Tesla Hit With Class Action Lawsuit Following Third Model S Fire
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:
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 firstname.lastname@example.org 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.
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.
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.