Tesla on Trial! Federal Judge OKs Repair Monopoly Case
A federal judge approved an amended class action antitrust suit filed by Tesla owners, clearing the way for a trial. Also: Appeals Court ruling on DMCA could upset pro-repair exemptions.
A federal judge for the Northern District of California cleared the way for a class action lawsuit to proceed that seeks relief from what it claims is Tesla’s unlawful monopoly on aftermarket parts and repair.
In a ruling dated June 17th, U.S. District Judge Trina Thompson found that the plaintiffs in the case VIRGINIA M LAMBRIX, et al. v. TESLA, INC., a group of Tesla owners living in California, Colorado, Florida, and Maryland, “provided direct and indirect evidence of monopoly power in the Telsa Repair Services and Tesla-Compatible Parts markets,” under the terms of the federal Sherman Act as well as California’s Cartwright Act and Unfair Competition Law (UCL). In so doing, Judge Thompson denied a motion by Tesla and its attorneys to dismiss the case.
The ruling sets up a trial over widely-documented practices by Tesla that restrict the ability of vehicle owners and independent repair shops to service, maintain and repair Tesla vehicles. It marks a reversal of fortune for the plaintiffs following an earlier ruling in December, 2023 to dismiss the case.
In that ruling, Judge Thompson found that the plaintiffs “failed to show either that the alleged problems were ‘not generally known’ by the Tesla owners when they bought their vehicles, or that they could not predict the costs to keep their vehicles running.”
Want to get paid content for free? Refer two readers to Fight to Repair and get access to our entire catalog of paid articles and podcasts for one month. Refer ten readers and you get eight months of paid content at no cost!
She also ruled, in December, that the plaintiffs customers could not prove that Tesla coerced them into using its services and parts simply because they had bought their vehicles in the first place.
Despite ruling in Tesla’s favor, the judge invited the plaintiffs to address those issues and resubmit their complaint for consideration. In her latest ruling, Judge Thompson said that the plaintiffs proved that they were not generally aware of the costly restrictions on repair, maintenance and aftermarket parts that Tesla imposes.
In addition to citing evidence such as news articles that supported the notion that Tesla buyers are “generally unaware of the aftermarket restrictions,” the Tesla owners showed how Tesla marketing “misleads consumers into believing their EVs requir little to no maintenance, have fewer moving parts, and receive over-the-air software updates,” while talking up Tesla’s things like free manuals, an electronic parts catalog, and Tesla’s Toolbox diagnostic software. Despite provisioning such tools and information, the plaintiffs allege that Tesla undercuts their utility by “restrict(ing) individual shops and car owners from conducting everything but the most minimal repair.”
The ruling sets up a court case that shines a light on the automotive- and EV sector’s anti-repair practices. Tesla has been a vocal opponent of automotive right to repair laws. The company sent a letter to its Massachusetts customers in October 2020 ahead of a ballot measure to expand that state’s automotive right to repair law urging them to vote “NO.” The letter argued - without evidence - that the measure would open vehicles to cyber attacks. The ballot measure, Question 1, ultimately passed with the support of close to three quarters of voters: 74% yes to 26% no.
In the meantime, vehicle owners and independent repair professionals have highlighted how Tesla’s restrictive repair ecosystem and the lack of consumer choices leads to exorbitant costs. Videos by the YouTube-r Rich Rebuilds, an independent EV repair shop, have highlighted a $700 repair for a new Tesla Model 3 in which the customer was quoted $16,000 to fix the same problem by the authorized Tesla dealer, or a $22,500 quote to replace a Tesla battery that the independent shop completed for just over $5,000.
Services and other revenue increased by $2.2 billion or %37 in 2023 and accounted for around 9% of Tesla’s $96.8 billion in revenue last year. That was driven, in part, by “higher used vehicle revenue driven by increases in volume, body shop and part sales revenue, non-warranty maintenance services revenue,” the company reported. CEO Elon Musk recently told shareholders that the company’s services arm had become profitable, declaring it "kind of a big deal."
Other News
Federal Automotive Repair Law Gains Bipartisan Support
The proposed federal REPAIR Act picked up the support of two more co-sponsors: Reps. Elise Stefanik, (R-New York), and Bill Foster, (D-Illinois), joined as new supporters, bringing the total to 54 co-sponsors (27 Democrats, 27 Republicans). Known as the Right to Equitable Professional Auto Industry Repair (REPAIR) Act, the bill is a federal version of auto right to repair laws passed in Massachusetts and - more recently - Maine. It requires manufacturers to allow vehicle owners to access their car data. Rep. Warren Davidson (R-Ohio) said that the bill ensures vehicle owners can access and share their data and use third-party repair shops, tools, and parts. As of this past week there are 54 co-sponsors with an even split between Democrats and Republicans, offering hope for it to become law.
Appeals Court Ruling Could Upend Repair-Focused DMCA Exemptions
A ruling in a case challenging the Librarian of Congress’s exemption of certain medical device software from DMCA anti-circumvention provisions during the recent triennial review could jeopardize the right of independent repair providers to continue servicing medical devices. An October, 2021 exemption to the Digital Millennium Copyright Act (“DCMA”)’s prohibition on bypassing technological protections on digital copyrighted material covered certain classes of copyrighted works, e.g., medical software in devices like CT scanners and MRI machines. Following the October 2021 order issuing the exemption, two medical trade associations filed suit, claiming the exemption for medical device repair is unlawful under the Administrative Procedure Act (APA). A District Court ruled the claims were barred by sovereign immunity, stating the Library of Congress is part of Congress and not an agency under the APA. In a recent ruling, the Court of Appeals disagreed, stating DMCA rules are subject to APA review, thus allowing for judicial review of the exemptions. That creates a legal pathway for challenging DMCA exemptions, impacting the right to repair medical devices. The case was remanded to the District Court for further proceedings to address the APA claims regarding the exemptions themselves.
Forbes: Stopping the fastest growing source of waste in the world
Ugo Vallari, co-founder of The Restart Project, was interviewed in Forbes on the power of repair in empowering communities to resist waste—especially e-waste. After years of organizing and advocacy, new right-to-repair laws in Europe are set to enhance product repairability, decrease waste, and shift consumer behavior away from disposable products, Ugo and his colleagues are advocating for longer-lasting electronics and encouraging a sustainable approach to consumption and production.
Circular Fashion Requires Holding Companies Accountable, says New Report
Extended producer responsibility (EPR) laws, are necessary to cut down the massive amount of waste created by textile manufacturing according to a new report from the Ellen MacArthur Foundation. Currently, 80% of clothes made globally “leak” out, ending up as waste or getting incinerated. This report says that the answer is to move toward circularity by placing costs on waste and incentivizing recycling and sorting of textile waste. Repairing clothing would be an essential piece to ensuring circularity in fashion. The status quo of the fashion industry is to use large amounts of virgin materials to create clothes with incredibly short lifespans. A model of circularity would instead extend the lifespan of clothes while also minimizing the environmental impact extraction of raw materials and disposal of textiles.
Freedom Over Our Software is Essential, Says Cory Doctorow
For both physical or digital products, the growth of digital rights management (DRM) is spelling problems for all of us. Whether it’s needing an internet connection to play a video game that you paid for, being actively kept from repairing farm equipment that sustains your livelihood, or making a tow hitch for your car potentially dangerous to use, the growth of software in physical products has meant DRM is continuing to spread. Author and digital rights advocate Cory Doctorow write this week about his viral talk from 2004, and how he still remains hopeful for the future of tech.
For True Freedom We Need Power Sharing Liberalism
The New Republic highlights efforts to enshrine a right to repair as part of an emerging American “supermajority consensus around policies that reflect homespun values of fairness, inclusion, and sticking up for the person getting the short end of the stick.” As evidence, author Danielle Allen points to state-level ballot measures that have “secured supermajority support include cannabis legalization in multiple states, a decision in Mississippi to replace Confederate iconography on the state flag with new forward-facing iconography, and a decision in Massachusetts to give small auto shops access to the data in cars so that they can continue to compete in the repair business with the big auto manufacturers,” alongside efforts to restore voting rights to former convicts in Florida and ballot measures enshrining reproductive rights in Kansas and Ohio. “Each of these decisions is about affirming not material well-being but core freedoms (personal and political) and inclusion in the political community. This is liberalism. Twenty-first-century liberalism. Power-sharing liberalism,” Allen writes.