U.S. Justice Department Supports Tesla’s Argument in Louisiana Lawsuit

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In a significant development, the U.S. Justice Department has thrown its weight behind Tesla in the electric car manufacturer’s ongoing legal battle against the Louisiana Automobile Dealers Association, Louisiana Motor Vehicle Commission members, and a group of dealers. Tesla alleges these entities conspired to limit competition through Louisiana’s ban on direct-to-consumer automobile sales. The case, which Tesla appealed after its initial dismissal in June, has taken a new turn with the Justice Department’s involvement.

Antitrust Law Misinterpretation

The Justice Department filed a “friend of the court” brief to the New Orleans-based 5th U.S. Circuit Court of Appeals, asserting that the trial court judge in Tesla’s case had misinterpreted antitrust law in her ruling to dismiss the case. The government’s filing, echoing Tesla’s recent submission, argued that U.S. District Judge Sarah Vance incorrectly held that Tesla was obligated to demonstrate that members of Louisiana’s motor vehicle commission had the intent to restrain market competition.

Importantly, the Justice Department emphasized that it was not taking sides by supporting Tesla, nor did it express any opinion on the “proper disposition” of the appeal.

  

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Absence of Intent Requirement in U.S. Civil Antitrust Law

In its submission, the Justice Department and Tesla’s legal team underscored that U.S. civil antitrust law does not necessitate proving intent. They contended that introducing such a requirement would “improperly” restrict antitrust law.

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Tesla’s Unique Direct-to-Consumer Model

Tesla stands out as one of the few car companies selling their vehicles directly to consumers and not relying on independent franchises for sales and service.

Ruling and Tesla’s Allegations

Judge Vance’s ruling against Tesla argued that the state’s ban on direct sales applied universally to all vehicle manufacturers and that Tesla had not presented any evidence of anti-Tesla bias within the Louisiana Legislature. Tesla countered in its appeal, alleging that Louisiana car dealers had collectively engaged in baseless investigations and harassment to drive Tesla out of the state.

Future Proceedings

The appeals court has not yet scheduled a date for oral arguments.

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Past Settlement in a Similar Dispute

In a related development, in 2020, Tesla settled with the state of Michigan, allowing Michigan residents to purchase lawfully and service Tesla vehicles within the state.

The case is titled “Tesla v. Louisiana Automobile Dealers Association et al.,” before the 5th U.S. Circuit Court of Appeals under case number 23-30480.

For Tesla, legal representation is provided by Ari Holtzblatt of Wilmer Cutler Pickering Hale and Dorr and Mark Beebe of Adams and Reese.

The Louisiana Automobile Dealers’ legal team includes Paul Clement of Clement & Murphy.

Matthew Mandelberg of the U.S. Justice Department handles the amicus brief on behalf of the United States.

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