Following up on yesterday's decision in a San Mateo, California court, ex-Tesla Motors CEO Martin Eberhard's legal team has issued a statement of its own regarding the lawsuit against Tesla Motors and Elon Musk. While Tesla's official response to the decision obviously focused on the judge's decision not to declare Eberhard as one of only two co-founders, there was more to the decision.

In response to Eberhard's original filing, Tesla filed an anti-SLAPP motion in an attempt to quash the entire suit. The judge declared "an anti-SLAPP motion is not the proper mechanism to use to contest the validity of this cause of action." Aside from the question of founder status, the judge decided that Eberhard's side had established a probability that it could win on the breach of contract and defamation claims. He also declared that based on the information so far, Eberhard's claims were legal and valid to proceed. So unless Musk decides to settle (highly unlikely) this one appears to be far from over. Read Eberhard's statement in full after the jump.

  • No. 2 - Tesla Roadsters are in production, albeit in small numbers still, and the company is still with us (for now at least). We've driven it and it's a wonderful sports car - even disregarding the powertrain. Factor in that electric drive and it's amazing. Unfortunately, recent financial issues have threatened the company's future. The investors seem committed to making Tesla survival so far.

Elon Musk Photo copyright ©2009 Sebastian Blanco / Weblogs, Inc.

[Source: Tesla Motors, The Daily Green]


Martin Eberhard Clears Roadblocks in Lawsuit Against Elon Musk/Tesla Motors – Eberhard's Lawsuit Gets Green Light to Proceed.

San Mateo, CA-July 29, 2009-In what can only be characterized as a resounding victory today, Martin Eberhard, the cofounder and former CEO of Tesla Motors, has successfully established the legitimacy of his claims of defamation, libel, and breach of contract against Elon Musk and Tesla Motors. His lawsuit will now proceed.

In response to Eberhard's lawsuit filed this past May, Tesla Motors and Elon Musk filed papers on June 29, 2009 seeking to have Eberhard's lawsuit dismissed. They filed an Anti-SLAPP motion, arguing that Martin Eberhard's claims against Elon Musk and Tesla Motors are constitutionally protected conduct, and a demurrer, arguing that even if the facts presented by Eberhard were taken to be true, Eberhard's lawsuit was without legal merit and should not be allowed to proceed.

The first significant ruling in this litigation came this morning at the San Mateo County Superior Court. The honorable Judge John L. Grandsaert denied Tesla Motors's and Musk's Anti-SLAPP motion in its entirety, finding that Eberhard demonstrated a probability that he will prevail on the challenged causes of action.

The court also dismissed most of Tesla Motors's and Musk's demurrer, finding that Eberhard pled legally valid claims against Tesla for several counts of breach of contract, including its illegal cancellation of his severance payments and stock options grants, its failure to deliver to Eberhard the second production Roadster as agreed by contract, and the extensive damages inflicted on Eberhard's car prior to delivery (requiring the replacement of the bumper, the hood, both front fenders, both headlights, the windscreen, and a long list of under-hood components).

Tesla Motors issued a formal statement today stating, "We are pleased that the judge struck down Eberhard's claim asking to be 'declared' one of only two founders of the company." However, while the court today found in favor of Musk/Tesla on this cause of action, its decision underscored the fact that the issue of who is a cofounder is a purely factual question and not one that could be decided on the pleadings as a matter of law at this early stage in the litigation.

Eberhard and his counsel, Yosef Peretz, look forward to litigating this matter, and the other causes of action in Eberhard's lawsuit, on their merits as the case proceeds.

Relevant excerpts from the court's decision can be found below:


• As to the First and Second Causes of Action (Defamation) Plaintiff has established a probability he could prevail on at least some of his defamation/libel claims relating to statements made by MUSK, including but not limited to, that Plaintiff caused the financial issues at TESLA, that he left a "mess" when he left the company, that he caused
the delays in the production of the Roadster, and that MUSK had to spend a lot of time correcting all the errors made by Plaintiff. (Complaint, ¶¶89-102; Exhibits. 24-30.)

• As to the Third Cause of Action (Injunctive Relief), because Plaintiff has shown the probability he may prevail on the merits of a portion of his defamation claims, he may also prevail on his claim for injunctive relief. An injunction which does no more than prohibit Defendants from repeating the defamation is not a prior restraint and does not
offend the First Amendment. (Balboa Island Village Inn v. Lemen (2007) 40 Cal.4th 1141, 1148.)

• As to the Sixth Cause of Action (Declaratory Relief), an anti-SLAPP motion is not the proper mechanism to use to contest the validity of this cause of action. Rather, the separate motion to strike under Code of Civil Procedure §436 et seq contemporaneously filed herewith fully and adequately addresses this dispute.

• As to the Eleventh Cause of Action (Negligence), the Complaint does not predicate this cause of action solely upon Defendants' alleged defamatory statements."


• Defendants' Demurrer to the 3rd and 7th through 9th causes of action of Plaintiff's Complaint is OVERRULED in its entirety.

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