Enlarge / Tesla Motors Store in Tokyo, Japan, on Friday, August 18, 2023.
Getty Images | Bloomberg
A judge ruled that four Tesla drivers who sued the company over its allegedly fraudulent “self-driving” claims must go to arbitration instead of launching a class action lawsuit.
The complaint sought class action status on behalf of “consumers who purchased or leased a new Tesla vehicle with Tesla’s ADAS.” [Advanced Driver Assistance Systems] technology, but never received the self-driving car Tesla promised them.” Claims made by Tesla and CEO Elon Musk about self-driving cars “have been proven false time and time again,” the lawsuit says.
While the plaintiffs agreed to terms including an arbitration clause in the car purchase, they argued that “Tesla’s arbitration agreement is unreasonable and therefore [un]enforceable.” They said that the arbitration agreement “is not mentioned on the order page” and is “hidden in small print in the middle of an order agreement that is only accessible via an inconspicuous hyperlink.”
Judge Haywood Gilliam Jr. of the U.S. District Court for the Northern District of California disagreed. Gilliam issued an order Saturday granting Tesla’s request to compel arbitration and denying the plaintiffs’ request for a preliminary injunction.
Judge: Tesla “gave conspicuous information”
Gilliam said the Tesla website offers “a type of hybrid browsewrap agreement where the terms of the agreement are hyperlinked above the ‘Place Order’ button. Contrary to the plaintiffs’ claims, Gilliam did not consider Tesla’s references to the arbitration agreement to be all that subtle:
As explained above, the text reads: “By placing this order, I agree to the model.” [3 or Y] Order Agreement” and the agreement is hyperlinked. Contrary to plaintiffs’ insistence, the text in this sentence was the same size as the text of the “Place Order” button below it and the same size as the other text on the web page. The hyperlinked agreement was highlighted in blue, which courts have found regularly indicates to a user that a hyperlink exists. And this blue text is one of the only colored texts on the screen. There are no other disturbing details on the website and the relevant language. The order contract is therefore noticeable and also clearly indicates that by clicking on the “Place order” button, the customer declares his consent to the contract.
Gilliam concluded that Tesla’s “order payment screens provided a clear indication of the order arrangements.”
The plaintiffs also argued that the agreement’s 30-day opt-out clause was “illusory” because it “typically takes Tesla much longer than 30 days to configure and deliver a car, depriving customers of any opportunity to use it.” before the expiration of the 30 days.” ” The agreement also “forces consumers to waive their right to participate in class arbitration,” a factor that “speaks to material unreasonableness,” they said.
But Gilliam did not find the 30-day opt-out clause or other parts of the agreement unreasonable. He noted that “the engagement agreements themselves are only a few pages long and the arbitration provisions therein are separated from the rest of the agreement by a large text box.” The text included the provision that customers “within 30 days of the execution of this agreement from the “You can withdraw from arbitration by sending a letter to Tesla.”
Gilliam also rejected plaintiffs’ claims that the arbitration agreement violated California’s McGill Rule, a precedent that holds arbitration provisions unenforceable if they waive a plaintiff’s right to seek public injunctive relief.
“The plaintiffs do not explain how [Tesla] The arbitration agreement at issue here waives their right to seek public injunctive relief through arbitration, and the Court sees no evidence that this is the case. “The court therefore finds that the arbitration agreements are enforceable,” he wrote.
Fifth plaintiff’s claims dismissed
The plaintiffs are four California residents and one Florida resident. One of the five plaintiffs, Thomas LoSavio of California, rejected the arbitration agreement. However, the judge granted Tesla’s request to dismiss LoSavio’s claims based on the statute of limitations.
LoSavio bought his Tesla in January 2017 and waived the arbitration agreement. However, he sued more than five years later, after the relevant statute of limitations, which ranges between two and four years, had expired. LoSavio argued that the doctrine of continuing injury allowed him to bring the case, but the judge was unconvinced.
“Here, plaintiff’s injury appears to have occurred and became apparent in January 2017 when he first purchased the car and paid $8,000 over the base price for the ‘Full Self-Driving ADAS Package’ which did not function as such, as he thought… But crucially.” The plaintiff does not explain in his statement of objection – let alone allege it in the lawsuit – how such misrepresentations have continued to harm him. Plaintiff does not suggest that he made any ongoing or new purchases from Tesla based on their subsequent representations regarding their technology. He does “I do not claim that he even saw these subsequent statements, much less that he relied on them,” Gilliam wrote.
LoSavio has the opportunity to amend the complaint within 21 days. The ruling would also not prevent other Tesla owners from suing if they opt out of arbitration and are within the statute of limitations.
A Portal article said Gilliam’s verdict “came in the middle of the first U.S. trial over allegations that Tesla’s Autopilot feature caused a death because it was based on untested experimental technology that should not have been sold to the public.” “. The trial is taking place in California state court and concerns a 2019 accident that killed a driver. Tesla previously dismissed another lawsuit in which a plaintiff suffered serious injuries in an accident, blaming Autopilot.
Tesla is also facing a class-action lawsuit from customers who claim they were misled by the company’s exaggerated range claims. Tesla has until October 13 to file a response to the class action lawsuit.