The U.S. Court of Appeals for the Ninth Circuit has upheld a jury verdict clearing Tesla Inc. and CEO Elon Musk of liability in a high-profile investor lawsuit. The suit alleged Musk misled shareholders in 2018 when he tweeted about potentially taking Tesla private with “funding secured.” The ruling, delivered on Wednesday, is a significant win for Musk and Tesla, affirming the earlier decision that found the company and its CEO not liable for investor losses tied to the controversial social media post.
The class-action lawsuit stemmed from Musk’s 2018 tweets, in which he claimed he was considering taking Tesla private at $420 per share. The posts caused a temporary surge in Tesla’s stock price, but shares quickly fell back as the proposed buyout failed to materialize. Investors argued that Musk’s statements were misleading and cost shareholders billions when the plan unraveled.
Lawyers for the shareholders had sought a retrial, arguing that the instructions provided to the jury by U.S. District Judge Edward Chen placed an undue burden of proof on them. The plaintiffs contended that jurors were incorrectly instructed to determine if Musk knowingly made false statements, despite Judge Chen’s pretrial ruling that Musk’s tweets were reckless and inaccurate.
However, the three-judge appeals panel rejected this argument, emphasizing that the jury had appropriately considered Musk’s recklessness and intent in assessing potential damages. The court noted that Musk’s awareness of the accuracy of his statements was crucial to understanding the extent of liability across involved parties, including Tesla’s board members.
Tesla and Musk have already faced regulatory fallout from the tweets. In 2018, Musk and Tesla settled with the U.S. Securities and Exchange Commission (SEC), agreeing to a combined $40 million penalty while Musk relinquished his role as Tesla’s chairman. The settlement did not, however, require an admission of wrongdoing by Musk or Tesla.
Ellyde Thompson, Musk and Tesla’s attorney, praised the appellate court’s decision, which she said brings long-awaited resolution to a contentious issue that had overshadowed Tesla’s substantial growth since 2018.
This ruling underscores the judicial limits around corporate social media communication and could signal how future cases involving influential tech figures and social media are handled. For now, Musk and Tesla emerge victorious, with the court’s decision marking a decisive closure to one of the company’s most scrutinized chapters.
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