Posted by Rebecca Tushnet

https://tushnet.blogspot.com/2025/08/class-certification-partly-granted-in.html

In Re Tesla Advanced Driver Assistance Systems Litig., No. 22-cv-05240-RFL, 2025 WL 2391446 (N.D. Cal. Aug. 18, 2025)

While not adopting all plaintiffs’ arguments, the court certifies a limited class to challenge Tesla’s full self-driving claims. I’m going to omit a lot, but the claims are the usual California statutory claims plus fraud, negligent misrepresentation, and negligence.

Of note, because Tesla doesn’t pay for traditional marketing/advertising, “it reaches consumers directly through its website, as reinforced by its own YouTube, Instagram, press conferences, sales events, marketing newsletters, and CEO Elon Musk’s personal Twitter account.” There’s a bizarre redaction of historical fact about the prices offered to the public: “Tesla has historically offered customers the ability to purchase or subscribe to optional technology packages—ranging from [redacted] to [redacted] in price—designed to enable autonomous vehicle operation.”

Plaintiff allegedly relied on two misrepresentations to pay an extra $8000: (1) that Tesla vehicles are equipped with the hardware necessary for full self-driving capability, and (2) that a Tesla vehicle would be able to drive itself across the country within the following year. Musk touted the hardware for “full self-driving for driver-less capability” in 2016, claiming it was “in every car we make.” These statements also appeared on Tesla’s website, including on the Autopilot, Model S, and Model X subpages, and other places.

Hardware updates followed, and “Musk later stated on a 2024 earnings call that a hardware upgrade may be necessary for customers who purchased FSD with prior hardware configurations.”

In 2016, Musk also claimed that “we will be able to demonstrate a [demonstration] drive of our full autonomy all the way from LA to New York.” He tweeted words to this effect three times. Embarrassing: “While Musk’s Twitter account has over 200 million followers, the 2019 Tweet generated around 2,000 engagements, and the 2017 Tweet generated around 300 engagements.” Also in 2016, “Tesla began displaying a video that showed a Tesla driving autonomously, which remains on the Tesla site today” and was also on YouTube.

It’s undisputed that Tesla has not yet provided cross-country capability, and Tesla has not even applied for regulatory approval to deploy a Society of Automotive Engineers  Level 3 or higher vehicle in California, which is a necessary step for approval of a full self-driving vehicle. Before this ruling, the court compelled arbitration as to one group of plaintiffs and dismissed all warranty claims but permitted fraud-based, negligence-based, and related statutory claims based on the statements above.

The court thus certified a class of California purchasers/lessees who opted out of the arbitration agreement or who paid before the arbitration agreement came in and who bought or leased while the key statements were being made.

The number of people estimated to be in the class was redacted (again, why?) but numerosity was satisfied.  Commonality and predominance were also satisfied because the case turned on whether Tesla’s statements were deceptive to a reasonable consumer. Tesla argued that there was no showing of class-wide exposure where there was neither a product label nor a traditional mass advertising campaign.

Plaintiff met his burden of showing class-wide exposure on the hardware statement, but not the cross-country statement. The hardware statement was (1) on the “Autopilot” subpage of Tesla’s website from October 2016 until August 2024; (2) on various other subpages of Tesla’s website, including the “Model X” and “Model S” pages, at points throughout that period; (3) disseminated by Musk at a high-profile conference in 2016; (4) stated in a Tesla blog post published in October 2016; (5) stated in a Tesla quarterly earnings call in May 2017; and (6) sent via newsletter to prospective and current Tesla vehicle owners in 2016. “While these channels alone may not ordinarily be enough to establish class-wide exposure for a traditional car manufacturer, Tesla’s distinctive advertising strategy warrants a departure from the typical approach.”

Given Tesla’s direct-to-consumer sales and lack of independent dealers, consumers are “highly likely to visit the website when considering the purchase of an expensive package such as EAP or FSD.” The undisputed evidence “indicates that the Autopilot page is the principal source of detailed marketing information from Tesla, and typically the only written source of such information, describing the supported features and how they work. Additionally, consumers can order those packages directly through the site.” Thus, “it is reasonable to infer that almost all consumers spending thousands of dollars on the packages would review Tesla’s description to make that decision.”

Further, “because Tesla itself serves as the primary source of product information, it is reasonable to infer that the few alternative sources available to consumers—i.e., YouTube videos demonstrating self-driving capability, word-of-mouth, news articles—reinforce Tesla’s core message that full-self driving capability is on the horizon, even if they do not specifically contain the Hardware Statement.” Plaintiff’s expert also supported this finding. However, without the hardware statement on the Tesla site, “the remaining channels of communication are insufficient to support an inference of class-wide exposure,” which led the court to limit the class period to the time the statement was on the site.

As with product labels, “though some consumers may not read the packaging when opening an item, courts have inferred class-wide exposure based on the ‘inherently high likelihood’ that consumers would have relied upon those representations when encountering them in the course of purchasing the product.” Monthly Tesla website traffic data did not show otherwise; Tesla contended that only a few thousand people visited tesla.com/autopilot the related blog post:

But this information has little bearing on the key issue of the proportion of FSD purchasers who viewed those pages, as it is reasonable to assume that many people visit the Tesla website for reasons other than to purchase FSD. Moreover, the table does not include the number of monthly visits to the Model X and Model S subpages, which also contained the Hardware Statement at certain points throughout the relevant time period, and is missing large portions of data (i.e., from January to November 2017 for tesla.com/autopilot). Indeed, the view counts are consistent with a finding of class-wide exposure, as it appears thousands of people on average—which does not include those using ad blockers—viewed the Autopilot page and blog post each month throughout the class period. Tesla has therefore failed to rebut Plaintiff’s showing of class-wide exposure as to the Hardware Statement.

But the cross-country statement was less well-disseminated (Musk only said it four times and didn’t get much engagement when he did), so class-wide exposure was not established.

Materiality is an objective standard, and plaintiff showed it with testimony from a marketing expert who explained that these statements were material “due to the objective credibility of the speakers (i.e. Tesla itself and Musk, Tesla’s CEO and an industry leader), existence of multiple channels conveying a consistent message, centrality of statement to the product’s core qualities, and clear nature of the promise.”

Tesla argued that its disclosure on the Tesla website that FSD functionality was subject to “validation and regulatory approval,” as well as other “manuals, contracts and [ ] documents [that] made it crystal clear that the technology was for ‘driver assistance’ and NOT to replace the driver” disproved materiality. But “a consumer can simultaneously believe that his car has the hardware necessary to enable full self-driving and that such functionality would only be released to him after regulatory approval.” The “manuals, contracts and [ ] documents,” likewise referred to a Tesla vehicle’s current capabilities, not the full self-driving capability touted by Tesla and Musk as being possible using the existing hardware. Nor did the testimony of a “handful” of customers perceiving the Hardware Statement to be “mere puffery” undermine the common evidence demonstrating materiality, because the standard is objective. However, this conclusion only applied to the FSD package, not a lesser package.

Tesla also argued that falsity wasn’t subject to common proof because it kept tweaking the hardware. But Plaintiff’s expert reviewed the sensor and compute configurations for Tesla vehicles throughout the class period and testified that, for example, “[t]he [in]ability for the sensors to perform in bad weather” is a limitation that would be common across the different hardware versions. “Moreover, that Tesla has been unable to demonstrate a long-distance autonomous drive with any of its vehicles or obtain the required certifications to do driverless testing in California further supports the lack of full self-driving capability across the class.”

Damages were also subject to common proof because plaintiff’s theory was that the appropriate measure of damages would simply require refunding class members the amounts paid for their purchases or subscriptions to FSD.

Nor would statute of limitations issues preclude class treatment; individual application of a limitation period to a class member rarely does. Also, the delayed discovery rule and equitable estoppel theories of tolling “turn primarily on the objective inquiry of whether Tesla’s misrepresentations to the class stopped a consumer from discovering the cause of action or pursuing a lawsuit.”

The court also certified an injunctive class of members of the classes above “who have stated that they would like to purchase or subscribe to FSD in the future but cannot rely on the product’s future advertising or labelling.” Tesla argued that this was subjective, but ascertainability is not a requirement for certifying a Rule 23(b)(2) class.  And the requested injunctive relief was clear enough: “Plaintiff seeks to stop Tesla from continuing to state that its vehicles have the hardware capable of full self-driving until the vehicles are actually able to do so.”

https://tushnet.blogspot.com/2025/08/class-certification-partly-granted-in.html