Tesla, Inc. v. Tripp
| Decision Date | 17 September 2020 |
| Docket Number | Case No. 3:18-cv-00296-MMD-CLB |
| Citation | 487 F.Supp.3d 953 |
| Parties | TESLA, INC., Plaintiff and Counter Defendant, v. Martin TRIPP, Defendant and Counter Claimant. |
| Court | U.S. District Court — District of Nevada |
Alexander Benjamin Spiro, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan LLP, New York, NY, Aubrey Laine Jones, Pro Hac Vice, Jeanine Zalduendo, Pro Hac Vice, Matthew Alexander Bergjans, Pro Hac Vice, Quinn Emanuel, Michael T. Lifrak, Quinn Emanuel Urquhart Sullivan LLP, Los Angeles, CA, Douglas Beteta, Pro Hac Vice, Sean P. Gates, Pro Hac Vice, Charis Lex P.C., Pasadena, CA, Joshua A. Sliker, Jackson Lewis P.C., Rory T. Kay, McDonald Carano Wilson LLP, Las Vegas, NV, for Plaintiff and Counter Defendant.
Martin Tripp, Hungary, Robert D. Mitchell, Pro Hac Vice, Fletcher R. Carpenter, Pro Hac Vice, William M. Fischbach, III, Pro Hac Vice, Tiffany & Bosco, P.A., Phoenix, AZ, Ace Clinton Van Patten, Tiffany & Bosco, Jason C. Kolbe, Kevin S. Soderstrom, Tiffany & Bosco, P.A., Las Vegas, NV, for Defendant and Counter Claimant.
Plaintiff and Counter Defendant Tesla, Inc. sued Defendant and Counter Claimant Martin Tripp, a former employee, primarily for violations of federal and state trade secret law, after he shared confidential information about the production of Tesla's Model 3 car with a reporter. (ECF No. 1.) Tripp filed counterclaims for defamation and false light after Tesla's CEO Elon Musk, and others at Tesla, sent out various emails and tweets about Tripp. (ECF No. 25.) Before the Court are two primary, and four ancillary, motions: (1) Tripp's motion for summary judgment on some of the claims and damages theories Tesla asserts against him (ECF No. 154 ("Motion")); (2) Tesla's motion for summary judgment on Tripp's defamation and false light counterclaims (ECF Nos. 155, 162 (sealed) ("Cross-Motion")); (3) Tesla's motions to seal portions of its briefs and exhibits (ECF Nos. 161, 183, 195); and (4) Tripp's motion for leave to file a surreply to Tesla's Cross-Motion (ECF No. 197). As further explained below, the Court will grant in part, and deny in part, Tripp's Motion because it is persuaded Tripp's actions lack the requisite causal link to any diminution in the value of Tesla's stock, but is otherwise unpersuaded by Tripp's arguments in his Motion. The Court will grant Tesla's Cross-Motion because the Court agrees with Tesla that Tripp must show actual malice, but cannot, and alternatively agrees none of the statements Tripp challenges were false. The Court will grant Tesla's motions to seal because compelling reasons support them, and they are unopposed. Finally, the Court will deny Tripp's motion for leave to file a surreply as unnecessary.
Tripp contends he is a whistleblower, blowing the whistle on production inefficiencies and delays in Tesla's race to produce 5,000 Model 3 cars per week. Tesla believes Tripp is a misguided leaker, who came to incorrect conclusions about the efficiency and effectiveness of Tesla's assembly lines at the Gigafactory1 in the Nevada desert, then shared confidential information Tripp thought supported his conclusions with a reporter, without permission. These differing views color the parties’ claims against each other in this case, and the way they approach it. Regardless, Tripp had a brief but dramatic tenure as a Tesla employee.
Tesla brings five claims against Tripp: (1) violation of the Defend Trade Secrets Act, 18 U.S.C. §§ 1836, et seq. ; (2) violation of the Nevada Uniform Trade Secrets Act, NRS §§ 600A.10, et seq. ; (3) breach of contract; (4) breach of the fiduciary duty of loyalty; and (5) violation of the Nevada Computer Crimes Law, NRS § 205.4765 ("NCCL"). (ECF No. 1 at 4-10.) Tripp asserts two2 counterclaims: (1) defamation; and (2) false light. (ECF No. 25 at 9-25.)
The following facts are undisputed unless otherwise noted, and proceed in roughly chronological order.
Tesla hired Tripp as a Lead Process Technician in October 2017. (ECF No. 155 at 3-4.) At and around the time Tesla hired Tripp, Tripp signed several agreements containing confidentiality provisions. (ECF Nos. 174-13 (sealed), 174-14 (sealed), 174-15 (sealed), 174-16 (sealed).) Later in 2017, Musk announced that one of Tesla's goals was to produce 5,000 Model 3 cars per week. (ECF No. 155 at 4; see also ECF No. 157 at 2.) This announcement led to media coverage and public interest regarding Tesla's production targets for the Model 3. (ECF No. 157 at 2.) Tripp's work at the Gigafactory contributed to Tesla's ability to achieve that goal, because assembly lines at the Gigafactory make batteries and drivetrains for the Model 3. (Id. )
Soon after he started, Tripp grew concerned about the amount of scrap generated by the assembly line he worked on. (ECF No. 177-1 at 5-7.) He got into disputes with coworkers about it, complained to his managers, and even sent Musk two emails about it—and Musk responded on at least one occasion, writing "[g]etting scrap from when cells exit Panasonic to less than 1 percent needs to be a hardcore goal." (ECF Nos. 174-11 (sealed), 174-18 (sealed), 177-1 at 5-7.)
Between the time he was hired, and when Tesla fired Tripp on June 19, 2020, Tripp was disciplined by his managers for fomenting conflict with his coworkers on at least three occasions. (ECF No. 155 at 4-5 (partially redacted).) On May 17, 2018, Tripp's managers transferred him from one assembly line at the Gigafactory to another. (Id. at 4-5.) On May 25, 2018, Tripp was formally disciplined regarding a conflict with his coworkers. (ECF No. 174-19 (sealed).)
On May 27, 2018, Tripp sent an email to several reporters saying that he had information about Tesla's Model 3 production he was willing to share.3 (ECF No. 175-2 (sealed).) Tripp requested to remain anonymous in this email. (Id. at 2.) As to the content of the email, Tripp wrote that the amount of scrap generated during production at the Gigafactory was much higher than Tesla had previously disclosed publicly. (Id. ) Tripp also wrote in the email that Tesla was not as close to hitting its production target of 5,000 Model 3s a week as Musk had stated publicly. (Id. ) Finally, Tripp stated that Musk had changed manufacturing processes to increase speed, creating safety issues such as smoking batteries. (Id. ) Linette Lopez of Business Insider responded that she was interested, and Tripp began sharing information with her. (ECF No. 155 at 6.) The information Tripp gathered and shared with Lopez forms the basis of Tesla's claims against Tripp. (ECF No. 1.)
On June 4, 2018, Lopez published an article in Business Insider titled, "Internal documents reveal Tesla is blowing through an insane amount of raw material and cash to make Model 3s, and production is still a nightmare" (the "Scrap Article"). (ECF No. 159-5.) Lopez used information that Tripp gave her in this article. (ECF No. 154 at 4.) Tesla held its annual shareholder meeting the next day, on June 5, 2018. (ECF No. 157 at 3.)
On June 6, 2018, Lopez published another article in Business Insider titled, "Tesla's new Gigafactory robots that are supposed to help it ramp up Model 3 production aren't working yet" (the "Robot Article"). (ECF No. 159-6.) Lopez also used information that Tripp gave her in this article. (ECF No. 154 at 4.)
Musk was unhappy with the publication of these two articles. (ECF No. 157 at 3.) Thus, Musk initiated an investigation into the source of the articles. (Id. at 3-4.) Members of Tesla's security team, including Tesla employee Nicholas Gicinto, working with security investigation contractors, worked backwards from the information included in the Scrap Article and the Robot Article to uncover Lopez's source. (ECF No. 174-2 (sealed) at 6-7.) They were able to pinpoint Tripp as the potential source using the audit logs of Tesla's Manufacturing Operating System ("MOS"), Tesla's internal computer system it uses to keep track of its manufacturing processes. (Id. at 8-9.)
Tesla security employees interviewed Tripp on June 14 and 15, 2020. (Id. at 9-10.) While at first he denied being the source for the two articles, he later admitted he was the source, and stated he knew he was not permitted to share the information he had shared with Lopez. (Id. at 26-28; see also ECF No. 174-6.) Over the weekend of June 16-17, 2018, Tesla's security team passed the results of their investigation on to Musk. (ECF No. 157 at 4.)
Having received these results, Musk sent an email to all employees at Tesla at 11:55 p.m. that Sunday night. (ECF No. 160-17.) In the email, without naming Tripp, Musk wrote he was "dismayed to learn this weekend about a Tesla employee who had conducted quick extensive and damaging sabotage to our operations." (Id. at 2.) Musk went on to write this employee had made direct changes to the MOS, and exported "large amounts of highly sensitive Tesla data to unknown third parties." (Id. ) After speculating that "there may be more to this situation than meets the eye," Musk noted Tesla's investigation will continue, and stated "there are a long list of organizations that want Tesla to die[,]" including Wall Street short-sellers, oil and gas companies, and "big gas/diesel car company competitors." (Id. ) Musk wrapped up the email by warning all employees to remain vigilant, encouraging them to report any suspicious activity to him. (Id. ) This email is the First Challenged Statement upon which Tripp bases his counterclaims for defamation and false light. (ECF No. 177 at 2.)
On June 19, 2018, Tesla terminated Tripp's employment. (ECF No. 159-9.) Tesla filed this lawsuit the next day. (ECF No. 1.) Then things heated up. The same morning Tesla filed this lawsuit, Musk and Tripp exchanged escalating emails about the articles and this case in which Tripp wrote to Musk that he had "what's coming to you for the lies you have told the public and investors[,]" they both called each other ‘horrible...
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