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U.S. District Judge Edward Chen in San Francisco agreed with
Musk and Tesla that the proposed temporary restraining order
appeared overbroad because it prevented Musk from speaking to
"anyone" about the case.
Chen also found no proof that letting Musk, the world's richest
person according to Forbes, talk publicly posed a "clear and
present danger" or "serious and imminent threat" to a trial.
But the judge also said he plans to tell jurors at the scheduled
January 2023 trial he had already ruled that Musk's tweets were
false, and made with sufficient knowledge they were false.
Shareholders sued over losses resulting from volatility in
Tesla's shares after Musk tweeted on Aug. 7, 2018, that he had
"funding secured" to potentially take Tesla private at $420 per
share, and that "investor support is confirmed."
Nicholas Porritt, a lawyer for the shareholders, in an email
said he was pleased that jurors will be instructed that the
tweets "were false and were made fraudulently by Elon Musk." He
said the primary remaining issue is the amount of damages owed.
Lawyers for Musk and Tesla did not immediately respond to
requests for comment.
The April 15 request for a gag order came one 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 sued him for fraud anyway over his tweeting.
Musk and Tesla said the proposed gag order "evokes a level of
censorship" that could not be reconciled with the U.S.
Constitution's guarantee of free speech.
They also said an order could block 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 lawyers to vet some of his tweets.
Musk has said he would never lie to shareholders. He has offered
to buy Twitter for $54.20 per share.
The case is In re Tesla Inc Securities Litigation, U.S. District
Court, Northern District of California, No. 18-04865.
(Reporting by Jonathan Stempel in New York; Additional reporting
by Hyunjoo Jin in San Francisco; Editing by Will Dunham, Bernard
Orr)
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