- In April, Tesla got a restraining order and filed a lawsuit against Randeep Hothi, alleging he – a short seller, Ph.D. candidate, and outspoken critic of the company – harassed its employees on two occasions.
- Hothi fought back, requesting evidence and a hearing.
- Once Tesla was ordered to produce audio evidence of its allegations, it dropped the suit.
- In its July 19 court filing, Tesla said it disagrees with the court’s order that the company submit audio recordings to support its claim against Hothi because “other evidence amply demonstrates Hothi’s conduct.”
- Publicly available court documents dated April 19 and filed with the Alameda County Superior Court show photo evidence, online postings, and signed witness affidavits from several Tesla employees in support of Tesla’s claims against Hothi.
- A Tesla spokesperson told Business Insider that the company is confident that it has made it clear that Hothi is never to return to its property unless he wants more legal trouble.
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There are hundreds of lawsuits against Tesla, most of them warranty suits or issues with suppliers, but some have become bizarre spectacles for anyone watching the stock.
Tesla’s now defunct suit against Randeep Hothi fits into the latter category.
In April, Tesla accused Hothi of menacing and injuring its employees, and driving recklessly around them as they tested the company’s Autopilot technology on the open road around Tesla’s Fremont, California, factory. The company also accused Hothi – who has been an outspoken critic and active member of the Tesla short-seller community on Twitter under the moniker @skabooshka – of trespassing on its property. These incidents, Tesla alleged, occurred in February and April.
On April 19, it filed a temporary restraining order against Hothi. On May 5, Hothi and his lawyer fought back, describing Hothi as a “citizen journalist” and requesting an evidentiary hearing and limited discovery on the matter.
“Tesla’s accusations here fall into a long and disturbing pattern of using lies and intimidation in an effort to silence its critics,” Hothi’s attorney, Gill Sperlein, wrote.
“This matter plainly has ramifications for beyond the individual Respondent and therefore deserves a long-form evidentiary hearing. Because Tesla controls potentially exculpatory evidence, the parties should have the opportunity to take discovery in advance of the hearing. Hothi provides the following information to establish good cause for the requested continuance, discovery, and long-form evidentiary hearing,” he added.
In a surprising turn of events for what should be a quick legal proceeding, the judge granted Hothi his motion for discovery on July 1.
A few things to keep in mind here:
- Because Tesla was testing its Autopilot function, Hothi and his lawyer knew there were recording devices taking footage of Hothi’s entire interaction with Tesla’s employees, according to court filings.
- Elon Musk has taken issue with short sellers before. Last summer, a short seller who tweeted and wrote under the moniker @MontanaSkeptic1 said in a blog post that his identity had been revealed and that Musk called his boss, an early Tesla adopter. All this in the midst of what Musk called “production hell” as Tesla struggled to launch the Model 3 car.
- Montana, outed as the attorney Lawrence Fossi, helped Hothi raise money for his defense – and they raised a lot.
- Tesla switched law firms in July. It started out being represented by Sideman & Bancroft and ended with Boersch & Illovsky LLP.
Show us the goods
Tesla tried to fight the motion to produce audio and video recordings of the harassment Hothi was accused of. It filed a motion asking the judge to reconsider, saying there was “confidential business information” on the recordings. In response, Hothi filed an opposition motion offering ways for Tesla to shield any sensitive information.
Either way, the court was not really swayed by Tesla’s arguments. On July 18, it ordered Tesla to produce any video recordings, including any taken with an employee cellphone, of the April incident. It also asked Tesla to provide limited audio recordings of what happened as the employees became aware of Hothi’s presence within 50 meters of their car.
By July 19, Tesla balked. It let Hothi’s attorney know that it would not produce any further evidence and dropped the suit. In their letter to the court, Tesla’s lawyers said they did not want to produce any audio.
The Tesla lawyers disagreed with the court’s order that the company submit audio recordings to support its claim against Hothi because “other evidence amply demonstrates Hothi’s conduct,” Tesla’s letter reads.
Publicly available court documents dated April 19 and filed with the Alameda County Superior Court show photo evidence, online postings, and signed witness affidavits from several Tesla employees in support of the company’s claims against Hothi.
From the letter:
While Tesla is confident that the evidence supports the claims made in this case, Tesla has endeavored to make clear that the audio recording contains its employees’ private and personal conversations. As described in Tesla’s briefing, those conversations include personal information and private discussions that these individuals never intended for public consumption.
Tesla’s employees have already been subjected to both the conduct described in Tesla’s petition and the unwanted publicity and online harassment that followed the filing of that petition. Production of their private conversations to Mr. Hothi would, in Tesla’s view, inflict more damage by subjecting them to an unwarranted invasion of their privacy and further harassment.
And once the audio is produced, as the Court’s Order itself suggests, little doubt remains that it will make its way into the public domain, publicly exposing every detail of an informal conversation among coworkers who did nothing wrong.
Hothi’s attorney has asked Tesla to preserve any evidence related to this matter as it may pursue a malicious prosecution claim or a similar claim. He said Tesla produced legal action against Hothi in “bad faith.”
A spokesperson told Business Insider that the company is confident that it has made it clear that Hothi is never to return to its property unless he wants more legal trouble.