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Tesla watch: Louisiana lawsuit, proposed 'phantom braking' class action, labor board loss

·Senior Reporter
·3 min read

After an initial boost from a three-for-one stock split last Wednesday, Tesla stock has been under pressure.

With shares of the electric vehicle maker down more than 2% as of the market close on Tuesday, here are three big stories moving Tesla stock (TSLA):

Tesla takes on Louisiana’s dealership laws

Tesla is suing several parties in federal court over Louisiana's ban on the direct selling of vehicles to customers, the Wall Street Journal reported. Louisiana is now one of 10 states in the country that requires automakers to sell their cars through independent dealerships.

In the suit filed last week, Tesla went after the Louisiana Automobile Dealers Association, Louisiana Motor Vehicle Commission officials, and some dealerships in the state claiming the defendants conspired to put the state's new law in place and restrict sales and customer choice.

BEIJING, CHINA - AUGUST 29: A Tesla logo is displayed at Tesla booth ahead of the 2022 China International Fair for Trade in Services (CIFTIS) at China National Convention Center on August 29, 2022 in Beijing, China. The 2022 CIFTIS is slated to be held in Beijing from August 31 to September 5 to provide platforms for exchanges in service trade. (Photo by VCG/VCG via Getty Images)
BEIJING, CHINA - AUGUST 29: A Tesla logo is displayed at Tesla booth ahead of the 2022 China International Fair for Trade in Services (CIFTIS) at China National Convention Center on August 29, 2022 in Beijing, China. (Photo by VCG/VCG via Getty Images)

Currently, prospective customers in Louisiana must go out of state to buy Tesla vehicles. Furthermore, Tesla claims the defendants prevented Tesla from leasing cars and servicing Tesla vehicles registered in the state of Louisiana.

The Journal notes that Tesla has challenged laws like this in the past, notably in Michigan, where it settled with the state to allow the direct sales of cars to residents. If Tesla is successful in this lawsuit, the company may use this as another test case to challenge other state bans on direct sales.

Tesla sued over ‘phantom braking’

Tesla is on the other side of the docket in the state of California where a Model 3 owner is suing the company over a “phantom braking” defect.

Reuters reported that the plaintiff claimed his Model 3 suddenly stops for no apparent reason, which he called a "frightening and dangerous nightmare" in the complaint. The plaintiff is seeking class-action status for the lawsuit, claiming that Tesla rushed its Autopilot and Full Self Driving software to customers across the country, rendering it unsafe.

Missouri, United States - March 14, 2022: Close-up of a Tesla Model S plaid, driving down a highway on autopilot. And a man sitting with his hands on his legs.
Missouri, United States - March 14, 2022: Close-up of a Tesla Model S plaid, driving down a highway on autopilot. And a man sitting with his hands on his legs. (Associated Press)

The lawsuit accuses Tesla of “fraudulently hiding the safety risks associated with Autopilot, breaching its warranties, unfairly profiting from Autopilot and violating California's unfair competition law,” according to Reuters.

The National Highway Traffic Safety Administration is currently investigating several Tesla Autopilot crashes concerning accidents with parked emergency vehicles.

NLRB rules Tesla violated labor laws

On Monday, the National Labor Relations Board (NLRB) ruled that Tesla violated labor laws by forbidding workers to wear pro-union shirts.

Tesla requires workers at the factory to wear black shirts emblazoned with the Tesla logo. Tesla has argued the dress code is meant to prevent workplace hazards and damage to cars.

According to the ruling, a former Tesla worker claimed that a manager told him to remove his T-shirt supporting the United Auto Workers (UAW), despite the fact other workers were wearing shirts with sports team logos.

Workers assemble cars on the line at the Tesla’s factory in Fremont, California (Getty Images)
Workers assemble cars on the line at the Tesla’s factory in Fremont, California (Getty Images)

Tesla factories are not unionized and CEO Elon Musk has been critical of unions in the past.

“Wearing union insignia, whether a button or a t-shirt, is a critical form of protected communication,” the ruling said, adding that “for many decades, employees have used insignia to advocate for their workplace interests — from supporting organizing campaigns, to protesting unfair conditions in the workplace — and the law has always protected them."

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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