Santiago v. Tesla, Inc.
1:23-cv-02891
N.D. Ill.Nov 22, 2024Background
- Plaintiff Joshua Santiago alleges his 2020 Tesla Model 3’s forward collision monitoring system has a defect causing false collision warnings and sudden, unnecessary braking ("phantom braking").
- Tesla allegedly knew of this defect through internal reports, consumer complaints, and a whistleblower article, but did not fix it via software updates or disclose it to consumers.
- Santiago claims the defect caused unnecessary panic and increased his Tesla insurance premiums, as false warnings were counted as unsafe driving events.
- He initially brought claims for breach of implied warranty (under the Magnuson-Moss Warranty Act and Illinois law) and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), seeking damages and injunctive relief.
- After removal to federal court and Tesla’s motion to dismiss, Santiago dropped the Magnuson-Moss claim and injunctive relief, leaving just the Illinois warranty and ICFA claims; a second named plaintiff and subclass claims were also dropped.
- Tesla moved to dismiss for lack of standing for a nationwide class and for failure to state a claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing for nationwide class | Standing challenge is premature; to be addressed at class certification stage. | Santiago lacks standing for claims outside Illinois laws. | Standing exists; multi-state scope is a class certification issue. |
| Implied warranty notice requirement | Tesla's general knowledge of defect from complaints and media suffices for notice. | Santiago failed to provide pre-suit notice specifically; general knowledge is insufficient. | Dismissed with prejudice for lack of notice; general knowledge not enough. |
| ICFA deceptive conduct (misrepresentation) | Tesla made misrepresentations about vehicle safety and collision prevention on its website. | Statements were not deceptive and/or were non-actionable puffery. | Dismissed; statements not deceptive or actionable. |
| ICFA deceptive conduct (omission) | Tesla omitted material information on its website and failed to disclose the defect before sale. | Omission claim fails for lack of specific material omission and insufficient knowledge pleaded. | Allowed; sufficient detail and plausible pre-sale knowledge alleged. |
| ICFA unfair conduct (insurance premium issue) | Inflated insurance premiums due to defect-induced events is an unfair practice offend public policy. | Claims are conclusory, duplicative of deceptive claim, unsupported as unfair under ICFA factors. | Dismissed; conclusory, lacks detail to sustain unfairness claim. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard for plausibility)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard for plausibility)
- Connick v. Suzuki Motor Co., 174 Ill.2d 482 (notice requirement for breach of warranty and ICFA omission requirements)
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (ICFA elements)
- Robinson v. Toyota Motor Credit Corp., 201 Ill. 2d 403 (Sperry test for unfair conduct under ICFA)
- Batson v. Live Nation Ent., Inc., 746 F.3d 827 (Sperry factors for unfairness)