Elon Musk, the CEO of electric car giant Tesla, will face trial on Tuesday over allegedly manipulating the stock market with a tweet after a federal judge rejected his request to move the case out of California.
The case dates back to August 2018 when Musk tweeted that he had sufficient funding to take Tesla private, causing a whirlwind in the company’s share price.
Musk was swiftly sued by shareholders for allegedly costing them billions of dollars with the Twitter post that said funding was “secured” to buy out the company’s shareholders.
According to a spokesperson for the court, Judge Edward Chen on Friday refused to transfer the proceedings to Texas, the southern state where Musk moved Tesla’s headquarters and jury selection is scheduled to begin on Tuesday.
Defense lawyers had argued that the multibillionaire would be denied a fair trial in San Francisco, where he bought Twitter in late October and has been widely criticized for his decisions since taking over the social media firm.
After taking over Twitter, Musk fired more than half of the 7,500 employees, most in San Francisco, and radically changed the site’s content moderation policies.
“For the last several months, the local media have saturated this district with biased and negative stories about Mr. Musk that have fostered… highly prejudicial biases in the jury pool,” the CEO’s lawyers argued in a filing.
“The local media, in a deviation from how they typically cover these stories, have blamed Mr. Musk personally for the reductions and even accused him of violating the law,” the lawyers said.
According to Bloomberg, Judge Chen expressed confidence at the hearing that impartial jurors could be chosen.
Musk’s short tweet in 2018 has already attracted the attention of authorities.
The US stock market regulator, the Securities and Exchange Commission, ordered that Musk step down as chairman of the board of Tesla and pay a fine of $20 million.
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But a woman who wrote in a questionnaire that “Mr. Musk is not likeable” wasn’t immediately eliminated – despite objections from Musk’s lawyer, Alex Spiro.
“Likeability is not at the core” of evaluating who’s fit to sit on the civil jury, US District Judge Edward Chen said during a hearing Friday in San Francisco as he huddled with lawyers for a preliminary round of jury screening to decide which candidates should be called into court for further questioning next week.
The judge added that the woman’s expression of dislike toward one of the world’s best-known and richest business people was of a “low intensity” compared to others. Chen also declined to disqualify a person who wrote that “the cars are beautiful, but Mr. Musk is an idiot.”
And so it went – with Chen voicing confidence he’ll be able to seat an impartial panel of 12 in short order and Spiro complaining that his client can’t get a fair trial in San Francisco “period, full stop.”
The judge aims to select the jury by Tuesday and then launch into the trial with opening arguments and witness testimony — including, in all likelihood, from Musk himself.
The challenge is to weed out anyone who might be biased from a pool of about 200 prospective candidates, of which 82% who acknowledged having an opinion about the billionaire said in the questionnaires that they view him negatively.
On Friday Chen divided potential jurors in two groups: one which had expressed neutrality or even positive views of Musk, and another, which he called “hot” and “radioactive,” that shared negative, sometimes harshly critical opinions of Musk. People from either group may end up serving on the jury, based on their reactions to further questioning next week.
Exactly what the would-be jurors wrote in the questionnaires was blacked out in court filings to protect their privacy but Musk’s team characterized their dislike of the entrepreneur as passionate.
Spiro argued in a filing that the questionnaires show “not only that a vast majority of potential jurors hold ill-will toward Mr. Musk. but that they are not afraid to declare it proudly and vividly to the court.”
Read More: Musk Says San Francisco Jurors Dislike Him With ‘Passion’
At one point Friday, Chen contemplated aloud whether a juror who lives far from San Francisco in northern California could be put up in a hotel during the trial. But the idea was quickly dropped when Spiro pointed out that the juror had described Musk in the questionnaire with a vulgar word.
Spiro, who has become Musk’s go-to lawyer for high-profile matters, persuaded a federal jury in Los Angeles in 2019 to return a verdict in favor of the CEO in less than an hour in a case brought by a British caver who claimed he was defamed when Musk called him a “pedo guy” in a tweet.
In the current case, Tesla investors allege Musk’s August 2018 tweets about taking the electric-car maker private with “funding secured” were “indisputably false” and cost them billions of dollars by spurring wild swings in Tesla’s stock price. Musk has maintained that Saudi Arabia’s sovereign wealth fund had agreed to support his attempt to take Tesla private.
Spiro wasn’t able Friday to convince Chen to move Musk’s latest trial out of the city that is home to Twitter Inc., even with the argument that “local negativity” has run high ever since Musk acquired the social networking company in October and started slashing its workforce.
“The media reports are character assassinations,” the lawyer said. The “flavor and tenor” of the “character reporting” is about a “human being who is making firing decisions” at Twitter.
Read More: Saudi Fund Chief Refuses to Testify at Musk’s Tesla Fraud Trial
Chen held firm. He alluded to how a fellow judge in a nearby courthouse was able to assemble an “unbiased” jury for the criminal trial of disgraced Theranos Inc. founder Elizabeth Holmes. Her lawyers, too, had voiced concern about too much negative press.
It’s rare for cases, especially civil suits, to be transferred to another district due to pretrial publicity, said Tim Crudo, a securities and criminal defense lawyer. “You really have to show that the jury pool is so tainted that you can’t get a fair trial.”
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