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Auto dealers group keeps up fight against Tesla, gets sued by Hanover supervisor

Michael Schwartz February 7, 2017 6

Several Teslas dotted the DMV parking lot during the March hearing. (Linda Dunham)

Several Teslas dotted the DMV parking lot during the March 2016 hearing. (Linda Dunham)

The Virginia Automobile Dealers Association has a full plate of legal issues these days.

The Richmond-based trade and lobbying group on Jan. 20 filed a formal appeal aimed at reversing a decision made by the commissioner of the Virginia DMV that helped clear a path for electric carmaker Tesla to potentially open a local dealership on West Broad Street.

The filing, made in Richmond Circuit Court against DMV Commissioner Richard Holcomb and Tesla Motors Inc., included a 60-page petition and more than 800 pages of supporting documents.

Holcomb ruled in November that Tesla is eligible to operate a corporate-owned dealership in Richmond and could take the next step to get its license to do so. That decision gave some clarity to a nearly year-long fight between Tesla and VADA, which hinged on a Virginia law that prevents car manufacturers from operating their own dealerships, unless it can be proven that no other licensed dealers would be willing and able to run such a dealership independently “in a manner consistent with the public interest.”

Holcomb’s decision also went against the recommendation of a hearing officer who oversaw a series of public debates between the two sides.

VADA argues that its appeal of the commissioner’s decision would “protect the very basis of administrative decision-making in the Commonwealth.”

It claims Tesla lobbied the governor and DMV commissioner directly and that the commissioner erred in his decision according to current laws governing franchised auto dealers.

VADA says the DMV commissioner “bent into a pretzel” in response to Tesla lobbying and “ignored procedural safeguards in the headlong dash to fulfill the Tesla lobbyist’s gleeful report of his support.”

VADA also argues that a new Tesla dealership in Richmond would violate a previous settlement reached between the parties that allowed the carmaker to open a storefront in Northern Virginia. That agreement included a provision by which Tesla could not expand in the state for 30 months.

The group claims that a second Tesla dealership in the state is not in the best interest of the public.

“(Tesla) plays fast and loose with the law, and the public interest demands that it not have another location at which it can continually flout the law,” the filing said.

In April 2016, Tesla leased the property formerly housed by Bassett Furniture.

In April 2016, Tesla leased the property formerly housed by Bassett Furniture.

A Richmond Circuit Court judge will ultimately decide how and whether the case should move forward.

A Tesla spokesman said the company in the meantime will continue to prep its dealership, which will take shape in a 30,000-square-foot former furniture building 9850 W. Broad St.

A few days prior, in a separate case in Richmond Circuit Court, VADA and CEO Don Hall were sued by former VADA employee and current Hanover County Supervisor Sean Davis, who claims he was wrongfully fired from the organization and was misled by Hall into thinking he would be heir apparent to take over leadership of VADA.

Davis, who was employed as director of dealer operations at VADA from May 2014 until his termination on Dec. 1 of last year, seeks $2.35 million in damages and alleges counts of fraud, breach of contract, wrongful discharge and defamation.

Davis claims he left a higher-paying job as a Realtor for a $125,000 salary at the VADA, on the alleged representations that he would succeed Hall as president and CEO after three years with the organization.

In often lurid detail, Davis alleges “The VADA office work environment under Hall was a hostile, predatory, misogynistic, sexist, immoral and unprofessional, and wholly unpredictable.”

He claims he was fired in retaliation for making complaints about Hall to VADA’s human resources department “and his unwillingness to support and promote Hall’s” behavior.

In an interview last week Hall, who has been with VADA for 29 years, said he was shocked by Davis’ allegations.

“On a personal level, I was shocked that he would stoop to this level,” said Hall, adding that he’s the father of two daughters and has granddaughters. “There is nothing in this claim that is remotely true. These are outrageous claims.”

As to the allegations of sexism and the like, Hall said “we’ve never had that culture. I do not subscribe to that culture.”

“I would not have the long-term employees I do if I did have that culture,” he said, adding that VADA’s head of legal affairs, who is female, has been with the group for 19 years.

Hall said Davis left VADA because he did not fit into the organization’s culture.

“I suggested to him that he ought to look for other opportunities,” Hall said. “I literally said to him when I gave him his severance package, ‘I love you like a little brother, but it did not work out. I want to help you, but you can’t stay here.”

Hall, 60, also said he has no intention of retiring and that Davis’ claims of a promise of succession are unfounded, adding that VADA’s board of directors ultimately makes the decision of who acts as CEO.

“I’m not retiring anytime soon,” Hall said. “I don’t have the authority to anoint anyone to take my job, period.”

Among the suit’s allegations is a passage alleging Hall’s feelings about the Tesla debate, claiming Hall, “would become upset with what he perceived as Governor McAuliffe’s support of Tesla.

“Hall would often state that the governor’s support was purely political in nature.”

Hall, who like Davis is a veteran of the Marine Corps, said he and his attorney, Charles Sims of O’Hagan Meyer, will respond to the suit.

“I am outraged that people can make these kinds of claims. I look forward to going to court,” Hall said. “We’ll see which marine honors the code we take in the Marine Corps.”

Davis, in an interview Monday, stood by his allegations.

“There is little doubt about the culture that’s existed there,” Davis said of VADA.

He said VADA made attempts to settle the matter, “but they failed to take the right and honorable path.”

Davis also is fighting an ongoing lawsuit against Style Weekly, its owner, Norfolk-based Landmark Media Enterprises and reporter Peter Galuszka in Hanover County Circuit Court. That case was filed in April 2016 alleging defamation related to an article in Style about Davis’ interactions with the Hanover County schools.

Davis is represented in both lawsuits by attorney Steven Biss.

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6 Comments »

  1. Gavin McGinnis Jr. February 7, 2017 at 10:43 am - Reply

    I feel like this story is not really the story here. The Tesla lobbyists outfoxed old boy VADA lobbyists who control how cars are sold in Virginia. Doesn’t this mean that consumers will also be able to buy directly from Honda, or Ford, and avoid paying the dealers who mark up the sale? What we’re seeing here is a radical change in the same regard that Uber has changed the taxi industry. The taxi commissions and companies have lost control and are in a death spiral to hang on. This is going to happen with the auto dealers if this passes. Not to mention the collapse of the VADA who most be rolling in the dough this year. It’s interesting to note I have seen very little coverage on this story from the times dispatch. Maybe it is because they will lose out on that valuable full page auto dealer ad buy? Thank’s Richmond Biz Sense!

    Also, ssshhh… listen to how quiet Dave Brat is on this issue taking place in his state and district. One reason might be because he is too busy obsessing over gays and feminists who are hurting his fragile liberty. How much money does he get from the VADA to uphold this antiquated system? Where is the liberty in being prevented from selling your product direct to a consumer? Follow the money surrounding this story. Fetch the popcorn!!! It’s going to get more interesting.

  2. Michael Sos February 7, 2017 at 11:52 am - Reply

    Car dealers are one of the biggest employers in the state and have huge economic impact. Be careful what you ask for. If Tesla succeeds, the profits from all car sales will be hauled back to Detroit, Germany, Japan and Korea…not invested in the local market.

  3. ron virgin February 7, 2017 at 1:06 pm - Reply

    VADA…sounds like a wild place to work. Should’ve never made the Tesla deal in N. VA. Bad precedent akin to Hans Brinker keeping the dam from bursting with his finger.

  4. John Jay February 7, 2017 at 4:15 pm - Reply

    You know, I see more Tesla’s on the road here every week. I can only see a company authorized service center and showroom as helping the general public. I don’t get these antiquated franchise laws. To be fair, I have never had a positive car buying experience and the service afterwords has been mediocre at best.
    Tesla owners on the other hand tend to praise the company and its service centers. How many other manufacturers are able to advance reserve 400,000+ copies at $1000/car of a car that no one really knows that much about other than the body style! Yet you can’t buy one in Virginia, so all that sales tax is going to another state coffers.

  5. Joseph Martin April 9, 2017 at 12:26 pm - Reply

    I reserved my Tesla Model 3 sight unseen the morning before it was even revealed, in Tysons Corner Va, a three hour drive for me. I had hoped to pick it up in Richmond this Fall. If justice does not prevail, I will pick it up in Raleigh, NC, also a three hour drive. Many others will do the same. Buying a Tesla is completely pain free, as opposed to the dealership scam of “let me talk to my manager, maybe I can get you a deal”. Dealerships are in the business of profiting by how much they can overcharge you and then selling you overpriced, often unneeded service for the life of the car. Virginia’s loss, North Carolina’s gain.

  6. Rahul Kumar June 23, 2017 at 10:32 pm - Reply

    And don’t forget the dreaded “What can I do to put you in this car today!”. Car dealers are over rated.

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