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Tesla faces jury in litigation for the first time over fatal car crash

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Yahoo Finance's Alexis Keenan joins the Live show to break down Tesla's ongoing litigation over a car crash death tied with its EV battery pack design.

Video Transcript

[MUSIC PLAYING]

- Welcome back. Nearly four years after Elon Musk's funding secured tweet hit Twitter feeds back in 2018, we now have more details from a federal judge's ruling over Musk's now infamous announcement that he was planning on taking Tesla private. Yahoo Finance's own legal correspondent Alexis Keenan is here with the details from the unsealed ruling. Alexis?

ALEXIS KEENAN: Hi, guys. Yes, so the saga continues. And we all know these tweets, right? And you can see them there on the screen. This is the I'm taking Tesla private at $4.20 per share tweets. A series of them, really. So that's the first one. That was followed by investor support is confirmed by Elon Musk, also followed by only reason why this is not certain is that it's contingent on a shareholder vote.

So this is a shareholder proposed class action in the state of California. It's a federal lawsuit, and it's a consolidated group of shareholders' actions that are all in California. Trial is not set until January of next year. However, the case is moving along. And what this judge in California decided is that these tweets by Musk were, A, he concluded, false. And he also said the tweets were reckless.

And this is really unusual for a judge to make this kind of ruling. This is a partial summary judgment in favor of these plaintiffs. So they get a big win here. They get to move forward with their case with the judge agreeing with them that these were not only untoward, but false and reckless.

Also, what is, I think, the highlight of some of these pleadings as we're getting to read the judge's decision here is that we get to look at some of the events that led up to those tweets, OK? So to Musk's credit, there was a lot going on about taking Tesla private. It goes all the way back to 2017, with Saudi Arabia's sovereign wealth fund contacting Musk. And that was followed by a meeting that was attended by SoftBank's [INAUDIBLE], as well as Larry Ellison, all of them talking about let's take Tesla private.

So I want to read part of that in the order here that the judge wrote, talking about it, saying at that meeting, that Saudis' fund representative and [INAUDIBLE] expressed interest in making a large potential investment in Tesla in any form that Elon would desire. And that included taking Tesla private. So sometimes, he might have a point here. And what he was thinking, we can never get into his head and know, but this is what the judges decided at this juncture, not really agreeing with Musk here.

- And then separately, Alexis, we know that Tesla will have to face a jury trial for the first time over one of its vehicle crashes. What's at stake in this case?

ALEXIS KEENAN: Yeah, so [INAUDIBLE], this is a wrongful death case, and a very different action from the shareholder one. And it's all over a crash that happened, a Model S driven by an 18-year-old in Florida. It crashed. It was a fatal accident. The 18-year-old died, as did one of his passengers. There were three in the car.

And what this lawsuit is saying is that Tesla was negligent. They say that, in its batteries and battery packs, that they were not safe for this vehicle. They go on to say that, later on, in subsequent models of the Teslas, that there was a design that was invented to better protect the fires that we've all seen erupt in these Tesla vehicles when they do get into these very tragic crashes.

But this case is going to allow-- be allowed to go forward to trial. Both of these cases, I guess, in essence, though, could be settled before that happens. But getting a green light here. And this will be the first time that one of those crashes will be put to the test. And that technology that Tesla was using back then and somewhat, to some extent, still now will really be put in front of a jury.

- All right. Tough times for Elon and Tesla and a whole lot. Nice to see you, Alexis Keenan. Thank you.