Tesla’s Drive to Reopen: An Intersection of Employment and Constitutional Law

The COVID-19 pandemic has led state and local governments to order businesses throughout their states closed in order to reduce the spread of the virus and its strain on healthcare systems.  The electric carmaker Tesla was one such business and, as has been widely covered in the news, recently sued Alameda County in California because it prohibited Tesla from reopening its factory.  Earlier this month Elon Musk, Tesla’s CEO, dramatically announced that Tesla’s factory in Alameda County would reopen and begin manufacturing again in defiance of the County’s order.  This position put Tesla directly at odds with the County in which it operates and offers an interesting intersection between employment, government and constitutional law.

Tesla’s decision was met with strong opposition and the threat of criminal prosecution from the County because it directly violated the County’s lockdown order.  Tesla’s chief argument was that the County’s decision violated Tesla’s rights under the constitution.  In particular, Tesla pointed out that Alameda County wrongfully declared its own county rules as superseding California’s state order to carry on with “critical infrastructure activities.”  According to Tesla, the County was thus not acting under existing authority of local health officials, but rather issuing policies that were more restrictive than the baseline policies outlined by Governor Gavin Newsom’s stay-at-home order.  Thus, Tesla claimed that the County was acting beyond the authority of the state.  Musk went so far as to threaten to shutter his California manufacturing facilities and relocate them to more business friendly states such as Texas and Nevada should Tesla not be allowed to reopen.

In its complaint, Tesla made three overarching arguments.  First, it argued that the County’s order violated the Fourteenth Amendment’s right to due process as the order failed to give reasonable notice in addressing forbidden conduct and expressly prohibiting and subjecting to criminal prosecution that which was permitted under the California Governor’s orders.  Second, Tesla alleged that the County’s order violates the Fourteenth Amendment’s Equal Protection Clause as the County discriminated against “identically situated parties without any rational basis.”  The equal protection argument is grounded in the fact that manufacturers, who are considered “essential” businesses throughout California, are permitted to operate in neighboring counties while Tesla’s facility was forced to close.  Third, continuing on constitutional grounds, Tesla alleged that the County violated the California Constitution when it enforced laws that directly conflict with the laws of California.

The parties appear to have resolved the issue for now, but Tesla’s lawsuit against the County is among the growing number of constitutional challenges to stay-at-home orders nationwide.  Most notably, the Wisconsin Supreme Court recently struck down that Governor’s stay-at-home order holding that the governor did not have standing to impose stay at home restrictions and related penalties.  With nearly every state in the country enacting some form of social distancing or stay-at-home order, litigation of this nature is likely to continue as businesses seek the right to open and challenge government restrictions that are often premised on dubious or at least unclear legal grounds.

Determining the constitutionality of state and local orders is a complicated and nuanced exercise as public health and safety interests naturally conflict with long-held constitutional rights.  While the Supreme Court has not directly addressed the powers of state and local governments to create and enforce such stay at home orders, the litigation over the coming months will help define the contours of what powers states and localities have in responding to public health crises.  In the middle of this debate will be employers seeking to operate, employees seeking to work, and families scared about their health and security.  As a result, decisions made now will have profound effects on the contours of employment in New York, Connecticut and throughout the country.  The Boyd Law Group will monitor the effects of these orders and is here to help both individuals and small businesses navigate the legal landscapes of the current crisis. #TheBoydLawGroup