Elon Musk's legal problems: A list of all the biggest cases and investigations on the billionaire's docket
PATRICK PLEUL/POOL/AFP via Getty Images; Chelsea Jia Feng/BI
- Elon Musk has a lot of legal problems.
- BI scoured the dockets to find the biggest court cases and investigations posing a threat to the billionaire.
- If Musk throws his support behind Donald Trump, he stands to gain if Trump wins the presidency.
It's not unusual for a high-profile businessman to attract a lot of lawsuits. But by any standard, Elon Musk is spending a lot of time and money on lawsuits.
Musk and his companies — especially Tesla, SpaceX, and X (formerly known as Twitter) — keep running into controversies, whether it's over whether the products actually work as well as they're supposed to, the billionaire's pay structure, his hiring practices, and even his firing practices.
He has also become a magnet for personal lawsuits. Musk is involved in messy litigation with Claire Boucher, AKA Grimes, the mother of three of Musk's children. He has also launched lawsuits of his own through his companies, wading into arguments about free speech on the internet. Musk often relies on Alex Spiro, his longtime personal lawyer, to fight and coordinate the lawsuits.
Business Insider has combed through court records and created a list of the most significant legal challenges on Musk's docket. Tesla shareholders are weighing some of these issues as they decide whether to approve a pay package that was estimated to be worth $55 billion in 2018— which would be the largest pay package in history.
The lawsuits and government investigations into Musk and his companies range from discriminatory hiring practices to allegations that some of Tesla's features don't work as advertised.
Some of his highest-profile battles — such as the recent withdrawal of a lawsuit against OpenAI and founder Sam Altman, the court victories over Musk's "funding secured" tweet and "pedo guy" tweets, his losses against an anti-hate group and the SEC over a "Twitter sitter" and an anti-hate group, and his settlement with a Black Tesla employee who was the victim of racist discrimination — have been resolved, and aren't included on this list.
With his vast wealth, Musk could stand to gain from supporting Republican presidential candidate Donald Trump in the 2024 election. Over the past several years, Musk's politics have drifted rightward, and there were reports he was being considered for an advisory role in a second Trump administration if the former president wins the election. As the leader of the executive branch, Trump — who in his first term used the levers of the federal government for his own benefit — could seek to force agencies to drop investigations and ongoing cases against Musk and his companies.
Spiro and representatives for Elon Musk did not immediately respond to BI's requests for comment.
Anna Webber/Variety/Getty Images
Lawsuits brought by Musk
Musk v. Media Matters
The issue: Musk's company X Corp. filed a lawsuit in Texas against the liberal advocacy group Media Matters in November, alleging the group launched a "blatant smear campaign" against X.
What's going on: Last year, Media Matters published a report that indicated X was placing advertising content next to pro-Nazi posts on the social media site. The nonprofit's report appeared to launch another advertising exodus from Musk's social media site.
Musk claims in his lawsuit that the group manipulated its findings and cherry-picked information. In response, Media Matters president Angelo Carusone called it "a frivolous lawsuit meant to bully X's critics into silence."
The issue has broadened into investigations from right-wing state attorneys general in Texas and Missouri, who are examining whether Media Matters broke civil laws with its reporting on Musk's social media company.
Media Matters laid off several employees in May, blaming the "legal assault" that it says restricted its resources.
What's next: Media Matters filed a motion to dismiss Musk's lawsuit in March, but a judge has yet to rule.
Gina Carano v. Disney
The issues: Actress Gina Carano is suing Disney after it fired her from "The Mandalorian" after she made posts on X comparing the treatment of conservatives in America to Jews in Nazi Germany. One post also engaged in Holocaust denial, claiming that "thousands" of Jews were "rounded up," rather than millions. X is funding the lawsuit, and Musk has championed it on the platform.
What's going on: Musk has promised to support lawsuits supporting people who were fired because of their X posts, and Carano's is a test case for that project, which Musk says is meant to protect free speech.
The lawsuit, crafted by boutique conservative law firm Schaerr Jaffe, focuses on California labor laws that protect political activism outside the workplace.
Disney has filed a motion to dismiss the case, arguing the company has a First Amendment right not to associate with Carano's views, which also include criticism of vaccine mandates and questioning the results of the 2020 election.
What's next: The judge overseeing the case has yet to rule on the motion to dismiss the lawsuit.
Musk v. NLRB
The issues: Musk's Tesla is fighting a decision by the National Labor Relations Board that the electric-car company CEO violated labor laws back in 2018 when he tweeted that Tesla employees could lose their stock options if they unionized.
What's going on: A three-judge panel of the 5th US Circuit Court of Appeals last year upheld the NLRB's finding that Musk's tweet unlawfully threatened Tesla employees' benefits. Musk's May 21, 2018 tweet at the center of the matter read: "Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing? Our safety record is 2X better than when plant was UAW & everybody already gets healthcare."
Attorneys for Tesla — which argued that Musk's tweet could not be interpreted as a threat — asked the federal appeals court to reconsider the ruling. That request was granted.
What's next: The full 5th Circuit heard oral arguments in the case earlier this year, and the 17-judge panel has yet to issue a ruling.
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Government lawsuits and investigations
SEC investigation into Musk's Twitter takeover
The issues: The Securities and Exchange Commission is investigating Elon Musk's Twitter purchase.
What's going on: The SEC and Musk have a long history together. In October, the agency announced it had opened an investigation into his $44 billion purchase of the social media company. The SEC hasn't said specifically what it's looking into — only that the probe concerns his purchase of Twitter stock and his 2022 statements and SEC filings relating to his purchase.
What's next: In May, Musk agreed to testify in the investigation, which remains ongoing.
Tesla Autopilot investigation
The issues: Justice Department prosecutors — as well as regulators from other federal agencies — are looking into Tesla's claims of self-driving.
What's going on: Federal prosecutors are examining whether Tesla committed wire fraud or securities fraud with exaggerated claims of self-driving using the cars' "Autopilot" feature. The Securities and Exchange Commission is also looking into whether investors were misled by the claims, according to Reuters. And in a separate probe, the US National Highway Traffic Safety Administration is looking into reports of Tesla crashes involving the Autopilot feature.
What's next: Tesla has already issued recalls — which, in its case, just means a software update — to add more safeguards to its Autopilot feature. Tesla recalls are essentially just software updates, and the company already issued a recall on 2 million of its vehicles to add more safeguards to its Autopilot feature. The NHTSA is still looking into whether those updates were sufficient.
The company also recently settled a civil lawsuit over a crash that killed an Apple engineer while one of its cars was in Autopilot mode — one of several dozen Tesla deaths involving the feature.
Tesla steering loss investigation
The issues: The US National Highway Traffic Safety Administration is investigating thousands of complaints that drivers of Tesla's Model Y and Model 3 vehicles suddenly lost steering control.
What's going on: The investigation began in 2023. Earlier this year, the agency advanced its investigation and sought more records from Tesla.
What's next: The probe's recent upgrade to the "engineering analysis" stage suggests the NHTSA may soon issue a Tesla recall.
NLRB v. SpaceX
The issues: In a complaint earlier this year, the NLRB accused Musk's SpaceX of illegally firing eight employees for criticizing Musk in an open letter.
What's going on: The former employees alleged that they were terminated in 2022 over their involvement in the open letter to SpaceX executives that called Musk's public behavior "a frequent source of distraction and embarrassment for us." The NLRB filed its complaint in connection with the matter earlier this year.
What's next: In response to the complaint, SpaceX sued the NLRB in federal court, alleging that the government agency's structure is unconstitutional. An appeals court handed Musk a legal win in May when it temporarily blocked the NLRB's case against the rocket company.
SpaceX lawsuit for not hiring refugees
The issues: The Justice Department's civil rights division filed a lawsuit alleging SpaceX illegally discriminated against asylees and refugees by refusing to hire them.
What's going on: The lawsuit, filed in August, pointed to Elon Musk's own social media posts where he claimed that US law requires "at least a green card" to be hired at SpaceX for national security reasons. That simply isn't true, the Justice Department alleged.
Instead of suing in a federal district court under a Senate-confirmed judge, the Justice Department brought the lawsuit through an administrative court, where the judges are appointed by the US Attorney General. SpaceX sued in a federal district court in Texas over this arrangement, and a judge agreed with the company, ruling in November that there were constitutional problems with the arrangement.
What's next: The case has been gummed up in the federal district court in Texas, as the Justice Department and SpaceX exchange volleys over the jurisdiction for different parts of the lawsuit. The US Supreme Court has also shown a willingness to reconsider the constitutionality of administrative law judges in different agencies, and pending decisions from the high court could continue to alter the trajectory of the SpaceX case.
Tesla racism lawsuit
The issues: The US Equal Employment Opportunity Commission sued Tesla in September, alleging Black employees at a California manufacturing facility have been subjected to racist harassment.
What's going on: The federal agency's lawsuit joined dozens of other cases from Tesla workers who've said they experienced racist abuse. One employee, Owen Diaz, won a major victory when Tesla was ordered to pay $3.2 million in a racial discrimination case.
What's next: A federal judge denied a motion to dismiss the EEOC lawsuit in March, putting it on the path for a trial.
Matt Winkelmeyer/Getty Images
Personal lawsuits against Musk
Tornetta v. Musk
The issues: Tesla shareholder Richard Tornetta sued Musk and Tesla in a class action lawsuit regarding Musk's compensation package, which was worth $55.8 billion at the time.
What's going on: In 2018, Tesla set up a pay plan for Musk that involved a 10-year grant of 12 tranches of stock options that would vest when Tesla hit certain targets tied to the automaker's market value and revenue. Musk was able to hit all 12 targets in 2023. With each milestone, Musk received stock equal to 1% of outstanding shares at the time of the grant.
Tornetta's lawsuit alleged that the pay package was "beyond the bounds of reasonable judgment" and claims Musk had influenced the board's approval of the plan, including through his close personal relationships with board members such as his brother Kimbal Musk.
Tesla has argued that compensation was needed to maintain Musk's attention and shareholders have benefited from the impact Musk's leadership has had on Tesla's stock, which has climbed dramatically since 2018.
The Delaware Court of Chancery struck down Musk's pay package in January. Musk is trying to regain the pay package by another route, with a Tesla shareholder vote this week.
What's next: Must is expected to use the vote to ask the Delaware Chancery Court to reconsider its decision, hoping that shareholder approval will help convince the judge that the pay package is sensible. He's also likely to continue appealing the case if he loses.
Boucher v. Musk
The issues: Claire Boucher, AKA Grimes, and Musk have each filed dueling lawsuits in a custody dispute in California and Texas, respectively.
What's going on: The Musk-Grimes custody battle began in September when the CEO sued his ex-partner to "establish the parent-child relationship" with their three kids: X Æ A-XII, Exa Dark Sideræl, and Techno Mechanicus. In his petition, the billionaire said he filed the lawsuit after he realized Grimes "was not returning to Texas with their younger children." Three-year-old X has remained with Musk.
A few weeks later, Grimes sued Musk in San Francisco court, seeking primary physical custody and joint legal custody of the pair's three children.
What's next: The case was sealed in January and remained ongoing as of April, when Business Insider was last able to view the docket. Neither side has publicly indicated that the case has been resolved.
Benjamin Brody v. Musk
The issues: California man Benjamin Brody filed a defamation lawsuit against Musk in Texas last year, alleging that the billionaire amplified a conspiracy theory that falsely affiliated the college graduate with a neo-Nazi extremist group.
What's going on: Brody's lawsuit accuses Musk of boosting the claims on his X social media site and says Brody endured "severe personal harassment and permanent damage to his reputation." Musk's "personal endorsement of the false accusation against" Brody reverberated across the internet, transforming the accusation from anonymous rumor to gospel truth for many individuals, and causing others to use Musk's endorsement to justify their desire to harass Ben Brody and his family," the lawsuit says. In a deposition, Musk said he didn't know who Brody was.
What's next: Brody's lawsuit is seeking $1 million in damages and a trial by jury. Musk's attorneys have filed a motion to dismiss the lawsuit.
Twitter severance lawsuits
The issues: Hundreds of former Twitter employees are suing X for unpaid severance.
What's going on: When Elon Musk took over Twitter, he quickly fired thousands of employees — he claimed over 80% — and didn't pay any severance to many of them. In court filings, X claims the merger agreement that allowed Musk to control Twitter didn't require any payments and that the former employees have no standing to sue because they weren't part of the merger.
There are several different lawsuits in different districts. Litigation has stalled in most of them as a California court weighs whether to turn one of them — asking for $500 million in damages — into a class-action lawsuit. Several lawsuits also allege Musk discriminated against them because of their race, gender, or disability in choosing to fire them.
What's next: Deciding a class action certification for the California case could take years. In the meanwhile, Twitter has weighed settling some of the claims.
Agrawal v. Musk
The issues: Four former Twitter executives (ex-Twitter CEO Parag Agrawal, ex-Twitter CFO Ned Segal, ex-head of legal, policy, and trust at Twitter Vijaya Gadde, and ex-senior legal counsel at Twitter Sean Edgett) sued Musk and X in March, alleging the company failed to pay out millions of dollars in severance.
What's going on: After Musk took over Twitter in 2023, he terminated the four executives within minutes.
The executives were set to receive golden parachutes, but claim Musk and X have not paid them out. The group says X collectively owes them $128 million in severance.
Musk has said he fired the executives for cause and does not owe them anything. In August, Agrawal, Segal, and Gadde separately sued Twitter for over $1 million, alleging the social media company hadn't paid the legal fees they accrued during their time at Twitter.
What's next: The lawsuits are all in various stages, with judges having yet to rule on motions to dismiss them.
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Thursday, June 13, 2024
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