The electric car manufacturer Tesla, led by billionaire Elon Musk, challenged Louisiana’s restriction on direct automobile sales to consumers in a lawsuit that was brought back to life on Monday by a divided federal appeals court.
TakeAway Points:
- On Monday, a divided federal appeals court reopened a lawsuit in which Elon Musk’s electric car business, Tesla, was challenging Louisiana’s restriction on selling vehicles directly to consumers.
- Tesla had sued members of the Louisiana Motor Vehicle Commission, dealerships owned by individual commissioners, and the Louisiana Automobile Dealers Association in August 2022.
- Tesla accused Louisiana officials of illegally banning direct sales since 2017 and restricting the leasing and servicing of its vehicles in the state.
- Meanwhile, AT&T has agreed to pay $950,000 after a Federal Communications Commission investigation found the company failed to deliver 911 calls to emergency call centers and did not notify officials during an August 2023 outage.
The lawsuit between Tesla and Louisiana
In a 2-1 decision, the 5th U.S. Circuit Court of Appeals in New Orleans reversed a lower court judge’s dismissal of Tesla’s constitutional due process claim and vacated her dismissal of its antitrust claim. It upheld her dismissal of Tesla’s equal protection claim.
Tesla had sued members of the Louisiana Motor Vehicle Commission, dealerships owned by individual commissioners, and the Louisiana Automobile Dealers Association in August 2022.
It accused various defendants of exploiting their control of the motor vehicle commission to drive Tesla from the market by targeting its sales model, which does not use a network of franchised dealers.
Tesla accused Louisiana officials of illegally banning direct sales since 2017 and restricting the leasing and servicing of its vehicles in the state.
Circuit Judge Jerry Smith wrote that Tesla sufficiently alleged that the defendants had “plausible actual bias,” citing emails from the commission’s executive director assuring Tesla rivals that their complaints would be addressed.
The dissenting judge, Dana Douglas, would have upheld the dismissal of Tesla’s case.
“The issue is whether a company can change the composition of a state’s regulatory commission because it merely disagrees with state law, which the commission is required to enforce,” she wrote. “But Tesla cannot use this court as an end-run around the legislative process.”
Smith was appointed to the bench by Republican President Ronald Reagan. Circuit Judge Catharina Haynes, an appointee of Republican President George W. Bush, concurred in much of the result. Douglas was appointed by Democratic President Joe Biden.
The appeals court returned the case to U.S. District Judge Sarah Vance in New Orleans, who had dismissed it in June 2023.
The case is Tesla Inc. et al. v. Louisiana Automobile Dealers Association et al., 5th U.S. Circuit Court of Appeals, No. 23-30480.
AT&T agreed to pay $950,000 to resolve investigation into 911 outage
AT&T has agreed to pay $950,000 after a Federal Communications Commission investigation found the company failed to deliver 911 calls to emergency call centers and did not notify officials during an August 2023 outage, the agency said on Monday.
The outage, which occurred during testing of portions of AT&T’s 911 network, impacted calls in parts of Illinois, Kansas, Texas, and Wisconsin. AT&T failed to deliver 911 calls and failed to timely notify 911 call centers.
AT&T has agreed as part of the settlement to implement a three-year plan aimed at ensuring future compliance with the FCC’s 911 and outage notification rules. The 911 outage lasted for 1 hour and 14 minutes, resulting in over 400 failed 911 calls, the FCC said.
“We understand the importance of having critical access to 911. We’ve resolved this matter and are committed to keeping our customers connected when they need it most,” an AT&T spokesperson said.
The FCC said during testing, an AT&T contractor technician inadvertently disabled a portion of the network, and AT&T’s system did not automatically adjust. The testing was not connected to planned maintenance activities and, as a result, did not undergo the stringent technical review that would have otherwise been undertaken, the FCC added.
The FCC is separately investigating a nationwide AT&T wireless outage in February that lasted over 12 hours, blocked more than 92 million voice calls and prevented more than 25,000 attempts to reach 911, the agency said.
Last month, Charter Communications agreed to pay $15 million to resolve an FCC investigation into compliance with network and 911 outage notification rules.
In June, Verizon Communications Wireless agreed to pay a $1.05 million fine to resolve an FCC investigation after the company failed to deliver 911 calls during an outage in six states in December 2022.
The FCC said the outage lasted an hour and forty-four minutes, prevented hundreds of 911 calls from being completed, and was similar to an October 2022 outage.
