Elon Musk Seeks Jurisdiction Change in Shareholder Class Action Lawsuit, Likely Citing “Local Negativity” on San Francisco Jury

Elon Musk wants to move a shareholder class action lawsuit from San Francisco to West Texas, claiming there is no impartial jury in the Bay Area.

A federal judge will review the application. Musk and other Tesla board members are facing a lawsuit alleging he manipulated Tesla shares in 2018. At the time, he tweeted that he was taking the company private for $420 per share and that he had “secured funding” to do so. The “420” was thought to be a joke about a time associated with smoking marijuana.

The stock soared on the tweet and then fluctuated for weeks.

In 2018, Musk lived in California and Tesla’s headquarters in Palo Alto, California. Musk moved to Texas in 2020 and Tesla moved to Austin in 2021.

Last year, Northern California Chief District Judge Edward M. Chen, who is overseeing the trial, ruled that Musk’s 2018 statements were false and that he knowingly tweeted them. The trial will determine whether the tweets are meaningful to shareholders, whether and how Tesla’s share price was affected, and whether the company or its directors should be held liable and pay damages.

In the motion to change venue, attorneys argued that Musk’s takeover of Twitter created negative publicity and potentially jeopardized a jury pool in the Bay Area.

“A significant portion of the jury pool in this district, as a result of the recent layoffs at one of his firms, is likely to have a personal and material bias against Mr. Musk, as individual potential jurors — or their friends and family members — may personally affected,” it said in the short text. “The existing baseline distortion was exacerbated, extended and reinforced by the negative and inflammatory local publicity surrounding the events.”

Protests outside Twitter headquarters and inflammatory statements from local politicians also clouded the potential jury.

Musk and his lawyers claim that the 2018 tweet did not violate the law and that he entered into an agreement with the Saudi Arabia Public Investment Fund.