Tesla and CEO Elon Musk are facing dozens of lawsuits and investigations, according to public filings.
The costs of defense and settlements burden the car maker financially at a time when Tesla is already cutting headcount, closing stores and delaying loan repayments. No doubt Tesla would rather spend its money to improve its service, set up manufacturing lines to make the Model Y (its forthcoming compact SUV), or to build out its Shanghai Gigafactory.
Among Tesla's most recent legal woes, the Securities and Exchange Commission has filed a motion to hold Musk in contempt of court. The financial regulators argue that Musk violated the agreementthey finalized with him and Tesla in October 2018 requiring the CEO to submit his tweets for review by the company's in-house counsel if they contained material business information and could potentially affect the company's stock price.
Musk is represented in this matter by John C. Hueston, formerly the lead prosecutor for the federal trial of Enron's Jeffrey Skilling.
Beyond the contempt case, here are some of the other cases and investigations Tesla and Musk are facing that could most impact the company.
- NHTSA and NTSB regularly investigate crashes involving Tesla vehicles and the use of "Autopilot" features. These agencies initiated new investigations in March 2019, after another Tesla-involved incident proved fatal for a Model 3 driver who collided with a semi-trailer in Delray Beach, Florida.
- According to a Department of Justice statement, a former Tesla employee named Salil Parulekar was indicted in November 2018 for allegedly embezzling $9.3 million from Tesla by diverting payments from one supplier to another. The potential case, which hasn't moved past the indictment, could reveal more about troubles with Tesla's supply chain.
- Two former Tesla security employees, Karl Hansen and Sean Gouthro, filed whistleblower complaints via the law firm Meissner Associates to the SEC. They claim, among other things, that Tesla spied on workers, and covered up theft and narcotics trafficking at its battery plant in Sparks, Nevada.
- A former employee, Marcus Vaughn, is pursuing a class-action lawsuit against Tesla in California alleging that the company ignored black employees' reports of rampant racism. Tesla is trying to compel arbitration, and the plaintiff's lawyers say they are fighting Tesla's motions.
- The National Labor Relations Board filed a complaint in August 2018 accusing Musk of violating labor laws with a tweet on May 20 that employees wouldn't have stock options if they formed a union.
- Tesla-owned SolarCity has been the subject of multiple SEC investigations dating back to 2012, according to Probes Reporter, a firm that publishes FOIA research for investors. (As of May 2108, SolarCity was still under at least one SEC investigation, said Probes Reporter CEO John P. Gavin.)
- Musk is being sued by spelunker Verne Unsworth, whom Musk claimed without evidence was a pedophile and child rapist. Musk lobbed those dramatic accusations at Unsworth after the cave diver questioned the Musk's attempts to aid in the rescue of a Thai boys' soccer team. Unsworth was part of the successful rescue effort and was critical of Musk's approach.
- In a Delaware Chancery Court, shareholders are suing Tesla alleging that the company's acquisition of SolarCity in 2016 was improperly handled by the board, benefitted six out of seven of Tesla's then-board members, and was ultimately a detriment to the company and its minority shareholders.