Judge dismisses shareholder’s lawsuit against Tesla, Musk over self-driving promises

Tesla and its CEO Elon Musk on Monday won a dismissal of a lawsuit accusing them of defrauding shareholders by exaggerating the effectiveness and safety of the automaker’s self-driving technology to boost its stock price.

U.S. District Judge Araceli Martinez-Olguin in San Francisco said the shareholders had not shown Tesla and Musk should be liable for falsely promising they were close to delivering technology that would lead to safety more than humans, but this was actually “fraught with safety issues” and encouraged carelessness. .

Tesla vehicles included “Autopilot” software designed to enhance self-driving capabilities, and the company sold “Full Self Driving” software upgrades.

Martinez-Olguin said some of Tesla’s and Musk’s contested statements aren’t necessarily false, while others could be excused for addressing future expectations for the technology.

She said Musk’s “hands-on” leadership did not mean he knew more than he let on, while his nearly $34 billion profit from selling Tesla stock between February 2019 and February 2023 did not show that they collect from other shareholders. expense.

Shareholders said Musk, the world’s richest person, received about $39.4 billion in proceeds from the stock sale, about the same as Vermont’s gross domestic product.

Attorneys for the shareholders did not immediately respond to requests for comment. Tesla did not immediately respond to similar requests. The judge dismissed the lawsuit without prejudice, in the sense that the shareholders can modify it.

Tesla still faces investigations by the US Department of Justice and the US Securities and Exchange Commission, as well as a case from the California Department of Motor Vehicles, into its self-driving claims.

The case is Lamontagne v Tesla Inc et al, US District Court, Northern District of California, No. 23-00869.

(Reporting by Jonathan Stempel in New York; Editing by Jamie Freed)

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