Tesla owners must arbitrate false advertising claims over autopilot feature- ruling

By Daniel Wiessner

(Reuters) – A California federal judge has ruled that a group of people who own cars made by Tesla Inc must pursue claims that the company misled the public about its autopilot features in individual arbitration rather than court.

The ruling marks a significant victory for Tesla, as it means the company will not have to face class action claims on behalf of much larger groups of vehicle owners.

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.

Tesla and lawyers for the plaintiffs did not immediately respond to requests for comment on Monday.

The lawsuit accuses Tesla of repeatedly making false statements indicating that its advanced driver assistance systems (ADAS) technology was on the verge of delivering fully self-driving vehicles.

The plaintiffs all said that they paid thousands of dollars to purchase the optional ADAS technology when they bought Tesla cars between 2017 and 2022.

But instead of delivering on its promises, Tesla’s technology has been unreliable and has led to accidents, injuries and deaths, the plaintiffs claimed.

Tesla has denied wrongdoing. The company moved to send the claims to arbitration, citing the plaintiffs’ acceptance of the arbitration agreement.

Gilliam on Saturday rejected claims by the plaintiffs that the agreements signed by four of the plaintiffs were unenforceable.

The decision came in the midst of the first U.S. trial over allegations that Tesla’s Autopilot feature led to a death because it was based on untested experimental technology that should not have been sold to the public.

The plaintiffs in that trial in California state court allege the Autopilot system caused a Model 3 to veer off a highway near Los Angeles at 65 miles per hour, strike a palm tree and burst into flames, killing the owner and injuring two passengers.

Tesla has said the accident was the result of driver error.

(Reporting by Daniel Wiessner in Albany, New York, Editing by Alexia Garamfalvi and Deepa Babington)