Tesla Model 3 Production Shortage Lawsuit Dismissed

AWD Tesla Model 3 being built in a tent

AUG 28 2018 BY STEVEN LOVEDAY 29

It turns out, federal securities laws don’t punish companies for failing to meet production targets.

Yet another judge has ruled in Tesla’s favor. In May, we reported about a securities fraud lawsuit that was launched in October 2017 by the Rosen Law Firm claiming that Tesla:

made false and/or misleading statements and/or failed to disclose that: (1) contrary to defendants’ representations that Tesla was prepared for the launch of its Model 3 sedan, in reality, Tesla had severely inadequate inventory and was woefully unprepared to launch Model 3 sedan as anticipated; and (2) as a result, Tesla’s public statements were materially false and misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.

San Francisco federal judge Charles Breyer has now dismissed the lawsuit against Tesla and CEO Elon Musk. He stated that even though shareholders complained about the automaker misleading the public about the production progress of its popular Model 3 sedan, the company cannot be punished for a lack of achievement related to its goals. However, the shareholders will have about a month (September 28) to amend the original complaint.

Breyer made it evident that the shareholders didn’t provide a clear case that Musk should have been more forthcoming with the fact that Model 3 production would likely be a struggle. He stated:

Plaintiffs are correct that defendants’ qualifications would not have been meaningful if defendants had known that it was impossible for Tesla to meet its stated production goals, not merely highly unlikely. The facts plaintiffs have put forth do not tend to establish that this was the case.

Over time, Tesla and CEO Musk admitted that there were many bottlenecks causing “production hell.” Production was very slow at first and targets were not met. However, the automaker has since worked out most of the issues and is manufacturing the Model 3 in substantially larger numbers.

Source: Reuters

Categories: Tesla

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29 Comments on "Tesla Model 3 Production Shortage Lawsuit Dismissed"

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Mark.ca

“When the true details entered the market, the lawsuit claims that investors suffered damages”
What investors they were talking about? During that time the stock was around $360 just under the all time high. Are these “investors” the shorts? Talk about a sue happy country.

joe

Elon Musk wins again where others would not. This man has had more chances than any other CEO in the history of auto building. I bet the judge lives in California and wants to make sure the business stays there no matter unfair it is.

Mark.ca

Unfair for who? Go get a coffee…

William

Maybe a good cup of “Joe” ought to do it!

I didn’t know “unfair” business localities (automotive plants included), especially in the Golden State, EVen existed. Some context or substance to the verdict, in the blaming of the judge, might be helpful.

OttawaM3

That’s simply not true. Judges are well trained in the law and their decisions are heavily scrutinized by the lawyers involved. Any company sued in the same way would have the same outcome.

Tesla’s been public for years and everyone knows that Musk aims for the stars and that he rarely makes his goal timelines but also that he does usually get there. If you invest in Tesla now, you should already know the ride that you are in for and I don’t think investors who long or short have any reason to complain.

TomArt

Agreed. He was clear to the fact that the Model 3 ramp was going to be incredibly difficult for them. And, yes, they have been manufacturing vehicles for 10 years – they have yet to reach a production target when the production target was promised to be achieved. Tesla has beaten every target, but always delayed. Always. By multiple months. No surprises here.

David Green

The headline here is an interesting spin on what happened… The lawsuit was dismissed, prior to discovery, winning a dismissal is much different then winning a lawsuit. Winning a lawsuit means that after evidence is shown a judge or jury sides with the respondent . No evidence was shown in this case, Tesla’s legal team got the complaint dismissed without going to discovery or trial. Its a small win for Tesla, but In this case more then likely the plaintiffs will reorganize and be back.

This is a proper headline…

https://www.reuters.com/article/us-tesla-lawsuit/tesla-elon-musk-win-dismissal-of-lawsuit-over-model-3-production-idUSKCN1LC26L

William

A better perspective indeed!
The real details are informative.

It’s almost as if Tesla, and its failed attempt at excessive Model 3 production automation, are what got this attempt at litigation, it’s potential day in court.

TomArt

It’s only the whiny gamblers (short-sellers). Anybody long on Tesla has had nothing to complain about. It amuses me how they gamble, and then go crying to momma when their gambles fail! Losers.

David Green

Actually the plaintiffs in this case were longs… Maybe you should read the complaint…

OttawaM3

Actually it’s a bigger win because it means that there was so little evidence raised by the plaintive that the case would have no chance of succeeding.

Get Real

Kind of like the FUD that keeps getting repeated here.

Nix

It is even worse than that. The judge ruled that even if absolutely everything they claimed was 110 percent true, they still would have no legal claim.

Essentially the judge ruled there was no way for them to win because nothing in their lawsuit was illegal.

Pushmi-Pullyu

That’s what I said in response to the first report. This was the very definition of a frivolous lawsuit, and no reasonable person would claim the judge made the wrong decision.

As I recall, the price of the stock actually went up over the period in question. So what is the basis for the suit? That their investment didn’t increase in value fast enough?!?!

LS

> The lawsuit was dismissed, prior to discovery, winning a dismissal is much different then winning a lawsuit.

Indeed. If a case is dismissed it means it was so ludicrously unfounded that it shouldn’t even go to trial. Dismissing a case means it has no merit.

David Green

Usually a dismissal like this means the plaintiff side was not well organized which I can see from the hundreds of spelling errors in the complaint, or the respondent made a good argument that the case was unfounded or without merit.

Having read the filing, I think this case had a bit of both… Its a win for Tesla Legal, as I posted in the forum yesterday…

Nix

The lawyer (Laurence M. Rosen, Esq) had from Oct. 10th 2017 right up until the deadline on submitting briefs on the dismissal hearing to amend his case. Amending lawsuits is done all the time.

If it were simply a disorganized and sloppy lawyer, instead of the case failing to have merit, the case would have been amended already long before the judge ruled. The reality is that they don’t have a case, and never did.

Get Real

LMAO at “alternative facts” by trolls and shorters!

Pushmi-Pullyu

“Having read the filing, I think…”

Oh, so you’re an expert on legal matters, too? In addition to being part of a professional racing pit crew, hobnobbing with leading execs in the auto industry, dining out with the Blue Angels, and running a construction company?

Of course all know what a fine upstanding member of this community Mr. “Green” is. But if it was anyone else, one might suggest they are not merely a poseur; they’re being an overachiever at that!

Pushmi-Pullyu

“Dismissing a case means it has no merit.”

Exactly! David “Green” wants us to believe this is less of a win for Tesla than winning the case in court, but it’s actually more of a win, because Tesla doesn’t have to waste money and time fighting a frivolous lawsuit.

Go Tesla! Illegitimi non carborundum.

Unplugged
“… the plaintiffs will reorganize and be back.” Your comments would be interesting if they had an ounce of factual basis. But I have to hand it to you, despite having what is surely a record setting number of those who disagree with you, you always come back for more. The real fact is that the plaintiffs, much like you, are trying to weave a legal web from air, rather than anything of substance. To demonstrate legally what the silly plaintiffs are up against, I quote a small part from the judge’s decision dismissing the case for failure to state any cause of action: To the extent Plaintiffs contend that this statement was misleading because Musk represented that Tesla had the best suppliers, their claim fails because Plaintiffs do not put forth any facts tending to show that this was not the case. Moreover, it is an inactionable statement of opinion. “Plaintiffs also contend that two more general statements Tesla made regarding its production process constituted misrepresentations. First, they argue that the following statement by Musk regarding the supply chain for the Model 3 is misleading: “We’ve got I think a much better supply chain in place where we’ve got… Read more »
Nix

“In this case more then likely the plaintiffs will reorganize and be back.” Actually, the ability to refile is just a procedural “Sonoma” ruling, that rarely results in suits being refiled. Especially since Plaintiffs had since Oct. 2017 to amend their suit at any time they wanted, and did not.

A “Sonoma” ruling is precedent where the judge “should liberally allow a party to amend its pleading” when there is a dismissal. In this case, the judge has set the bar very high for what the amended pleading must present in order for any amended pleading to be accepted by the court.

Specifically, Plaintiffs must prove specific INTENT of Tesla to violate § 10(b) and Rule 10b-5. This proof must specifically prove that from May 4th 2016 through Oct 23rd 2017, that the ENTIRE TIME Tesla knew of EVERY problem that would come in the future. IF you have evidence of that, go ahead and post it.

Sorry your legal analysis has been repeatedly wrong, and this ruling exposes exactly why.

Pushmi-Pullyu

That reads like the judge’s ruling was just shy of dismissing the suit “with prejudice”, which would be the only condition under which the plaintiff would not be allowed to filed the suit again under any circumstances.

Rather far from what Mr. “Green” claimed, which will be a surprise to no one familiar with the type of comments he posts.

krona2k

Good. All these people trying to screw Tesla are so annoying. They’re obviously trying to do something pretty difficult. Sometimes they don’t help themselves but they could do without all this crap too.

Nix

For those who have all there hopes wrapped up in Tesla getting sued for this that or the other accusation, this judge’s ruling clearly shows the problem with ALL of these lawsuits, and why they will all fail:

“To state a claim under § 10(b) and Rule 10b-5, a plaintiff must allege (1) a misrepresentation or omission of (2) material fact (3) made with intent…”

This last clause “MADE WITH INTENT” is the plaintiff’s burden to prove. Instead all the evidence is that Tesla’s intent is clearly to build as many EV’s as fast as they possibly can.

The absolute proof of this is right here on the Plug-in Sales Scorecard. I’ve tried repeatedly to explain this before, with it falling on intentionally deaf ears. Maybe the ruling of a judge may enlighten them? I doubt it. It is not possible to enlighten those who refuse with all their will being enlightened.