Massachusetts' highest court ruled this week that the state dealer association does not have standing to sue Tesla for operating one of its company-owned stores there.
The ruling by the state Supreme Judicial Court upholds a lower court's decision to dismiss a suit brought by the Massachusetts State Automobile Dealers Association.
The court ruled that the law dealers were using to justify their suit was intended to protect franchised dealers from abuse by car manufacturers or distributors, The Boston Herald reports.
Since Tesla doesn't have any franchised dealers, the court decided, the law doesn't apply.
Massachusetts law still requires dealerships to be owned by independent franchisees, but Tesla has argued throughout that the stores aren't specifically involved in sales.
Since cars are ordered online, customers don't have to go to a store to buy one. Tesla views the stores primarily as a way to educate consumers about electric cars.
In addition, local officials in Natick--a suburb of Boston where the store is located--consider the store separate from Tesla Motors.
During the course of litigation, Tesla was also reportedly granted a dealership license by Natick officials, which would seem to clarify the matter.
Failing to shut down Tesla with lawsuits, the Automobile Dealers Association may turn to the state legislature, and push new rules explicitly banning the carmaker's direct-sales model.
The Massachusetts ruling comes shortly after Nevada officially legalized Tesla direct sales, as part of the incentives package lawmakers created to land Tesla's massive battery Gigafactory.
It also puts Massachusetts firmly in the pro-Tesla camp, along with Minnesota, North Carolina, and New York, where anti-Tesla legislation has been defeated.
Legislation pending in New Jersey would allow sales to resume after two stores were effectively shut down earlier this year.
Tesla cannot presently operate its stores in Arizona, Texas, or Virginia. It is limited to a single location in Colorado.
