— A Tesla class action lawsuit has survived a motion to dismiss, but not by much.
The Tesla forward collision warning lawsuit will continue based on an omission-based deceptive practices claim.
The class action lawsuit includes all Tesla vehicles which suffer from "phantom braking" events, which are false activations of the forward collision warning systems.
According to the lawsuit, customers who also have Tesla insurance policies are forced to pay more because the cost is based on how a customer drives. The plaintiff contends the false forward collision warnings cause drivers to pay increased insurance premiums.
The lawsuit alleges Tesla engaged in an unfair practice when it “advertised that its Tesla Insurance product would provide Plaintiff and the other Tesla Insurance Subclass members reduced insurance premiums based on their actual driving behavior.”
This occurred even though Tesla knew its vehicles allegedly had the false collision warning defect and that Santiago would pay higher premiums as a result.
The class action also alleges this “imposed a lack of meaningful choice on [Santiago] as [Tesla] exclusively advertised its Tesla Insurance product as the sole product that could utilize the sensors on its vehicles to provide driving-behavior based insurance….”
According to the plaintiff, “[w]hile information about the exact number of false collision warnings is within [Tesla’s] sole custody and control, [his] premiums have consistently increased due to false collision warnings he experienced.”
He further alleges “because of false collision warnings, [he] paid $319.45 in insurance premiums to Tesla Insurance in August 2024 when he was assigned a Safety Score of 67,” and “[i]n October 2024, when he did not experience any false collision warnings, his insurance premium went down to $175.70 with a Safety Score increasing to 85.”
Tesla filed a motion to dismiss the unfair practices claim under the Illinois Consumer Fraud and Deceptive Business Practices Act, and Judge Georgia N. Alexakis granted Tesla's motion.
Tesla notes how the claim was previously dismissed, but the judge allowed the plaintiff to modify and refile his allegations. But the automaker says the plaintiff failed to fix the problems the judge previously identified.
The unfair act Santiago alleges is Tesla “advertised that its Tesla Insurance product would provide [Santiago] and the other Tesla Insurance Subclass members reduced insurance premiums based on their actual driving behavior,” when Tesla knew they would pay inflated premiums because of the alleged forward collision warning defects.
According to the forward collision warning lawsuit:
"Tesla’s 'conduct of actively advertising its Tesla Insurance product on the same website as where it advertised the collision warning features of its Tesla Vehicles while omitting any facts about the False Collision Warning Defect … was unscrupulous and unethical.'”
The judge ruled even though Santiago labels his claim as an “unfair act,” his allegations as to Tesla’s insurance-related false advertising still “sound[] in fraud.”
"Instead of pointing to a particular advertisement or communication, he only generally alleges that Tesla “advertised” that its insurance program would reduce his premiums. He does not allege when, where, or how this advertisement reached Santiago, and such barebones allegations of deceptive conduct fall short." — Judge Alexakis
According to the judge, if the plaintiff has neither seen nor heard a deceptive statement, he cannot have relied on the statement and cannot prove the statement was the proximate cause of his injury.
Unlike the allegations supporting his omission-based deceptive practices claim which remains, "Santiago does not say that he relied on or was otherwise influenced by Tesla’s advertisement when deciding to purchase Tesla insurance."
The Tesla forward collision warning lawsuit was filed in the U.S. District Court for the Northern District of Illinois (Eastern Division): Joshua Santiago v. Tesla, Inc.
The plaintiff is represented by McGuire Law, P.C.