Tesla’s Direct Sales Model Helps It Thwart Customer Lawsuits

Ford maintains that arbitration is a better way to resolve disputes. Resolution of claims “should be fair, fast, efficient and proportional to the dispute,” Ian Thibodeau, a Ford spokesman, said in an email. “Arbitration often achieves those goals faster and more effectively than the court system.”

In another recent case, though, a federal judge in Illinois denied a motion by Subaru to compel arbitration for an owner who had signed an arbitration agreement with a dealer. The owner claimed her privacy was violated by Subaru technology designed to tell whether drivers are being attentive. The judge ruled that an agreement between the dealer and the buyer did not apply to disputes with the manufacturer.

Because of its direct sales model, Tesla stands apart from much of the industry, lawyers said.

“Tesla appears to be unique among car companies in their use of arbitration clauses to avoid responsibility in courts of law,” said Donald Slavik, who represents Derrick Monet, whose wife, Jenna Monet, was killed when their Tesla hit a parked fire truck on I-70 in Indiana.

A lawsuit by Mr. Monet, who was seriously injured, attributed the crash to Tesla’s Autopilot system, which can steer, brake and accelerate a car on its own. Tesla, which is contesting the lawsuit, has not yet tried to force the case into arbitration. The company has maintained that Autopilot improves the safety of its cars.

Kristin Hull, chief executive of Nia Impact Capital, an investment firm, has pushed Tesla to eliminate forced arbitration for employees, arguing that it conceals problems investors should know about. In August, almost 40 percent of shareholders supported a resolution proposed by Nia that would have instructed Tesla to study whether forced arbitration affects employees’ ability to seek redress for discrimination or other complaints.

“As investors we don’t have any insight into company culture and what is happening,” Dr. Hull said. “Managers aren’t held accountable.”

Source link