A Federal judge in California has certified a class action with two subclasses. What does this mean?

First, let’s briefly discuss what a class action is. Under Federal law, a class action can be filed where there is a common claim that can be made by a lot of people that could best be administered by handling all the claims at one time. Under the law, this is called commonality (the similar claims) and numerosity (the number of people). A plaintiff files a class action, making the commonality and numerosity allegations, seeking class status. The defendant fights the class status because class actions can be expensive and many of the class members might not start a lawsuit on their own.

Now, let’s discuss what happened in California. In the case In Re Tesla Advanced Driver Assistance Systems Litigation (Case no.: 3:22cv5240 in the Northern District of California), the court initially dismissed the class action in favor of arbitration, because Tesla started including arbitration clauses in its various agreements. This happened in 2023. Those clauses had a 30-day opt out provision. I intend to dig deeper to find out how many people actually opted out. But the judge only dismissed the claims of people Tesla could prove had an arbitration clause. One plaintiff, LoSavio, had opted out. He was given leave to amend the complaint, which he did.

The case that’s in the news is the same case, but this time the court did not dismiss the class action. Instead, the court created two subclasses, both limited to California residents. The first subclass contains buyers of FSD who bought between October 20, 2016, and May 19, 2017. These buyers did not have an arbitration clause in their agreement. These are buyers who were exposed to Tesla and Elon Musk’s clearly erroneous statements about the capabilities of the FSD in vehicles being sold at the time. Frankly, they might as well have said that the cars could fly because that was about as accurate as the representations they made about FSD at the time. There’s also this little issue of a video that purports to show the car self-driving, when it was actually preprogrammed to act like it was self-driving, but it wasn’t.

The second subclass is the group of buyers who bought FSD between May, 2016, and July 31, 2024. These are the California “opt-out” buyers. These folks bought the car and, within 30 days of the order, sent in a letter to Tesla opting out of the arbitration clause. Think about this. Tesla appears to be one of the most technologically advanced companies in the US, if not the world, but it relies on snail mail to opt out of an electronically executed order agreement. I hope the irony is not lost on anyone. Remember, you can make any demand you want via email to resolutions@tesla.com, but you can’t opt out of the arbitration agreement.

There are plenty of people who are opposed to arbitration because they want their “Day in court”. That’s understandable. I’ve been to court and I’ve been to arbitration. I prefer arbitration. It certainly worked to my advantage in my own case. We’ll see how it goes for my clients.

What the California class action ruling does not do is establish a nationwide class action for all FSD purchasers in every state. Further, it would only cover those who opted out of arbitration. One could argue that Tesla should allow the FSD class action to go forward nationwide so that it can put a fixed number on the liability, buy its way out, and move on. Instead, Tesla could end up fighting individual arbitration cases, at a not-insignificant aggregate cost for the arbitrator alone, for a long time. With the class action, it would eventually be one and done. Tesla, if you’re listening, come up with a strategy to do right by your customers and make some arrangement with them to resolve their claims without forcing them to court or arbitration. I’ll bet that they’re reading, but not listening.

Soon, California class members will be forced to make another opt-out decision. Do they opt out of the class action and go it alone? Since they opted out of arbitration, that’s not an option. Now they’re in court. If they qualify for small claims, that might help. But if they have to go to real court, that might be a long process. And good luck doing that without a lawyer.

So does the class action ruling help non-class members? I think it does. I think the language about the allegedly false statements made along the way, particularly the promises that were made as to when FSD would “finally” roll out, may constitute wrongful conduct to the level where the limitations period is extended to allow for otherwise barred claims to progress.

Whether it’s in court or arbitration, don’t sit on your rights. Do it yourself or find someone to do it for you. If you didn’t get what you were promised, you have the right to demand your money back for Tesla.