There is nothing that irks the powerful and rich more than authorities that tell them what to do or restrict what they say or do. What is all that money for if you can’t bat away things in your path like gnats? In the case of Elon Musk – one of the world’s richest men – the court decision that gave the US Securities and Exchange Commission the authority to screen Musk’s tweets has been a major bone of contention for the South African-born entrepreneur and a new battle has broken out between the two with subpoenas. Musk has quoted Eminem rap lyrics and is even talking about starting his own social media platform. Rebecca Elliot plots the claims and subpoenas in this article from The Wall Street Journal and says that taking these cases to trial could be risky for both Musk and the SEC. Personally, the fight I would like to see and am prepared to pay big money for, is Musk taking on another foe and that is Vladimir Putin. On 14 March, Musk challenged Putin on Twitter to ‘single combat’. – Linda van Tilburg
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I hereby challenge
Владимир Путин
to single combatStakes are Україна
— Elon Musk (@elonmusk) March 14, 2022
Elon Musk Doesn’t Like Backing Down—on Twitter or in Court
The Tesla CEO has gone on offense with the SEC, the latest in a series of combative legal maneuvers
Mar. 30, 2022 9:00 am ET
Elon Musk has escalated his battle with the Securities and Exchange Commission, highlighting the billionaire chief executive’s unusual appetite for legal sparring.
Mr. Musk, in recent legal filings, has accused the SEC of harassment after the agency opened a probe into whether recent stock sales by him and his brother, Kimbal Musk, violated insider-trading rules.
On Tuesday, a lawyer for Mr. Musk cited the rapper Eminem as he reprised his request for a federal judge to toss out a 2018 settlement the Tesla Inc. boss reached with the SEC, arguing that the accord violates Mr. Musk’s right to speak freely. The deal stems from Mr. Musk’s tweet the same year stating that he had “funding secured” to take Tesla private. The settlement requires a Tesla lawyer to preapprove some of the billionaire’s public statements.
“‘The [SEC] won’t let me be or let me be me so let me see / They tried to shut me down…’” the lawyer, Alex Spiro, wrote in a legal filing, quoting from Eminem’s “Without Me.” The lyrics reference the Federal Communications Commission, which fined radio stations for playing another of the rapper’s songs.
The Tesla chief executive also is seeking to quash portions of a November subpoena from the SEC that sought information about whether he had precleared a poll that asked Twitter users whether he should sell 10% of his stake in Tesla.
Mr. Musk’s legal strategy is another example of his charting an unusual course. Many executives avoid antagonizing regulators. Not Mr. Musk, who routinely clashes with an array of critics and has demonstrated a willingness to see legal disputes through to trial, rather than settling.
“I didn’t start the fight, but I will finish it,” Mr. Musk tweeted in February, referring to his conflict with the SEC. He later said in a legal filing that he felt pressured to settle the SEC’s civil lawsuit in 2018.
Tesla didn’t respond to a request for comment. Mr. Musk characterized the company’s legal strategy in a tweet last year: “Tesla policy is never to give in to false claims, even if we would lose, and never to fight true claims, even if we would win.”
Urska Velikonja, a Georgetown University law professor, described Mr. Musk’s posture toward the SEC as highly unusual for the chief executive of a public company. “He seems to like fighting,” she said.
The SEC, which declined to comment, has called the billionaire’s harassment claim baseless and opposed his requests to quash portions of a subpoena the agency issued and scrap its 2018 deal with him.
“So long as Musk and Tesla use Musk’s Twitter account to disclose information to investors, the SEC may legitimately investigate matters relating to Tesla’s disclosure controls and procedures,” the agency wrote in a legal filing last week. The SEC said Mr. Musk waived any potential First Amendment objections when he agreed to the 2018 settlement.
Mr. Musk has, on several occasions in recent years, opted against pursuing legal settlements. The Tesla CEO was the lone member of the company’s board to go to trial last year in a shareholder lawsuit over the company’s 2016 acquisition of home-solar company SolarCity. Others who were Tesla directors at the time of the deal settled in 2020 for a combined $60 million, denying wrongdoing.
Shareholders alleged that Mr. Musk controlled the takeover while having a financial interest in both companies, that many of Tesla’s directors were conflicted, and that the electric-vehicle company overpaid for SolarCity. Mr. Musk, who took the stand during the nonjury trial in Delaware Chancery Court last summer, has said he didn’t dictate the deal process or price. The judge has yet to issue a verdict. A lawyer for the plaintiffs suggested during post-trial arguments that the judge order Mr. Musk to pay more than $13 billion in damages.
Mr. Musk’s appetite for legal risk has, at times, paid off. He took the stand in 2019 in a defamation lawsuit brought by British spelunker Vernon Unsworth, whom Mr. Musk had referred to on Twitter as “pedo guy.” A Los Angeles jury ruled in Mr. Musk’s favor, deciding that his suggestion that Mr. Unsworth was a pedophile didn’t amount to defamation. L. Lin Wood, an attorney who represented Mr. Unsworth, called the verdict an “injustice.” Mr. Wood had suggested at trial that the jury award $190 million in damages.
Taking cases to trial also can be risky. A federal jury in San Francisco awarded a Black former contract worker $137 million in damages last year, finding that Tesla had subjected him to a racially hostile work environment. Those damages included $6.9 million in compensatory damages for the worker, Owen Diaz, and $130 million in punitive damages, or money intended to punish a defendant.
Punitive damages are relatively rare in workplace harassment and discrimination cases, said David Oppenheimer, a clinical law professor at the University of California, Berkeley. “The most egregious cases usually settle because the exposure for the employer is so substantial,” Mr. Oppenheimer said.
Tesla had an opportunity in 2020 to settle the case for $8 million, said Larry Organ, one of Mr. Diaz’s lawyers. A lawyer representing Tesla in the case didn’t respond to a request for comment. The company has said it doesn’t believe the jury’s verdict is justified and asked for a new trial or the damages to be reduced.
As for the SEC, Mr. Musk’s decision to go on offense is a gamble, said James Park, a law professor at the University of California, Los Angeles, noting that the agency could end up feeling as if it can’t back down.
“But,” he said, “the SEC I think cares about public perception as well, and I don’t think it wants to be perceived as harassing entrepreneurs unnecessarily.”
Write to Rebecca Elliott at [email protected]
