LOS ANGELES -- Tesla Motors has won a round in its legal fight against franchised dealership laws in New York over direct sales to consumers while it continues to lobby Texas legislators on the issue.
In ruling for Tesla on Thursday, New York Supreme Court Justice Raymond J. Elliott III wrote "dealers cannot utilize the Franchised Dealer Act as a means to sue their competitors."
Furthermore, Elliott wrote that New York franchised dealers could not prove they had sustained an injury from Tesla's factory stores.
"An increase in business competition is insufficient to confer standing," Elliott wrote.
The Greater New York Automobile Dealers Association, in a statement Friday, said it is considering whether to appeal the judge's ruling or pursue other remedies. The association said it disagrees with Elliott's determination regarding its standing in the case.
Furthermore, the licensing of Tesla's factory-owned stores "is clearly prohibited" by the state's franchised dealer law and its vehicle and traffic law, the statement said.
Tesla operates three stores and two service centers in New York.
Dealers in New York sued Tesla in October 2012 to shut down company-owned stores they claim violate state franchise laws and consumer protection laws.
The dealers behind the lawsuits say Tesla should use independent franchised dealers as other automakers do.
Musk was in Texas this week attempting to persuade Texas legislators to exempt Tesla from the state's franchise laws.
Texas law prevents Tesla from selling its cars directly to the public because it does not have an independent franchised dealership network.
"Nothing could be further from what Texas is all about," Musk told reporters at a capitol press conference on Wednesday, citing examples of Texans such as Michael Dell who have succeeded in direct-to-consumer sales.
Bill Wolters, president of the Texas Automobile Dealers Association, said an exemption for Tesla "boils down to the consumer," according to the Austin American-Statesman.
Said Wolters: "What happens if someone like Tesla, who is a very small organization and always will be a very small niche player, but if they change the franchise laws, it allows every other manufacturer to come in and do what Tesla is going to -- compete with our family-owned businesses," the American-Statesman reported.
Amy Wilson and Reuters contributed to this story.
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.