Tesla Sues California County In Effort To Reopen Facility

Electric carmaker Tesla has filed a complaint against Alameda County, California for its shelter-in-place order as a result of the COVID-19 pandemic. Tesla questioned the constitutionality of these orders. They alleged that Alameda County’s actions and order violated the Due Process and Equal Protection Clauses of the Fourteenth Amendment, was out of line with the federal and California constitutions, and was preempted by state law.

To help combat the COVID-19 pandemic, the Governor of California issued statewide a stay-at-home order on March 20. The order allowed for “critical infrastructure” businesses to continue to operate; Tesla claims that it is considered “critical infrastructure.” Tesla stated that the Governor’s order “was not a state-level baseline inviting county innovation above and beyond a minimum; this is an order that certain essential businesses shall be permitted to remain open statewide to provide essential goods and services to all Californians.”

The complaint went on to state that “Nevertheless, Alameda County decided that – notwithstanding the clear language and statewide logic of the Governor’s order on this point – it would insist that its prior (and subsequent) conflicting pronouncements controlled over the state-wide order. Alameda County thus arrogated to itself the power to force closure of businesses that the state government had ordered could remain open because they are federally-defined ‘critical infrastructure’ serving vital security, safety, or economic needs of Californians.”

As a result of the County’s decision, Tesla was forced to shut down its Fremont Facility during this order, despite language in the County’s order “that expressly describes essential businesses in terms that encompass Tesla’s Fremont Facility.” For example, the County’s frequently asked questions page states “My business installs distributed solar, storage, and/or electric vehicle charging systems – can it continue to operate? Yes, this is permissible construction activity and must comply with the Construction Project Safety Protocols in Appendix B of the Order. Businesses may also operate to manufacture distributed energy resource components, like solar panels.”

Tesla also stated that violating these orders results in criminal penalties, but the County does not have the authority to do so. They asserted that Alameda County is “making rules that directly contradict and undermine the policy announced by the Governor in his Orders.”

Alameda County’s First County Order stated that “[a]ll businesses with a facility in the County, except Essential Businesses . . . are required to cease all activities at facilities located within the County except Minimum Basic Operations.” By contrast, “Essential Businesses were strongly encouraged to remain open.” The County included 21 “Essential Businesses” and “Essential Infrastructure,” but did not relate its definition to the Governor’s list of “critical infrastructure.”

The County issued a Second County Order, which added more types of “Essential Businesses.” The Order noted that “[w]here a conflict exists between the Order and any state public health order related to the COVID-19 pandemic, the most restrictive provision controls.” The County then issued a Third County Order, which “allow[ed] a limited number of additional Essential Business to resume operating.” The County’s FAQ allegedly allows “battery and electric vehicle manufacturing companies to operate.” Thus, Tesla argues that despite confusion it is allowed to operate in the County and can reopen its facility in the county based on the information provided by the County.

Tesla operated its Fremont Facility in good faith after the First Order believing that it was exempt, since it fell within the state’s “critical infrastructure” sector, however, afterward Alameda County declared that Tesla was not an essential business and must abide by the state’s stay-at-home order. However, Tesla claims that its business operations count as three of the included critical infrastructure sectors, “Transportation Equipment Manufacturing,” “Electrical Equipment, Appliance, and Component Manufacturing,” and the “Energy Sector.”

Tesla alleged that Alameda County’s order violates the Fourteenth Amendment’s Due Process Clause because “it fails to give reasonable notice to persons of ordinary intelligence of what is forbidden under the law. By prohibiting what the Governor’s order expressly permits, the County’s Order puts businesses deemed critical to the nation’s wellbeing by the federal and state governments between a rock and a hard place – unable to discern what the applicable law permits, under threat of criminal prosecution.” The Due Process requires fair notice, however, Tesla claimed it was not provided fair notice, and “there is no procedure for Plaintiff even to challenge the County’s determination that it is not an essential business that may continue operations under the County’s Order.”

Tesla claimed that the County’s order violates the Fourteenth Amendment’s Equal Protection Clause because it “discriminates against identically situated parties without any rational basis.” For instance, a “neighboring county is allowing car manufacturing to resume, Alameda County continues to insist – in violation of the Governor’s Order and against reason – that what is permitted in a neighboring county will endanger the public health if permitted to also occur within Alameda County borders.” Tesla stated that not only does this go against the Governor’s order, but Alameda County also considers businesses like Tesla essential, so it should be able to operate and reopen its facility in the county.

Tesla has sought a permanent injunction, declaratory judgment, an award for cost and fees, and other relief as determined by the court.

The suit was filed in the Northern District of California. Tesla is represented by Quinn Emanuel Urquhart & Sullivan.

Tesla also published a blog post discussing the company’s effort to “get back to work,” including steps it has taken with its Fremont Facility and Alameda County’s current position, which left the company “no choice but to take legal action to ensure that Tesla and its employees can get back to work.”