Cars not fully autonomous
Lin didn’t rule on the merits of the claims but found that they are adequately alleged. LoSavio points to a Tesla statement in October 2016 that all its cars going forward would have the “hardware needed for full self-driving capability,” and a November 2016 email newsletter stating that “all Tesla vehicles produced in our factory now have full self-driving hardware.”
The ruling said:
Those statements were allegedly false because the cars lacked the combination of sensors, including lidar, needed to achieve SAE Level 4 (“High Automation”) and Level 5 (“Full Automation”), i.e., full autonomy. According to the SAC [Second Amended Complaint], Tesla’s cars have thus stalled at SAE Level 2 (“Partial Driving Automation”), which requires “the human driver’s constant supervision, responsibility, and control.”
If Tesla meant to convey that its hardware was sufficient to reach high or full automation, the SAC plainly alleges sufficient falsity. Even if Tesla meant to convey that its hardware could reach Level 2 only, the SAC still sufficiently alleges that those representations reasonably misled LoSavio.
The complaint also “sufficiently alleges that Musk falsely represented the vehicle’s future ability to self-drive cross-country and that LoSavio relied upon these representations pre-purchase,” Lin concluded. Musk claimed at an October 2016 news conference that a Tesla car would be able to drive from Los Angeles to New York City “by the end of next year without the need for a single touch.”
Statute of limitations not an obstacle, for now
Lin ruled that the complaint can move forward even though the relevant statutes of limitations range from two to four years, and LoSavio sued over five years after buying the car. Under the delayed discovery rule, the limitations period begins when “the plaintiff has, or should have, inquiry notice of the cause of action.”
In September 2023, the court granted Tesla’s motion to dismiss claims from LoSavio because of the statute of limitations but allowed LoSavio to amend his complaint.
LoSavio alleges that for years after buying his car, he relied on “Tesla’s repeated claims that the car’s software was the source of delay, and that software fixes were perpetually forthcoming,” yesterday’s ruling said. But when Tesla declined to update his car’s cameras in April 2022, “LoSavio allegedly discovered that he had been misled by Tesla’s claim that his car had all the hardware needed for full automation.”
Lin rejected Tesla’s argument that LoSavio should have known earlier. “Although Tesla contends that it should have been obvious to LoSavio that his car needed lidar to self-drive and that his car did not have it, LoSavio plausibly alleges that he reasonably believed Tesla’s claims that it could achieve self-driving with the car’s existing hardware and that, if he diligently brought his car in for the required updates, the car would soon achieve the promised results,” Lin wrote.
Tesla can still argue later in the litigation that LoSavio should have made this realization earlier. “Having adequately alleged diligence, the extent of his diligence and its reasonableness are questions of fact not suitable for disposition at this stage,” the judge wrote.
