Roadster Rage: Tesla Founder Sues CEO for Defamation; Alleges Tesla Breached Contracts

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One of the founders of Silicon Valley electric car startup Tesla Motors (Tesla), Martin Eberhard, has sued the company and its current CEO, Elon Musk, for libel, slander and allegedly breaching Mr. Eberhard’s severance agreement. 

The complaint, filed last month in San Mateo County Superior Court, further alleges that Tesla breached a Roadster Delivery Agreement providing that Eberhard was to receive the second Roadster that came off the production line by giving the No. 2 car to someone else. 

When Eberhard finally did receive a Roadster, the complaint says, it was damaged goods because it had been smashed into the back of a truck by a company employee doing an “endurance test” on the car.

According to the complaint, Musk forced Eberhard out of the company in November of 2008, and Tesla breached his severance agreement in February 2008 when it ceased the severance payments.

The defamation claims relate to Musk’s alleged statements regarding Eberhard’s status as founder and creator of Tesla and the work product he created for the company.  In particular, the complaint accuses Musk of falsely stating that Eberhard had been terminated by Tesla because of performance and management issues.

Eberhard also accuses Musk of falsely portraying himself as the founder of the company.  However, most of the statements listed in the complaint that state or suggest that Musk is the founder of Tesla Motors were made by media outlets; only a few appear to have been made by Musk himself.

The complaint tries to paint a picture of a broad pattern of misrepresentation by Musk with respect to his achievements and credentials, alleging that he has misrepresented his educational credentials by lying about attending Stanford University and having a physics degree from the University of Pennsylvania.

Among other things, Eberhard is seeking an injunction ordering Musk to stop making statements to the effect that he is a founder or creator of Tesla, that anyone other than Eberhard and co-founder Marc Tarpenning are the founders, or that Eberhard was responsible for the Roadster’s production delays or the company’s financial instability. 

Eberhard also wants the court to order Tesla and Musk to publish a public statement regarding those items and distribute it to major media outlets.

As the Greentech Media piece notes, while legal complaints often are dry, “this one has some gems.”

Eric Lane Avatar

Eric Lane

Eric Lane, the founder and principal of Green Patent Law, is an intellectual property lawyer and registered U.S. patent attorney in New York and is a member of the bar in New York and California. Eric has more than two decades of experience working with wind, solar PV, CSP, biofuels, and geothermal, energy storage technologies, carbon capture and sequestration, medical devices, data communications, mechanical, chemical, internet and software.