Court dismisses securities action complaint against Tesla over Model 3

By Shanice Harris | Apr 8, 2019

SAN FRANCISCO – The U.S. District Court for the Northern District of California has dismissed a man’s second amended securities action suit filed against Tesla Inc. 

District Judge Charles R. Breyer ruled March 25 that plaintiff Gregory Wochos' complaint "fails because the statements it identifies were not false, or were forward-looking and accompanied by meaningful qualifications." Breyer granted Tesla's motion to dismiss with prejudice in part.

Wochos had claimed that Tesla and its officers fell short of their production goals and misled the public in regards to the progress of its Tesla Model 3 vehicle. 

"The court granted the first motion to dismiss with leave to amend because, 'while plaintiffs claim that Tesla and its officers ... fell short of their production goals, a firm’s failure to meet projections is only actionable if the firm did not accompany those projections with meaningful qualifications. Because plaintiffs fail to allege that defendants made any projections that were not so qualified, their claims fail,'" the ruling states.

In addition to the motion to dismiss the second amended complaint, both parties requested a judicial notice of various Tesla documentation, which includes filings with the U.S. Securities and Exchange Commission (SEC), news reports, public statements and stock information. The court denied in part and granted in part the parties’ request.

Breyer wrote that “the court considers the parties’ proffered statements for the sole purpose of determining what representations Tesla made to the market, not for the truth of any facts asserted. The court also does not take judicial notice of the issues of scienter, as the court has no cause to reach that question.”

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