

�We feel it�s a violation of the law,� MADA�s president and CEO, Doug Smith, said in a conference call with reporters last week, describing Tesla�s business model. �The law ... clearly states that a manufacturer cannot sell vehicles to consumers.�

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Looking at Missouri law I'd say it's not particularly clear on this front.

The restriction they appear to be referencing is in Section 407.826 of Missouri Revised Statues.

Which says (in part):

A franchisor shall be prohibited from owning or operating a new motor vehicle dealership in this state

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Franchisor is defined in Section 407.815 as follows:

(10) "Franchisor", a person who grants a franchise to another person;

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Since Tesla has not granted a franchise to anyone else they do not meet the definition.

All that said there may be a tiny part of Missouri law that may be problematic for Tesla. Section 301.568 says that new vehicles can't be sold except by a franchised dealer for that make. Granted the section's entire purpose is to talk about something else but it's there. It seems that this is a poorly worded section that doesn't reflect the overall intent of the law but it is arguable.

A motor vehicle dealer shall not assign ownership on any vehicle in a retail sale by the assignment of a manufacturer's statement of origin unless he is enfranchised by the manufacturer to sell that particular make of vehicle

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Telsa is most certainly a motor vehicle dealer under the law and is most certainly assigning ownership by way of a manufacturer's statement of origin. So Tesla may find themselves in a Catch 22 with the law. They may need to operate a franchised dealer in order to transfer ownership with a statement of origin. But they may not do so if they are the manufacturer.

There may be some clever way around this if they do all the sales like they do in states like Texas. But I'm not sure how that would work.

So while I don't think the state law is clear cut, I sadly do think the dealers have something to potentially argue in court.

Looks like there is more "Trouble in Missouri"

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Jan 22, 2015

efusco

Would love some guidance from Tesla or just about anyone on how we can help here.

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Jan 22, 2015

breser

efusco said: ?

Would love some guidance from Tesla or just about anyone on how we can help here.

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I'm not sure about Missouri courts but courts tend to be inclined to accept government agencies interpretation of the law over other parties. So this may not go very far.

If it gets to that point (and Missouri law allows it) I'd imagine an amicus curiae filing to the court would be helpful. However, I'd imagine that Tesla would do that themselves.

Beyond that I think getting the existing law made clearer as to Tesla's ability to sell vehicles might be helpful. My suggestion is to change the word "enfranchised" in 301.568 to "authorized" or at least something that removes a franchise requirement to use a statement of origin. The intent seems to be to prevent a used dealer from buying a new car and then starting to sell them as new. I don't know why that's important but I know that sort of thing is included in many state laws on automobile sales. Though you might not want to try and do that until Tesla loses their license on that basis.

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Jan 22, 2015

efusco

breser said: ?

I'm not sure about Missouri courts but courts tend to be inclined to accept government agencies interpretation of the law over other parties. So this may not go very far.

If it gets to that point (and Missouri law allows it) I'd imagine an amicus curiae filing to the court would be helpful. However, I'd imagine that Tesla would do that themselves.

Beyond that I think getting the existing law made clearer as to Tesla's ability to sell vehicles might be helpful. My suggestion is to change the word "enfranchised" in 301.568 to "authorized" or at least something that removes a franchise requirement to use a statement of origin. The intent seems to be to prevent a used dealer from buying a new car and then starting to sell them as new. I don't know why that's important but I know that sort of thing is included in many state laws on automobile sales. Though you might not want to try and do that until Tesla loses their license on that basis.

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Had to look up the fancy lawyer words... Amicus curiae - Wikipedia, the free encyclopedia

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Jan 22, 2015

Liz G

Tesla will contact us if they need us and then we will mobilize same as last time. In th e mean time reaching out to you state rep and state senator wouldn't hurt.

On a pleasant note, did anyone notice how fabulous Lithies photo was in the St Louis Post Dispatch.

Auto dealers sue Missouri over Tesla car sales : Business

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Jan 22, 2015

RiverBrick

Sorry you have to deal with such nonsense.

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Jan 22, 2015

evme

breser said: ?

Seems like MADA is executing a different tactic since modifying the law directly hasn't been successful for them.

Missouri car dealers sue state over Teslas direct sales - SFGate
Auto dealers sue Missouri over Tesla car sales : Business

The second link is a better write up but unfortunately has a terribly survey in order to see the story, my appologies for that.



Looking at Missouri law I'd say it's not particularly clear on this front.

The restriction they appear to be referencing is in Section 407.826 of Missouri Revised Statues.

Which says (in part):


Franchisor is defined in Section 407.815 as follows:



Since Tesla has not granted a franchise to anyone else they do not meet the definition.

All that said there may be a tiny part of Missouri law that may be problematic for Tesla. Section 301.568 says that new vehicles can't be sold except by a franchised dealer for that make. Granted the section's entire purpose is to talk about something else but it's there. It seems that this is a poorly worded section that doesn't reflect the overall intent of the law but it is arguable.



Telsa is most certainly a motor vehicle dealer under the law and is most certainly assigning ownership by way of a manufacturer's statement of origin. So Tesla may find themselves in a Catch 22 with the law. They may need to operate a franchised dealer in order to transfer ownership with a statement of origin. But they may not do so if they are the manufacturer.

There may be some clever way around this if they do all the sales like they do in states like Texas. But I'm not sure how that would work.

So while I don't think the state law is clear cut, I sadly do think the dealers have something to potentially argue in court.

Looks like there is more "Trouble in Missouri"

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Is MADA the one suing? The article I saw mentioned Osage Industries (aka Mike Kehoe) as the one suing. (Edit: Ok the STL article makes it more clear, all 3, MADA, Reuther Ford and Osage Industries are suing)

For those who don't remember, Osage Industries was at one point owned by Mike Kehoe, he is the one who tried to sneak in that legislation prior:

Mikes Biography | Mike Kehoe


Also, I don't think Tesla will have any issue with 301.568. Since enfranchised is not defined, we go by the dictionary definition. Which gives plenty of room for Tesla to argue that it has "the right to sell a company's goods or services in a particular area".

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Jan 22, 2015

TEG

Original thread on this topic:

http://www.teslamotorsclub.com/showthread.php/30907-Trouble-in-Missouri

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