Courts

Elon Musk Changes X Terms To Push All Disputes Toward Tesla-Investor Federal Judge

When you clicked 'accept' you agreed to a new courthouse.

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Milken Institute’s Global Conference Held In Beverly Hills

(Photo by Apu Gomes/Getty Images)

Elon Musk didn’t get where he is without taking risks. And “where he is” involves having epically botched a merger agreement requiring him to drop roughly $44B of his own (and Diddy’s!) money into a company while driving up the legal expenses he would eventually own and then proceeding to obliterate almost 80 percent of the company’s value. But you can’t make an omelette without inviting Nazis to help you break some eggs!

However, one risk Musk isn’t taking is in handling the legal fallout of his tenure as self-described Chief Twit.

For those playing along at home, due to the Northern District of Texas’s one-stop-forum-shop rules — which they’ve defended even as the rest of the federal judiciary urged them not to drag the credibility of the courts into the mud — a case filed in the Tarrant courthouse has a massively good chance of ending up in front of O’Connor. That said, the language did NOT choose to send everything to Wichita Falls, the courthouse that would guarantee O’Connor heard the case. I’m assuming X’s lawyers didn’t want to have to drive the extra hour and a half every time. In Tarrant County, there’s an equal chance (45 percent) that the matter would draw Judge Mark Pittman — also appointed by Trump — and a small chance of getting Senior Judge Terry Means — a George H.W. Bush appointee.

Judge Reed O’Connor owns a whole lot of Tesla stock, a functional meme stock tied to Musk’s persona. Lest there be any doubt that Tesla functions as an empty signifier for investors betting on Musk as an individual, he’s managed to convince the shareholders to award him a compensation package so divorced from Tesla’s worth as a company that it amounts to roughly half the company’s total assets. Delaware courts aren’t so sure about that one.

In Musk’s SLAPP suit against Media Matters, the advocacy group challenged X’s certification of financially interested parties for not including Tesla — the public company whose fortunes rise and fall with Musk’s private travails. An agitated O’Connor dismissed the notion out of hand and then ordered Media Matters to cover the attorneys’ fees involved in lieu of missing an opportunity to preside over a case between Musk and progressive fact checkers.

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To be clear, O’Connor has recused himself from another X case after the public learned of his Tesla investment… he just doesn’t seem to want to let go of this one.

O’Connor has had a busy week in the headlines, because he’s also held up the DOJ’s plea agreement with Boeing over the airline’s deadly accidents because — despite no challenge by any party — he wants to confirm that the independent monitor won’t be a DEI hire… whatever the hell that means.

The Media Matters case is one that only a hack could love. After promising advertisers that the service could prevent their brand from ever appearing next to white supremacist content, Media Matters proved that it was entirely possible that respectable brands could appear next to white supremacist content. Musk’s company claims that Media Matters had to create some really racist profiles to get those results, which is true but sort of misses the point that (a) there are real people with really racist profiles, (b) X promised that mainstream advertisers wouldn’t be visible in those feeds, and (c) MAINSTREAM ADVERTISERS WERE TOTALLY VISIBLE IN THOSE FEEDS.

One of the big requirements of all the causes of action in this case is that the statement be, you know, false.

When making unequivocal promises that the platform will prevent advertisers from being featured next to this content, it’s not really sufficient to say it “probably won’t” happen. That would be like unequivocally promising a self-driving car that’s only probably won’t veer into a wall or burst into flames.

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But putting aside the merits of O’Connor’s decision at the time, the revelation that X has rearranged its terms of service to stack the deck toward getting him as their judge should be worth… something.

Even if a judge didn’t think his growing portfolio of Tesla stock equated to a personal financial stake in Elon’s X/Twitter vanity project, learning that X itself appears to believe the judge is sufficiently in the tank to rewrite the terms of service to place most of their chips on ending up in his courtroom — even though X is not even headquartered in that district — should give pause that, at the very least, there’s an appearance of impropriety.

It doesn’t matter if the appearance of impropriety is the fault of a party and not the judge. The fact that we’re even talking about this crazy change to the terms of service has created an indelible appearance of impropriety.

Let’s not hold our breath though.

Earlier: Media Matters Isn’t Saying Judge Reed O’Connor Is Conflicted. They’re Just Saying That He Stands To Financially Benefit From Twitter SLAPP Suit.
Judge Reed O’Connor Seems To Own Too Much Tesla To Rule Against CVS, Just Enough To Rule Against Liberal Fact-Checkers

HeadshotJoe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter or Bluesky if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

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