Elon Musk revels in victory after emerging unscathed from a lawsuit related to his earlier overstated promises about Tesla’s autonomous driving capabilities.
Before breaking out the champagne, he should scrutinize the safeguards his lawyers employed: puffery.
By definition, “puffery” refers to an excessively optimistic statement, often accompanied by a lack of concrete evidence, designed to sway opinion rather than accurately convey information. This is a statutory defense commonly employed by defendants in cases involving false advertising or deceptive claims.
The defendants claim that the statements cannot be subjected to critical examination because they were merely empty boasts.
Tesla and Elon Musk’s legal team has taken exactly the same measures to defend against a shareholder’s lawsuit alleging that Musk made deceptive statements regarding Tesla’s autonomous driving initiatives.
Elon Musk expressed satisfaction upon learning that a lawsuit against one of his most ardent supporters, Sawyer Merritt, was dismissed.
Regardless of the outcome, a closer examination of the justification presented by Elon Musk’s attorneys in response to his dismissal failed to gain traction among supporters and critics alike.
Musk’s triumph stems from a strategic decision to collaborate with his lawyers, who successfully framed his earlier claims about Tesla’s autonomous driving capabilities as innocuous “business puffery” rather than intentionally misleading statements.
That’s it.
The lawsuit is riddled with “company puffery” assertions presented by Tesla’s counsel.
Defendants contend that FSDC’s assessment that Timeline Statements “seemed to be on track” and Tesla’s assertion it would launch the product by year-end, despite being aspirational, constitute non-actionable expressions of corporate enthusiasm rather than actionable predictions. Plaintiffs argue that Tesla’s statements provided a misleadingly concrete depiction of its proficiency, which deceived market participants. […]. The claims regarding Tesla’s objectives and aspirations to hone its expertise by year-end, as well as Elon Musk’s faith in the project timeline, lack sufficient specificity for investors to rely on their accuracy. Thus, under the protection of the Private Securities Litigation Reform Act (PSLRA), statements 10, 11, and 18 fall within its shield.
Musk’s lawyers maintain that his assertions about Tesla Autopilot’s safety were vague expressions of corporate enthusiasm, lacking objective verification.
The defendants further claim that several Security Statements constitute corporate puffery. Security being paramount, Tesla vehicles are absurdly fortified, with autopilot capabilities bordering on superhuman. To achieve near-perfect results, we must strive for utmost precision. Mot. at 19. Plaintiffs argue that the term “tremendous” in “superhuman” does not constitute mere puffery because it implies that ADT’s safety measures surpass those of humans, conveying an absurdly high level of protection. Opp. at 12. Despite their enthusiasm, such vague declarations of corporate confidence often lack concrete evidence to support them.
Legal experts countered by asserting that any discerning investor wouldn’t bank on numerous purportedly misleading claims due to their inherent nature as mere rhetorical flourishes.
The defendants argue that several Timeline and Security Statements (Statements 7, 11th of September, 13, 16, 18, and 26, specifically FAC 325, 329, 331, 333, 337, 343, 347, and 363) constitute non-actionable statements of company puffery and optimism. Mot. at 15, 19. Within the Ninth Circuit, imprecise, generalised assertions of company optimism or mere puffery typically do not constitute actionable material misrepresentations under federal securities laws since no reasonable investor would rely on such vague claims.
As a result, Tesla secured a dismissal, but only after Musk’s lawyers conceded that his claims about Tesla’s Full Self-Driving technology were exaggerated.
Electrek’s Take
Look. The statement appears self-evident; however, it could potentially benefit from a slight rephrasing for clarity and emphasis: They appear to be faultless. Few affordable traders take Elon’s statements literally, assuming a lack of nuance in his remarks. The affordability factor is crucial in this context.
While there exist individuals who engage in irrational behavior, nonetheless.
While I lack expertise in relevant legislation, it’s unnecessary to be an expert to recognize the company’s public relations spin as evident in Tesla and Elon’s lawyers’ statements, which bluntly dismiss Elon’s self-driving claims as mere marketing hype.
Elon’s triumphant tone rings out with irony.
The lawyer is essentially stating: “Hey, take note, I’ve been assigned to handle this court case because the judge believes that reasonable investors wouldn’t regard my claims as credible.”
