Thoughts from the Driver’s Seat with Mike Nelson
Is A Privacy Rights Dispute Rightly Venued in Private Arbitration? Tesla Thinks So.
In a recent post, we explored how the move by EV manufacturers away from the traditional dealership sales model is disrupting not only how we buy cars but also the way we litigate disputes related to them. To recap, by selling directly rather than through a dealership, EV manufacturers remain in “contractual privity” with their consumers, which allows them to enforce contractual language requiring consumers to bring disputes with the manufacturer in arbitration (a private forum) rather than in court (a very public forum).
Tesla’s order and purchase agreements, for example, both include provisions that require the consumer to arbitrate “any dispute between you and Tesla, Inc. and its affiliates” unless the consumer opts out of arbitration within thirty days of signing the agreement.
Excerpt from Tesla Order Agreement
As Mike Nelson notes in today’s video, many consumers probably do not even read this language, much less appreciate that they are giving up the right to have any dispute with Tesla heard in a public forum—whether that dispute relates to something predictable like vehicle performance or something less predictable like data privacy.
This particular issue has been brought to the forefront in a pending putative class action lawsuit filed by a Tesla owner named Henry Yeh, on behalf of himself and similarly situated owners, who alleges that Tesla violated the owners’ privacy rights by sharing video recordings and images captured by their cars—some while the car was parked and not in use—without the owners’ consent. Yeh v. Tesla, Inc., Case No. 23-cv-01704, U.S. District Court for the Northern District of California.
Consistent with its contractual language, Tesla sought to compel the claims to private arbitration on a non-class basis. Yeh subsequently filed an amended complaint adding his one-year-old child as a plaintiff, including the following allegations:
The amendment rendered Tesla’s motion to compel moot, at least for the time being, and the Court denied it without prejudice. But this motion practice and the case generally still raise important questions about how wide a net Tesla can cast with its arbitration provision.
In today’s video, Mike Nelson shares his thoughts on these questions and more, from the driver’s seat (and outside of) his Telsa Model Y. We’ll continue to watch the Yeh case and other developments related to the arbitrability of claims against EV manufacturers. In the meantime, let us know what you think in the comments below.
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The opinions expressed in this blog are those of the author(s) and do not necessarily reflect the views of the Firm, its clients, or any of its or their respective affiliates. This blog post is for general information purposes and is not intended to be and should not be taken as legal advice.