Tesla Seeks Declaration of Arbitration Award’s Validity in Ex-Employee’s Defamation Case

Tesla Motors and its chief executive asked the Northern District of California for an order confirming their victory in a Judicial Arbitration and Mediation Services (JAMS) decision rendered last month. Cristina Balan, a former Tesla engineer, originally sued in federal court in Seattle, Washington in January 2019 claiming that the company baselessly spoke out against her after she raised alarms about safety concerns and the electric car maker’s business practices.

Balan’s reportedly successful career at Tesla, including her “critical work” on its electric car batteries, ended in 2014 and was followed by an employment arbitration. The complaint claims that the allegedly defamatory statements were made by Tesla during the pendency of that adversarial proceeding in the form of comments posted to an online story written about Balan by The Huffington Post.

In the company’s September 2017 comments, a Tesla spokesperson allegedly accused Balan of engaging in criminal conduct, including theft of company property and using its resources without management approval. Balan pushed Tesla to remove the comments, citing a complete lack of evidence, but the company reportedly refused. Eventually, The Huffington Post removed them when asked by an advocate for the plaintiff, the complaint said. 

Balan’s defamation litigation was partially shunted to arbitration after the judge said that some, but not all of her claims had to be heard in the para-judicial forum pursuant to the arbitration agreement she signed. Tesla appealed and the Ninth Circuit reversed, finding that all of the employee’s claims had to be arbitrated.

Last month, the JAMS arbitrator granted Tesla and CEO Elon Musk’s motion to dismiss on the basis that Balan’s claims were untimely given California’s one-year statute of limitations for defamation. In its decision, the arbitrator gave no credence to Balan’s arguments asking for an exception to the limitations period, Tesla’s filing said.

As to her claim against Musk, the arbitrator found that Balan presented no evidence that the company or the executive “prevented or dissuaded Ms. Balan from pursuing litigation or arbitration based on the purported defamatory statements that were allegedly made on September 11, 2017 and August 7, 2019.”

In last week’s motion, the company asked for the statutorily required judicial confirmation of the decision. “The Arbitration Award is a final and binding resolution of the dispute between Petitioners and Ms. Balan which now requires confirmation by this Court to effectuate the relief contained therein,” the filing said.

Tesla is represented by Morgan, Lewis & Bockius LLP.