Court: Tesla on the Hook for Some Claims in Solar Roof Breach of Contract Class Action

A dismissal opinion issued by Judge Vince Chhabria on Tuesday greenlighted some claims in a case over whether Tesla Inc. improperly increased the price of its Solar Roof product in what the plaintiff called “a textbook bait and switch scheme.” 

The operative complaint was filed in February and explained that Tesla’s Solar Roof product made of individual roof tiles with integrated photovoltaic solar cells capable of generating energy, was unveiled in 2016. During the product’s reveal, Tesla CEO Elon Musk reportedly touted the Solar Roof as more durable than traditional roofs and a more affordable energy solution for homeowners. 

However, the complaint alleges that at the time of its debut, the product was far from ready. Moreover, “[t]he company lured in consumers with promises of stylish, affordable solar energy solutions with predictable installation times and costs, but then sought to hold its customers hostage with unjustified and unlawful price increases and delays,” the suit says.

Specifically, and in April 2021, the company advised that it would not be able to meet the promised timeframe, switched certain materials without consent, and told customers it could not honor their contracts without a substantial price increase, as much as a 100% increase for some consumers. A few months later, the company reportedly reversed course and said it would honor the prior prices.

However, the complaint faults the company for failing to honor its promised installation dates and allegedly continuing to deceptively increase pricing and impose new and additional charges on customers, on top of its previously agreed-to prices.

In this week’s four-page dismissal motion, Judge Chhabria considered, among other issues, whether the claims were moot. Despite the fact that the plaintiff’s Solar Roof was already installed, there was a possibility that Tesla owed him a refund, the opinion found. 

Further, the court said the claims could not be moot on account of Tesla’s purported offer to install the plaintiff’s  roof at the original price. “Voluntary cessation of a defendant’s challenged conduct does not moot a case unless it is ‘absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur,’” the court explained, in finding that Tesla fell short of meeting that “heavy burden.”

The court then granted Tesla’s motion as to the California consumer protection, business practice, and federal fair lending claims, finding that the plaintiff failed to articulate why a legal remedy would be inadequate.

Interpreting the contract, the court said that “[t]he term ‘final cost’ appears to refer to the final cost of repairs—not the final cost of the roofing agreement—and so it does not appear to authorize the across-the-board increase in this case.” Noting that the foregoing and another contested provision were “ambiguous at best,” the court declined to dismiss the specific performance claim.

The plaintiff is represented by Edelson PC, Berger Montague PC, and Cotchett, Pitre & McCarthy, LLP.