Tesla Tries to Dismiss FSD Fraud Lawsuit Saying Delays Are a Just Failure

Tesla argued that failing to deliver Full Self-Driving when it promised it would is not fraud: just failure 16 photos
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On September 15, we told our readers that Tesla was being sued by Briggs Matsko. This customer was fed up with the company’s promises about Full Self-Driving (FSD) and with Elon Musk repeatedly saying that robotaxis would arrive "next year" since 2016. According to the Los Angeles Times, Tesla’s first move in that lawsuit was to try to dismiss it with two main arguments. The first one is that delays are a failure, not a fraud.
Matsko is suing Tesla because he thinks that is precisely the opposite. His lawyers claim that the company either said the pieces of software were fully functional or “just around the corner” with the purpose of driving up its stock price, trying to boost sales, attract investments, and avoid bankruptcy.

The second main argument Tesla will use is that Matsko could not sue the company in a federal court. According to the LA Times, the EV maker’s attorneys are saying the lawsuit is not possible because Matsko agreed to solve any issues with the automaker in arbitration courts, like all Tesla customers.

We do not recall the American EV maker using this legal strategy with customer lawsuits before. When Model S and Model X owners sued Tesla for voltage capping their cars, the case only ended two years later after these clients agreed to settle. Ironically, all their cars still had their battery packs under warranty when the lawsuit started. When it ended, each of them received compensation of $625. On the other hand, some of them are getting invoices to replace their out-of-warranty battery packs for around $20,000.

Taking cases to arbitration is a more common strategy with employees. The LA Times notes that this was Tesla’s option in the lawsuit Cristina Balan filed for defamation against the EV maker. The Romanian engineer is still fighting to take her case to a federal court: Tesla publicly accused her of kickback and embezzlement years after she had left the company.

Melvin Berry’s and Owen Diaz’s racism lawsuits are two other good examples of Tesla’s preference for arbitration. As a former employee, Berry went straight to one of these courts to sue Tesla and was awarded $1.02 million.

Diaz was a contract worker, so Tesla’s attempt to bring his case to an arbitration court did not work: only workers have to sign an agreement restricting them from going to public trials. The San Francisco federal court that submitted his case to a jury awarded him $136.9 million, but Tesla appealed. The case will go to a jury again, but not to decide if Tesla prevented racism in its factories or not: it will only determine how much Diaz will receive for being subject to racist harassment in Fremont.

The LA Times stresses that Tesla also wants Matsko’s case to go to arbitration because that would prevent its engineers and executives from discussing FSD in a public trial. Besides being public, the lawsuit would be even more harmful to Tesla if the court decided it fit the class action requirements. That would allow all customers who bought the beta software to apply for the same compensation Matsko may receive.

Tesla currently has more than 260,000 clients with FSD in the U.S. alone. Some of them paid $5,000, but prices increased to the current $15,000. Suppose they could all receive their money back and the average price for the beta software was $10,000. In that case, we would be talking about $2.6 billion that Tesla would have to disburse only by paying back what customers spent on FSD. Fraud charges can make that even more expensive.
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About the author: Gustavo Henrique Ruffo
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Motoring writer since 1998, Gustavo wants to write relevant stories about cars and their shift to a sustainable future.
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