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Federal Court: Tesla Owners Require to Arbitrate Autopilot Case


According to a report from Reuters, a federal court in California has ruled that Tesla owners will be required to arbitrate their “autopilot” claims against the company. The court determined that a pre-dispute arbitration provision in the purchase contract is enforceable. Here, our West Palm Beach business arbitration lawyer provides an overview of the case and explains the enforceability of arbitration provisions in commercial matters.

Background: Allegations of Material Misrepresentations By Tesla 

Several different consumers—including people in both California and Florida—filed a false advertising lawsuit against Tesla. The claims in question were related to the company’s Advanced Driver Assistance Systems (ADAS). ADAS is also often referred to simply as “autopilot. ”While all Tesla vehicles come standard with an ADAS called Autopilot, users can pay for upgraded versions with additional features. Notably, the Full Self-Driving (FSD) software, which costs approximately $15,000, is one such upgrade. The plaintiffs in the lawsuits contend that they were materially misled about the functionality of the autopilot self-driving feature. The plaintiffs filed a lawsuit in California seeking class action certification for themselves and similarly situated class members.

Federal Court Decision: Pre-Dispute Arbitration Provision Enforceable 

In a victory for Tesla, United States District Court Judge Haywood Gilliam ruled that certain vehicle owners must address their claims about the company’s purported misleading Autopilot features through individual arbitration rather than through court proceedings. In effect, the federal court has upheld a pre-dispute arbitration provision. The ruling has important implications for the case. Instead of a class action lawsuit, the disputes will now be handled through arbitration.

 Many Pre-Dispute Arbitration Clauses are Enforceable (Florida) 

In Florida, many pre-dispute arbitration clauses are enforceable. Consistent with federal law, Florida has a strong policy favoring arbitration as an alternative to litigation. These clauses—which can be found in a wide range of different business and consumer contracts—require parties to resolve disputes through arbitration rather than through the court system. With this in mind, parties entering contracts should be mindful of any arbitration provision.

When are Pre-Dispute Arbitration Provisions Not Enforceable in Florida? 

Although pre-dispute arbitration provisions are generally enforceable in Florida, there are exceptions. A court could potentially rule such a clause invalid. Here are some notable reasons:

  • Unconscionability: If a provision is both procedurally and substantively unconscionable, then it could be ruled unenforceable by a Florida.
  • Fraud: Arbitration cannot be required for fraud claims. If the allegation is outright fraud, the alleged victim has a right to pursue litigation as a remedy.
  • Ambiguity: If the pre-dispute arbitration clause is ambiguous or unclear, it may not be legally enforceable in Florida.

 Contact Our Florida Commercial Arbitration Attorney Today

At Pike & Lustig, LLP, our Florida business arbitration lawyer is a devoted advocate for clients. Your rights and interests should always take the top priority. Have any specific questions about the enforceability of a pre-dispute arbitration provision? We are here to help. Contact us now for your confidential consultation. We handle commercial arbitration throughout South Florida.



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