Musk lawyer: Gag order would trample on free speech rights

PTI, Apr 21, 2022, 8:39 AM IST

Detroit: Elon Musk’s lawyer says a federal judge would trample on the Tesla CEO’s free speech rights if he ordered Musk to stop talking about 2018 tweets saying he had the funding to make Tesla a private company.

In a court document filed Wednesday, lawyer Alex Spiro says a motion from a group of Tesla shareholders seeking a gag order doesn’t establish that Musk’s comments will prejudice the pool of jurors who may hear the case.

Lawyers for the shareholders have argued that Musk is trying to influence potential jurors before the lawsuit comes to trial on Jan. 17 of next year. They contend that the CEO’s August, 2018 tweets were written to manipulate the stock price, costing shareholders money.

In court documents, the shareholders say U.S. District Judge Edward Chen in San Francisco already has ruled that Musk’s statements about having the money to take Tesla private at $420 per share were false.

They also argue that Musk violated an October, 2018, court settlement with U.S. securities regulators. Musk signed the agreement to pay a $20 million fine and not make any statements denying securities fraud allegations. Musk is challenging the agreement, saying it is unconstitutional.

Spiro’s response comes about a week after Musk, the world’s richest person, made a controversial offer to take over Twitter and turn it into a private company with a $43 billion offer that equals $54.20 per share. Twitter’s board on Friday adopted a “poison pill” strategy that would make it prohibitively expensive for Musk to buy the shares.

At issue is Musk’s April 14 interview at the TED 2022 conference, where he said that he did have funding secured to take Tesla private in 2018. He called the Securities and Exchange Commission a profane name and said he only settled the case because bankers told him they would stop providing capital if he didn’t, and the Austin, Texas-based Tesla would have gone bankrupt.

Lawyers for the shareholders say Musk’s comments in the interview were an “unsubtle attempt to absolve himself in the court of public opinion” over misrepresentations made with his Aug. 7, 2018 tweets.

But Spiro wrote in his response that the shareholders didn’t show that Musk’s speech presented a “clear and discernable danger” that the whole community would be corrupted by pretrial publicity, or that finding 12 objective jurors would be impossible.

Musk’s comments merely reiterated the case that’s already on the public record in his challenge to the SEC settlement, Spiro wrote.

His motion says that Musk is in the middle of a public offer to take over Twitter, which has led to debate over censorship of free speech. Reporters, he wrote, have compared this to Musk’s previous statements about taking Tesla private.

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 permitted to respond meaningfully and truthfully to inquiries such as this, and not be compelled to remain silent,” Spiro wrote.

If Musk violated the SEC agreement, the agency can ask a judge to scrap it and restore the securities fraud complaint. The SEC wouldn’t comment.