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What Do the Tesla Files and Arbitration Rules Have To Do With Each Other? A Lot!

After I first wrote about the Tesla Files, it surprised me people were not giving them the attention they deserved – especially in the US. So I wrote about why these documents are crucial for American Tesla employees and customers. To a large number of these folks, the importance relates solely to being properly informed: arbitration rules prevent them from even thinking about suing the BEV maker.
Owners affected by the Tesla Files who have not refused arbitration provisions will not be able to sue the company 58 photos
Photo: Tesla/Bob Atkins/edited by autoevolution
Tesla said its battery packs only lose 12% capacity after 200,000 miles, and you should not buy itTesla said its battery packs only lose 12% capacity after 200,000 miles, and you should not buy itTesla said its battery packs only lose 12% capacity after 200,000 miles, and you should not buy itTesla said its battery packs only lose 12% capacity after 200,000 miles, and you should not buy itTesla said its battery packs only lose 12% capacity after 200,000 miles, and you should not buy itTesla said its battery packs only lose 12% capacity after 200,000 miles, and you should not buy itTesla said its battery packs only lose 12% capacity after 200,000 miles, and you should not buy it2013 Tesla Model 3 that belonged to Mario Zelaya had an issue more units may also present: water invading the battery pack through the fuse box2013 Tesla Model 3 that belonged to Mario Zelaya had an issue more units may also present: water invading the battery pack through the fuse boxTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S facedTransport Canada report about the issue Mario Zelaya's 2013 Tesla Model S faced2013 Tesla Model 3 that belonged to Mario Zelaya had an issue more units may also present: water invading the battery pack through the fuse boxTesla's invoice with the battery pack replacement priceTesla Service Center emails telling Mario Zelaya to sign the papers to release his Model SGerman lawyers contradict Elon Musk and state Tesla cars last less than their battery pack warrantiesThis is where the steel box cover sits: see the signs of rustThe battery pack in Joaquim Rodrigues' Model S had rusted bolts and plenty of waterThe fuse inlet had to be replaced in Joaquim Rodrigues' Model S battery packThe battery pack in Joaquim Rodrigues' Model S had rusted bolts and plenty of waterThis is the steel fuse box cover in a Model S after some years: after it rusts, the battery pack failsTesla Model S with the most mileage has its ninth motor replacementHansjoerg Eberhard von Gemmingen when his car reached 1 million km (621,371 mi)Hansjoerg Eberhard von Gemmingen when his car reached 1 million km (621,371 mi)Tesla Model S with the most mileage when it reached 1.5 million kmTesla Model S with the most mileage has its ninth motor replacementHansjörg Eberhard von Gemmingen achieved another milestone with his Model 2: 1 million miles. Now he wants a Lucid AirThis is the menu showing the BMS_u029 error that demands the battery pack to be replacedBob Atkins' mother-in-law bought this Model S 85 brand new in 2014The 2014 Model S 85 Bob Atkins' mother-in-law has came with this battery packTesla eMMC Inside the MCUTesla eMMC Inside the MCUTesla eMMC Inside the MCUTesla eMMC Inside the MCUTesla eMMC Inside the MCUTesla FremontTesla FremontTesla FremontTesla FremontTesla FremontTesla FremontTesla FremontTesla FremontTesla Fremont
All Tesla employees have to agree not to go to court should they have any legal dispute with the company. This is what made it so hard for Cristina Balan to sue Tesla for defamation after it publicly accused her of embezzlement and kickback in a Huffington Post story. The Romanian engineer is now fighting breast cancer while trying to clean her name. And she is far from being the only example of how this compulsory arrangement can prevent people from pursuing adequate compensation for Tesla's mistakes.

Owen Diaz only got to sue Tesla for racism because he was a contract worker. Melvin Berry was an employee and had to go to arbitration for the same complaint. The BEV maker lost and had to pay him $1 million. Diaz was initially supposed to receive $136.9 million, but Tesla managed to reduce that to $3.2 million. Assuming that this is the final decision in Diaz's case, it is still theoretically three times more than Berry was granted. Ultimately, he received only $266,000 because more than $755,000 went to attorneys and legal fees.

Tesla Fremont
Photo: Tesla
Any of the more than 100,000 employees listed on the Tesla files would have to go to arbitration to require the company to fix its data protection policies and pay them for exposing their information. It is more likely that regulators will be the ones punishing the BEV maker for the leak – if any penalty happens, mind you. In California, the Department of Fair Employment and Housing (DFEH) took the initiative to sue the company on behalf of its employees.

Regarding Tesla customers, Bob Atkins recently shared with me a bitter discovery. When he tried to help his mother-in-law join the class action that compares the BEV maker's over-the-air (OTA) updates to hacker attacks, he received this automatic message from the attorneys' website:

"Please respond to this email if you are not bound by a Tesla arbitration clause. You are not bound by a Tesla arbitration clause if you (1) purchased from a private seller/dealer, (2) opted out of arbitration, (3) already submitted a case for arbitration, or (4) if your sales agreement did not contain an arbitration clause."

Atkins discovered that his mother-in-law did not reject the arbitration provision when she took delivery of her 2014 Tesla Model S.

This is the menu showing the BMS_u029 error that demands the battery pack to be replaced
Photo: Bob Atkins
How many of Tesla's customers do that? We'd ask the company about the percentage of buyers that refuse that clause, but it abolished its PR department years ago. That said, it is not unlikely that most people with their data included in the Tesla Files cannot sue the BEV maker. Sadly for them, their cases will be another reminder of the precautions they have to take before buying their electric vehicles from Tesla. Apart from a thorough inspection of the brand-new car to make sure it does not have serious defects or damages, they must also remember to check the box that sets them free from arbitration as the only legal remedy available. The Tesla Files case is a good example of why that is necessary. Unfortunately, it is also not the only one.

BMS_u029 error messages are emerging mostly after the MCUv1 recall. Some owners get that in an even worse circumstance: after paying to have the MCUv2 computer because they want their Model S units to have the most recent hardware possible. Little did many of them know that it would also lead them to need a new battery pack for at least $15,000 a pop. The lawsuit shows these customers want a better explanation from Tesla than just crappy bad luck with components that can fail for six major causes, including water ingress.

This is the steel fuse box cover in a Model S after some years\: after it rusts, the battery pack fails
Photo: Joaquim Rodrigues
The Tesla Files also mention crashes and Autopilot issues such as phantom braking and sudden unintended acceleration (SUA) episodes. So far, the best explanation for them is a pedal confusion that apparently emerges from how the software makes the vehicle move without driver intervention. In forums, you can see some commenters making fun of the drivers who claim SUA caused them to crash their Teslas.

I have no doubt some of the 2,400 people who complained about the problem (until March 2022) eventually did the same. Or that the ones mocking their fellow Tesla owners will see themselves in the same boat. It will be inevitable unless the BEV maker applies the same recall it performed in China to the US. The deal is that none of them will get to challenge Tesla in court if they forgot to tick the box rejecting arbitration clauses. All they have left is to pray for regulators to take measures.
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About the author: Gustavo Henrique Ruffo
Gustavo Henrique Ruffo profile photo

Motoring writer since 1998, Gustavo wants to write relevant stories about cars and their shift to a sustainable future.
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