California judge sends Tesla cases to arbitration instead of class-action

Wiki Commons/Ian Maddox

Four Tesla owners who sought to initiate a class-action lawsuit in regard to what they perceive to be false advertising for Tesla’s self-driving software lost a battle in an Oakland, California court last Friday when, according to Reuters, U.S. District Judge Haywood Gilliam said the owners “had agreed to arbitrate any legal claims against the company when they accepted its terms and conditions while purchasing vehicles through a Tesla website.”

It’s a substantial win for Tesla, which means it will not have to face a presumably well-funded major class action suit in court, and it is expected to have a cooling effect on similar suits against the automaker.

The lawsuit claimed Tesla made false statements suggesting that its “Advanced Driver Assistance Systems” technology “was on the verge of delivering fully self-driving vehicles,” Reuters said. The owners paid as much as $15,000 to buy the ADAS technology when they bought their cars between 2017 and 2022.

“But instead of delivering on its promises, Tesla’s technology has been unreliable and has led to accidents, injuries, and deaths, the plaintiffs claimed,” said Reuters.

autonomous self driving intelligent lane change tesla

The sticking point for the plaintiffs is that they had to sign an arbitration agreement to buy a car from Tesla: “In the event of a concern or dispute between us, please send Tesla written notice to describing the nature of the dispute and the relief sought. If it is not resolved within 60 days, Tesla and you agree that any dispute arising out of or relating to any aspect of the relationship between us will not be decided by a judge or jury but instead by a single arbitrator in an arbitration administered by the American Arbitration Association (AAA). This includes claims arising before this Agreement, including claims related to statements about our products.”

It seems clear, but some publications, however, did not hold back when reporting on the decision., a respected electric and hybrid car website, wrote, “Tesla has managed to weasel its way out of a class-action lawsuit over its Full Self-Driving claims because it argued that customers have agreed to take any issue to arbitration in their contracts … Tesla will crush anyone individually, especially with Elon’s ‘hardcore litigation’ team.”

Tesla Model Y Conference
Frederic J. Brown/AFP via Getty Images

Andrew Kirtley, a lawyer for some of the plaintiffs, told Reuters via email that he was prepared to file “thousands of individual arbitration cases” if necessary. “It is telling that Tesla doesn’t want to defend its marketing practices in public in open court but instead has fought to get as many of these claims as possible sent to private arbitration,” Kirtley wrote.

Tesla has denied any wrongdoing. It is unclear at this point whether the plaintiffs plan to appeal.




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