The two certified classes in the case against Tesla contained at least 3,595 people and at least 212 people. Those were the numbers a federal judge in California signed off on in August 2025, in a lawsuit about a driver-assistance feature that Tesla had sold to buyers in the hundreds of thousands. The gap between the size of the class and the size of the market is the story of what happened next.
On October 16, a three-judge panel of the Ninth Circuit vacated the certification of all three classes, two of them under Rule 23(b)(3) and one seeking injunctive relief under Rule 23(b)(2), and sent the case back to the district court. The memorandum, numbered 25-7927, is not published and is not precedent beyond the circuit’s own rules, which limits how much it will bind anyone. It will still be read closely by every company that markets a product on a website.
The holding turned on exposure, not on whether Tesla’s statements were true. Thomas LoSavio’s complaint alleges that Tesla misrepresented the hardware in cars sold with the Full Self-Driving package, in violation of California’s consumer protection statutes and common law. A sentence describing that hardware appeared on Tesla’s Autopilot webpage from October 2016 until August 2024, and on other pages at various points. The district court reasoned that because Tesla sells directly, buyers were likely to consult its site, and certified classes on that basis.
The panel rejected the inference. Buyers did not have to visit the Autopilot page to order a car with the package, and a court cannot assume that a statement posted on a website was seen by everyone who bought the product the website described. “The first assumption prevents an inference of classwide exposure,” the panel wrote. Without a common answer to the question of who saw the statement, the commonality that Rule 23(b)(3) requires for damages classes was not there, and the statute-of-limitations defenses Tesla raised became individual questions as well.
The court did not decide whether the statements were false. It did not reach the plaintiffs’ damages model, because the exposure ruling disposed of certification on its own. The lawsuit is alive, and one plaintiff can still take it to trial.
What the ruling removes is the financing. A class action is a mechanism for aggregating claims that are too small to litigate alone, and the arithmetic here is unforgiving. The FSD package has been priced between 8,000 dollars and 15,000 dollars over its life, and is now also sold as a subscription at around 99 dollars a month. An owner’s individual damages are a fraction of that, net of the value of the feature actually delivered. Expert reconstruction of what each buyer saw, when, and whether it mattered costs more than the claim is worth, which is why plaintiff firms take these cases on contingency and only when a class is certified.
The arbitration clauses had already done most of the work before the panel touched the case. Tesla’s purchase agreements route most disputes to individual arbitration, and the certified classes excluded buyers bound by them. What remained was a group in the low thousands out of a customer base in the millions, which is what a liability regime looks like when it is administered through contracts nobody reads.
Defense lawyers have been building toward this ruling for several years. In misrepresentation cases involving online marketing, the pressure point has moved from falsity to exposure, and from exposure to predominance. The U.S. Chamber of Commerce filed a brief urging the panel to reverse, arguing that certifying a class without proof that each member encountered the statement would expose every company with a website to aggregate liability for pages most customers never load. Plaintiffs’ lawyers will answer with purchase-flow data, session records and surveys, and the fight over what counts as proof of seeing something will continue in the district courts.
For Tesla, the immediate effect is a large reduction in expected payout and no reduction in the underlying argument. The company has maintained that its hardware was capable of the features it described and that the software would arrive through updates, and the case has never reached a jury that could accept or reject that account. The claims about the name of the product, and about what the phrase full self-driving is reasonably understood to mean, remain the subject of regulatory inquiries in several states and of scrutiny from federal safety officials.
The wider consequence is where deterrence now lives. When a class cannot be certified and individual claims cost more than they recover, misconduct that harms many people a little is policed by regulators and attorneys general rather than by courts. That is a policy outcome produced by two ordinary pieces of commercial drafting, a website and an arbitration clause, and it applies well beyond cars.
The plaintiffs can ask the full Ninth Circuit to rehear the case, a petition that succeeds rarely, or return to the district court with narrower classes, perhaps defined by state or by purchase channel, that answer the exposure question the panel raised. Either path takes years, and the vehicles in question are already off warranty.
Tesla has not commented beyond its filings. The buyers who paid for a feature that did not do what they believed they were buying have no equivalent remedy, and no forum in which their numbers add up to anything a lawyer will fund.
