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Tesla Sues California County Over Factory Closure, Starts Production Without Approval

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  • Tesla is suing Alameda County in an effort to resume operation at its Fremont factory, claiming that it is considered “national critical infrastructure” and should be able to restart under the governor’s guidance for reopening some businesses with safety modifications.  
  • Musk even threatened to move Tesla’s headquarters out of California, noting that it is the last major carmaker in the state as well as one of it’s largest manufacturing employers.
  • Though a move would be costly and difficult, some believe the tensions could further push Musk to look elsewhere for the manufacturing of other projects.  
  • Fremont’s Mayor urged the county to work with businesses trying to reopen after expressing concern about the potential implications for the regional economy. The county says it is communicating with Tesla and hopes to reach an agreement soon, but Tesla has already started ordering employees back to work.  

Musk Threatens To Move Tesla HQ 

Tesla has filed a lawsuit against Alameda County in Califonia, arguing that its Fremont factory should be allowed to operate during the coronavirus pandemic under the governor’s new guidance for reopening some businesses. 

The factory has been shut since March 23, after the county called for its closure as part of social distancing measures and stay-at-home orders, but the company has been pushing to resume production.

Then on Thursday, Gov. Gavin Newsom announced that he is allowing for sectors like retail, manufacturing, and logistics to reopen with “modifications that reduce risk,” however, he stressed that local officials still have the authority to speed up or slow down reopening at the county level. 

On Saturday, Tesla CEO Elon Musk expressed frustration about local resistance Tesla has faced.

“Tesla is filing a lawsuit against Alameda County immediately,” Musk announced in a tweet. “The unelected & ignorant “Interim Health Officer” of Alameda is acting contrary to the Governor, the President, our Constitutional freedoms & just plain common sense!”

Musk even threatened to move Tesla’s headquarters to Texas or Nevada as a result of the shutdown.

Musk’s frustration seems to have been building because late last month, he ranted about stay-home orders in the company’s April 29 first-quarter earnings call. In it, he called the restrictions fascist and a violation of people’s constitutional rights. 

Tesla Releases Blogpost Explaining Lawsuit and Restart Plans

The same day Musk tweeted his threat, Tesla released a blog post about how it will get it’s employees back to work safely. In the post, the company noted that it is the last major carmaker in the state as well as one of it’s largest manufacturing employers with more than 10,000 workers at its Fremont factory and 20,000 statewide. 

Tesla again argued that its Fremont plant should be allowed to reopen under Newsom’s recent guidelines, but it also said it should have always had permission to continue production because the state and federal government classifies vehicle manufacturing as “national critical infrastructure.”

It company even noted that, “Alameda county, where our factory resides, and Santa Clara County next door, have stated in their return to work order FAQs that the manufacturing of distributed energy resources (which is defined in state law to include electric vehicles, solar and battery storage) is permitted to resume.”

Along with these points, the company explained that it has worked hard on a “robust” restart plan, saying, “It was modeled after the comprehensive return to work plan we established at our Shanghai Gigafactory, which has seen smooth and healthy operations for the last three months.”

“Contrary to the Governor’s recent guidance and support from the City of Fremont, Alameda County is insisting we should not resume operations,” Tesla’s leadership added in the post. 

“This is not for lack of trying or transparency since we have met with and collaborated on our restart plans with the Alameda County Health Care Services Agency.” 

The company claims that the County Public Health Officer making decisions about reopening has not returned its calls and emails listing out detailed restart plans, factory layouts, and more. 

“We will continue to put people back to work in a safe and responsible manner. However, the County’s position left us no choice but to take legal action to ensure that Tesla and its employees can get back to work,” it said before noting that it is asking the court to render the shutdown order invalid.

Alameda County Responds  

Fremont Mayor Lili Mei responded to Tesla Saturday afternoon saying, “As the local shelter-in-place order continues without provisions for major manufacturing activity, such as Tesla, to resume, I am growing concerned about the potential implications for our regional economy.”

“We know many essential businesses have proven they can successfully operate using strict safety and social distancing practices. I strongly believe these same practices could be possible for other manufacturing businesses, especially those that are so critical to our employment base.”

She then encouraged the county to work with local businesses to reopen with acceptable guidelines.

Shortly after, Alameda County’s Health Department released a statement saying it has been working with Tesla to develop a safety plan allowing the Fremont plant to reopen while protecting workers. 

“This has been a collaborative, good faith effort to develop and implement a safety plan that allows for reopening while protecting the health and well-being of the thousands of employees who travel to and from work at Tesla’s factory,” the county said.

“We look forward to coming to an agreement on an appropriate safety plan very soon.″

However, it stressed that “It is our collective responsibility to move through the phases of reopening and loosening the restrictions of the shelter-in-place order in the safest way possible, guided by data and science.”

Scott Haggerty, supervisor for the Fremont district of Alameda County, told the New York Times on Saturday, “We were working on a lot of policies and procedures to help operate that plant and quite frankly, I think Tesla did a pretty good job, and that’s why I had it to the point where on May 18, Tesla would have opened.”

“I know Elon knew that. But he wanted it this week,” he added.

Criticism and Support 

It seems like Tesla could be getting the green light it was hoping for, though it’s unclear when. However, Tesla apparently isn’t waiting for approval. According to a report from The Verge, some employees were called back to work at the facility over the weekend and others are scheduled to report to work later this week.

Then on Monday, Musk acknowledged that he was restarting against orders.

Still, some lawmakers don’t seem to happy about Tesla’s attempts to reopen. California State Assemblywoman Lorena Gonzalez (D-San Diego) added fuel to the flames after Musk’s threat when she tweeted, “F—- Elon Musk.”

“California has highly subsidized a company that has always disregarded worker safety & well-being, has engaged in union busting & bullies public servants,” wrote Gonzalez in a follow-up tweet on Sunday. “I probably could’ve expressed my frustration in a less aggressive way. Of course, no one would’ve cared if I tweeted that.”

On the other hand, Tesla has seen some support from those like U.S. Treasury Secretary Steven Mnuchin. Mnuchin backed Musk on Monday, telling CNBC that California should help Tesla reopen its plant.

“I agree with Elon Musk. He’s one of the biggest employers and manufacturers in California, and California should prioritize doing whatever they need to do to solve those health issues so that he can open quickly and safely,” Mnuchin said on “Squawk on the Street.”

“They’re going to find that if he’s threatened he’s going to move his production to a different state,” Mnuchin added.

As some have pointed out, moving Tesla’s headquarters, especially during the pandemic, would be a difficult and costly move for the company.

“Moving away from Fremont would take at least 12 to 18 months and could add risk to the manufacturing and logistics process in the meantime,” Wedbush Securities analyst Daniel Ives wrote in a note to investors.

However, Musk has previously hinted that he’s eyeing other places to build his Cybertrucks and expand production of his Model Y crossover, so some believe Musk’s frustrations with the state and county could further push him to launch more operations elsewhere.

The lawsuits come as competing automakers are gradually starting to reopen factories in the U.S. Toyota will restart production on Monday, while General Motors, Ford, and Fiat Chrysler all plan to restart their plants gradually on May 18. 

See what others are saying: (Huffington Post) (Axios) (CNBC) 

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CVS, Walgreens, and Walmart Helped Fuel the Opioid Crisis, Jury Finds

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While all three chains have vowed to appeal, this ruling is a massive win for plaintiffs who argued that opioid manufacturers and retailers violated “public nuisance” laws when contributing to the opioid epidemic.


Jury Sides Against Retailers

A federal jury in Cleveland agreed Tuesday that CVS Health, Walgreens, and Walmart — three of the country’s biggest pharmacy chains — are responsible for contributing to the opioid crisis in two Ohio counties.

This is the first time that the retail arm of the drug industry has been held accountable for opioid overdoses and deaths. It’s also the first time a jury has been used to decide in a major opioid lawsuit.

Previously, only manufacturers such as Purdue Pharma and Johnson & Johnson faced settlements or penalties, though the latter narrowly escaped $465 million in opioid fines in Oklahoma earlier this month after the state’s Supreme Court overturned a lower court ruling. 

Many plaintiffs in thousands of similar lawsuits all across the country are seeing the Ohio jury’s decision as an optimistic sign — especially since most of them are using the same argument. Plaintiffs in Ohio alleged that either opioid manufacturers or retailers violated “public nuisance” laws by ignoring harm caused by opioid abuse that later snowballed into a full-fledged public health crisis. 

Retailers Vow to Appeal

Unsurprisingly, all three chains have promised to appeal Tuesday’s verdict.

There is precedent to think this decision could be overturned. For example, the now-overturned J&J lawsuit first successfully used the public nuisance argument in lower courts, but during an appeal, the Oklahoma Supreme Court thought the plaintiff’s argument was too broad. 

That said, every state has different public nuisance laws, so there may not be a clear-cut answer as to what actually could happen with all these cases. 

Despite a pending appeal, the judge overseeing Tuesday’s Ohio verdict will make a determination on how much these companies must pay after additional hearings in the spring. 

While the retail arm has largely avoided settling up to this point, if this case ultimately does not go their way, it could open the door for future settlements if they decide that route is less costly than going to trial. 

See what others are saying: (The New York Times) (Associated Press) (The Wall Street Journal)

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Biden Authorizes Release of 50 Million Barrels of Oil From U.S. Reserve To Ease Gas Prices

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Experts believe the release will, at best, provide temporary relief to extremely high gas prices but only if other countries tap into a significant amount of oil from their reserves as well. 


Biden Taps Into Oil Reserves

President Joe Biden authorized the release of 50 million barrels of oil from the U.S. Strategic Petroleum Reserve on Tuesday in an attempt to bring down staggeringly high gas prices.

“American consumers are feeling the impact of elevated gas prices at the pump and in their home heating bills, and American businesses are, too, because oil supply has not kept up with demand as the global economy emerges from the pandemic,” a White House announcement reads. “That’s why President Biden is using every tool available to him to work to lower prices and address the lack of supply.”

As of Tuesday morning, the national average of gas sat at $3.40, according to the American Automobile Association (AAA). While down slightly over the last few days, the national average for November remains the highest it’s been since 2013. 

Despite the announcement, Americans shouldn’t expect to see an immediate drop in gas costs. In fact, gas prices are unlikely to be impacted much in the coming weeks since the government’s reserve only stores crude oil, which will need time to be refined into gasoline. 

Many analysts expect gas from the reserves to start reaching consumers’ pumps around mid-December, but even then, it will likely be used up in around a week. Last year, the U.S. used about 8 million barrels of gas from the reserve a day.

Those two factors are likely major contributors to why this news didn’t do much to calm the oil market. Following the announcement Tuesday, the benchmark oil price in the U.S. — measured by West Texas Intermediate crude futures — actually rose. 

Last week, Biden asked the Federal Trade Commission to look into “mounting evidence of anti-consumer behavior by oil and gas companies” amid rising gas prices. 

Price Concerns Persist

In its announcement, the White House said the U.S. release is being taken “in parallel with other major energy consuming nations, including China, India, Japan, Republic of Korea, and the United Kingdom.” 

A number of analysts cited by various news publications have predicted that this kind of multi-country release is the only chance the U.S. actually has of meaningfully impacting gas prices.

“The bottom line for motorists is this moves the needle — but barely, and maybe not for a very long period of time,” Patrick De Haan, an industry expert at Gas Buddy, explained to The Washington Post. “It’s certainly something, but how much that something is will be contingent on how much the other countries put in.”

It is currently unclear how much oil the other countries plan to release, though Indian officials have said the country will release 5 million barrels from its reserve. 

Efforts could also go south in the long-term if the Organization of the Petroleum Exporting Countries (OPEC) pushes back. It previously warned of a possible response if Biden decided to make this type of release, with the organization arguing that the U.S. has no real justification for needing to tap into its reserve. 

“There’s a threat this could lead to a risk of prices being elevated for longer if OPEC holds back meaningful production increases as a result,” De Haan told The Post. 

Overall, the release of oil is a tricky situation for Biden. He was already facing stacking criticism from Republicans for recent inflation and supply chain bottlenecks. Even now, many have said the release of 50 million barrels isn’t good enough on its own.

On the other side, Democrats like Senate Majority Leader Chuck Schumer (N.Y.) have argued that tapping into the reserve could provide temporary relief.

See what others are saying: (The Washington Post) (Business Insider) (Fox Business)

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Looters Launch Coordinated Attacks on High-End Stores Like Louis Vuitton in Chicago and San Francisco

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It’s unclear if the multiple attacks in each city are connected, but police have described the events as coordinated and planned. 


Raid on San Francisco’s Union Square

Dozens of individuals looted at least 10 stores in San Francisco’s Union Square on Friday, though that’s far from the only seemingly organized raid that occurred over the weekend.

Cell phone video from the incident shows multiple people running into a Louis Vuitton store and emerging with armfuls of merchandise. KGO-TV reporter Dion Lim shared images of the store picked clean in the aftermath, with its windows shattered. Burberry, Fendi, and YSL were among the other businesses she said looters targeted.

Video shared by Twitter user @CARLITOSGUEY shows San Francisco police officers swarming a Mustang outside of the Louis Vuitton store and beating its windows with their batons. They then pull someone from the passenger’s seat and pin that person to the ground.

At a news conference on Saturday, police told reporters they “were confronting an armed individual” in the Mustang. That vehicle, along with another, has now been seized by the department. Police also said they have so far made eight arrests connected to the incident. 

Police Chief Bill Scott has called the attack “concerted,” saying, “There’s no doubt in my mind that this was not unplanned.”

In total, over $1 million in merchandise was stolen. 

Other San Francisco Raids

Friday’s raid was quickly followed up the next night when around 80 looters ransacked a Nordstrom near San Francisco. All but three thieves managed to evade authorities.

At least two store employees were assaulted during the attack, including one worker who was pepper-sprayed by looters, according to a press release published Sunday by the Walnut Creek Police Department. 

Like the previous raid in Union Square, police described this attack as “clearly a planned event.” 

On Sunday night, yet another raid occurred at a jewelry store in Hayward, which is about 30 miles outside of San Francisco.

As of Monday afternoon, investigators have not been able to confirm whether these attacks are connected, though in recent years — and especially in recent months — they have become increasingly common.

For example, in May, Walgreens said it closed 17 Bay Area stores because of rampant shoplifting. 

“We are exploring every single possible criminal charge related to the conduct,” San Francisco District Attorney Chesa Boudin said Saturday. “We will use every tool in our tool belt.”

Chicago Louis Vuittons Raided 

The attacks in San Francisco follow a similar event that happened in a Louis Vuitton store in the suburbs of Chicago this past Wednesday.

During that heist, a group of 14 seemingly unarmed individuals ran into the store in broad daylight and began stockpiling merchandise sitting on shelves. 

So far, police have not made any arrests; however, they said they have retrieved one of the three vehicles the looters used as getaway cars. 

They also confirmed that no one was injured during the attack but that $120,000 in merchandise was stolen.

See what others are saying: (KGO-TV) (The Washington Post) (NBC News)

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