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Elio Court Hearing On 3/27/2018...

Rob Croson

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Maybe I missed it somewhere, but I have not seen when Elio was told beforehand that it would be required to have these licenses to simply lease a factory facility in Louisiana.
As a manufacturer/dealer, it is EM's responsibility to ensure they are in compliance with the law. (Let's ignore the whole question of whether they actually are or are not a manufacturer/dealer for the sake of this post.) It is not the law's responsibility to ensure that you are familiar with it. If I am going to sell a new medicine, I have to make sure that I comply with all applicable FDA regulations. It is not the FDA's responsibility to sit me down and explain all those regulations to me. And in fact, they won't. They will tell you if you are violating the law. When you ask how, they pretty much just quote the law back to you, and tell you you're breaking it. You can hire consultants and lawyers to explain it to you, or you can read it yourself and try to figure it out.

I mean, this requirement just popped up one day two years down the road and made retroactive?
The requirement has been there all along. EM just never complied with it, probably out of the reasonable (IMHO) assumption that since they are not making or selling anything, they don't have to register yet. Apparently the LMVC and the judge felt differently.

What is even the cost of such a license?
Dunno.

This page lists the steps involved in opening a used car dealership in Louisiana:
https://www.dmv.org/la-louisiana/buy-sell/car-dealers/dealer-licensing.php
There is a $400 application fee, and you have to post $50k and $55k surety bonds for stuff, and have insurance.

The requirements for a new car dealership are not listed, and you are advised to call the LMVC for details.
 

Sailor Dog

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As a manufacturer/dealer, it is EM's responsibility to ensure they are in compliance with the law. (Let's ignore the whole question of whether they actually are or are not a manufacturer/dealer for the sake of this post.) It is not the law's responsibility to ensure that you are familiar with it. If I am going to sell a new medicine, I have to make sure that I comply with all applicable FDA regulations. It is not the FDA's responsibility to sit me down and explain all those regulations to me. And in fact, they won't. They will tell you if you are violating the law. When you ask how, they pretty much just quote the law back to you, and tell you you're breaking it. You can hire consultants and lawyers to explain it to you, or you can read it yourself and try to figure it out.


The requirement has been there all along. EM just never complied with it, probably out of the reasonable (IMHO) assumption that since they are not making or selling anything, they don't have to register yet. Apparently the LMVC and the judge felt differently.


Dunno.

This page lists the steps involved in opening a used car dealership in Louisiana:
https://www.dmv.org/la-louisiana/buy-sell/car-dealers/dealer-licensing.php
There is a $400 application fee, and you have to post $50k and $55k surety bonds for stuff, and have insurance.

The requirements for a new car dealership are not listed, and you are advised to call the LMVC for details.
ELIO is not currently a manufacturer/dealer in the true sense of the words...clearly... obviously the greatly reduced penalties indicate what the final outcome will be...no penalties & all legal costs to be shouldered by the LMVA...without any doubt at all about that.

The appeal is ALREADY filed...ELIO won't owe the plaintiffs or courts a penny before this gets before the Supremes!
 
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Ty

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As a manufacturer/dealer, it is EM's responsibility to ensure they are in compliance with the law. (Let's ignore the whole question of whether they actually are or are not a manufacturer/dealer for the sake of this post.) It is not the law's responsibility to ensure that you are familiar with it. If I am going to sell a new medicine, I have to make sure that I comply with all applicable FDA regulations. It is not the FDA's responsibility to sit me down and explain all those regulations to me. And in fact, they won't. They will tell you if you are violating the law. When you ask how, they pretty much just quote the law back to you, and tell you you're breaking it. You can hire consultants and lawyers to explain it to you, or you can read it yourself and try to figure it out.


The requirement has been there all along. EM just never complied with it, probably out of the reasonable (IMHO) assumption that since they are not making or selling anything, they don't have to register yet. Apparently the LMVC and the judge felt differently.


Dunno.

This page lists the steps involved in opening a used car dealership in Louisiana:
https://www.dmv.org/la-louisiana/buy-sell/car-dealers/dealer-licensing.php
There is a $400 application fee, and you have to post $50k and $55k surety bonds for stuff, and have insurance.

The requirements for a new car dealership are not listed, and you are advised to call the LMVC for details.
I agree with the burden being on Elio to know the laws. I was merely pointing out that Elio conducted its "manufacturing" and "dealership" actions outside of the state. They are no more liable to follow Louisiana's laws than they are to follow North Dakota's at this point. They operated in neither state.
 

Sailor Dog

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I agree with the burden being on Elio to know the laws. I was merely pointing out that Elio conducted its "manufacturing" and "dealership" actions outside of the state. They are no more liable to follow Louisiana's laws than they are to follow North Dakota's at this point. They operated in neither state.
The most important reason why LMVA wasted THEIR money!
 

Rob Croson

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How they can be charged with what they didn't do yet, is also hard for me to understand. Guess why I'm not a lawyer.
Just a guess here, as IANAL either. According to the LMVC, Elio purportedly marketed and offered for sale a vehicle, advertising that the point of manufacturing was going to be in Louisiana. They even own the factory, and all the equipment required to do so. Elio claims that they are not selling, just "reserving spots in line". LMVC claims that is substantially the same thing. Thus they are offering vehicles for sale in Louisiana without a dealership license. The judge obviously agreed with the LMVC, as he upheld the fines. He just declared that the fines levied by the LMVC were inordinately high, and reduced them. Then he added more requirements on top of the original judgment, in the form of requiring proof for the refundable deposits.

Just because you haven't actually had the first vehicle roll off the line doesn't mean you don't have to be licensed to manufacture them. It could very well be possible that you are required to be licensed before you start building them.

IMHO, the thought that EM is a vehicle manufacturer is more than a bit ridiculous. Sure, they own a factory. And yes, they do want to build vehicles. But so far as I know, they haven't hired a single worker, and have no firm timeline for doing so. How can that possibly be construed as "manufacturing"?

On the sales end, that's quite a bit more sticky. Also IMHO, the whole SIL thing, and selling reservations, was always a bit iffy. Especially when you call them deposits and reservations, and give bonuses, promise to put the money toward the purchase price, make it non-refundable, etc. Not "iffy as in illegal", but "iffy as in equivalent to a sales deposit, and therefore constituting a sale of sorts". Despite the legal language put into the deposit, doesn't mean it can't somehow be interpreted as a form of sale, or an offer of sale. Just because you write it down in a contract doesn't make it legal or enforceable. And if you market it in certain language, you are liable for that language, regardless of what the legal text on the contract says.

I wonder how other vehicle manufacturers are going to get around this licensing same thing. (ElectraMeccanica, Arcimoto, Sondors, etc.) In many other industries, you can't sell things in a particular state without being licensed in that state. For instance: Insurance. It doesn't matter if you have an office in, say, Ohio. You can't sell insurance to a resident of Ohio if you are not licensed to sell insurance in Ohio. Same way in other businesses. That's why you see all those commercials that say things like "Offer not valid in all states", or "Offer open only to residents of OH, PA, WV", etc. Place of business does not always matter, if you are offering that business to people that reside in a particular state.
 

Ty

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Just a guess here, as IANAL either. According to the LMVC, Elio purportedly marketed and offered for sale a vehicle, advertising that the point of manufacturing was going to be in Louisiana. They even own the factory, and all the equipment required to do so. Elio claims that they are not selling, just "reserving spots in line". LMVC claims that is substantially the same thing. Thus they are offering vehicles for sale in Louisiana without a dealership license. The judge obviously agreed with the LMVC, as he upheld the fines. He just declared that the fines levied by the LMVC were inordinately high, and reduced them. Then he added more requirements on top of the original judgment, in the form of requiring proof for the refundable deposits.

Just because you haven't actually had the first vehicle roll off the line doesn't mean you don't have to be licensed to manufacture them. It could very well be possible that you are required to be licensed before you start building them.

IMHO, the thought that EM is a vehicle manufacturer is more than a bit ridiculous. Sure, they own a factory. And yes, they do want to build vehicles. But so far as I know, they haven't hired a single worker, and have no firm timeline for doing so. How can that possibly be construed as "manufacturing"?

On the sales end, that's quite a bit more sticky. Also IMHO, the whole SIL thing, and selling reservations, was always a bit iffy. Especially when you call them deposits and reservations, and give bonuses, promise to put the money toward the purchase price, make it non-refundable, etc. Not "iffy as in illegal", but "iffy as in equivalent to a sales deposit, and therefore constituting a sale of sorts". Despite the legal language put into the deposit, doesn't mean it can't somehow be interpreted as a form of sale, or an offer of sale. Just because you write it down in a contract doesn't make it legal or enforceable. And if you market it in certain language, you are liable for that language, regardless of what the legal text on the contract says.

I wonder how other vehicle manufacturers are going to get around this licensing same thing. (ElectraMeccanica, Arcimoto, Sondors, etc.) In many other industries, you can't sell things in a particular state without being licensed in that state. For instance: Insurance. It doesn't matter if you have an office in, say, Ohio. You can't sell insurance to a resident of Ohio if you are not licensed to sell insurance in Ohio. Same way in other businesses. That's why you see all those commercials that say things like "Offer not valid in all states", or "Offer open only to residents of OH, PA, WV", etc. Place of business does not always matter, if you are offering that business to people that reside in a particular state.
Good point about selling to someone in a state other than the one you are selling from. I know that if Amazon doesn't have a warehouse in your state, you typically don't pay state sales tax on the item. But, cars may be different. Tesla couldn't sell in some state without a dealer but that doesn't keep a person from traveling out of state to buy a car. I would think the same could apply to Elio. Though, they are "intending" to build in Louisiana, they "could" still build them elsewhere. Nowhere does Elio's reservation system say "The car WILL be build in Louisiana". So, how can Louisiana call them out as a "Louisiana manufacturer"? Should Elio start production, I could see Louisiana retroactively fining Elio for producing cars but not until then. I think the lawyers will win this one for Elio though maybe not permanently. And if Elio wins this battle, will Louisiana suddenly make it more difficult to obtain a license to manufacture cars? I would hope not. I would hope they actually WANT more jobs in the area.
 

Rob Croson

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Good point about selling to someone in a state other than the one you are selling from. I know that if Amazon doesn't have a warehouse in your state, you typically don't pay state sales tax on the item. But, cars may be different. Tesla couldn't sell in some state without a dealer but that doesn't keep a person from traveling out of state to buy a car. I would think the same could apply to Elio.
Right. Tesla doesn't sell cars in Michigan, but they do sell them in Ohio and Indiana. So someone who lives in Michigan can buy a car out of state in Ohio, then bring it home. The dealership has to be located out of state, and the transaction has to take place out of state. I wonder how that would work if the transaction was done over the Internet. Would they have to deliver the vehicle in an out-of-state location in which they are a valid retailer/dealer? If I am a company incorporated in Delaware, and I sell a vehicle over the Internet using a server farm located in Virginia, and the vehicle is stored in a lot in PA prior to delivery, does it matter if I sit in my house in Ohio and have the vehicle delivered to my doorway? Does that constitute selling the vehicle in Ohio, requiring a dealership license, because the customer accomplished the transaction in Ohio and the delivery point is in Ohio? There are fairly strict requirements in Ohio for selling new cars.

Though, they are "intending" to build in Louisiana, they "could" still build them elsewhere. Nowhere does Elio's reservation system say "The car WILL be build in Louisiana". So, how can Louisiana call them out as a "Louisiana manufacturer"? Should Elio start production, I could see Louisiana retroactively fining Elio for producing cars but not until then. I think the lawyers will win this one for Elio though maybe not permanently. And if Elio wins this battle, will Louisiana suddenly make it more difficult to obtain a license to manufacture cars? I would hope not. I would hope they actually WANT more jobs in the area.
Yeah, I agree, the "manufacturing without a license" doesn't really make any sense. I can't imagine that the law forbids you from intending to build without a license, or from owning a non-producing factory without a license. So how, exactly, are they considered a manufacturer? I think that once this gets out of the local jurisdiction, so long as EM keeps appealing it higher, they will win. The "sales without a license" part, though, I am unsure about. Is accepting deposits for reservations considered the same as selling? The Elio web site specifically says "Click here to reserve yours today" and "Over 65,000 reservations to date". Is taking a reservation considered a selling? Sure, the actually contract may it explicit that you are only buying a T-Shirt and getting a place in line to buy one later, and that this isn't a contract to buy or sell a car, bla bla bla... But if the marketing language doesn't match the contract, that in and of itself could be a violation. This is the part that I feel is shaky.
 

Ty

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Right. Tesla doesn't sell cars in Michigan, but they do sell them in Ohio and Indiana. So someone who lives in Michigan can buy a car out of state in Ohio, then bring it home. The dealership has to be located out of state, and the transaction has to take place out of state. I wonder how that would work if the transaction was done over the Internet. Would they have to deliver the vehicle in an out-of-state location in which they are a valid retailer/dealer? If I am a company incorporated in Delaware, and I sell a vehicle over the Internet using a server farm located in Virginia, and the vehicle is stored in a lot in PA prior to delivery, does it matter if I sit in my house in Ohio and have the vehicle delivered to my doorway? Does that constitute selling the vehicle in Ohio, requiring a dealership license, because the customer accomplished the transaction in Ohio and the delivery point is in Ohio? There are fairly strict requirements in Ohio for selling new cars.


Yeah, I agree, the "manufacturing without a license" doesn't really make any sense. I can't imagine that the law forbids you from intending to build without a license, or from owning a non-producing factory without a license. So how, exactly, are they considered a manufacturer? I think that once this gets out of the local jurisdiction, so long as EM keeps appealing it higher, they will win. The "sales without a license" part, though, I am unsure about. Is accepting deposits for reservations considered the same as selling? The Elio web site specifically says "Click here to reserve yours today" and "Over 65,000 reservations to date". Is taking a reservation considered a selling? Sure, the actually contract may it explicit that you are only buying a T-Shirt and getting a place in line to buy one later, and that this isn't a contract to buy or sell a car, bla bla bla... But if the marketing language doesn't match the contract, that in and of itself could be a violation. This is the part that I feel is shaky.
I still think that Elio is "Operating" out of Arizona for all intents and purposes and thus, Arizona would be the only state that has any say about Elio sales. Production? Well, that shouldn't even be an issue yet as you pointed out. If I rent a building in Nebraska to manufacture time machines in, do I have to get a permit before I start building? I suppose I could just go back in time and get one...
 
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