Judge Presiding Over Tesla Securities Litigation Denies TRO Against Elon Musk

On Wednesday, a San Francisco, Calif. judge ruled that the plaintiff failed to show that he was entitled to the requested “gag order” against Elon Musk based on the applicable three-part test. The plaintiff moved for a temporary restraining order (TRO) late last week after Musk spoke on the TED stage about the events giving rise to the tweet-centered case.

The plaintiff argued that Musk’s public statements that funding had been secured to take Tesla private in July-August 2018 and derisive comments about the Securities and Exchange Commission threatened the fairness of the securities fraud trial, set for January 2023. The litigant asked for an order restraining Musk from speaking about the case wholesale, a request that the court found overbroad.

The four-page opinion by Judge Edward M. Chen said that the plaintiff failed to show any of the three conjunctive requirements necessary to grant a TRO. The court first considered whether “the activity restrained poses either a clear and present danger or a serious and imminent threat to a protected competing interest.”

Judge Chen reasoned that though the court has a duty to insure a fair trial, it is still seven months away. He added that the jury will be drawn from a large, diverse, and metropolitan community and that voir dire can eliminate bias caused by pre-trial publicity.

Similarly, the second factor was not satisfied because the TRO was not narrowly drawn, Judge Chen concluded. “[T]he proposed TRO appears overbroad in that it restricts Mr. Musk (not just his counsel) from speaking and that it prevents him from speaking to anyone (not just, e.g., media),” the opinion explained.

Finally, the court said that less restrictive alternatives are available. Judge Chen once again pointed to voir dire and noted that the jury will be instructed that Musk’s statements were false and that he acted with the requisite intent when making them, per the court’s recent summary judgment ruling.

Levi & Korsinsky LLP is class counsel and Tesla and Musk are represented by Quinn Emanuel Urquhart & Sullivan LLP.