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Transportation Businesses The Courts

New Lawsuit Accuses Tesla of Knowingly Selling Defective Vehicles (theverge.com) 62

A new lawsuit from a former Tesla employee claims the company knowingly sold defective cars, and that the employee was demoted and eventually fired after reporting the practice to his superiors. The lawsuit was filed in late January in New Jersey Superior Court under the Conscientious Employee Protection Act (CEPA). The Verge reports: The former employee, Adam Williams, worked for Tesla as a regional manager in New Jersey dating back to late 2011. While there, he says he watched the company fail "to disclose to consumers high-dollar, pre-delivery damage repairs" before delivering its vehicles, according to the complaint. Instead, he says the company sold these cars as "used," or labeled as "demo/loaner" vehicles. "There's no merit to this lawsuit. Mr. Williams' description of how Tesla sells used or loaner vehicles is totally false and not how we do things at Tesla," a representative for the company said in response to the lawsuit. "It's also at odds with the fact that we rank highest in customer satisfaction of any car brand, with more owners saying they'd buy a Tesla again than any other manufacturer. Mr. Williams was terminated at Tesla for performance reasons, not for any other reason." The lawyer for the plaintiff could not be reached in time for publish.

Williams says in the court filing that he reported this behavior in late 2016 and early 2017 to his supervisor, as well as Lenny Peake, Tesla's East Coast Regional Manager, and Jerome Guillen, a company vice president. Shortly after that, he claims, he was demoted to service manager of the Springfield, New Jersey Tesla store. He then says he was demoted again later in the year to a "mobile manager" position and was ultimately fired in September 2017. In the lawsuit, Williams argues that he was terminated for reporting the alleged lawbreaking practices, and he should therefore be covered by CEPA's whistleblower protection.

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New Lawsuit Accuses Tesla of Knowingly Selling Defective Vehicles

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  • Hard Case (Score:2, Troll)

    by OverlordQ ( 264228 )

    Since who can prove what was pre-delivery damage and the normal bad QA process.

    • Do not blame the QA process or pre-delivery damage. It is simply that the vehicles are "flight proven" vehicles.
  • by Anonymous Coward

    Tesla would never, ever do such a thing. They don't even care about money.

    • by HiThere ( 15173 )

      An interesting question is, assuming his complaint is valid (not proven, valid) "Was it the company policy, or just his manager wanting to look good?"

      I could believe either one, but I lean toward a self-promoting manager.

  • omg (Score:5, Insightful)

    by viperidaenz ( 2515578 ) on Wednesday February 21, 2018 @06:30PM (#56166527)

    He alleges Tesla sold used cars that had been repaired as used cards, without labelling them as "lemons"

    Thats.... a normal thing to do? It's not like they were claiming to be selling the used cars as new.

    • by AmiMoJo ( 196126 )

      Most lemon laws require such cars to be marked as such when re-sold. Often the manufacture agrees a buy back to avoid that.

      Also if the car is damaged before delivery that might have to be disclosed. Consider that if you have an accident and get the car repaired it's value is diminished compared to a similar car that hasn't been crashed. So why would it be different if the factory damaged and fixed it before delivery?

    • According to the Tesla forums, it's not uncommon for Teslas to spend 3+ months in the repair shop.

      They can't sell these factory-damaged cars at full price so they should just use them as loaner vehicles.

      • I'm not surprised about the time to repair. They don't even have production capacity for regular sales and are woefully behind schedule for all their current offerings.
        I wouldn't be surprised if they have a backlog producing spare parts.

        They don't sell these repaired cars at full price, they're sold as used cars.
        Right now I could buy a Model X 75D for $NZ124,400 with 11,695km used or a new 75D for $150,645 with fewer options (which for some reason I can't select all the upgrades the used one comes with, lik

        • After further playing around I found the missing interior options, which bring the new price up to $161,545 (still with no towing package)

  • Wait, what? (Score:5, Insightful)

    by drinkypoo ( 153816 ) <martin.espinoza@gmail.com> on Wednesday February 21, 2018 @06:35PM (#56166543) Homepage Journal

    A former Tesla employee claims the company knowingly sold defective cars, often referred to as âoelemons,â

    Wow, lemons? That sounds serious! If a vehicle is in the shop more than it's out, then that's certainly grounds for return or replacement. As far as I know, Tesla is pretty good about providing loaner vehicles, but I'd be pissed off if my car were in the shop all the time — especially since the only shop is Tesla. Is there any more information about this?

    The former employee, Adam Williams, worked for Tesla as a regional manager in New Jersey dating back to late 2011. While there, he says he watched the company fail âoeto disclose to consumers high-dollar, pre-delivery damage repairsâ before delivering its vehicles, according to the complaint. Instead, he says the company sold these cars as âoeused,â or labeled as âoedemo/loanerâ vehicles.

    So just to be clear, Tesla had demo and/or loaner vehicles which were repaired (at some expense which might be described as "high") before they were delivered to customers. These repairs were performed by Tesla, which then sold them as demo and/or loaner vehicles. I'm failing to see a problem here. Their status as demo and/or loaner vehicles was disclosed to the customer, and the problems with the vehicles were repaired before delivery. Who's been harmed in any way? Where in fact is the fraud? What is this alleged whistleblower blowing the whistle about?

    Maybe there's more to this, and this just isn't a very good article.

    • Re:Wait, what? (Score:5, Insightful)

      by Obfuscant ( 592200 ) on Wednesday February 21, 2018 @07:05PM (#56166669)

      Wow, lemons? That sounds serious! If a vehicle is in the shop more than it's out,

      TFA mentions "lemons". It also says "high-dollar pre-delivery damage repairs." "Pre-delivery" and "damage repairs" means the car wasn't "in the shop" because of some failure in hardware. It means that there was damage to the car before it was ever sold the first time. This is not a sign of poor design or part failure. It's what happens when someone backs a forklift into a car after it comes off the assembly line but before it is delivered. Or it gets damaged going onto the delivery truck.

      It's not a "lemon" in any sense of the word.

      So just to be clear, Tesla had demo and/or loaner vehicles which were repaired (at some expense which might be described as "high") before they were delivered to customers.

      They had vehicles. They didn't have to be demo or loaners, they could have been in the factory being built when the damage occurred.

      These repairs were performed by Tesla, which then sold them as demo and/or loaner vehicles. I'm failing to see a problem here.

      Me either.

      Maybe there's more to this, and this just isn't a very good article.

      This is slashdot.

      What I question is the headline, since the lawsuit isn't about selling defective vehicles, it's about being fired, and selling "high-dollar pre-delivery damage repair[ed]" vehicles isn't selling defective vehicles anyway. There is no proof that the damage was the result of a defect, and after they are repaired (i.e. when they were sold) they didn't have the damage anymore.

      • by AmiMoJo ( 196126 )

        The lawsuit says "vehicles designated as lemons". If that means they were returned under lemon laws and sold again without disclosing that, it's illegal under most lemon laws.

        If it just means that the factory replaced the door motor three times already and the QA person thinks it's a "lemon" that's gonna come back after they deliver it... Well that's crappy but legal.

        • The lawsuit says "vehicles designated as lemons".

          Citation required. I see no link to the actual lawsuit, only The Verge's story about the lawsuit. What IT says is "A former Tesla employee claims the company knowingly sold defective cars, often referred to as 'lemons,'". That "often referred to" could simply be The Verge's addition where they try to link the concept of "lemon" and "defective".

          If that means they were returned under lemon laws and sold again without disclosing that

          The cars were "high-dollar pre-delivery damage repairs". How do you return a car as a lemon if is has never been delivered to you? That phrase is much more specific

          • by AmiMoJo ( 196126 )

            Citation required. I see no link to the actual lawsuit, only The Verge's story about the lawsuit.

            It's embedded in the Verge article. You have to scroll down about a page to see it... Which is interesting because you go on to quote a few phrases from TFA. Like you skimmed it so fast you didn't notice the huge embedded document or something...

            Anyway, direct link: https://www.scribd.com/documen... [scribd.com]

            A defective door motor is not "damage" to the vehicle, it is a defect.

            I was talking about the "lemon" designation. Is it a lemon under a state lemon law, or is it just that the factory staff noticed it's unreliable and called it a lemon.

            Man, you really do skim stuff so fast you mi

            • It's embedded in the Verge article.

              It appears under a reference to a 2016 lawsuit, so one could be forgiven for thinking that it refers to the lawsuit in 2016. I looked for a link. There was none.

              Like you skimmed it so fast you didn't notice the huge embedded document or something...

              Like every web browser displays HUUUGE embedded documents by default.

              I was talking about the "lemon" designation.

              I know you were.

              you just cam here to argue with me long after anyone really cares.

              I asked you for a citation for something I did not see. Get over it. Your life will go on.

          • by mysidia ( 191772 )

            Citation required. I see no link to the actual lawsuit, only The Verge's story about the lawsuit

            TheVerge's story contains the Text of the lawsuit embedded into the article via Scribed, thus the link to that TheVerge IS a citation.


            "During the course of Mr. Williams' employment with Defendents, he became aware of Defendants' practice of failing to disclose to consumers high-dollar, pre-delivery damage repairs prior to any transaction with consumers"

            Mr Williams reasonably believed this practice to be illeg

    • So just to be clear, Tesla had demo and/or loaner vehicles which were repaired (at some expense which might be described as "high") before they were delivered to customers. These repairs were performed by Tesla, which then sold them as demo and/or loaner vehicles.

      The issue is that "high dollar" repairs could be for myriad things. A complete engine swap for a failed engine would be a high dollar repair ( from a customer viewpoint, the manufacturer installing the replacement engine and labor is obviously much cheaper ) to customers but not necessarily to the manufacturer. Such a thing I personally would have no problem with.

      But what if the repair that was done, and then never specified, included repairs from someone smashing the vehicle into a pole or tree, or droppin

      • But what if the repair that was done, and then never specified, included repairs from someone smashing the vehicle into a pole or tree, or dropping the completed vehicle off of something when loading it / coming off the assembly line ( in which case the vehicle SHOULD have been reported as an accident repair / totaled vehicle repair)?

        The vehicle wasn't totaled because it wasn't insured. It had never been owned by anyone. It was damaged somehow. And the factory fixed it.

        Even if everything looks perfect the frame could be out of specifications,

        Well, if the factory was failing to repair the vehicles properly, then THAT would be the lawsuit, not that they were simply selling "high-dollar pre-delivery damage repairs" as used or demos. Since improper repairs were not alleged, allegedly, then we should assume the factory knows how to fix their own cars to be within factory standards.

        Probably just outside of warranty.

        You're buying it used. If you don

        • by mysidia ( 191772 )

          You're buying it used. If you don't like the warranty, don't buy it. If it fails outside of warranty, well, that's why a warranty has a lifetime.

          When you're buying a vehicle from someone used they may NOT withhold information they know about defects or damage to the vehicle, or if it had been flooded or submerged and then fixed up --- or accidents or major damage the vehicle has been repaired from.
          That would be fraud, which would make this lawsuit reasonable -- if that's what Tesla was doing.

        • The vehicle wasn't totaled because it wasn't insured. It had never been owned by anyone. It was damaged somehow. And the factory fixed it.

          If it was damaged during shipping, shipping insurance would have paid for it. I also would not be surprised if the factory itself was insured against accidental damage - even if they would likely not file a claim for the occasional one-off that could be repaired and wasn't a total write-off. This in itself may constitute fraud if it causes issues down the road to the consumer due to the repairs not being disclosed.

          Yeah. So why all the hoopla. They aren't lemons, they're just damaged before delivery. And the buyer was told they were not new.

          They are still new cars. They hadn't been sold yet. Just because something is refurbished does

      • As a side note, as this reads they were selling these cars as used / loaner vehicles even though the damage that was repaired was incurred before they were ever sold or used as loaner cars the first time. A vehicle that was damaged and then repaired before ever being sold is NOT a used vehicle, it's refurbished merchandise that was originally damaged in shipping / manufacture.

        Yeah, this would make those vehicles a great deal for the buyer. A used vehicle has we wear and tear on it. A brand new vehicle which was damagedbefore delivery and then repaired to spec has no wear and tear. By all rights they could have sold them as new. Whoever ended up buying them at used prices got one hell of a discount on a brand new vehicle.

      • by mysidia ( 191772 )

        No matter how well the repairs are done the frame is never going to be the same as it was pre-accident. Even if everything looks perfect the frame could be out of specifications

        EXACTLY if damage was done to the vehicle after construction but before delivery, then this is an accident --- and is required to be disclosed; repairing all the non-functioning and aesthetically damaged elements does not mean the vehicle has been fully restored to Pre-Damage specifications.

    • Maybe there's more to this, and this just isn't a very good article.

      Yes there is more to this. The guy is suing for unfair dismissal and it likely has nothing at all to do with cars and their quality and everything to do with some guy feeling like he's been hard done by.

    • by Anonymous Coward

      From: http://www.nj.gov/oag/newsreleases12/pr20121121a.html

      "Attorney General Chiesa noted that, under New Jersey’s Consumer Fraud Act and Motor Vehicle Advertising Regulations, it is illegal to advertise a car for sale without disclosing past damage"...

    • Agreed. If I had an employee that kept escalating a non-issue I would question his or her judgement, likely demote them and eventually fire them. Unless there is more to the story than has been released this is a silly lawsuit.

  • Don't think there's too much merit to this given the "he said/she said" angles to it, and damages being conjecture estimate by plaintiff.

    However, the general theme of lawsuits is Tesla's most significant material risk I think - at least in USA.

    Tesla does the whole start-up 'move fast break things' ethos; that works for social media platforms or a game. But if a bad defect makes it out into fleet of cars on rolling firmware update...that's an instant class-action in car world; and that's assuming nobody ac

  • Standing to Sue? (Score:4, Interesting)

    by CrashNBrn ( 1143981 ) on Wednesday February 21, 2018 @07:05PM (#56166667)

    Unless Adam Williams owns one of these "used" / "demo" vehicles, how does he have any Standing to bring this lawsuit about at all?

    It also seems like it would be pretty easy to query the owners of said vehicles to see if they've had unusual, or frequent problems with their cars.

    This sounds like little more than a disgruntled ex-employee abusing the Wild West US Court system.

    • Unless Adam Williams owns one of these "used" / "demo" vehicles, how does he have any Standing to bring this lawsuit about at all?

      If the lawsuit was actually about selling defective vehicles he wouldn't. But the lawsuit is actually about him being fired for telling people that Tesla was selling "high-dollar pre-delivery damage repair[ed]" vehicles and upper management got tired of his whining about it. It's not about "defective" vehicles, since the vehicles weren't defective when they were sold. They had been "damaged".

  • Unless he reported it to the Securities and Exchange Commission (SEC), he has no protection under the Dodd-Frank Act.

    Maybe (just maybe) he can still recover under the Sarbanes-Oxley Act, but that is trickier. Hope he has a competent lawyer and deeper pockets than Tesla (yeah, right).

  • "Mr. Williams was terminated at Tesla for performance reasons, not for any other reason."

    That's what they always say, now, isn't it?
  • I'm pretty sure all car companies do this. Why is Tesla being singled out? Sounds more like a disgruntled ex- employee to me.
  • What would he like o have happen to the cars? And whats the price tag on these cars.
  • My model S is a pre-owned 85P from Nj. It took over 50 days to get delivery. When he Kansas City service center received it there was significant body damage that had to be repaired before they would even let me see it. After I got it Discount Tire discovered 2 bent wheels. Tesla replaced the wheels and a few minor issues on warranty. I did complain directly to them that they should not have sold a used car in the condition it was at the time. I never received much in response. The KC guys are great an

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