A judge agreed with Musk's lawyers that some of Musk's statements regarding self-driving Teslas amount to “corporate puffery"
Tesla $TSLA boss Elon Musk is no stranger to litigation, having fought off legal challenges against his massive salary, claims of a conflict of interest between his companies and even accusations of insider trading. Now, he’s celebrating winning a legal battle over his lofty claims about Tesla’s self-driving abilities, but the way he got to that victory might not really be much to shout about.
Musk was sued by a group of shareholders who claimed that the Tesla boss had defrauded them with his lofty claims about the capabilities of Tesla’s advanced driver assistance tech, including Autopilot and Full Self-Driving.
After hearing the case, U.S. district Judge Araceli Martinez-Olguin claimed that the plaintiffs had failed to prove that the Tesla boss had acted with “deliberate recklessness,” reports the Verge. The win for Musk followed a tough battle from his legal team, who took an unexpected route to the victory.
That’s because Musk’s lawyers didn’t decide to argue that Tesla’s claims about its self-driving abilities were perfectly accurate. Instead, the legal team representing Musk basically said that nobody would realistically believe what Musk was banging on about, as the Verge explains:
Many of Musk’s claims about self-driving capabilities amount to “corporate puffery,” or exaggerations about future products, the judge determined. Other claims could be categorized as “forward-looking statements,” in that they addressed future expectations for the technology. The case was dismissed without prejudice, meaning it can be relitigated with amendments.
For anyone that doesn’t speak legal, “corporate puffery” basically means massively upselling your abilities. It’s a legal term used in commercial law to describe an “exaggerated description of a good or service,” according to the legal experts at Cornell.
This means that Musk’s team of crack lawyers was pretty much arguing that his comments about self-driving Teslas coming any day now “can’t be taken seriously because they were mere puff,” reports Electrek. As the site adds:
In a mind-numbing statement, Musk’s lawyers argue that his claims about Tesla Autopilot safety were “vague statements of corporate optimism are not objectively verifiable.”
The lawyers even argued, successfully, that “no reasonable investor would rely” on many of the alleged misleading statements because they are “mere puffing.”
Therefore, yes, Tesla won a dismissal, but at the cost of a judge agreeing with Musk’s lawyers that his statement about Tesla’s Full Self-Driving effort was “mere puffing.”
Musk might be celebrating his victory in court this week, but next week he’s meant to be unveiling the self-driving future of Tesla in the form of a new robotaxi that could be deployed across America in the coming years. Does this ruling mean we’re all meant to take his presentation next week as nothing more than “mere puff?”
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