Jackson v. Tesla, Inc.

Background

This products-liability case concerns a 2020 Tesla Model 3. The complaint alleges that, on November 24, 2021, the vehicle moved forward at full acceleration while its driver did not press either the brake or gas pedal. It struck Sylvia Jackson’s vehicle while she was loading groceries, crushing her between two cars. Jackson survived, but her injuries required amputation of both legs above the knee.

Jackson alleges that the vehicle’s Forward Collision Warning activated but that three other safety features did not: Automatic Emergency Braking, Obstacle-Aware Acceleration, and Pedal Misapplication Mitigation. She filed claims for strict products liability, negligence, and loss of consortium. The case was filed in California state court and then removed to federal court based on diversity jurisdiction.

Tesla’s motions asked the court to disqualify the judge, transfer the case to the Southern District of Maryland, and apply Maryland products-liability law.

Motion to disqualify

Tesla relied on 28 U.S.C. § 455(a), which requires disqualification when a judge’s impartiality might reasonably be questioned. Tesla pointed to the judge’s prior employment as an associate and partner at Altshuler Berzon LLP. While the judge worked there, other attorneys at the firm represented Tesla employees in two lawsuits in which Tesla was the defendant. The opinion states that the judge did not participate in either case or represent the plaintiffs in them.

The court denied the motion for two independent reasons. First, it was untimely. The judge’s employment history and the firm’s involvement in the earlier lawsuits were publicly known when the case was assigned to the judge, but Tesla waited nearly seventeen months to seek disqualification. By then, discovery was complete and trial was scheduled to begin in four months. The court found that Tesla offered no reasonable explanation for the delay.

Second, the court concluded that the motion lacked merit. The earlier lawsuits involved different plaintiffs, different facts, and employment-discrimination law rather than products-liability law. The court held that a reasonable, well-informed observer would not conclude that the judge was biased merely because other lawyers at the judge’s former firm had represented parties adverse to Tesla. The motion to disqualify was denied.

Motion to transfer

Under 28 U.S.C. § 1404(a), a federal district court may transfer a civil case to another district where it could have been filed if transfer would be more convenient for the parties and witnesses or would serve the interests of justice. The parties did not dispute that the case could have been filed in the Southern District of Maryland.

The court nevertheless denied transfer. Applying the factors identified in Jones v. GNC Franchising, Inc., the court gave weight to Jackson’s choice of the Northern District of California. Tesla had significant contacts with that district because it designed, engineered, and manufactured the Model 3 there. Those activities were centrally related to Jackson’s products-liability claims and gave California a local interest in the dispute.

The court acknowledged that the driver and first responders were in Maryland, but found that their location was less important because the case concerned the vehicle’s design and safety features rather than negligent driving by the driver. The vehicle’s vision system recorded the incident, and deposition testimony could potentially be used if witnesses could not be compelled to attend trial. The retained experts did not appear to have a strong connection to either district.

The court also held that Tesla waited too long to seek transfer. Tesla had known about the Maryland witnesses since at least the November 2022 case-management conference, had participated in discovery for more than two years, and filed the transfer motion nearly four months before the scheduled trial. The court concluded that transferring the case would delay trial and prejudice Jackson. The motion to transfer was denied.

Motion to apply Maryland law

Because the case was in federal court based on diversity jurisdiction, the court applied California’s choice-of-law rules. California uses a three-step governmental-interest test: the court first determines whether the states’ laws differ; next determines whether a true conflict exists because both states have legitimate interests; and finally applies the law of the state whose interests would be more impaired if its law were not used.

Tesla identified six alleged differences between Maryland and California law. The court found that the states’ laws were aligned on two issues: strict products liability and negligence are separate bases for liability in both states, and both states allow use of a risk-utility test when a product malfunctions. The court found material differences concerning whether the product must be unreasonably dangerous, the burden related to product misuse, the effect of warning labels, and limits on noneconomic damages.

The court found a true conflict because California has an interest in regulating conduct by manufacturers operating in California, while Maryland has interests in regulating conduct within Maryland and protecting people injured there. The court also found a true conflict over noneconomic damages. California does not impose a fixed cap described in the opinion, while Maryland law would cap Jackson’s noneconomic damages at $905,000 as of the order’s date.

The court concluded that California’s interests would be more impaired by applying Maryland law. For strict products liability, California law would better serve California’s interest in deterring unsafe product design and avoiding different liability rules depending on where a vehicle happened to be driven. The court found that applying California law would only minimally impair Maryland’s interests because California law still allowed Jackson to pursue strict products liability and imposed fewer burdens on products-liability plaintiffs in some respects.

For noneconomic damages, the court found that applying California law would not seriously undermine Maryland’s interest in maintaining affordable liability insurance and attracting businesses. The opinion states that Tesla did not carry insurance covering the claims at issue. By contrast, applying Maryland’s cap could reduce the deterrent effect of a damages award in California. The court therefore ruled that California law applies to the strict-products-liability issues and noneconomic damages.

Disposition

The opinion’s conclusion states that Tesla’s motions to dismiss, transfer, and apply Maryland law are denied. The body of the order, however, addresses and denies a motion to disqualify, a motion to transfer, and a motion to apply Maryland law; it does not otherwise analyze a motion to dismiss. The court did not decide whether Tesla is ultimately liable for Jackson’s injuries.