The man who filed the lawsuit, Adam Williams, is a former Tesla employee. He worked as regional manager in New Jersey since 2011. He claims that he observed how the company would knowingly sell defective vehicles to customers without properly disclosing the vehicles’ faults. The company would instead, according to Williams, sell the cars as used or demo/loaner vehicles.
He reported this in 2016 and 2017 to his supervisors. Every time he would see this occurring, he would report it to his supervisor, Tesla’s East Coast Regional Manager Lenny Peake, and a company vice president, Jerome Guillen. After this, he says, he was demoted several times, once to service manager of Tesla’s Springfield, New Jersey store, and once to being a mobile manager, and then he was eventually fired.
Tesla Denies The Claim
Tesla completely denied these claims, and says that there is no merit to any of them. “There’s no merit to this lawsuit. Mr. Williams’ description of how Tesla sells used or loaner vehicles is totally false and not how we do things at Tesla. It’s also at odds with the fact that we rank highest in customer satisfaction of any car brand, with more owners saying they’d buy a Tesla again than any other manufacturer. Mr. Williams was terminated at Tesla for performance reasons, not for any other reason.”
Williams says that he should be covered by the Conscientious Employee Protection Act (CEPA), which is also referred to as a whistleblower act. This is an act put into place in New Jersey which would protect employees who reported or refused to participate in a company’s illegal practices from retaliation by their employers.
The issue was tweeted and widely discussed.
a Tesla employee believes $TSLA commits ONGOING FRAUD1) sells vehicles that it KNOWS are "lemons" 2) fails to disclose known damage to vehicles pre deliveryBelieves its illegal, reports it, gets demoted, Wow! WOW! New $TSLA lawsuit . . . pic.twitter.com/xCDXyW2D4e— luis carruthers (@orthereaboot) February 21, 2018
In the lawsuit, it clearly states that, “Mr. Williams was aware of a practice of Defendants involving receiving vehicles designated as “lemons” and, with this knowledge, reselling these vehicles without branding the titles of these vehicles or offering disclosure, rather representing the cars as “used” or a “demo/loaner.”” The lawsuit also states that Williams was protected by the CEPA.
Apparently, according to Williams, the problems that the vehicles would have were serious ones which would cost customers a lot of money to repair.
This is not the first time that Tesla has gotten into legal trouble with regards to the issue of them supposedly selling defective vehicles. A Model X owner complained in 2016 of problems with his vehicle’s doors and software and thus, a lawsuit was settled.
According to Reddit user IWasToldTheresCake, “The plaintiff is claiming that they were demoted and then fired because they blew the whistle about an activity that they reasonably believed to be illegal. They will have to prove that (1) they had a reasonable belief that the activity was against the law or other such rules, (2) that they blew the whistle on the activity, (3) that they were demoted and fired, and (4) that the reason for the demotion and/or firing was causally related to the whistle-blowing.”
It will be interesting to see the outcome of this case. Do you think that Tesla is at fault here, and Williams had a reasonable case to file a lawsuit? Do you think that Williams was unreasonably fired? What do you think will be the outcome? Let us know your thoughts in the comments. Any legal expertise is welcomed.