Supreme Court rejects appeal from Musk
Lawsuit against CBD company can proceed
WASHINGTON – The Supreme Court on Monday agreed to decide if a trucker can sue a CBD company after failing a drug test, but rejected an appeal from Tesla CEO Elon Musk claiming SEC “overreach,” and a second bid by former Trump aide Peter Navarro to get out of jail.
Musk still needs to be careful about what he posts on X after the court declined to review the Security and Exchange Commission’s restrictions put on his social media communications about Tesla as part of a 2018 settlement agreement.
The billionaire businessman had asked the court to decide if the agreement violates his free speech rights.
By rejecting Musk’s petition, the justices left in place an appeals court’s decision dismissing Musk’s attempt to modify or cancel the 2018 agreement.
“We see no evidence to support Musk’s contention that the SEC has used the consent decree to conduct bad-faith, harassing investigations of his protected speech,” a unanimous three-judge panel of the New Yorkbased 2nd Circuit Court of Appeals wrote last year.
The SEC went after Musk in 2018 when he tweeted that the company had enough funding to go private.
“Am considering taking Tesla private at $420. Funding secured,” Musk posted on the social media platform he purchased in 2022 that is now known as X.
The SEC called Musk’s tweets “false and misleading” statements that boosted Tesla’s stock price and led to significant market disruption.
Musk and Tesla agreed to separate settlements with the commission.
Musk had to pay a $20 million fine and step down as chairman. He also had to get pre-approval from a Tesla attorney before publishing written communications about Tesla.
Months later, when Musk tweeted about Tesla’s production rate, the SEC
accused him of violating the agreement. The commission said the post included misleading information and had not been pre-approved.
After negotiations, both sides agreed to revise the terms of the initial settlement. But Musk’s tweets in November 2021 asking people to vote on whether he should sell 10% of his Tesla stock again caused the SEC to step in. Musk responded by challenging the constitutionality of the settlement agreement.
In response, the Justice Department said the lower courts correctly ruled that Musk had voluntarily agreed to the restrictions as part of the settlement.
“This Court has long recognized that individuals may waiver their constitutional rights in order to resolve or avoid litigation,” Solicitor General Elizabeth Prelogar told the court.
Trump aide Navarro must stay in jail during appeal
The court on Monday also rejected former Trump adviser Navarro’s request that he be released from prison while he appeals his contempt of Congress conviction. It was the second time the court declined to keep Navarro from serving his four-month sentence.
Navarro was locked up on March 19 after Chief Justice John Roberts said he saw no reason to disagree with a lower court’s decision denying Navarro’s request to remain free on appeal.
Fifteen days later, Navarro’s lawyers asked the court to reconsider Roberts’ decision. The lawyers pointed out that Navarro’s appeal for the contempt conviction will be not heard until after he’s completed his sentence. Navarro was convicted in September for refusing to testify or provide documents to the House committee that investigated the Jan. 6, 2021, Capitol attack.
Navarro, a former trade adviser, has maintained that he couldn’t cooperate with the House inquiry because former President Donald Trump had asserted executive privilege to keep their communications confidential. But U.S. District Judge Amit Mehta found no evidence Trump did that.
Even if Trump had, Mehta ruled Navarro was obligated to appear before the committee to refuse to answer specific questions.
Navarro had argued he should remain free while appealing because he’s not likely to flee the country and poses no danger to public safety. He also said he is raising issues in his appeal that could overturn his conviction, including what constitutes a “proper” invocation of executive privilege.
The Jan. 6 committee wanted to question Navarro because he wrote, in his 2021 book “In Trump Time,” about the scheme to delay certification of President Joe Biden’s election. Navarro described the scheme as the “Green Bay Sweep” and said it was the “last, best chance to snatch a stolen election from the Democrats’ jaws of deceit.”
Can a maker of CBD products be sued under RICO?
After an accident left truck driver Douglas Horn with chronic pain, he wondered if a supplement advertised as a “new CBD-rich medicine” would help. The company promised the hempbased product, Dixie X, did not contain THC, the active ingredient in marijuana. But after Horn failed a drug test and lost his job, he sued – using in part a federal law created to fight organized crime.
On Monday, the Supreme Court said it would decide if Horn can continue his suit. The justices agreed to hear an appeal from Medical Marijuana, Inc., asking for review of a lower court’s ruling that Horn could sue under the Racketeer Influenced and Corrupt Organizations Act.
Prosecutors can use RICO to go after mobsters and others. But civil suits are also allowed, even if no one has been charged with a crime. If successful, the litigant can get three times the amount of actual damages and attorney’ fees.
Horn alleges that Medical Marijuana, Inc., committed mail and wire fraud, causing him to lose his job. In 2015, Horn sued for lost earnings, using both RICO and New York state laws.
A district judge said RICO excludes personal-injury claims. When Horn appealed, the New York-based 2nd U.S. Circuit Court of Appeals sided with him. The court said the plain meaning of the word “business” allows Horn to sue.
“Because the term ‘business’ encompasses ‘employment,’ Horn has suffered an injury ‘in his business,’ as contemplated by the RICO statute,” Circuit Judge Gerard Lynch wrote for the threejudge panel.