Business & Economy

Factbox-Elon Musk’s growing legal challenges

FILE PHOTO: U.S. Senate Majority Leader Schumer hosts tech leaders and experts at AI forum at the U.S. Capitol in Washington

By Tom Hals

(Reuters) -Elon Musk was sued by the U.S. securities regulator related to his takeover of Twitter, the latest court battle against the billionaire whose empire spans electric carmaker Tesla, space startup SpaceX and brain-chip startup Neuralink.

Below is a list of Musk’s legal entanglements.

TWITTER LAWSUITS

The U.S. Securities and Exchange Commission has sued Musk to compel the world’s richest man to testify as part of a probe into his $44 billion takeover of social media giant Twitter, a court filing on Oct. 5 showed.

In May 2022, Twitter investors had sued Musk, claiming he manipulated the company’s stock price by failing to disclose in March 2022 that he was amassing shares in the platform now known as X.

X was sued in federal court in Florida on Oct. 2 by a legal-marketing company that claims the social media firm’s new name infringes its trademark incorporating the letter “X.”

$56 BILLION TESLA COMPENSATION LAWSUIT

A ruling is also expected soon following a non-jury trial challenging Musk’s $56 billion pay at Tesla.

In the closing arguments in February, a judge pressed lawyers for Tesla directors and the investor challenging Musk’s pay over whether the company’s explosive growth outweighed misleading disclosures about the pay plan in 2018.

EMPLOYMENT DISPUTES

Musk’s major companies Tesla, SpaceX and the X social media platform are embroiled in several employment discrimination lawsuits.

SpaceX was hit in October by a proposed class action lawsuit filed by a former female employee who claims the firm promotes women and minorities less often than white men. The space startup was also sued by the U.S. Justice Department in August for allegedly discriminating against asylum recipients and refugees in hiring.

X faces a series of lawsuits alleging sex, age, and disability discrimination stemming from last year’s layoffs of half its workforce, along with two separate cases claiming the company owes laid-off employees at least $500 million in severance pay.

Tesla and Musk are defending numerous allegations of workplace harassment and discrimination, including lawsuits by California’s Department of Civil Rights and by a federal civil rights agency.

In April, a federal jury in San Francisco ordered Tesla to pay $3.2 million to a Black elevator operator who won a racial harassment lawsuit.

Tesla has said it does not tolerate discrimination and has taken steps to address workers’ complaints.

LAWSUITS SPARKED BY MUSK’S TWEETS

Musk’s tweets on the social media platform that he now owns has often courted controversy and been the subject of legal trouble.

In March, a U.S. appeals court upheld a decision by the U.S. National Labor Relations Board and said Musk violated federal labor law by tweeting that Tesla employees would lose stock options if they joined a union. The court is reconsidering that ruling.

In February, a U.S. jury found Musk and Tesla were not liable for misleading investors when the billionaire tweeted in 2018 that he had “funding secured” to take the electric car company private.

The same tweet led to allegations of security fraud by the U.S. SEC and a 2018 settlement under which Musk stepped down as Tesla chairman, paid fines and agreed to get a lawyer’s approval for some of his tweets before posting them.

Musk now plans to ask the U.S. Supreme Court to consider whether the SEC overstepped its authority in enforcing a consent decree, as part of the 2018 settlement, that he has called a “muzzle” on his free speech.

The settlement with SEC had lead to the creation of a “fair fund” under which a $41.53 million payout will be given to investors who lost money due to the Musk tweet, a federal judge said in September.

INVESTIGATIONS INTO TESLA’S DRIVER ASSISTANCE FEATURES

Tesla is under criminal investigation in the United States over claims the company’s electric vehicles can drive themselves, Reuters previously reported.

Tesla is facing a lawsuit alleging its Autopilot system caused a fatal crash of a Tesla Model 3 that killed one person and injured two other passengers, according to documents filed in California state court.

An attorney for Tesla, in the first U.S. trial over allegations that its Autopilot feature led to a death, however, said the crash was the result of “a classic human error.”

The company had won a bellwether trial in Los Angeles in April over a Tesla crash related to its Autopilot feature with a strategy of saying that it tells drivers that its technology requires human monitoring, despite the Autopilot name.

MUSK PERKS

Federal prosecutors in New York have also opened an investigation related to Musk’s corporate perks and claims related to vehicle driving range, a source with knowledge of the probe said. The Wall Street Journal first reported the probe.

TRUMP SUSPENSION

A lawyer for former U.S. President Donald Trump on Oct. 4 asked a U.S. appeals court to revive his lawsuit claiming that X violated his and other users’ free-speech rights when it suspended their accounts. The case was dismissed last year.

INSIDER TRADING ACCUSATIONS

Musk was accused in June of insider trading in a proposed class action by investors who allege he manipulated the cryptocurrency Dogecoin, costing them billions of dollars.

In a filing in Manhattan federal court, investors said Musk used Twitter posts, online influencers and publicity stunts like his 2021 appearance on NBC’s “Saturday Night Live” to trade profitably at their expense through several Dogecoin wallets that he or Tesla controls.

(Reporting by Tom Hals in Wilmington, Del.; Jaspreet Singh and Zaheer Kachwala in BengaluruEditing by Noeleen Walder, Matthew Lewis and Rod Nickel)

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