Page 1 INDEX NO. 654765/2019
FILED: NEW YORK COUNTY CLERK 08/20/2019 06:40 PM
NYSCEF DOC. NO. 58
RECEIVED NYSCEF: 08/20/2019
EXHIBIT 252Page 2 INDEX NO. 654765/2019
FILED: NEW YORK COUNTY CLERK 08/20/2019 06:40 PM
NYSCEF DOC. NO. 58
RECEIVED NYSCEF: 08/20/2019
DavisPolk
New York
Northern California
Washington DC
Sao Paulo
London
Paris
Madrid
Hong Kong
Beijing
Tokyo
James P. Rouhandeh
Davis Polk &Wardwell ~~P Lexington Avenue
New York, NY 10017
450 4835 tel
rouhandeh@davispolk.com
August 14, 2019
Fred Norton
The Norton Law Firm PC Third Street, Suite 106
Oakland, CA 94607
Re:
Notice of Material Breach of Solar Power &Services Agreements
Dear Mr. Norton:
write on behalf of Walmart Inc.("Walmart") in response to your correspondence dated August 1, 2019 (the "Letter"). The most notable aspect of your Letter is its continued failure to address
the extensive factual record demonstrating Tesla's system-wide negligence. While claiming that
Tesla wants to resolve this dispute outside of litigation, the Letter's references to "bad faith" belie
that purported preference. Without responding to every assertion or repeating the points from
our prior correspondence, we write to correct several of the Letter's misstatements.
First, the Letter misstates or overlooks the evidence that Tesla's solar panel systems, if reenergized, would pose an imminent risk of danger to people and property. Those systems
caused at least six fires (not four, as the Letter contends, see Letter at 3), and the extensive
information developed to date—uncontradicted by Tesla or by the Letter—indicates that
negligent installation, operation, and maintenance practices caused or contributed to those fires.
The Letter's assertion that Walmart has continued de-energization of 244 systems "based on
events that occurred at four" (id.) is incorrect: Walmart has inspected numerous sites (beyond the
four that experienced fires in 2018), and the results of its examinations—coupled with the
conclusions of Tesla's own inspectors—confirmed that conditions creating a risk of fire were
present at site after site. Tesla's inspection reports, far from reassuring Walmart that the sites
are safe, have increased Walmart's concerns by further documenting patterns of negligence by
Tesla. Tesla's cavalier dismissal of those findings—and its suggestion that Walmart should reenergize sites that Tesla's own inspectors found to pose safety risks—reflects either an inability
to appreciate its inspectors' findings or indifference towards the safety of Walmart's personnel
and customers.
Instead of joining issue on the merits of Walmart's breach claims, the Letter attempts to distract
from the core issue with baseless allegations. For instance, you contend that Walmart has not
consistently demanded root cause analyses from Tesla (id. at 2); however, from the moment it
notified Tesla of breaches of the relevant agreements on May 31, 2018, Walmart has insisted on
receiving final root cause analyses. The "causation analyses"(id.) that Tesla provided in 2018Page 3 FILED: NEW YORK COUNTY CLERK 08/20/2019 06:40 PM
NYSCEF DOC. NO. 58
INDEX NO. 654765/2019
RECEIVED NYSCEF: 08/20/2019
August 14, 2019
were not final root cause analyses. In fact, Walmart did not see any final root cause analyses
until August 8, 2019, when-over fourteen months after Walmart's initial request-Tesla finally
produced the first of these reports. The rest remain outstanding.
Similarly, despite the Letter's efforts to twist the words of a Walmart employee (id.), Walmart has
never agreed to any Tesla inspection protocol. In part, that is because any such protocol must
account for the findings of the final root cause analyses and ensure that the causes of the fires
do not exist at any Walmart sites. The Letter's insistence that Walmart has changed its
objectives over the course of the parties' negotiations (id.) is untrue. One of Walmart's principal
objectives has always been to ensure that the factors that caused the fires at Beavercreek,
Denton, Indio, and Yuba City (as well as at least two other locations) were not present at other
stores. Tesla's repeated inability to demonstrate that it knows how to care for solar panel
systems has stymied Walmart's persistent efforts to achieve this objective.
The Letter's discussion of the parties' negotiations over a possible contractual amendment (id. at-4) also contains inaccuracies. Following months of negotiations in which Tesla failed to
provide final root cause analyses, conduct appropriate inspections, or even provide Walmart with
contractually required payments for out-of-pocket losses, Walmart pursued discussions with
Tesla regarding a potential amendment to the parties' contracts. Walmart proposed an
amendment that, among other things, would have required Tesla to: (i) adopt additional site
monitoring protocols, (ii) compensate Walmart for damages "arising out of [Tesla]'s design,
construction, installation, testing, maintenance, operation, repair, alteration, replacement or
removal of the System," and (iii) compensate Walmart for certain consequential damages caused
by Tesla's solar panels. The Letter's assertion that the amendment "would have made Tesla
liable for thermal events even if they were not caused by the Tesla system" (id. at 3) is false.
Walmart's proposals were reasonable, and indeed, Tesla itself agreed that it would be
appropriate to grant Walmart additional contractual rights in light of the fires. It is baseless to
suggest that these negotiations reflected bad faith on Walmart's part and belies Tesla's
professed desire to resolve these disputes without litigation.
Finally, Walmart reiterates, as it has explained elsewhere, that it has not breached any of its
agreements with Tesla. (See Letter from E. Boniche Silcott, dated Aug. 6, 2019.) The Letter
does not identify any contractual provision that Walmart allegedly breached, nor does it cure the
failure of Tesla's prior correspondence to set forth any basis for a breach claim against Walmart.
Please direct any future correspondence regarding this matter to me.
cc:
Robert Williams (robert.williams@walmartlegal.com)
Eneida Boniche Silcott (eneida.silcott@walmartlegal.com)
Joseph Krcmar (joseph.krcmar@walmartlegal.com)
PDF Page 1
PlainSite Cover Page
PDF Page 2
INDEX NO. 654765/2019
FILED: NEW YORK COUNTY CLERK 08/20/2019 06:40 PM
NYSCEF DOC. NO. 58
RECEIVED NYSCEF: 08/20/2019
EXHIBIT 252
PDF Page 3
INDEX NO. 654765/2019
FILED: NEW YORK COUNTY CLERK 08/20/2019 06:40 PM
NYSCEF DOC. NO. 58
RECEIVED NYSCEF: 08/20/2019
DavisPolk
New York
Northern California
Washington DC
Sao Paulo
London
Paris
Madrid
Hong Kong
Beijing
Tokyo
James P. Rouhandeh
Davis Polk &Wardwell ~~P
450 Lexington Avenue
New York, NY 10017
212 450 4835 tel
rouhandeh@davispolk.com
August 14, 2019
Fred Norton
The Norton Law Firm PC
299 Third Street, Suite 106
Oakland, CA 94607
Re:
Notice of Material Breach of Solar Power &Services Agreements
Dear Mr. Norton:
write on behalf of Walmart Inc.("Walmart") in response to your correspondence dated August
1 1, 2019 (the "Letter"). The most notable aspect of your Letter is its continued failure to address
the extensive factual record demonstrating Tesla's system-wide negligence. While claiming that
Tesla wants to resolve this dispute outside of litigation, the Letter's references to "bad faith" belie
that purported preference. Without responding to every assertion or repeating the points from
our prior correspondence, we write to correct several of the Letter's misstatements.
First, the Letter misstates or overlooks the evidence that Tesla's solar panel systems, if reenergized, would pose an imminent risk of danger to people and property. Those systems
caused at least six fires (not four, as the Letter contends, see Letter at 3), and the extensive
information developed to date—uncontradicted by Tesla or by the Letter—indicates that
negligent installation, operation, and maintenance practices caused or contributed to those fires.
The Letter's assertion that Walmart has continued de-energization of 244 systems "based on
events that occurred at four" (id.) is incorrect: Walmart has inspected numerous sites (beyond the
four that experienced fires in 2018), and the results of its examinations—coupled with the
conclusions of Tesla's own inspectors—confirmed that conditions creating a risk of fire were
present at site after site. Tesla's inspection reports, far from reassuring Walmart that the sites
are safe, have increased Walmart's concerns by further documenting patterns of negligence by
Tesla. Tesla's cavalier dismissal of those findings—and its suggestion that Walmart should reenergize sites that Tesla's own inspectors found to pose safety risks—reflects either an inability
to appreciate its inspectors' findings or indifference towards the safety of Walmart's personnel
and customers.
Instead of joining issue on the merits of Walmart's breach claims, the Letter attempts to distract
from the core issue with baseless allegations. For instance, you contend that Walmart has not
consistently demanded root cause analyses from Tesla (id. at 2); however, from the moment it
notified Tesla of breaches of the relevant agreements on May 31, 2018, Walmart has insisted on
receiving final root cause analyses. The "causation analyses"(id.) that Tesla provided in 2018
PDF Page 4
FILED: NEW YORK COUNTY CLERK 08/20/2019 06:40 PM
NYSCEF DOC. NO. 58
INDEX NO. 654765/2019
RECEIVED NYSCEF: 08/20/2019
2
August 14, 2019
were not final root cause analyses. In fact, Walmart did not see any final root cause analyses
until August 8, 2019, when-over fourteen months after Walmart's initial request-Tesla finally
produced the first of these reports. The rest remain outstanding.
Similarly, despite the Letter's efforts to twist the words of a Walmart employee (id.), Walmart has
never agreed to any Tesla inspection protocol. In part, that is because any such protocol must
account for the findings of the final root cause analyses and ensure that the causes of the fires
do not exist at any Walmart sites. The Letter's insistence that Walmart has changed its
objectives over the course of the parties' negotiations (id.) is untrue. One of Walmart's principal
objectives has always been to ensure that the factors that caused the fires at Beavercreek,
Denton, Indio, and Yuba City (as well as at least two other locations) were not present at other
stores. Tesla's repeated inability to demonstrate that it knows how to care for solar panel
systems has stymied Walmart's persistent efforts to achieve this objective.
The Letter's discussion of the parties' negotiations over a possible contractual amendment (id. at
3-4) also contains inaccuracies. Following months of negotiations in which Tesla failed to
provide final root cause analyses, conduct appropriate inspections, or even provide Walmart with
contractually required payments for out-of-pocket losses, Walmart pursued discussions with
Tesla regarding a potential amendment to the parties' contracts. Walmart proposed an
amendment that, among other things, would have required Tesla to: (i) adopt additional site
monitoring protocols, (ii) compensate Walmart for damages "arising out of [Tesla]'s design,
construction, installation, testing, maintenance, operation, repair, alteration, replacement or
removal of the System," and (iii) compensate Walmart for certain consequential damages caused
by Tesla's solar panels. The Letter's assertion that the amendment "would have made Tesla
liable for thermal events even if they were not caused by the Tesla system" (id. at 3) is false.
Walmart's proposals were reasonable, and indeed, Tesla itself agreed that it would be
appropriate to grant Walmart additional contractual rights in light of the fires. It is baseless to
suggest that these negotiations reflected bad faith on Walmart's part and belies Tesla's
professed desire to resolve these disputes without litigation.
Finally, Walmart reiterates, as it has explained elsewhere, that it has not breached any of its
agreements with Tesla. (See Letter from E. Boniche Silcott, dated Aug. 6, 2019.) The Letter
does not identify any contractual provision that Walmart allegedly breached, nor does it cure the
failure of Tesla's prior correspondence to set forth any basis for a breach claim against Walmart.
Please direct any future correspondence regarding this matter to me.
cc:
Robert Williams (robert.williams@walmartlegal.com)
Eneida Boniche Silcott (eneida.silcott@walmartlegal.com)
Joseph Krcmar (joseph.krcmar@walmartlegal.com)
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