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The shareholder who sued Elon Musk and Tesla over Musk’s infamous “Funding secured” tweet is seeking a temporary restraining order to prevent Musk from continuing to claim publicly that the 2018 tweet was accurate. The lead plaintiff representing a class of Tesla shareholders says a federal judge has already ruled that Musk’s tweet was false—although that ruling has not yet been unsealed.
“As this Court has determined in its recent order granting Plaintiff’s motion for partial summary judgment, these statements by Musk were false and misleading and that Musk made these false statements recklessly and with full awareness of the facts that he misrepresented in his tweets,” said the filing on Friday in the class action lawsuit in US District Court for the Northern District of California.
The order was issued under seal, according to another court filing.
“The request for the temporary restraining order alludes to an earlier ruling by Judge [Edward] Chen that is currently under seal because it refers to evidence that Musk’s team regarded as confidential,” CNBC wrote. “We anticipate the order will be published soon,” CNBC was told by Adam Apton of Levi & Korsinsky, lead counsel for the class of Tesla shareholders suing Musk and Tesla.
In an earlier ruling that allowed the lawsuit to move forward, Chen in April 2020 found that “Plaintiff [Glen Littleton] has adequately pled that Mr. Musk made false or materially misleading statements in the scope of his role as CEO of Tesla, with knowledge of the inaccuracies of his statements—or was, at minimum, deliberately reckless when making such public disclosures.”
Musk has until April 20 to file a response to the motion for a temporary restraining order. In a public appearance last week, Musk claimed that the tweet was accurate and called the Securities and Exchange Commission “bastards.”
“No reasonable jury could find Musk’s tweets accurate”
The court issued the order on April 1, and it was received by the parties in the case on April 10. “As the Court held, the evidentiary record demonstrated that no reasonable jury could find Musk’s tweets on August 7, 2018 accurate or not misleading. Likewise, given that Musk was intimately involved with the facts leading to that conclusion, the Court also held that he recklessly made the statements with knowledge as to their falsity,” the plaintiff’s filing said.
If granted, the requested temporary restraining order would prevent Musk “from speaking with the press, media, news, and other public outlets about this case or the underlying facts until the end of trial.” Musk’s ongoing public comments claiming that his “Funding secured” tweet was accurate are likely to prejudice a jury, the plaintiff’s filing argued.
“Musk’s extensive pretrial media interviews pose a clear danger and serious risk to a fair trial because they attract pretrial publicity, poison the jury pool, and influence the outcome on the eve of trial,” they wrote.
Musk and Tesla settled with SEC
On August 7, 2018, Musk tweeted, “Am considering taking Tesla private at $420. Funding secured.” The SEC sued the Tesla CEO over that tweet and others on the same topic, alleging that “Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source.”
Musk and Tesla quickly settled with the SEC, agreeing to pay $20 million each in penalties to resolve the SEC’s complaint and to impose controls on Musk’s social media statements. In the settlement announcement, the SEC said “Musk’s misleading tweets” about taking Tesla private caused the stock price to jump “and led to significant market disruption.”
The shareholders’ lawsuit represents people who purchased or sold Tesla stock from August 7 to August 17, 2018, and alleges that Musk “caus[ed] billions of dollars of damage to Tesla investors” by making statements he knew to be false.