Auto dealers sue Revenue department over Tesla 'dealer' license

A message is left for display on the window of a Tesla Model S as several of the electric cars sit in front of the Missouri Capitol's south entrance. Auto dealers are suing the state after it gave a dealer license to Tesla.
A message is left for display on the window of a Tesla Model S as several of the electric cars sit in front of the Missouri Capitol's south entrance. Auto dealers are suing the state after it gave a dealer license to Tesla.

Missouri's Revenue department broke state law in 2013 when it issued Tesla Motors a dealer license, and again in 2014 and 2015 when it renewed that license, Missouri's Automobile Dealers Association claims in a 20-page lawsuit filed late Thursday afternoon.

Osage Industries of Linn and a Ford dealership in Herculaneum also are plaintiffs in the Cole County circuit court lawsuit against the department and its new director, Nia Ray.

They argue granting Tesla a dealer's license gave the California-based electric car-maker "preferential" treatment that no other dealer or manufacturer gets under the existing Missouri laws.

"Although the statutes are clear and unambiguous that an applicant can obtain a dealer license only when all the statutory requirements are met, the Respondents failed to follow them," Jefferson City lawyers Lowell D. Pearson and Johnny Richardson wrote in the lawsuit. "They issued and renewed a dealer license to an entity that is not a dealer at all.

"The entity, Tesla Motors, Inc., is a manufacturer with a company-owned store (not, by any means, a "dealership') in University City, Missouri. The law is plain that a dealer license holder must be the franchisee of a manufacturer; Tesla Motors, Inc. is not."

Nanci Gonder, Attorney General Chris Koster's spokeswoman, said Thursday evening the state had no comment "at this time." And Revenue spokeswoman Michelle Gleba told the Associated Press the agency doesn't comment on pending litigation.

But Diarmuid O'Connell, Tesla's vice president of Corporate and Business Development, said in a news release: "Today's lawsuit is a desperate attempt to prevent an innovative company like Tesla from bringing products directly to market.

"Missouri law is very straightforward in that it prohibits manufacturers that use independent franchisees from competing directly against them. This has nothing to do with Tesla, which has never used independent franchisees."

But, the lawsuit countered, current state law says a "motor vehicle franchise dealer is required to have a bona fide established place of business," which includes a "permanent enclosed building or structure (that is) actually occupied as a place of business by the applicant for the selling, bartering, trading, servicing, or exchanging of motor vehicles (and) an area or lot which shall not be a public street on which multiple vehicles ... may be displayed."

And Tesla's application for a license didn't meet that requirement, the lawsuit said, noting: "The photographs that Tesla submitted with its Application reveal that the University City location contains no showroom, contains no lot on which vehicles can be displayed, has no capability for servicing vehicles, and has inadequate signage."

Lawmakers last May attempted to amend several bills to make it clear Tesla didn't meet the current law, but those proposals failed.

In the Thursday statement, Tesla's O'Connell said: "The fact that MADA tried and failed last year to change existing Missouri law to make it apply to Tesla, proves the frivolousness of this legal challenge. The goal of both this lawsuit and anti-Tesla legislation is to create a distribution monopoly that will decrease competition, hurt consumer choice, and limit economic investment in Missouri.

"We will continue to oppose these efforts to advance anti-free market regulations both in Missouri court and in the legislature."

The lawsuit asks the court to:

• Declare that current Missouri law "does not permit the issuance of a new motor vehicle dealer license where the entity licensed is not a franchise, has not entered into a franchise agreement and/or does not meet the physical plant requirements to be a bona fide Missouri dealer."

• Prohibit Revenue from renewing Tesla's license or issuing or renewing any new motor vehicle dealer license to any other business that is not a franchisee or that doesn't file a franchise agreement with the department.

The case had not been assigned to any judge as of 5 p.m. Thursday.