Carvana claims that Michigan overstepped its authority by taking action against the company, which is accused of maintaining erroneous paperwork.
Carvana Co. has filed a lawsuit against Michigan after the Great Lakes State suspended one of the company’s vending machine-like “dealerships” following alleged violations of state-level law.
According to Bloomberg, the Tempe, Arizona-based automobile retailer called the state’s enforcement action “illegal and irresponsible.”
In its lawsuit, Carvana attorneys asked the court to compel state officials to collaborate with the company to resolve any outstanding disagreements.
The dealership, said the company’s legal team, should not be effectively censured and shuttered over “what amounts to technical paperwork violations.”
Bloomberg notes that the Michigan Secretary of State suspended the retail license of a Carvana outlet on October 7th, citing alleged violations such as the destruction of title applications, failure to maintain proper and correct odometer records, the improper issue of vehicle registrations, and not providing records in a timely manner.
Despite the seemingly serious round of allegations, Carvana has slammed Michigan’s enforcement actions as an “illegal and irresponsible attempt to shut down a growing Michigan business with tens of thousands of customers.”
Carvana’s legal motions accuse the Secretary of State of suspending the company’s license without a hearing, thereby depriving in-state consumers of the opportunity to receive purchased vehicles within a reasonable timeframe.
According to Carvana, Michigan’s decision “has brazenly violated state law in addition to its own rules, regulations and due process requirements while making false and reckless statements through press releases rather than engaging in constructive dialogue to remedy what are essentially technical paperwork issues.”
However, Erik Gordon—an attorney and business professor at the University of Michigan—told the Detroit Free Press that Carvana’s lawsuit appears to be a desperate move filed by a desperate company.
“It’s a sign of weakness that won’t work,” Gordon told the Free Press. “The state will not be intimidated. Carvana would be better off spending its time and money remedying the problems the state has identified. It is more likely to draw attention to the state’s claims and scare away customers than it is to scare off the state.”
Gordon further said that, in spite of Carvana’s requests, the courts will probably not issue an injunction against Michigan’s decision without very compelling evidence.
“The person who wants the court to order someone to do something has to convince the court that money [damages] is not enough to remedy the harm,” Gordon said. “The person has to convince the court that an order forcing the other side to do something or stop doing it is the only way to do justice. That’s why an injunction is called an extraordinary remedy.”