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Tesla ‘a Dictator’ That Bypasses State Lemon Laws, Attorney Says

A lawyer is challenging electric carmaker Tesla's unique sales plan, says it runs afoul of state lemon laws

A lawyer is challenging electric carmaker Tesla's unique sales plan, says it runs afoul of state lemon laws Rachel La Corte / AP

Electric carmaker Tesla has had its fair share of legal troubles in recent months as it battles New Jersey and other states intent on blocking its plans to set up a network of company-owned stores rather than going with the traditional franchise system.

The maker has routinely argued that the approach is better for consumers than buying from a third party. But a new lawsuit filed by the self-described “King of Lemon Laws” questions whether the automaker really has the public in mind with its unusual approach to retailing. And attorney Vince Megna seems to be more than capable of backing his case with social media to challenge Tesla founder and CEO Elon Musk, a fervent blogger and Twitter user.

Famous for taking on a wide range of automakers, Megna is now representing a Wisconsin physician who claims his $94,777 Tesla Model S has suffered from a wide array of problems that have kept it out of service for an extensive period and even required it to be put on a flatbed to the nearest dealer in Chicago. Dr. Robert Montgomery, of Franklin, has been pressing Tesla for a refund but has discovered that his purchase contract contains a variety of clauses which, among other things, would override Wisconsin lemon laws.

In a video posted on Youtube, attorney Megna lampoons the Silicon Valley electric automaker by holding up the Tesla’s power cord and asking, “My four-slicer works. Why won’t this one?”

Among other things, owner Montgomery claims he has had trouble charging his Tesla which, at times, wouldn’t start. Its door handles haven’t worked right and, to add insult, he claims it suffers from defective paint. All told, it has been at the dealer undergoing repairs for 66 days in the first five months after it was purchased in March 2013.

That would appear to trigger Wisconsin’s lemon law – which, among other things, takes effect after 30 days of repairs — and gives the doctor the option of having his money refunded.

According to the lawsuit, Tesla has refused, however. And that’s all the more a concern because Wisconsin’s law would make Dr. Montgomery eligible for double damages if the maker doesn’t comply.

But while Tesla declined a request to comment, it appears the maker is using its sales contract as a shield. The language of the agreement pointedly requires a customer to take any dispute to California, where the company is based, rather than local courts. That would appear to help shield it from the myriad of different state lemon laws – and make it more difficult for an owner to press a case because of the costs and challenges of hiring an attorney out of state.

Additionally, the contract lets Tesla demand arbitration, making it even more difficult to take a claim to court. Oh, and if there is a settlement, the details are sealed.

“Tesla is like a dictator,” claims attorney Megna.

The King of Lemon Laws appears likely to base his actions on claims that state consumer laws traditional supersede such restrictive contract language, especially when it comes to rules passed to protect car buyers.

Tesla did not respond to a request for comment. But the maker has shown a willingness to fight with everything it has to defend its position – whether in court or in the media. With CEO Musk leading the charge, Tesla forced the New York Times to apologize for a critical review of the Model S last year. Meanwhile, it is waging war, both on the legal front and in the media, with New Jersey and other states that are trying to block Tesla’s company-owned dealerships. Musk has even used his blog to attack NJ Gov. Chris Christie whom he accuses of setting up a backroom deal in favor of the franchised dealer lobby.

“They are a company that doesn’t have to follow state rules,” said attorney Megna. “It really puts a person in a tough, tough situation.”

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