Tesla Motors Inc (TSLA) is going to fight ‘lemon law’ lawsuit

Posted Apr 11, 2014

Tesla Motors Inc (NASDAQ:TSLA) was hit with a lawsuit in Wisconsin earlier this week. The lawsuit was filed by Vince Megna, who is a self-proclaimed “Lemon Law King.” Megna secured the largest lemon law judgment in history at $880,000 from Mercedes-Benz earlier this year.

Megna’s lawsuit says that the Tesla Model S that his client purchased was a lemon. His client that bought the vehicle is a man named Robert Montgomery. Megna claims that his client’s request for a buy-back was ignored despite Tesla’s attempt at addressing and fixing the issues.

Montgomery spent nearly $100,000 on the Tesla Model S. Wisconsin’s lemon law makes Montgomery eligible for damages at double the purchase price.

What is wrong with the Model S? Montgomery’s Model S allegedly had malfunctioning door handles, poor battery performance, paint defects, starting issues, and several other issues.

Here is what Tesla Motors wrote in a blog post:

First, let us state that we believe in lemon laws ? they exist to protect customers against cars that repeatedly suffer defects. That’s a worthy thing to address. We also make a point of going above and beyond in customer service, which extends to buying back cars on fair terms from any customer who ultimately remains unsatisfied with their vehicle. We never want someone to be unhappy in their ownership of a Model S.

In this case, however, there are good reasons to be skeptical of the lawyer’s motivations. The service record shows that the Tesla service team did everything reasonably possible to help his client and they were continuing their efforts to service his vehicle right up until the point the suit was filed with no warning. Indeed, our service team, which has been in contact with the customer numerous times since November, is still trying to resolve his stated concerns, many of which have elusive origins.

Tesla Motors suspects that the vehicle may have been tampered with:

Another issue was that the car’s fuse blew on numerous occasions. Each time, our engineers explored all possible explanations and were never able to find anything wrong with the car. Still, just to be sure, we replaced several parts that could have been related to the alleged problem ? all at no expense to the customer. When the fuse kept blowing despite the new parts, and faced with no diagnosis showing anything wrong with the car, the engineers were moved to consider the possibility that the fuse had been tampered with. After investigating, they determined that the car’s front trunk had been opened immediately before the fuse failure on each of these occasions. (The fuse is accessed through the front trunk.) Ultimately, Tesla service applied non-tamper tape to the fuse switch. From that point on, the fuse performed flawlessly.

Megna denied that the Model S was tampered with. He also released this video about the lawsuit:

Update: An earlier version of this article said that the largest judgment in history was at around $880,000. Megna contacted Pulse 2.0 with the following statement: “The final amount was  $880K. The $618K represented a judgment but about 2 years before the final. I’m just pointing this out for clarification purposes.”