Tesla Inc. shareholders suing Elon Musk’s 2018 tweet about privatizing the company said they won a key decision ahead of a fraud lawsuit with billions of dollars in damages at stake.
The investors said a federal judge agreed with them that “no reasonable jury could find Musk’s Aug. 7, 2018 tweets accurate or non-misleading,” according to a filing late Friday. The record describes an April 1 order by the judge that is not on the docket.
Alex Spiro, an attorney for Musk and Tesla, said “nothing will ever change the truth that Elon Musk was considering taking Tesla private and could have been.”
“All that’s left about half a decade later are random plaintiffs’ lawyers trying to make money and others trying to keep this truth from coming to light, to the detriment freedom of expression,” he said on Saturday.
The ruling – if not appealed – will put the electric carmaker at a significant disadvantage in a San Francisco jury trial scheduled for late May, as Tesla will not be allowed to claim that the controversial Twitter post was truthful. This will allow investors to focus primarily on the connection between Musk’s statement and their stock market losses.
The decision is also a blow to the credibility of the world’s richest person as he continues to fight legal battles that other business leaders would avoid or settle. Adding to the spectacle, Musk is making a hostile bid to take control of Twitter Inc. by pledging to make the platform a bastion of free speech.
Musk told a federal judge in New York in early March that he would “never lie to shareholders.” He’s asking this judge to release him from the social media restrictions he agreed to after the Securities & Exchange Commission sued him for 2018 tweet fraud.
In San Francisco, shareholders suing for securities fraud are urging U.S. District Judge Edward M. Chen to bar Musk from making any more public comments about his “interpretation and opinions” of the claims in their lawsuit until the end of the lawsuit. end of trial.
Investors took particular aim at Musk’s comments at a TED event this week in Vancouver. He said “I was forced to concede to the SEC illegally” and settle the agency’s lawsuit over the 2018 “Secure Funding” tweet.
Shareholders say August 2018’s ‘definitely false’ tweet and follow-up Twitter posts cost them billions of dollars amid rampant swings in Tesla’s stock price, while Musk’s lawyers have retorted that the message to his millions of subscribers was “entirely truthful”.
To push back against claims that the missive was fraudulent, Musk’s lawyers stood by their argument that the Saudi sovereign wealth fund had agreed to back his bid to take Tesla private.
Lawyers for the shareholders said Chen was “explicit and unambiguous” in siding with them in the judge’s April 1 order finding the August 2018 tweet to be false.
The judge found that Musk “recklessly made the statements knowing they were untrue,” the attorneys said in Friday’s filing.
Nicholas Porritt, an attorney for the plaintiffs, said the judge’s order was not made public and was shared with the parties on April 12.
“Because it refers to evidence that the defendants considered confidential, the court has provisionally filed the order under seal while the parties agree which parties, if any, are to remain under seal,” Porritt said in an email.
Court officials could not immediately be contacted to confirm the judge’s order.
The case is In re Tesla Inc. Securities Litigation, 18-cv-04865, US District Court, Northern District of California.