The first expert to testify was Diarmuid O'Connell, who is a VP at Tesla and apparently one of the old guard there. He is well-spoken and his direct testimony was clear and well-presented. It didn't really contain much information that would be new to us, but it covered a lot of ground in explaining Tesla and their mission. It did a good job of balancing the rah-rah save the planet stuff with more clear eyed profit motivated business stuff. Probably the one thing that was closed to news to me was that he said unequivocally that if Tesla ceased R&D and only produced that S and X, they could operate as a profitable company. This has been sort of hinted before, but I've never head a Tesla exec state it that flatly as a fact. As those of you who invest know, it is difficult to separate the Cash Ex that is R&D oriented from that spending that is needed to operate their business base. His direct testimony only took about 40 minutes and included a walk-through of the ordering process and website, a description of the compensation for the store folks and a few digs at the dealer model. He comes across as a likable guy and clearly has a solid understanding of what Tesla is trying to do.
The cross-examination of O'Connell was a complete disaster. Not so much in the sense that he gave up much ground, but it was tedious and confrontational and ended up making both parties look bad, although the dealer's attorney was very much the biggest loser if there was a jury. He starts out reading a letter from one of the dealers in the room behind him to Elon Musk. In the letter, the dealer expresses interest in starting a Tesla dealership in Richmond. There is an endless series of questions about if O'Connell saw the letter before (he saw it yesterday when preparing for this testimony), did he discuss it with Musk personally? Did he discuss it with Musk on email? Did he discuss it with Musk on twitter? Did he discuss it in a boat? In a moat? O'Connell points out that it was one of a thick package of identical letters sent by other dealers and that he regarded them as a litigation tactic and not as serious business proposals. They go back and forth about why did he think it was insincere, I didn't use the word insincere, etc etc. Then there is a long series of questions about did he know who this lady was? Had he ever met her? Did he look her up on "the Google machine?" How does he know she isn't qualified? Did he send her an application? Pretty much the whole deal was answered in the first two questions -- he never saw the letters before yesterday, no one in the company took them seriously, no one investigated the qualifications of the dealers because they weren't interested in recruiting dealers.
I didn't get too worked up, because that is how lawyers work -- poke at things from every possible angle. So fine, I can sit through this. Thankfully, he finally runs out of steam and instructs O'Connell to turn the page. The gallery is relieved to finally have a new topic. But no. It is another letter. From a different dealer sitting behind him. And he pretty much asks all the same questions.
Guess what happens next? Yep, another letter and all the same questions. And another. And another. And another.
I'm alternating between reading the email/text of the newspaper photographer in front of me who is juggling at least eight different conversations and playing games on my phone. I'm envious of his foresight in bringing laptop, iPad and phone to the hearing and a bit concerned that his social life is too hectic.
Sometime during this process, O'Connell becomes really frustrated and starts to get more combative with his answers. I totally understand it, but it probably wasn't the best tactic. It leads to some weirdness later as he appears unwilling to confirm things like Tesla's unwillingness to consider an independent dealer model that he has already stipulated on direct.
I'm somewhat frustrated by Tesla's attorney, because it seems to me by the third letter, the obvious thing would be to stipulate that they have the same answers to every one of these letters and that it is wasting everyone's time to do the same thing over and over. In a real court a judge would have stomped on that stuff even without an objection. Unfortunately no one objects and this goes on for at least 90 minutes, maybe even two hours.
Normally, even the relaxed atmosphere of a public hearing, outbursts from the gallery are really frowned upon. So we are all sitting silently watching this travesty. Finally, someone (I apologize if I met you and should know which owner this was), stands up in the gallery and objects, saying that this is a ridiculous waste of time and can we move on to another topic. The VADA attorney looked as surprised as anyone both at the outburst and at the fact that the hearing officer doesn't seem to mind. He says something frosty like "I don't know who that gentleman is" and is told "I'm a member of the public and this is a public hearing" The hearing officer agrees with him and requests the attorney to move on. Unfortunately, he was already on his last letter, so it didn't save much time. Another audience member, emboldened by the new development that we can comment on the proceedings, describes the proceedings as a filibuster by the VADA attorney designed to preclude any meaningful information from being shared. Mr. Small thinks about this for a while and decided a 30 minute lunch break is the right thing to do in order to calm things down.
When we return from lunch, the tone is different. The Tesla attorney is more pro-active in objecting to stuff as irrelevant and the audience is now much more prepared to interject. We move a bit more quickly through the remainder of the cross examination. Unfortunately, at this point I realize that the continuous usage of my cell phone to take notes and play video games is going to crush my battery before this exercise draws to a close, so I don't have much in the way of notes from this point onward, despite it being more substantive. Next time, I'd bring a battery pack and at least an iPad.
Specific areas where I know he hit O'Connell after lunch include:
- a lot of inquiries into the financials of the Tyco Road store. He is trying to get a P/L for that store or at the very minimum a list of expenses related to that store. O'Connell declines and pretty much says that the financial operations of the retail operation aren't his area.
- The consumer reports article where they knock Tesla on repairs. O'Connell handles this one pretty well, pointing out that they continue to report extraordinary customer satisfaction levels, just that they see high repair rates. He asserts that these are primarily teething pains and that newer model have fewer problems.
- He walks though a variety of customer complaints he's found on various forums. Some are valid, many are trolls, like the short who posts ridiculous stuff on the NHTSA website. He has a lot of questions about how Tesla tracks these complaints and ensures that they are responded to. O'Connell mostly asserts that these aren't his arena, although he does express confidence that they are handled. I'm assuming he is trying to avoid discovery hassles, because even I know the basics of how they track these issues. He does address the NHTSA stuff by pointing out that many of those reports are well known to be invalid. Someone from the audience points out that the "engine falling out" one is a well-known troll.
- He addresses the recall. The VADA guy tries to make it look bad, but I though O'Connell handled it well. I'm pretty sure this one also drew an audience comment.
- At some point the Tesla attorney objects. Mr. Small agrees, saying "I thought your position was that you thought Tesla was great and you wanted to open Tesla dealerships, why are you trashing them?" The VADA guy pretty much lays out that he's more concerned about the record for future proceedings and more or less doesn't care if Small thinks its irrelevant.
- The attorney attempts to drill through the 10K, but he doesn't seem to be very sophisticated about financial statements, because his questions are goofy. He seems to be trying to establish that Tesla might not be a viable business going forward, but doesn't have the tools to even slow O'Connell down on that front and he gives up, although he returns to it with a subsequent witness.
- There are a large number of questions calculated to identify what he should ask for in discovery. He wants to know about email retention policies and archiving (although he isn't able to articulate that is what he wants, even with some help from O'Connell) and he asks a number of questions trying to determine what other Tesla officials he should depose. At some point it came out that he tried to depose Musk and got the cold shoulder from Tesla.
When they finally release O'Connell, he can't get out of there fast enough. I know how he feels. The Tesla attorney makes the routine motion to have his written testimony admitted to the record and the VADA guy actually objects. This is just an asshole move. It would require Tesla to recall O'Connell and have him read all the written stuff in order to get it on the record and is not in keeping with the generally genteel style of Richmond law. The hearing officer gives the VADA attorney the stink-eye and admits it anyhow.