On Monday, Judge Edward M. Chen signed an order regarding class notice in the securities class action dating back to 2018 filed against Tesla Inc. and its CEO and former chairman, Elon Musk and other executives. Law Street Media previously reported that the case, centering on a tweet Musk sent, survived the motion to dismiss phase, and has since moved through class certification.
The infamous August 2018 tweet by Musk stated that he was considering selling the electric vehicle company to a private buyer at a certain share price with funding already secured. Subsequently, it came to light that Musk did not have the funding in place, and the attempt to sell the public company was halted.
As a result of the tweet, Tesla’s share price reportedly rose by 10%, but 10 days later fell 11% below the value it had prior to Musk’s tweet. The executive’s behavior also reportedly led to a lawsuit with the Securities and Exchange Commission that Tesla settled for $40 million and Musk’s forfeiture of his position as company chairman.
In their January 2019 consolidated complaint, the shareholders alleged that Musk and complicit board members misled Tesla shareholders about going private through the acts committed either intentionally or with reckless disregard. By doing so, the stock increased in volatility and shareholders suffered losses, the filing states.
This week’s order concerned class notice for the shareholder class that the court certified last November. In it, the court approved the parties’ stipulated amended notice plan and method of disseminating notice to class members. The order explained that the notices met applicable requirements by apprising potential class members of the nature of the action, the definition of the certified class, and class members’ rights to appear and request exclusion, among other things.
Upcoming deadlines in the case include the close of fact discovery on June 15, the close of expert discovery on September 15, and a jury trial starting on June 1, 2022.