Elon Musk will not be subject to a “gag order” that prevents him from discussing a lawsuit alleging he defrauded Tesla Inc shareholders by tweeting in 2018 about taking his electric car company private, a federal judge ruled Wednesday .
U.S. District Judge Edward Chen in San Francisco agreed with Musk and Tesla that the proposed temporary restraining order seemed too broad because it prevented Musk from talking to “everyone” about the case.
Chen also found no evidence that openly admitting Musk, the world’s richest person according to Forbes, posed a “clear and present danger” or “serious and imminent threat” to trial.
But the judge also said he plans to tell jurors at the scheduled trial in January 2023 that he had already ruled that Musk’s tweets were false, and had had sufficient knowledge that they were false.
Shareholders sued over losses due to volatility in Tesla’s stock after Musk tweeted on August 7, 2018 that he had “secured funding” to potentially take Tesla private for $420 a share, and that “investor support has been confirmed”.
Nicholas Porritt, a shareholder attorney, said in an email that he was pleased that the jurors will be instructed that the tweets were “false and fraudulently created by Elon Musk”. He said the main remaining issue is the amount of damages owed.
Attorneys for Musk and Tesla did not immediately respond to requests for comment.
The April 15 request for a gag order came a day after Musk told the TED conference in Vancouver that he had lined up funding to privatize Tesla, but the U.S. Securities and Exchange Commission charged him with fraud because his tweet.
Musk and Tesla said the proposed gag order “invokes a level of censorship” incompatible with the US Constitution’s guarantee of free speech.
They also said an injunction could prevent Musk from communicating with Tesla shareholders, discussing his proposal to buy Twitter Inc, and trying to end his consent decree with the SEC, which requires Tesla attorneys to vet some of his tweets.
Musk has said he would never lie to shareholders. He has offered to buy Twitter for $54.20 a share.
The case is In re Tesla Inc Securities Litigation, US District Court, Northern District of California, No. 18-04865.
(This story was not edited by DailyExpertNews staff and was generated automatically from a syndicated feed.)