Supreme Court won’t weigh Louisiana direct sales ban challenged by Tesla

The Supreme Court on Monday declined to order a lower court to reconsider its revival of a legal challenge brought by billionaire Elon Musk’s Tesla to a Louisiana law prohibiting car manufacturers from directly selling to consumers. 

Louisiana sought another shot at convincing the U.S. Court of Appeals for the Fifth Circuit that Tesla’s lawsuit should not be allowed to move forward. But the justices declined to intervene in the case. 

Tesla in 2022 sued members of the Louisiana Motor Vehicle Commission, composed of dealerships owned by individual commissioners, and the Louisiana Automobile Dealers Association, claiming they were abusing their control of the commission to take aim at Tesla’s sales model and push it from the market.  

Tesla sells its vehicles directly to customers via company-owned showrooms and online, as opposed to utilizing traditional dealerships. Nine of the 18 commissioners, on the other hand, are associated with dealerships that Tesla alleges are competitors, which Musk’s company said violates its due process.  

In the state’s petition to the justices, Louisiana’s attorney general argued that the 5th Circuit erred in allowing Tesla’s suit to move forward. A district court dismissed Tesla’s complaint but the appeals court revived several claims in a 2-1 decision, including the due process claim.

“In an opinion for only himself, Judge [Jerry] Smith held that Tesla plausibly alleged that the Commission’s industry-participant members possess a ‘substantial pecuniary interest’ that creates a due process problem,” Louisiana Attorney General Elizabeth Murrill wrote. “His opinion, however, never identifies such an interest; instead, the most it offers is Tesla’s alleged competitor status.” 

She said the case prevents a “straightforward grant-vacate-remand (GVR) issue” for the justices, pointing to a maneuver used by the court to send a pending petition back to a lower court for reconsideration. Tesla, meanwhile, said the court should not use the maneuver on the Fifth Circuit’s decision.  

“Petitioners identify no intervening change in law or fact, nor any authority supporting the Court’s intervention at this preliminary stage of the litigation,” Tesla’s lawyers wrote in their opposition.