DETROIT >> A federal judge in California has denied a motion by shareholders in a lawsuit to force Elon Musk to stop speaking about his 2018 tweets saying he had the funding to make Tesla a private company.
U.S. District Judge Edward Chen’s ruling on Wednesday came just hours after the Tesla CEO’s attorney in the case filed a document saying a gag order would trample on Musk’s freedom of speech.
Lawyers for shareholders have argued that Musk is trying to sway potential jurors before the lawsuit goes to court on Jan. 17. The lawsuit alleges that the CEO’s August 2018 tweets were written to manipulate Tesla’s stock price, costing shareholders money.
Chen confirmed in an executive order Wednesday that he ruled that Musk’s 2018 tweets about the money to take Tesla private at $420 a share were wrong.
But he wrote that one of the shareholders pursuing the gag order in the class action could not prove his case. Chen wrote that the trial has been postponed until early next year and that public relations is a bigger issue during or just before a trial. He also wrote that the jury would be from a large metropolitan area and that Musk’s comments are consistent with public positions in another related court case.
The plaintiffs’ attorneys also argued that Musk violated an October 2018 court settlement with US securities regulators. Musk signed an agreement to pay a $20 million fine and not make statements denying allegations of securities fraud. Musk questions the agreement, saying it is unconstitutional.
The ruling comes about a week after Musk, the world’s richest person, made a controversial bid to take over Twitter and turn it into a private company with an offer of $43 billion, or $54.20 per share is equivalent to. Twitter’s board of directors on Friday enacted a “poison pill” strategy that would make it prohibitively expensive for Musk to buy the shares.
It’s about Musk’s April 14 interview at the TED 2022 conference, in which he said he secured funding to take Tesla private in 2018. Calling the Securities and Exchange Commission a profane name, he said he only settled the case because bankers told him they would stop providing capital if he didn’t, and Austin, Texas-based Tesla would be bankrupt gone.
Lawyers for shareholders say Musk’s comments in the interview are an “unsubtle attempt to acquit himself in the court of public opinion” for misrepresentations in his August 7, 2018 tweets.
But Musk’s attorney, Alex Spiro, wrote in his response that shareholders failed to show that Musk’s speech presented a “clear and discernible danger,” that the entire community would be corrupted by pre-trial public relations, or that it was impossible to have 12 objective jurors Find.
His filing states that Musk is in the midst of a public bid to take over Twitter, which has sparked a debate over censorship. Reporters, he wrote, have compared this to Musk’s previous statements about Tesla’s privatization.
During the TED interview, Musk was asked if funding was secured for the Twitter deal, a reference to the 2018 Tesla tweets. “Mr. Musk should be entitled to meaningfully and truthfully respond to requests like this, and not be forced to remain silent,” Spiro wrote.
If Musk violated the SEC agreement, the agency can ask a judge to abolish it and reinstate the securities fraud lawsuit. The SEC declined to comment.
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