Tesla Gets Early Win in 'Non-Twitter' Securities Suit
U.S. District Judge Charles Breyer specified early in his order granting the electric car company's motion to dismiss that the claims centered on missed production goals for Tesla's "Model 3" rather than Elon Musk's recent tweets.
August 28, 2018 at 02:47 PM
3 minute read
The original version of this story was published on The Recorder
Tesla Model 3 on display during LA Auto Show at the Los Angeles Convention Center on Nov. 30, 2017. (Photo: Betto Rodrigues/Shutterstock.com)
With plaintiffs lawyers hawk-eyeing Tesla Inc. over founder and CEO Elon Musk's recent Twitter activity—not to mention the SEC's reported interest in the tweets implying Musk had “go-private” financing lined up—the electric car maker got some welcome news Monday on the securities litigation front.
A federal judge in San Francisco granted a motion to dismiss filed by Tesla's lawyers at Fenwick & West related to claims the company misled investors about its ability to meet goals of producing 5,000 of its mass-market “Model 3″ per week by the end of 2017.
U.S. District Judge Charles Breyer of the Northern District of California, who specified early in Monday's order that his ruling applied to a “non-Twitter-related securities action,” wrote that “a firm's failure to meet projections is only actionable if the firm did not accompany those projections with meaningful qualifications.”
“Because plaintiffs fail to allege that defendants made any projections that were not so qualified, their claims fail,” Breyer wrote.
In their amended class action complaint, the lead plaintiffs lawyers—Laurence Rosen of The Rosen Law Firm in Los Angeles and Jacob Goldberg and Gonen Haklay in the firm's Jonestown, Pennsylvania, office—cited confidential former Tesla employees who claimed that Musk and other executives knew that the 5,000-vehicle-per-week goal was unrealistic long before the company reported in a October 2017 press release that it had fallen short because of “production bottlenecks.”
But Breyer agreed with Tesla's lawyers at Fenwick, who argued the company and officials had always accompanied the forward-looking goal with appropriate cautionary statements regarding the company's supply chain and the unprecedented ramp-up they were asking of their parts makers.
“That Tesla employees and suppliers may have disagreed with Tesla's own estimates of what was a realistic timeline does not make Tesla's estimates false, given that the market had access to the same factual information as those employees and suppliers,” Breyer wrote.
Breyer's order dismissed the case but offered the plaintiffs an opportunity to amend their complaint. Neither Rosen nor Goldberg responded to email messages asking if the plaintiffs intend to amend their claims.
Read the ruling:
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View All
Recent FTC Cases Against Auto Dealers Suggest Regulators Are Keeping Foot on Accelerator
6 minute read Auto Dealer Software Upstart Accuses Entrenched Competitor of 'Attempted Monopolization'
4 minute read
Digging Deep to Mitigate Risk in Lithium Mine Venture Wins GM Legal Department of the Year Award
5 minute read
Porsche's Venture Capital Arm Adds General Counsel From Clifford Chance
Trending Stories
Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250
