Solomon: Jury Selection Begins in Trial Stemming from 2018 Musk Tweet
On Tuesday, in a U.S. federal court in San Francisco, lawyers representing Elon Musk and aggrieved Tesla shareholders began selecting members of a critically important jury.
The trial is a class action based on Musk’s statement, as expressed in a 2018 tweet, that funding was “secured” to take Tesla private.
The trial will determine whether Musk’s tweets were fraudulent and whether he should be held liable for damages suffered by shareholders as a result of their reliance on his public statements. This legal action could have significant implications for Musk and Tesla, as well as for the use of social media by public company executives.
It’s ironic that Musk is on trial for something that has nothing to do with his ownership of Twitter, as the event happened four years before he acquired the company, yet Twitter is at the center of the controversy.
In August 2018, in what is now a tweet of historical and legal significance, Musk said he would make Tesla a private rather than public company at a share price of $420.
In the same tweet, he said that funding at that price was “secured,” which would have meant that Tesla shareholders would make a handsome profit on that sale.
Relying on Musk’s tweet, some people bought Tesla stock. Some of these people now belong to the class of aggrieved investors who brought this class action against Musk. While damages are currently unspecified, it is estimated to be in the billions.
Last week, Musk failed in an attempt to shift the venue of the case to Texas, where he argued he would have a better chance of finding an impartial jury.
On the venue issue, attorney Jason Matzus observed that “Musk has placed himself in a position where he has become a polarizing figure. While he has many supporters, he also has passionate detractors. People in both camps would appear in a pool of potential jurors, both in Silicon Valley and in Texas.”
Jurors on Tuesday called Musk “narcissistic” and “smart,” among other things. No matter the jurors’ personal perspective on Musk, once empaneled, the jury will need to deep-dive into Musk’s motives for his tweet.
If the jury decides that Musk was reckless in tweeting what he did in 2018 and that his motive for his communication on the very public social media soapbox was to influence investors, then Musk could potentially find himself facing a massive verdict.
The reality is that, spurred on by Musk’s tweet, people did invest in Tesla in that 10-day period in 2018. The investments inflated Tesla’s share price, which then declined once it became apparent that Musk did not have a deal done to take Tesla private.
The public’s perception of Musk today is very different than it was in 2018. “Narcissistic” and “smart” may be the most charitable adjectives prospective jurors have to describe Musk in 2023. His stewardship of Twitter over the past months has been bumpy, which might be the understatement of the decade.
Even some of the largest Tesla shareholders now feel that Musk needs to step down, as they question his decision-making abilities and whether he (or anyone) can successfully run both companies.
The result of this trial, which is expected to last several weeks, will give the world some insight into a person who tightly controls what we see and how we see it. Testimony is expected to shed light on how Musk functions as a company owner and a people manager, all of which might further corrode his once-solid public image.
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