— A Tesla self-driving lawsuit remains dismissed after the U.S. Court of Appeals for the Ninth Circuit agreed with a district court judge who had dismissed the lawsuit.
The lawsuit is a securities fraud class action lawsuit, but similar claims are also being argued in separate consumer class actions filed by Tesla owners.
In this case, investor and plaintiff Thomas Lamontagne filed the securities class action in February 2023 which was later led by plaintiffs Oakland County Voluntary Employees’ Beneficiary Association and Oakland County Employees’ Retirement System.
The lawsuit alleges Elon Musk, Tesla and others made false statements about autonomous technology between 2019 and 2023 which caused investors to lose money.
The lawsuit alleges Musk and Tesla convinced investors the vehicles were equipped with technology that created self-driving vehicles that didn't need drivers. Instead of driverless cars and self-driving robotic taxis, investors supposedly threw their money into Tesla's "unequivocal lies."
Musk allegedly lied by "misrepresenting the safety, capability, and development of Tesla’s autonomous driving technology [ADT]." And the truth purportedly came to light through recalls of Tesla vehicles equipped with "full self-driving" software, causing investors to suffer "massive loses."
A California district court dismissed the Tesla self-driving lawsuit but said the plaintiffs could modify and refile their lawsuit. Instead, the plaintiffs appealed the dismissal to the Ninth Circuit.
Tesla Self-Driving Lawsuit Dismissed
According to the Ninth Circuit:
“Falsity is alleged when a plaintiff points to defendant’s statements that directly contradict what the defendant knew at that time. Even if a statement is not false, it may be misleading if it omits material information. Plaintiffs have failed to allege falsity for the three categories of statements at issue: Safety Statements, Capability Statements, and Timeline Statements."
The appeals court found the investors did not adequately claim safety statements from Tesla, Musk and others were false or misleading when those statements were made. Musk did not say Tesla's self-driving technology "could self-drive safer than humans."
In fact, the court found Tesla said its self-driving technology needs “a fully attentive driver. Thus, fairly considered, Musk represented that a driver with the technology is safer than a driver without it."
The court also ruled allegations, "including the claimed technological deficiencies and driver intervention rates," do not show these statements were false when made. And Musk’s later statements about self-driving safety capabilities also cannot establish falsity.
“[I]t is simply not enough to assume or implausibly infer that the defendants must have known about these issues. . . based on later facts or developments.” — Ninth Circuit
The court also found Musk and Tesla said nothing fraudulent regarding statements about the capabilities of Tesla's self-driving technology.
In particular, the Ninth Circuit ruled:
"Musk’s statement that the ADT was “capable of zero intervention drives” did not suggest that the ADT had already reached full autonomy––that is, autonomous driving without human intervention. To the contrary, Musk noted that he still has to intervene while the technology is engaged."
The appeals court also said some allegedly false statements were simply and clearly "opinions" made about when vehicles may be completely autonomous, and those opinions are not actionable in court.
The Ninth Circuit also referenced letters with the state of California in 2020 and 2021, letters the self-driving lawsuit claims shows Musk made false statements about the technology.
"Even if the remaining statements are not strictly opinions, Plaintiffs still have not adequately alleged falsity. The CA-DMV letters from late 2020 and March 2021 cannot show that Musk’s earlier statements were false when made. Regardless, Tesla did not represent to California regulators that it was impossible to achieve the projected timeline and confirmed that Musk was “extrapolating on the rates of improvement.” — Ninth Circuit
The Tesla self-driving lawsuit was filed in the U.S. District Court for the Northern District of California: Oakland County Voluntary Employees’ Beneficiary Association and Oakland County Employees’ Retirement System v. Tesla, Inc., et al.
