Judge rejects gag order in suit over 2018 Musk tweets

DETROIT » A federal judge in California has rejected a request from shareholders in a lawsuit to force Elon Musk stop talking about his 2018 tweets in which he said he had the funding to make Tesla a private company.

The ruling by U.S. District Judge Edward Chen Wednesday came just hours after the Tesla CEO’s lawyer filed a document in the case saying that a gag order would trample on Musk’s free speech rights.

Lawyers for the shareholders have argued that Musk is trying to influence potential jurors before the lawsuit comes to trial on Jan. 17. The lawsuit contends that the CEO’s August 2018 tweets were written to manipulate Tesla’s stock price, costing shareholders money.

Chen confirmed in an order Wednesday that he has ruled that Musk’s 2018 tweets about having the money to take Tesla private at $420 per share were false.

But he wrote that one of the shareholders who pursued the gag order in the class-action lawsuit failed to prove his case. Chen wrote that the trial has been rescheduled for early next year, and that publicity during or just before a trial is a larger concern. He also wrote that the jury would be drawn from a large metro area, and that Musk’s comments are consistent with public positions in another related court case.

Lawyers for the plaintiffs also argued that Musk violated an October 2018, court settlement with U.S. securities regulators. Musk signed the agreement to pay a $20 million fine and not make any statements denying the securities fraud allegations. Musk is challenging the agreement, saying it is unconstitutional.