The U. S. Court of Appeals in New Orleans sided with a lower court that barred Ford Motor Co. from pricing and merchandising used vehicles on a Houston Web site. The courts upheld the Texas franchise law, which bans factory-owned dealerships and forbids factories from retailing vehicles.
"This was a hard-fought battle, and the stakes were high," said Bill Newman, COO of public and legal affairs for the National Automobile Dealers Association, which filed a brief in support of the Texas statute and helped argue the case before the appellate court.
Dan Myers, a Tallahassee, Fla., dealer attorney who has helped shape similar franchise laws in several states, said he thinks other states will copy the language in the Texas law that forbids manufacturers from "acting in the capacity of a dealer."
At least 29 states outlaw factory-owned dealerships or bar manufacturers from retailing vehicles to consumers. But few of the restrictions are as sweeping as the Texas ban.
The Texas case "is a cornerstone for state dealer associations to build a comprehensive protection against the manufacturers' desires to get into the retail end of the business," Myers said.
On Thursday, Aug. 30, spokesman John Ochs said Ford has not decided whether it will continue the fight, which would require the company to appeal to the U. S. Supreme Court.
The Texas Motor Vehicle Division filed an administrative complaint against Ford with the Texas Motor Vehicle Board in 1999, alleging Ford violated state law by selling used vehicles to Texas consumers without a dealer's license and "acting in the capacity of a dealer."
Ford filed a federal lawsuit challenging the statute. Last year, the U.S. District Court in Austin rejected Ford's case, saying Ford was using constitutional arguments to get around the state law.