​Tesla Shareholder's Lawsuit Alleges Musk Lied About Model S Safety

Illustration for article titled ​Tesla Shareholder's Lawsuit Alleges Musk Lied About Model S Safety

Tesla is being sued by one pissed off shareholder, claiming that the automaker, Elon Musk, and its board lied about the safety of the Model S. But, as always, it's more complicated than that.


Last year, a trio of Tesla car fires sparked a media frenzy. Anyone with two brain cells to rub together knew it was a combination of bad luck and worse timing, but that didn't stop the media from declaring the Model S a rolling firetrap and Tesla stock heaving like Mavericks at high-tide.

Ross Weintraub, a Tesla shareholder and the man that's bringing the suit, wants something done, so he's employed what's known as a derivative suit. This bears some explanation.

Shareholders own part of the corporation they invest in, but they don't have direct control – that's why they vote for and appoint a board of directors to exert their collective will on the company.

If a shareholder thinks the board is doing harm to the company, they file a derivative suit to get the board to take action. Or to quote Paul Carr, who published the suit at PandoDaily, "to many, shareholder lawsuits are like patent trolls: An unfortunate cost of doing big business and not something that inherently bodes badly."


Still, Weintraub claims there's been a history of dishonesty, including, "a campaign of false and misleading statements designed to convince the market that the Model S was literally the safest car in existence."

And for Musk, who "gave several interviews during which he downplayed this Model S fire and worse, failed to disclose that another Model S had been consumed by fire in Mexico on October 18, 2013."


Those and other claims basically add up to Tesla being "significantly and materially damaged" according to the suit, and as such, the stock price was harmed. However, when Tesla shares closed today, they're within spitting distance of its highest value in March.

We reached out to Tesla, but per usual they can't comment on pending litigation. We've embedded the complaints below.


UPDATE 7/8/2014, 2:13 AM ET: Tesla got back to us with a comment, saying, "We believe this lawsuit is without merit and intend to defend against it vigorously."

Tesla lawsuit



I'm sure Mr. Weintraub has some fantastic scientific data to present in court that the Model S isn't as safe as claimed, and I'm sure that that data isn't simply the scattered anecdotal evidence of a tiny handful of crashes, two of which featured illegally high speeds.

Because otherwise, that would make him simply a troll with a lawyer.