A federal judge has ruled that Elon Musk’s Tesla must face a lawsuit alleging that the company committed fraud by misrepresenting the self-driving capabilities of its vehicles.
Ars Technica reports that in a recent ruling, US District Judge Rita Lin in the Northern District of California determined that a lawsuit filed by California resident Thomas LoSavio against Tesla can move forward on allegations of fraud. The lawsuit, which seeks class-action status, alleges that Tesla and its CEO, Elon Musk, made false claims about the self-driving capabilities of Tesla vehicles starting in October 2016.
LoSavio, who purchased a 2017 Tesla Model S with “Enhanced Autopilot” and “Full Self-Driving Capability,” points to specific representations made by Tesla that he claims were misleading. These include statements that Tesla vehicles have the hardware needed for full self-driving capability and that a Tesla car would be able to drive itself cross-country in the coming year.
Judge Lin dismissed some of LoSavio’s claims but allowed the lawsuit to proceed on the basis of the alleged misrepresentations. The ruling stated:
The remaining claims, which arise out of Tesla’s alleged fraud and related negligence, may go forward to the extent they are based on two alleged representations: (1) representations that Tesla vehicles have the hardware needed for full self-driving capability and, (2) representations that a Tesla car would be able to drive itself cross-country in the coming year. While the Rule 9(b) pleading requirements are less stringent here, where Tesla allegedly engaged in a systematic pattern of fraud over a long period of time, LoSavio alleges, plausibly and with sufficient detail, that he relied on these representations before buying his car.
The complaint argues that Tesla’s cars have not achieved the promised level of autonomy, stalling at SAE Level 2 (“Partial Driving Automation”), which requires constant human supervision and control. LoSavio alleges that Tesla’s cars lack the necessary combination of sensors, including lidar, to achieve full autonomy.
Tesla had previously won a significant ruling in the case when a different judge upheld the carmaker’s arbitration agreement, requiring four plaintiffs to go to arbitration. However, LoSavio had opted out of the arbitration agreement and was allowed to file an amended complaint.
While Tesla argued that LoSavio should have known earlier that his car needed additional hardware for full self-driving, Judge Lin ruled that LoSavio “plausibly alleges that he reasonably believed Tesla’s claims that it could achieve self-driving with the car’s existing hardware.”
The judge dismissed warranty claims and some fraud claims related to future developments in self-driving technology. However, LoSavio has the opportunity to amend his complaint by June 5, and Tesla must respond by June 19.
Read more at Ars Technica here.
