A Massachusetts judge has denied a request by dealers for a preliminary injunction against Tesla Motors Inc., which will allow the automaker to operate its store in suburban Boston as the dealers' lawsuit against the company proceeds.
The ruling, filed Friday, is an early setback for the Massachusetts State Automobile Dealers Association and individual dealerships that sued Tesla on Oct. 16, claiming the electric-vehicle maker has violated Massachusetts' licensing, consumer protection and franchise laws. The lawsuit poses a challenge to Tesla's strategy of owning and operating its own retail stores, rather than granting franchises to dealers as other automakers do.
The dealers asked the Massachusetts Superior Court for a restraining order and injunction that would stop the Tesla-owned showroom in Natick, Mass., which opened Sept. 28, from doing "anything other than an unstaffed display of a locked automobile." To get an injunction in Massachusetts, as in federal court, plaintiffs must show they are likely to prevail in the case and will otherwise suffer irreparable harm.
In an e-mail, Shanna Hendriks, a Tesla spokeswoman, said the court made the right decision.
"Tesla looks forward to continuing to focus on advancing the knowledge of EVs in a convenient, accessible environment," she wrote. "We remain hopeful for a positive outcome of this case."
Robert O'Koniewski, executive vice president of the Massachusetts association, says the group is considering an appeal and other judicial remedies, but it hasn't made a decision on which path to take.
"Dropping the lawsuit is not an option at this point," he added. "We feel very strongly that Tesla is operating a factory store outside parameters of our franchise law and our license law, and they are operating that store illegally."
A spokesman for the National Automobile Dealers Association declined to comment on the ruling.
Last month, as state dealer groups filed lawsuits against Tesla in Massachusetts and New York, NADA issued a statement saying it considers franchised dealers the best suited to distribute new cars and trucks. Forty-eight states have banned or restricted factory ownership of dealerships.
"Tesla may not yet recognize the value of the independent, franchised dealer system, but as its sales increase, NADA is confident it will re-examine its business model," Montana dealer and NADA Chairman Bill Underriner said in the statement. "Other companies such as Daewoo did. All companies should be complying with existing laws in the same way dealers are required to."