Elon Musk arrives before a joint session of Congress at the U.S. Capitol in Washington in July. Julia Nickinson/AP Hide Caption
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Julia Nickinson/Associated Press
A federal judge in Texas overseeing billionaire Elon Musk’s high-profile lawsuit against the watchdog group Media Matters has ruled that Musk should not pursue the lawsuit, according to recently released financial disclosure reports. It was revealed that he had bought and sold shares in Musk’s Tesla company in 2023.
In August, NPR reported that U.S. District Judge Reed O’Connor of the Northern District of Texas had invested between $15,001 and $50,000 in Tesla. Mr. O’Connor has issued a series of rulings in favor of Mr. Musk in the Media Matters case, in which Mr. Musk claims that advocacy groups have disrespected his social media site, X.
The investment was disclosed in a 2022 financial disclosure form required of all federal judges. But questions remain as to whether the judge could later sell the Tesla shares, and if so, whether before or after O’Connor accepts the Media Matters case in November 2023. Ta.
Tesla is not directly involved in Musk’s Media Matters lawsuit, but legal ethics experts have told O’Connor that the outcome of a lawsuit involving one of Musk’s companies could affect its stock price. Therefore, he requested that he recuse himself from the lawsuit. Another part of his empire includes the electric car company Tesla, which accounts for the bulk of his wealth.
However, newly released financial disclosure forms filed with the U.S. Courts Administrative Office for calendar year 2023 show that Mr. O’Connor bought and sold Tesla stock that year, and his positions in Tesla stock still totaled up to $50,000. It has been shown that All three transactions took place before November, with O’Connor buying Tesla stock in January, selling some in June, and buying it again in September.
O’Connor did not do any business with Tesla that year after filing the lawsuit in November, according to the filing. He hasn’t bought or sold Tesla stock in the first few months of 2024, according to his latest publicly available financial information.
Richard Painter, an ethics expert at the University of Minnesota Law School, said federal law requires a recusal when a judge or his or her family could potentially benefit financially from the outcome of the case.
“The relevant question is whether Tesla’s stock price could be materially affected by the outcome of this litigation,” Painter said, adding that while such an impact remains uncertain, “Mr. “That may be possible if it is an important issue at issue in this case,” he added. to Tesla’s stock price. ”
Neither O’Connor nor Media Matters responded to requests for comment.
Musk’s lawyers allege in the lawsuit that Media Matters produced “intentionally deceptive reporting” highlighting neo-Nazi content on X, which led to advertisers boycotting the platform. It is claimed that
In August, O’Connor rejected Media Matters’ attempt to dismiss the charges, ruling that Musk’s lawyers had sufficiently argued that the group acted with “actual malice.” . This emboldened X’s lawyers, who also received Mr O’Connor’s approval to begin the process of requesting thousands of pages of internal documents from Media Matters.
Shortly before the ruling, Media Matters asked X to identify all parties that may have a financial stake in the outcome of the case, citing O’Connor’s investment in Tesla. Media Matters argues that evidence in the case, including possible testimony from Musk himself, could impact Tesla’s stock price.
Mr. O’Connor dismissed the claim, determining that his Tesla stock was irrelevant to the case.
“First, there is no evidence that Tesla has a direct financial interest in the outcome of this litigation,” O’Connor wrote. “Tesla does not directly or indirectly own any stock in Company X, Tesla is not a director or advisor, and Tesla is not involved in the affairs of Company X.”
In addition to siding with Musk, O’Connor also ordered Media Matters to pay X’s legal costs regarding the discovery request. O’Connor did this in an attempt to “force a denial through the back door,” the judge wrote. “This kind of gamesmanship is inappropriate.”
In August, O’Connor withdrew his position in Musk’s separate lawsuit against the World Federation of Advertisers. The judge is an investor in Unilever and one of the defendants in the case.
But he never backed down from the Media Matters case.
Neither party to the Musk lawsuit is based in Texas, but Musk’s lawyers wrote in the filing that the lawsuit was filed in O’Connor’s district because X has users in Texas.
O’Connor’s involvement in the Musk case has led to criticism over the alleged practice of “judge shopping,” or filing cases in districts where litigants hope for a favorable outcome.
“It’s particularly extreme,” Jennifer Ahern, senior adviser for the Brennan Center’s justice program, told NPR in August about judge shopping in North Texas. “It’s a problem for the judiciary in a way it hasn’t been before.”
O’Connor nods to this controversy in recent remarks at a conference of the conservative Federalist Association in Fort Worth, Texas.
“I think you can see that Fort Worth is a very welcoming city. And no, I’m not referring to judge shopping, as some people would like to think.” O’Connor told conference attendees.
