Tesla’s direct selling model helps it thwart customer lawsuits

Ford argues that arbitration is a better way to resolve disputes. Settlement of claims “should be fair, prompt, efficient and commensurate with the dispute,” Ian Thibodeau, a Ford spokesman, said in an email. “Arbitration often achieves these goals more quickly and efficiently than the court system.”

In another recent case, however, a federal judge in Illinois denied a Subaru motion to compel arbitration from an owner who had signed an arbitration agreement with a dealership. The owner claimed her privacy was breached by Subaru technology designed to tell if drivers are paying attention. The judge ruled that an agreement between the dealer and the buyer does not apply to disputes with the manufacturer.

Because of its direct-selling model, Tesla stands out from much of the industry, attorneys said.

“Tesla appears to be unique among automakers in their use of arbitration clauses to avoid liability in court,” said Donald Slavik, who represents Derrick Monet, whose wife, Jenna Monet, was killed when their Tesla hit a parked fire truck on I-70 in Indiana.

A lawsuit filed by Mr Monet, who was seriously injured, attributed the crash to Tesla’s Autopilot system, which can steer, brake and accelerate a car on its own. Tesla, which is contesting the lawsuit, has not yet attempted to force the case into arbitration. The company argued that Autopilot improves the safety of its cars.

Kristin Hull, managing director of Nia Impact Capital, an investment firm, pushed Tesla to eliminate forced arbitration for employees, arguing that it conceals issues investors should be aware of. In August, nearly 40% of shareholders supported a Nia-proposed resolution that would have asked Tesla to investigate whether forced arbitration affects employees’ ability to seek redress for discrimination or other claims.

“As investors, we have no idea about corporate culture and what’s going on,” Dr Hull said. “Managers are not held accountable.”