Tesla has managed to weasel its way out of a class-action lawsuit over its Full Self-Driving claims because it argued that customers have agreed to take any issue to arbitration in their contracts.
The situation around Tesla selling its “Full Self-Driving Capability” (FSD) package before actually having figured out self-driving technology would inevitably lead to legal action.
After years of Tesla saying that its self-driving technology was right around the corner and not delivering on it, a group of Tesla owners who paid up to $15,000 for the package finally decided to take Tesla to court in California over the issue last year.
The proposed class-action lawsuit was expected to create an important precedent for Tesla and potential consequence for its failure to deliver on its self-driving promises.
However, Tesla has managed to avoid the class action altogether by using the controversial tactic of forced arbitration.
This weekend, the judge ruling over the case accepted Tesla’s argument that all the owners, except one, agreed to arbitration (via Reuters):
U.S. District Judge Haywood Gilliam in a decision issued on Saturday said four Tesla owners who filed a proposed class action last year had agreed to arbitrate any legal claims against the company when they accepted its terms and conditions while purchasing vehicles through a Tesla website. A fifth plaintiff who did not sign an arbitration agreement waited too long to sue, Gilliam ruled in dismissing that plaintiff’s claims.
In the US, everyone who bought a Tesla vehicle through Tesla has to agree to a purchase agreement that includes a section about an “agreement to arbitrate”:
In the event of a concern or dispute between us, please send Tesla written notice to resolutions@tesla.com describing the nature of the dispute and the relief sought. If it is not resolved within 60 days, Tesla and you agree that any dispute arising out of or relating to any aspect of the relationship between us will not be decided by a judge or jury but instead by a single arbitrator in an arbitration administered by the American Arbitration Association (AAA). This includes claims arising before this Agreement, including claims related to statements about our products. Alternatively, you may opt out of arbitration as described below.
Now, the lawsuit failed to move to a class action, and the owners will have to take up their issues individually with Tesla through this arbitration process unless there’s a successful appeal to this decision.
Electrek’s Take
This is wild. This is way too big of an issue to go through arbitration individually. Tesla will crush anyone individually, especially with Elon’s “hardcore litigation “team. I am aware arbitration is not litigation, but if you don’t think that team is not working on its arguments in arbitration, I have a bridge to sell you.
I have been saying for years now that Tesla should do the right thing and buy itself some goodwill by offering everyone who bought the FSD package a full refund or the ability to transfer (not on a deadline as a demand trigger) to a new car.
That’s just the right thing to do after failing to deliver on half a dozen timelines offered by its CEO.
Now, not only has it not done that, but Tesla has managed to weasel its way out of a class-action lawsuit that would have at least been studied by a judge or jury – hopefully for a fair outcome.
Instead, it looks like Tesla is going to force everyone to go one by one through an arbitration process. I understand that Tesla is taking advantage of the law in the US, which allows for forced arbitration, but I still think it’s shameful.