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Tesla drops lawsuit against critic after judge asks for evidence

Tesla drops lawsuit against critic after judge asks for evidence


The company got a restraining order in April, but now it’s walking away

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Photo by Sean O’Kane / The Verge

Tesla has dropped a lawsuit against a prominent short-seller and critic of the company, one it claimed struck an employee with his car, according to paperwork filed on Friday night with the Alameda County Superior Court. The company’s decision to drop the case comes two weeks after the judge asked Tesla to turn over evidence to back up its claims.

Tesla says it has video and audio evidence that would do just that. But in a letter to the court on Friday night, a copy of which Tesla provided to The Verge, the company’s lawyers disagreed with the judge’s order to produce the evidence.

Tesla’s legal team argued that producing the evidence would expose information about employees involved in the case that was “never intended for public consumption.” The company’s lawyers also claim the employees have been subjected to “unwanted publicity and online harassment” following the original complaint.

The company declined to comment further, and instead referred The Verge to the Friday filing.

The short-seller posted under a pseudonym, but his real identity was outed in court

In April, Tesla asked the court for (and was granted) a temporary restraining order against a prominent critic who was previously only known by the Twitter handle @skabooshka. In requesting the restraining order, Tesla revealed to the court that the man who ran that account was a California resident named Randeep Hothi.

Earlier that month, Hothi tweeted photos he took of a company-owned Model 3 that Tesla appeared to be filming for its then-upcoming “Autonomy investor day.” Hothi claimed he saw the driver break local speed limits and implied that Tesla might misrepresent the footage during the event.

Tesla told the court that Hothi “stalked, harassed, and endangered” the employees who were in that Model 3. The company alleged he “pursued these employees on the public highway for about 35 minutes, variously driving ahead of, beside, and behind them, and swerving dangerously close to the vehicle.”

Hothi also trespassed at Tesla’s Fremont, California factory a number of times before the April run-in, the company claimed in its original filing. (Most of the filings to the docket can be viewed here.) In August 2018, Tesla said it found an Arlo security camera stuck to a utility pole outside the factory and that an Arlo customer service representative revealed the camera belonged to Hothi. In January 2019, Tesla said it found another security camera hidden in a utility box in one of the factory’s parking lots, which the company’s own security cameras eventually caught Hothi removing.

Tesla says it has evidence that Hothi hid cameras at its California factory

In February 2019, Tesla found Hothi in his car in one of the factory’s parking lots. Two security employees approached him, with one taking photographs, and told him to leave. Tesla said Hothi did not roll down his window and, instead, “drove his car quickly and recklessly out of the parking spot.” The company also said Hothi struck one of those employees with his car.

Hothi is one of many people who are short Tesla’s stock, meaning he’s essentially placed a bet that the company’s share price will go down by a certain date. He has posted photos and videos of Tesla employee parking lots in the past as a way of estimating whether the company is operating at full production.

Hothi and other short-sellers have also photographed parking lots where Tesla stashes inventory, which they see as an indicator of demand (or lack thereof) for the company’s cars.

Tesla CEO Elon Musk has spent years taunting the people who short Tesla’s stock, often promising to “burn” their positions by announcing good news. But the community seems to grow the more Musk antagonizes, and it especially blew up following last year’s “funding secured” debacle, which some of the more prominent shorts have said was the reason they started following Tesla closely.

They organize by using the Twitter “cashtag” $TSLAQ, and post research to a website with the same name. The community quickly rallied around Hothi when the restraining order hit, and one formerly pseudonymous poster even started a GoFundMe for Hothi that has now eclipsed $100,000. (That poster was @MontanaSkeptic, aka Lawrence Fossi, whose identity was revealed after Musk called his boss to complain.)

In response to Tesla’s allegations, lawyers for Hothi wrote in a May court filing that he’s “a citizen journalist whose research and data have revealed discrepancies in claims Tesla and its CEO have made about the company’s manufacturing operations, its technological capabilities, its financial health, and its treatment of employees and customers.” They claimed Hothi’s research “informed public discussion about technology in Silicon Valley and has won for him a wide public following.”

Hothi’s lawyers said Tesla “painted a lurid picture” of their client, and argued the company has “a history of using the legal system to silence its critics.” They cite the example of Martin Tripp, a former Tesla employee-turned-whistleblower who was sued by Tesla for allegedly hacking company systems and stealing trade secrets. (Tripp has since countersued, alleging defamation.) They also pointed out harassment that Hothi endured as a result of the restraining order, including being called a terrorist. Musk even emailed Volkswagen CEO Herbert Diess about Hothi in 2018 after he found out his brother works for the German automaker.

Hothi’s lawyers say he’s a “citizen journalist”

Hothi’s lawyers also claimed that Tesla security employees gave conflicting accounts of the February incident and that none of his actions during the April encounter with the Model 3 qualified as stalking or violence.

In May, Hothi’s legal team requested that Tesla submit all of its evidence to the court. On July 1st, the court partially granted that request, ordering Tesla to submit “limited and focused” photographic, audio, or video evidence specifically related to the February and April incidents.

Tesla tried to fight this by claiming there was “confidential business information” in the recordings. Hothi’s legal team responded by offering to let Tesla exclude any sensitive information. But on Friday, Tesla’s legal team told the court it won’t produce that evidence because the company was dropping the case completely. Submitting the evidence to the court would have risked the safety and privacy of the employees involved in the case, the lawyers claimed.

Tesla also said it believes it has given Hothi “clear notice not to enter its property and that Tesla will take appropriate action in the future to protect its employees,” and that it will “redouble its efforts to protect its employees through other means.”

Gill Sperlein, Hothi’s lawyer, said in an email to The Verge that “Tesla did not file this lawsuit to protect its employees but rather to discredit Mr. Hothi.” Sperlein also said that “[w]hatever was on the audio tapes that they refused to produce would have demonstrated the first point.” Sperlein told the Los Angeles Times over the weekend that he sent a letter to Tesla notifying the company that Hothi plans to file “a malicious prosecution suit” and is demanding Tesla retain all of its evidence in the case against him.

Correction: Musk called Lawrence Fossi’s boss, but Fossi was not fired. The post has been updated.