Representative image REUTERS/Liesa Johannssen

By Mike Scarcella

Tesla, Elon Musk’s electric vehicle maker, failed to convince a US judge to dismiss a consumer lawsuit accusing it of failing to warn buyers of an alleged defect that could lead to the automatic braking of cars when there is no real risk of collision.

In a ruling Friday, U.S. District Judge Georgia Alexakis in Chicago sidestepped the case but said the proposed class action could move forward based on a claim that Tesla covered up the defect in safety of “phantom braking” to potential buyers.

Alexakis dismissed other parts of the lawsuit, including allegations that drivers overpaid for auto insurance premiums sold through Tesla’s insurance arm because of allegedly faulty crash monitoring by the company.

Tesla had asked the judge to dismiss the entire lawsuit.

Tesla and attorneys representing two Illinois and Ohio residents who filed the suit did not immediately respond to requests for comment Friday.

The 2023 consumer complaint stated that Tesla’s “forward collision monitoring system” often falsely alerted of an upcoming accident, even when there was no risk of collision.

Consumers alleged they were paying higher premiums because of data from their cars showing false collision alerts. The plaintiffs claim Tesla knew about the alleged defect as early as 2015 and failed to warn customers.

Tesla has denied knowledge of the alleged braking defect before one of the plaintiffs purchased its vehicle in early 2021.

The company argued that the plaintiffs failed to report any specific communications with buyers that concealed information about the defect.

Alexakis said the lawsuit “successfully connected the dots” between Tesla’s alleged omission of safety information on its website and buyers’ reliance on the website to make purchasing decisions.

The judge said the plaintiffs could file an amended complaint seeking to reinstate their insurance premium claims.

The case is Joshua Santiago et al v. Tesla, United States District Court, Northern District of Illinois, No. 1:23-cv-02891.

For plaintiffs: Eugene Turin and Andrew Heldut of McGuire Law

For the defendant: Livia Kiser and Susan Clare of King & Spalding

Learn more:

Tesla has launched its own car insurance. These drivers say it’s a lemon.

Tesla swaps law firms in antitrust case as Cravath steps down

Tesla has more time to defend itself against drivers’ insurance class action lawsuit

Tesla and estate of Autopilot crash victim clash over damages in Florida appeal

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