Tesla ‘is under federal probe by DOJ and SEC’ over claims company funds were misallocated to plan opulent glass MANSION for boss Elon Musk
By Dan Levine and Hyunjoo Jin
SAN FRANCISCO (Reuters) – Tesla Inc is set to defend itself for the first time at trial against allegations that failure of its Autopilot driver assistant feature led to death, in what will likely be a major test of Chief Executive Elon Musk’s assertions about the technology.
Self-driving capability is central to Tesla’s financial future, according to Musk, whose own reputation as an engineering leader is being challenged with allegations by plaintiffs in one of two lawsuits that he personally leads the group behind technology that failed. Wins by Tesla could raise confidence and sales for the software, which costs up to $15,000 per vehicle.
Tesla faces two trials in quick succession, with more to follow.
The first, scheduled for mid-September in a California state court, is a civil lawsuit containing allegations that the Autopilot system caused owner Micah Lee’s Model 3 to suddenly veer off a highway east of Los Angeles at 65 miles per hour, strike a palm tree and burst into flames, all in the span of seconds.
The 2019 crash, which has not been previously reported, killed Lee and seriously injured his two passengers, including a then-8-year old boy who was disemboweled. The lawsuit, filed against Tesla by the passengers and Lee’s estate, accuses Tesla of knowing that Autopilot and other safety systems were defective when it sold the car.
MUSK ‘DE FACTO LEADER’ OF AUTOPILOT TEAM
The second trial, set for early October in a Florida state court, arose out of a 2019 crash north of Miami where owner Stephen Banner’s Model 3 drove under the trailer of an 18-wheeler big rig truck that had pulled into the road, shearing off the Tesla’s roof and killing Banner. Autopilot failed to brake, steer or do anything to avoid the collision, according to the lawsuit filed by Banner’s wife.
Tesla denied liability for both accidents, blamed driver error and said Autopilot is safe when monitored by humans. Tesla said in court documents that drivers must pay attention to the road and keep their hands on the steering wheel.
“There are no self-driving cars on the road today,” the company said.
The civil proceedings will likely reveal new evidence about what Musk and other company officials knew about Autopilot’s capabilities – and any possible deficiencies. Banner’s attorneys, for instance, argue in a pretrial court filing that internal emails show Musk is the Autopilot team’s “de facto leader”.
Tesla and Musk did not respond to Reuters’ emailed questions for this article, but Musk has made no secret of his involvement in self-driving software engineering, often tweeting about his test-driving of a Tesla equipped with “Full Self-Driving” software. He has for years promised that Tesla would achieve self-driving capability only to miss his own targets.
Tesla won a bellwether trial in Los Angeles in April with a strategy of saying that it tells drivers that its technology requires human monitoring, despite the “Autopilot” and “Full Self-Driving” names. The case was about an accident where a Model S swerved into the curb and injured its driver, and jurors told Reuters after the verdict that they believed Tesla warned drivers about its system and driver distraction was to blame.
STAKES HIGHER FOR TESLA
The stakes for Tesla are much higher in the September and October trials, the first of a series related to Autopilot this year and next, because people died.
“If Tesla backs up a lot of wins in these cases, I think they’re going to get more favorable settlements in other cases,” said Matthew Wansley, a former General Counsel of nuTonomy, an automated driving startup and Associate Professor of Law at Cardozo School of Law.
On the other hand, “a big loss for Tesla – especially with a big damages award” could “dramatically shape the narrative going forward,” said Bryant Walker Smith, a law professor at the University of South Carolina.
In court filings, the company has argued that Lee consumed alcohol before getting behind the wheel and that it is not clear whether Autopilot was on at the time of crash.
Jonathan Michaels, an attorney for the plaintiffs, declined to comment on Tesla’s specific arguments, but said “we’re fully aware of Tesla’s false claims including their shameful attempts to blame the victims for their known defective autopilot system.”
In the Florida case, Banner’s attorneys also filed a motion arguing punitive damages were warranted. The attorneys have deposed several Tesla executives and received internal documents from the company that they said show Musk and engineers were aware of, and did not fix, shortcomings.
In one deposition, former executive Christopher Moore testified there are limitations to Autopilot, saying it “is not designed to detect every possible hazard or every possible obstacle or vehicle that could be on the road,” according to a transcript reviewed by Reuters.
In 2016, a few months after a fatal accident where a Tesla crashed into a semi-trailer truck, Musk told reporters that the automaker was updating Autopilot with improved radar sensors that likely would have prevented the fatality.
But Adam (Nicklas) Gustafsson, a Tesla Autopilot systems engineer who investigated both accidents in Florida, said that in the almost three years between that 2016 crash and Banner’s accident, no changes were made to Autopilot’s systems to account for cross-traffic, according to court documents submitted by plaintiff lawyers.
The lawyers tried to blame the lack of change on Musk. “Elon Musk has acknowledged problems with the Tesla autopilot system not working properly,” according to plaintiffs’ documents. Former Autopilot engineer Richard Baverstock, who was also deposed, stated that “almost everything” he did at Tesla was done at the request of “Elon,” according to the documents.
Tesla filed an emergency motion in court late on Wednesday seeking to keep deposition transcripts of its employees and other documents secret. Banner’s attorney, Lake “Trey” Lytal III, said he would oppose the motion.
“The great thing about our judicial system is Billion Dollar Corporations can only keep secrets for so long,” he wrote in a text message.
(Reporting by Dan Levine and Hyunjoo Jin in San Francisco, Editing by Peter Henderson and Grant McCool)