Tesla Hit With Class Action Lawsuit Following Third Model S Fire

4 years ago by Eric Loveday 19

Tesla Fire via Twitter (E@nasvillain)

Tesla Fire via Twitter (E@nasvillain)

Following the third Tesla Model S fire, Pomerantz Law Firm has filed a class action suit against the automaker.

The suit, which is almost surely to be tossed out in court, seeks to recover damages against Defendants for alleged violations of the federal securities laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.”

Basically, Pomerantz Law Firm argues that Tesla failed to disclose certain vital information that was linked to declining stock prices.

Pomerantz Law Firm went so far as to issue a press release on the matter, which reads as follows:

Model S Fire

Third Model S Fire

Pomerantz Grossman Hufford Dahlstrom & Gross LLP has filed a class action lawsuit against Tesla Motors, Inc. (“Tesla” or the “Company”) (TSLA) and certain of its officers. The class action, filed in United States District Court, Northern District of California, and docketed under 3:13-cv-05216, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Tesla securities between May 10, 2013 and November 6, 2013 both dates inclusive (the “Class Period”). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.

If you are a shareholder who purchased Tesla securities during the Class Period, you have until January 7, 2014 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll free, x237. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.

Second Model S Fire

Second Model S Fire

Tesla designs, develops, manufactures, and sells electric vehicles, including its flagship Model S, and electric vehicle powertrain components. The Complaint alleges that throughout the Class Period, Defendants made false and misleading statements and failed to disclose material adverse facts about the Tesla’s business, including: (1) Tesla’s statements about the Model S’s highest safety rating and its lack of prior fire incidents were materially misleading, due to undisclosed puncture and fire risks in its undercarriage and lithium ion battery pack; (2) the Model S suffered from material defects which caused the battery pack to ignite and erupt in flames under certain driving conditions; (3) Tesla’s future sales, its next generation Model X introduction, and its stock price were extremely vulnerable to the inherent risk posed by the Model S’s undercarriage and battery pack design flaws; (4) Tesla was unable to maintain a level of automobile deliveries sufficient to satisfy analyst concerns and compensate for other declining revenue streams; and, (5) as a result of the foregoing, Tesla’s public statements were materially false and misleading at all relevant times.

On October 2, 2013, a video of a Model S burning on the roadside was widely circulated, which Tesla attributed to a collision with road debris. The same day, Tesla was downgraded by an analyst who pointed to significant execution risks it faced. On this news, Tesla shares declined $12.05 per share, or more than 6%, to close at $180.95.

On October 28, 2013 a second Model S fire occurred in Mexico, which Tesla blamed on the car’s rate of speed and its crash into a tree. On this news, Tesla shares fell $7.32 per share, or more than 4.3% to close at $162.86 on October 28, 2013.

First Model S Fire

First Model S Fire

Tesla’s stock closed at $176.81 on November 5, 2013. That day, after hours, Tesla announced its Q3 2013 results, which failed to meet analyst expectations on key metrics, including rate of vehicle deliveries. On November 7, 2013, Tesla confirmed a third Model S fire, caused by impact with road debris during normal driving conditions. On this news, Tesla shares opened at $154.81 on November 6, 2013 – $22.00 per share (12.44%) lower than the prior day’s closing price, and declined on November 6-7, 2013 to $139.77.

The Pomerantz Firm, with offices in New York, Chicago, Florida, and San Diego, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.

These types of lawsuits pop up all the time, so we see no reason for Tesla to be concerned over this matter.  As such, we don’t expect an official response from Tesla to be forthcoming.

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19 responses to "Tesla Hit With Class Action Lawsuit Following Third Model S Fire"

  1. scottf200 says:

    The trouble is when Tesla lawyers show all the facts about ICE car fires and that no other company discloses those.

    1. Foo says:

      In the US, there is an ICE vehicle fire roughly every 90 seconds. The kicker is that a large majority of these fires occur while the cars are not moving, nor have not been in any kind of accident.

      For craps sake, a few months back Dick van Dyke’s late model Jaguar caught on fire for no apparent reason at the side of the freeway. The *only* reason it was news was because it was Dick van Dyke’s Jaguar. Other than that, it would have been, “oh ho hum, look a car on fire… and it’s a Jag, haha”.

      1. GeorgeS says:

        Dick Van Dyke is still alive??

        1. Foo says:

          Yes! And, amazingly, he wasn’t even driving a Tesla.

  2. kdawg says:

    LOL, and the stock is up 4% today. What happens if the stock returns to $180/share next week?

    Fricken hate vulture lawyers.

    1. Jeff D says:

      Totally agree. Can we have a class action lawsuit against predatory class action lawsuit lawyers?

    2. GeorgeS says:

      “Frickin’ hate vulture lawyers”

      I second the motion.

  3. MDEV says:

    Lawyers the disgrace of America

    1. Suprise Cat says:

      insideevs shouldn’t give them free publicity.

  4. Tesla Fan says:

    just read a bunch of bullshit “”hmm lets see tesla violated sections 10b, 13a, 392839f, and our own code, Section 4: G4y F4gg07s

    1. Trace says:

      Uhh. Not cool. I’m gay, you D0u¢#€B@g!

  5. HVACman says:

    First, Before trashing the entire law profession, consider how many lawyers may own Tesla’s.

    Second, consider this – what if when it all shakes out it turns out there IS a fundamental design flaw in the Tesla S related to the battery design and/or underbody battery protection AND Tesla has known about it since the first incident AND that the “fix” will be very expensive, but they haven’t disclosed that fact to their shareholders? The shareholders collectively own the company and have a right to know when something major has happened that might affect their ownership value. Disclosure rules change once a business changes from private ownership and becomes a public corporation – part of the price you pay for tapping the “public” market for capital. The SEC has really tightened up on disclosure requirements to prevent both insider trading and fraud.

    Yes, in this case it really looks like a predatory law firm is making a pre-emptive strike so THEY get the legal fees if there really is something nefarious behind these fires. I’m a huge fan of EV’s and particularly excited that Tesla took over the old Fremont GM assembly plant where my step-dad worked for over 20 years to keep us fed and clothed.

    Nonetheless, in his haste to be the consummate showman, Elon sometimes plays fast and loose with the facts and that bothers me. Teslas have less than 10% of all EV driving miles, but 100% of the real-world collision-based EV-sourced fires. One fire is a fluke. Two in short order could just be a statistical cluster. Three starts to look like a trend.

    1. CherylG says:

      Tesla opened themselves up for this suit when they responded the way they did after the first fire. If there was information within the company at that time that the battery protection was inadequate to,protect against common road debris, then the lawyers can make a case against Tesla.

    2. GeorgeS says:

      HVAC man,
      I think tesla has designed this pack pretty well. No intrusion on passenger compartment., Plenty of time for passengers to exit. Only front end of car is burned up. I think Tesla did their homework….

      w/ fire insulated battery compartments and vent fwd flame design is pretty attention to detail..

    3. Steven says:

      Spoken like a true lawyer. 😉

  6. Taser54 says:

    Eric, your assertion “The suit, which is almost surely to be tossed out in court” appears premature.

    1. CherylG says:

      Eric has a way of being premature about a lot of things. Like his declaration ‘safest car in the world!”

  7. Mark S says:

    Telsa is going no where….C’mon who else has a great looking EV with that kind of battery range?!? if you have the money, buy the stock now while there is blood in the water and the day traders are manipulating down…all the while the big fund managers are hanging on and probably buying more.

  8. Steven says:

    Effing ambulance chasers.