A detailed explanation of Tesla's $200 million sky - high compensation case: All the boasts made by Elon Musk have become evidence.
Tesla Loses Lawsuit for the First Time, Ordered to Pay $243 Million in Compensation!
Elon Musk's exaggerated claims over the years have now become evidence against Tesla. Tesla's undefeated record in lawsuits related to its driver - assistance systems has come to an end, potentially setting a precedent for similar liability lawsuits in the future.
Tesla Loses Lawsuit for the First Time
Last Friday, a federal jury in Miami, Florida, ruled that Tesla was partially responsible for a fatal car crash in Florida in 2019 and ordered the company to pay a total of $243 million in compensation to prevent similar future actions.
After a three - week trial and two days of deliberation, the eight - member jury found that Tesla was one - third responsible for the accident, while the driver was two - thirds responsible. The driver of the Tesla, who caused the accident while bending down to pick up a dropped phone, has been separately sued.
The jury determined that the plaintiff's pain and suffering, as well as emotional distress, totaled $129 million. However, since Tesla was only partially liable, it was ordered to pay one - third of the compensation, or $43 million in compensatory damages. Coupled with $200 million in punitive damages, Tesla must pay a total of $243 million to the plaintiff.
Tesla subsequently issued a statement saying, "Today's verdict is wrong and will only impede the progress of automotive safety, endangering Tesla's and the entire industry's efforts to develop and implement life - saving technologies. Given the significant legal errors and irregularities in the trial, we plan to appeal."
It's necessary to explain the unique punitive damages system in the U.S. legal system, as few other countries have similar high - value additional compensation. In U.S. civil litigation, especially in cases involving large corporations and serious misconduct, in addition to awarding the plaintiff actual damages, the court may also impose substantial punitive damages, usually not exceeding nine times the actual damages.
Punitive damages aim to punish the defendant's malicious fraud, intentional or grossly negligent actions, serving as a deterrent to the company and society to prevent similar behavior from recurring. It should be emphasized that this compensation is different from administrative fines. It is paid to the plaintiff, not the government, but lawyers usually take 30% to 40% of the amount.
Typically, companies will appeal, resulting in a significant reduction in punitive damages. Tesla does not accept this verdict and has announced an appeal. Therefore, it would not be surprising if the $200 million in punitive damages is significantly reduced after the appeal.
The well - known Liebeck v. McDonald's case in the Chinese internet sphere is a classic example. In 1994, a 79 - year - old woman was scalded by hot coffee from McDonald's. After the lawsuit, she received $200,000 in actual damages and $2.7 million in punitive damages. The court found that McDonald's had received hundreds of coffee scalding complaints but failed to take effective measures to protect customers' safety, thus requiring additional punishment. However, after McDonald's appeal, the punitive fine was reduced to $480,000.
The Monsanto case is also a typical example of punitive damages. A gardener in California developed non - Hodgkin lymphoma (NHL) after long - term exposure to glyphosate in Monsanto's herbicide Roundup. In 2018, a California court ruled that Monsanto had failed to adequately warn about the carcinogenic risks of glyphosate and had deliberately concealed scientific evidence, ordering it to pay $39 million in compensation and $250 million in punitive damages. After two appeals, the punitive damages were reduced to $21 million.
The victory in this case set a precedent for tens of thousands of subsequent lawsuits. In 2019, Monsanto was again ordered to pay $55 million in compensation and $1 billion in punitive damages to two plaintiffs in a Roundup carcinogenicity case. The pressure from a large number of lawsuits prompted Monsanto to be sold to Bayer. In 2020, Bayer agreed to pay $10.9 billion to settle approximately 125,000 related lawsuits.
An Innocent Couple Separated by Death
After understanding the unique punitive damages in the United States, let's look at the details of the Florida car crash to understand why the jury found Tesla partially responsible. Musk's past exaggerated descriptions of Autopilot were the main basis for the $200 million fine.
On the evening of April 25, 2019, at around 9 p.m., George McGee was driving a Tesla Model S on a remote rural road in Key Largo, Florida. He had driven this stretch of road at least thirty times and casually activated Tesla's Enhanced Autopilot driver - assistance system. However, during the drive, his phone slipped onto the car floor.
McGee later told the police that he bent down to pick up the phone and didn't notice the upcoming intersection. By the time he looked up, it was too late. His Tesla ran through a stop sign at the intersection and crashed directly into a parking lot at the side of the road at a speed of 100 km/h, flipping a parked Chevrolet Tahoe SUV on its side.
A couple standing on the other side of the Chevrolet was tragically separated. A 22 - year - old woman, Benevides Leon Naibel, was hit and thrown more than 20 meters, dying on the spot. Her boyfriend, 33 - year - old Dillon Angulo, suffered multiple fractures and a brain injury and underwent long - term treatment and rehabilitation.
Obviously, driver McGee was directly responsible for this terrible tragedy, and he admitted his negligence. Tests showed that McGee was not drunk, but he thought Tesla's Enhanced Autopilot would automatically brake when it detected an obstacle. Angulo and Naibel's families sued the driver that year and later reached a settlement. However, the victims' families believed that Tesla should also be partially responsible, so they subsequently sued Tesla.
They argued that Tesla's marketing of the Autopilot driver - assistance system misled drivers into thinking that the system was fully autonomous. Moreover, at the time, the system was in the "Beta" stage, meaning it had not undergone safety testing and was not suitable for use on roads with intersections or cross - traffic.
The stretch of road where the accident occurred was clearly not suitable for the Autopilot at that time. The plaintiff's lawyer wrote in the lawsuit, "Tesla allowed the activation of its autopilot on unsuitable roads, knowing that it could lead to collisions and cause harm to innocent people who did not choose to participate in Tesla's experiments."
Tesla clearly disagreed. In a statement, the company said, "The evidence clearly shows that this accident was not related to Tesla's autopilot technology. Like many unfortunate accidents since the invention of the mobile phone, this accident was caused by driver distraction."
"McGee admitted his responsibility. He was pressing the accelerator while looking for his dropped phone, which not only caused the vehicle to speed but also overrode the vehicle's systems. In 2019, there was no safety system that could have prevented this tragedy."
Musk's Statements Become Evidence
Although Elon Musk was not present at the trial, he was the focus of the court for the past three weeks. Both sides' arguments frequently mentioned Musk's name and his many statements about Autopilot.
During the opening statements and throughout the trial, the plaintiff's lawyers and expert witnesses cited many of Musk's past promises regarding autonomous driving and Tesla's autopilot technology. They accused Musk and Tesla of making false statements to customers, shareholders, and the public, exaggerating the safety and functionality of autonomous driving and encouraging drivers to overly rely on the system.
The trial focused on how Tesla and Musk marketed their driver - assistance software. Although Autopilot is a driver - assistance system that requires the driver to remain highly focused and be ready to take over the vehicle at any time, and Tesla emphasized this in its user manual, it still named the system "Autopilot."
What statements of Musk did the plaintiff's lawyer present in court to convince the jury?
In 2016, when announcing the Autopilot 2.0 hardware, Musk described its sensor system as "superhuman." In the same year, in a public interview, he said, "Our sensors and software will ultimately surpass human capabilities in detecting and responding to the environment. At that point, the Model S and Model X will be able to drive autonomously more safely than a human driver."
In 2016, during an earnings call, Musk said, "I think we'll be able to prove that we can achieve full self - driving... From a hardware perspective, the problem is largely solved." In 2019, he wrote online, "Tesla's Full Self - Driving will work. The software is gradually improving, and we're close to solving it."
The most controversial piece of promotion was a 2016 official Tesla video claiming that its hardware platform supported full self - driving, stating that "the driver is only sitting in the driver's seat for legal reasons." However, the video was later analyzed by multiple parties as misleading, as the hardware could not actually support the scenarios demonstrated in the video. Several former Tesla employees admitted that the route in the video had been pre - mapped, and the vehicle in the video was not truly making autonomous path decisions.
This statement has been widely cited to criticize Tesla's misleading marketing strategy, which implies that its vehicles have full self - driving capabilities when in fact they still require human supervision. This marketing strategy has become one of the key pieces of evidence in subsequent legal lawsuits and regulatory investigations, and the court and regulatory agencies have found that Tesla misled consumers.
Musk's statements at the time were intended to show that Tesla's driver - assistance system could eventually reach the level of autonomous driving. However, the plaintiffs argued that Musk exaggerated the technological capabilities of Tesla's Autopilot, misleading the public's safety expectations.
The driver of the accident, George McGee, also said during the trial, "My understanding of Autopilot was that if I made a mistake or did something wrong, the vehicle would assist me. If I made a mistake, the car should have helped me. In this accident, I really felt it let me down."
Tesla's lawyer emphasized in the defense, "McGee was the sole responsible party for the accident, and he admitted his responsibility. He had driven through that intersection dozens of times. It was his act of bending down to pick up the phone that caused the accident. In 2019, there was no safety system that could have prevented a similar accident. The plaintiff's lawyer is fabricating lies to shift the blame to the vehicle."
The jury ultimately sided with the plaintiff. On the most crucial question of whether Tesla had put a defective vehicle on the market and whether that defect was the legal cause of the plaintiff's harm, the jury gave an affirmative answer.
Most Lawsuits End in Settlement
This is not Tesla's first time being sued for car crashes related to its Autopilot or FSD driver - assistance systems. However, the Florida case is the first time Tesla has lost a related lawsuit and been found partially responsible for an accident. The sky - high punitive damages may prompt more lawsuits in the future.
In the past few years, Tesla has been involved in more than twenty civil lawsuits related to similar car crashes, sued by accident victims or the families of the deceased. However, Tesla has always insisted that these were due to the owners' failure to take over the vehicle in time and had nothing to do with the driver - assistance systems. In most cases, Tesla has reached settlements, and few cases have gone to trial.
In 2023, a jury in Riverside, California, found that Tesla's Autopilot did not have manufacturing defects and was not responsible for a fatal Tesla crash into a tree in 2019. At that time, a Model 3 in Autopilot mode crashed into a tree after leaving the highway at a speed of 120 km/h and caught fire. In that case, the jury focused on manufacturing defects at the technical level and did not discuss Tesla and Musk's misleading marketing.
In March 2018, Walter Huang, a 38 - year - old Chinese - American Apple engineer, was driving a 2017 Tesla Model X. He crashed head - on into a concrete median on Highway 101 at a speed of 100 km/h. The car's battery exploded and caught fire, and the scene was extremely tragic. Huang died in the hospital, leaving behind his wife and two children.
According to the accident investigation, Huang was operating his phone at the time of the crash and failed to take over the vehicle and brake in time to avoid the collision. However, Huang's widow later sued Tesla for using customers as beta testers. She said that Huang had previously noticed recognition errors in the Model X's Autopilot, but Tesla told him that they would fix the bugs in the future and asked him to continue driving.
Why is the $200 million fine in the Florida case so significant for Tesla? The family of Walter Huang, who had an accident in 2018, reached a settlement with Tesla last year after six years of litigation. The Florida car crash in 2019 persisted until the end and achieved an initial victory in the lawsuit.
For years, Tesla and Musk have been promoting Autopilot and its other driver - assistance software, Full Self - Driving, as a major advancement in automotive safety. Musk has claimed that Tesla vehicles using this software are safer than human drivers and has staked the company's future on developing a safe and autonomous taxi fleet.
Federal regulators and California regulatory authorities have long questioned the safety of Tesla's systems. According to a report by the National Highway Traffic Safety Administration (NHTSA) last year, Tesla's driver - assistance systems have "critical safety gaps," leading to at least 467 collisions, including 13 fatal accidents. Whether Autopilot and FSD were directly responsible in these accidents remains to be officially investigated and determined by U.S. regulators.
