Tesla has successfully managed to kill another class action lawsuit from customers by forcing them to go to arbitration.
It’s the second time in a few months that Tesla has managed to weasel its way out of a class-action lawsuit with its sneaky arbitration clause.
It’s not widely known among Tesla owners, but most of them are giving up their right to sue Tesla if an issue arises.
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.
This is becoming a common practice used by companies to avoid customers banding together and be more efficient in litigation through class action lawsuits. Instead, they have to go through arbitration one-on-one against Tesla individually, which is a bigger task as Tesla is lawyered up to the gills.
It shifts the advantage to the company.
Last year, Tesla already managed to shut down a class action lawsuit from its customers over its Full Self-Driving claims.
Now, Tesla has done it again.
Last year, following a report from Reuters that highlighted some questionable practices by Tesla related to overstating its advertised range, customers filed a class action lawsuit against Tesla.
The report showed how Tesla “gamed” the system to boost its EPA range, while Tesla owners have difficulty achieving that advertised range in their vehicles.
It also went as far as claiming that Tesla had developed a special algorithm that showed drivers a more optimistic range at first and then turned more precise once the vehicle’s state of charge dipped below 50%.
U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, released her judgment siding with Tesla on Thursday. The judge didn’t address the merit of the claims, but she agreed with Tesla that the customers agreed to let go of their right to sue Tesla and go through arbitration instead when they signed their order agreement.
The class action is thrown out, and customers have to go through arbitration.
Electrek’s Take
I don’t know about the merit of the lawsuit. The Reuters report that launched this was not the most convincing to me.
Some of the claims were simply Tesla taking advantage of loopholes in the EPA’s rules to be more optimistic about the range Tesla is allowed to advertise. You can argue whether or not that’s the right thing to do, but ultimately, it’s the EPA’s rules that need changing if you don’t want that to happen.
The other claims in the report were based on Reuters’ sources and those have been hit or miss when it comes to Tesla.
But regardless of that, I think that customers should have the right to bring the issue to court. It would have been figured out through the discovery process.
It’s hard to believe that the courts are leaving those customers on their own.
Elon said that Tesla would always strive to do the right thing, but those arbitration clauses are not the right thing. Do the right thing.