Tesla seeks to dismiss securities fraud lawsuit: U.S. court document

SAN FRANCISCO (Reuters) – Tesla Inc on Friday asked a court to dismiss a securities fraud lawsuit by shareholders who said the electric vehicle maker gave false public statements about the progress of producing its new Model 3 sedan.

A Tesla dealership is seen in West Drayton, just outside London, Britain, February 7, 2018. REUTERS/Hannah McKay

In a filing in federal court in San Francisco, Tesla said that its statements about the challenges the company faced with Model 3 were “frank and in plain language,” including repeated disclosures by Chief Executive Elon Musk of “production hell.”

Tesla did not seek to hide the truth, its motion to dismiss said.

The company says its Model 3 has experienced numerous “bottlenecks” from problems with Tesla’s battery module process at its Nevada Gigafactory to general assembly at its Fremont plant.

Tesla is under pressure to deliver the Model 3 to reap revenue and stem massive spending that has put Tesla’s finances in the red. The ramp of the Model 3, Tesla said in the court filing, was “the first of its kind,” with difficulties likely to crop up after it got underway.

The lawsuit filed last October seeks class action status for shareholders who bought Tesla stock between May 4, 2016 through October 6, 2017, inclusive. It said shareholders bought “artificially inflated” shares because Musk and other executives misled them with their statements.

Tesla made such statements during the lead-up to, and early production of, its Model 3 sedan and failed to disclose that the company was “woefully unprepared” for the vehicle’s production, the lawsuit said.

A hearing is scheduled for August.

The Tesla response chronicled disclosures of production bottlenecks the company faced in its third quarter of 2017 when it fell short of its targets.

Tesla’s statements that its Model 3 production was “on track” in May and August of 2017 – which plaintiffs argue were false – were made before production problems began to surface, Tesla argued.

Tesla said its “good faith belief” in the Model 3 program is reflected in everything it has done: a $4 billion investment, the build-out of its Gigafactory battery factory in Nevada and the high-volume equipment it commissioned.

Reporting By Alexandria Sage; Editing by Peter Henderson and Grant McCool

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Artist Frida Kahlo's popularity soars, but family struggles to manage legacy

MEXICO CITY (Reuters) – A coil of dark braids. Colorful Mexican dress. And a signature unibrow.

A Google employee maps the exterior of the childhood home of Mexican artist Frida Kahlo, now Frida Kahlo Museum, also known as “Casa Azul”, in Mexico City, Mexico May 21, 2018. Picture taken May 21, 2018. REUTERS/Gustavo Graf

Sixty-three years after her death, Mexican artist Frida Kahlo has achieved a level of fame she never reached in her lifetime, her image emblazoned on mugs, T-shirts, keychains and even underwear. But scholars and the painter’s descendants lament she has been reduced to a set of distinctive physical features that often overshadows her actual work.

The debate heated up this spring when toymaker Mattel released a Barbie in Kahlo’s image, over protests from her family.

The Barbie and other merchandise do not capture Kahlo’s complex legacy as a feminist icon, a disabled woman who channeled her pain into art, an ardent communist and an inspiration to the LGBT community, scholars say.

“Frida Kahlo is not a product or a brand…. Frida Kahlo is not a doll,” said photographer Cristina Kahlo, the artist’s great niece. “For us, it is important to maintain the image of Frida Kahlo as the painter that she was.”

This month, a new project aims to return the focus to her art. Alphabet’s Google, working in collaboration with the Kahlo family, has dedicated a portion of its Arts and Culture app to the artist’s life and work.

The search giant partnered with 33 museums to digitize Kahlo’s most famous paintings and bring new work into the public eye. The app also features rare letters, diary entries and sketches, in addition to a virtual tour of her famous blue home.

The Kahlo family played an active role. U.S. artist Alexa Meade and Mexican musician Ely Guerra collaborated on a piece of “living art” honoring Kahlo, working under her great niece’s guidance.

“These projects that are related to Frida from a cultural point of view, spreading her painting, works and story… are projects I like and feel comfortable participating in,” Cristina Kahlo said.

Cristina Kahlo, great-niece of Mexican artist Frida Kahlo, speaks during an interview with Reuters at the Frida Kahlo Museum, also known as “Casa Azul”, in Mexico City, Mexico May 21, 2018. Picture taken May 21, 2018. REUTERS/Gustavo Graf

The museums and cultural institutions that Google partnered with managed the rights. Google says no money changed hands.

Kahlo’s husband, artist Diego Rivera, established a trust supervised by the Banco de Mexico to operate museums dedicated to the couple’s work, and the trust also oversees the copyright to the works.

Kahlo’s brand and image are more contentious. In the early 2000s, one of Kahlo’s nieces, Isolda Pinedo, and her daughter, Mara Romeo, assigned rights to the Kahlo brand to a company known as the Frida Kahlo Corporation, according to court papers.

Tension boiled over in March when Mattel released a Kahlo Barbie, licensed by the Frida Kahlo Corporation.

In a case launched by family members, a Mexican civil court judge issued a preliminary injunction blocking the sale of the doll and other products licensed by the Frida Kahlo Corporation in Mexico. Mattel asked a federal court to lift the injunction, and a ruling is expected in June, a Mattel spokeswoman said.

“This Barbie doll is meant to honor Frida Kahlo’s great legacy and we hope it will be back on shelves in Mexico soon,” Mattel said in a statement.

Pablo Sangri Gil, a lawyer for Romeo, told Reuters the Barbie was an example of the Frida Kahlo Corporation operating without consulting with the family, in violation of the rights agreement.

Slideshow (9 Images)

In turn, the Frida Kahlo Corporation sued Romeo this month in a Florida federal court, alleging that she violated the contract by licensing Kahlo-branded products of her own.

Gil said he had not been formally notified of the Florida lawsuit.


The feud underscores the challenges of managing celebrity legacies, said Jonathan Faber, CEO of Luminary Group, a licensing firm.

Guitarist Jimi Hendrix’s family battled over his image, licensing dueling products. A memorial fund for Princess Diana tried to block Franklin Mint from selling dolls and other memorabilia modeled after the royal, but a U.S. court ultimately allowed the products to stay on shelves.

Kahlo, who died at age 47, gained greater prominence with the publication of a landmark biography in the early 1980s, and her popularity has only grown since.

In contrast with many famous male artists, Kahlo is better known for her appearance than her work, scholars say. They welcome a return to the art.

Kahlo “has become a Halloween costume,” said Oriana Baddeley, a professor at University of the Arts London.

There is irony in her reincarnation at the hands of Mattel, said Charlene Villasenor Black, an art history professor at the University of California, Los Angeles.

“How many other communist Barbie dolls are there?” she said.

Reporting by Julia Love; Editing by Cynthia Osterman

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