Federal Judge Dismisses Tesla Shareholders’ Lawsuit on Model 3 Production—Again

March 25, 2019, 9:45 PM UTC

A federal judge dismissed for the second time Monday a shareholder lawsuit against Tesla that claimed the automaker made “false and misleading” statements about its production of the Model 3 car.

Charles Breyer, a U.S. District Court judge in San Francisco, dismissed a suit that was brought on behalf of investors who bought Tesla shares between May 2016 and October 2017, Reuters said Monday. The lawsuit claimed that, “contrary to Defendants’ representations that the Company was prepared for the launch of its Model 3 sedan, in reality, the Company had severely inadequate inventory and was woefully unprepared to launch Model 3 sedan as anticipated.”

Last August, Breyer dismissed the original version of the lawsuit, but allowed the plaintiffs to amend the lawsuit in October. At the time, Breyer said that the plaintiffs didn’t show that Tesla knew meeting its ambitious production goals for the Model 3 would be impossible.

The amended lawsuit said Tesla shareholders bought the stock at prices that were “artificially inflated” by allegedly misleading statements from the company. Tesla argued that it was clear about the obstacles faced in meeting its Model 3 production targets, including statements from CEO Elon Musk about the company’s “production hell” in manufacturing the Model 3. Breyer wrote Monday that the fraud claims overlooked the company’s “repeated warnings about Model 3 production risks.”

Last October, Tesla was said to be facing an FBI investigation over statements it made about Model 3 produciton levels. The company also settled with the SEC charges it misled investors after Musk tweeted he had secured funding to take Tesla private.

Tesla’s stock closed down $4.11 a share, or 1.6%, at $260.42 a share Monday.