Products Liability Law Daily Wrap Up, SECURITIES FRAUD—MOTOR VEHICLES—9th Cir.: Court affirms dismissal of shareholder suit over Tesla’s self-driving car, (Dec 9, 2025)

By Suzanne Cosgrove

Plaintiffs had alleged Tesla and Elon Musk misled investors from 2019 to 2023 by misrepresenting the safety, capability and development of Tesla’s autonomous driving technology.

The U.S. Court of Appeals for the Ninth Circuit has affirmed the dismissal of a suit brought by the Oakland County Voluntary Employees’ Beneficiary Association and Oakland County Employees’ Retirement System, with the circuit court ruling that the shareholders failed to allege falsity in three categories of statements at issue in the case: safety statements, capability statements and timeline statements (Oakland County Voluntary Employees' Beneficiary Association v. Tesla Inc., No. 25-55 (9th Cir. Dec. 2, 2025)).

As reported in March 2023, the suit alleged the company and certain of its principals misled investors about the company's "business, operations, and prospects" by significantly overstating the efficacy, viability and safety of the company's autopilot and Full Self-Driving (FSD) technologies. The company’s stock fell on media reports that a Tesla vehicle had driven itself into a tree, killing two passengers. Its shares fell again on news that the National Highway Traffic Safety Administration (NHTSA) opened a formal investigation into Tesla's Autopilot System.

Falsity claims insufficient. In its ruling, the Ninth Circuit found the plaintiffs did not sufficiently allege that Tesla’s safety statements were false or misleading when made. Musk did not state that Tesla’s autonomous driving technology (ADT) could self-drive safer than humans, the court noted. Rather, Tesla represented that its ADT technology requires “a fully attentive driver.”

“Fairly considered, Musk represented that a driver with the technology is safer than a driver without it,” the court stated.

Safety capacity. Musk’s later statements about the ADT’s safety capabilities likewise cannot establish falsity, the Ninth Circuit maintained, citing a similar securities fraud lawsuit brought before the court, Weston Fam. P’ship v. Twitter, Inc., 29 F.4th 611, 621 (9th Cir. 2022). In that case, the panel affirmed the district court’s dismissal of a lawsuit that had alleged Twitter, Inc., misled investors by hiding the scope of software bugs that hampered its advertisement customization. (“[I]t is simply not enough to assume or implausibly infer that the defendants must have known about these issues... based on later facts or developments.”) Similarly, Musk’s statement that the ADT was “capable of zero intervention drives” did not suggest that the ADT had already reached full autonomy, the court said.

Timeline statements. Further, the court found the plaintiffs failed to adequately allege that Tesla’s timeline statements were false or misleading when made. Because at least four of the eight statements cited were opinions, they are governed by Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 575 U.S. 175, 183–88 (2015), the court stated. Plaintiffs failed to allege that Musk did not believe reaching full autonomy was possible on his suggested timeline. Nor did the plaintiffs sufficiently allege that the opinions are actionable under Omnicare.

Risks disclosed. Finally, the district court correctly determined that the plaintiffs failed to allege scienter, the Ninth Circuit stated. “Tesla repeatedly warned investors that the ADT may not proceed as quickly as planned because it involved ‘highly complex state-of-the art technology that was evolving and being developed on a daily basis.’ These risk disclosures undermine any inference of scienter,” the court stated.

This is case No. 25-55.

Attorneys: Carol C. Villegas (Labaton Keller Sucharow, LLP) for Oakland County Voluntary Employees' Beneficiary Association. Alex Spiro (Quinn Emanuel Urquhart & Sullivan, LLP) for Tesla Inc.

Companies: Tesla Inc.

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