Federal Judge Dismisses Fraud and Defamation Lawsuit Against Elon Musk Amid a Week of Controversy

Elon Musk attends the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, on March 22, 2022. Patrick Pleul/Pool via Reuters

A federal judge in California dismissed a securities fraud and defamation lawsuit filed by a Tesla investor against Tesla Inc., the company’s CEO Elon Musk, and a Musk supporter on May 19.

Judge James Donato threw out the lawsuit by the investor, Aaron Greenspan, a legal document website owner, after noting that the lawsuit had no legally plausible claims.

Greenspan had alleged that Omar Qazi, a Musk fan, made a series of defamatory tweets that made baseless accusations against him, and asserted that the tweets were part of a conspiracy campaign of 80,000 coordinated tweets that praised Tesla and attacked its critics.

Qazi had previously called Greenspan’s allegations “absurd,” and Tesla’s attorneys have disputed Greenspan’s allegations as baseless conspiracy theories.

Donato had previously dismissed the case, which was originally filed in 2020, back in June, but he gave Greenspan the opportunity to file another complaint on federal legal issues.

The judge ruled that claims such as defamation made under California law would be taken up later as warranted.

Donato, in his order to dismiss, found that Greenspan failed to provide facts to support his allegations, or that Qazi acted as an agent of Tesla or Musk.

Musk has lately been embroiled in controversy since his planned acquisition of Twitter, regarding statements criticizing the Biden administration and a claim of sexual harassment.

The Tesla CEO on Thursday denied a report by Business Insider that he sexually harassed a flight attendant on a private jet in 2016, calling her a liar.

“But I have a challenge to this liar who claims their friend saw me ‘exposed’—describe just one thing, anything at all (scars, tattoos, …) that isn’t known by the public. She won’t be able to do so, because it never happened,” Musk wrote in a tweet.

Musk on May 18, in the middle of his effort to buy Twitter, said he would now vote Republican instead of Democrat.

“In the past I voted Democrat, because they were (mostly) the kindness party. But they have become the party of division & hate, so I can no longer support them and will vote Republican. Now, watch their dirty tricks campaign against me unfold …,” he posted on Twitter.

Tesla was removed this week from the S&P 500 ESG Index, which an index executive claimed was due to issues including accusations of racial discrimination within the company and crashes linked to its vehicles.

Musk responded by calling the issue regarding the ESG ratings a “scam,” and questioned the reason behind why the index could drop his environmentally-friendly electric car company while promoting oil and gas producers.

“Exxon is rated top ten best in world for environment, social & governance (ESG) by S&P 500, while Tesla didn’t make the list! ESG is a scam. It has been weaponized by phony social justice warriors,” he wrote on Twitter.

Tesla shares fell almost 9 percent at the end of the week, with $66 billion in stock market losses, putting its shares at their lowest level since last August.

After some analysts alerted investors about “distraction risks” for Tesla regarding the Twitter deal, Musk assured shareholders and supporters on May 19 that his car company was constantly on his mind.

Some Tesla and SpaceX employees complained that they were “a little bit rattled and angry,” as technology company employees tend to be very liberal.

The hashtag #BoycottTesla was trending on Twitter this week, and several people claimed that they were canceling their Tesla orders.

Bill Nelson, an administrator for NASA, which is working closely with Musk’s SpaceX to fly American astronauts into space, told Reuters that Musk has a strong team of executives at the spacecraft company, and that the agency’s partnership with the tech CEO was “going without a hitch.”

Meanwhile, Elon Musk met with Brazil’s President Jair Bolsonaro Friday to discuss potential projects with the South American nation in the Amazon rainforest.

The meeting was held in Sao Paulo state and organized by Communications Minister Fábio Faria, who said that the Brazilian government is seeking a partnership with Musk to build up internet access in schools and improve health facilities in rural areas using technology developed by his SpaceX and Starlink companies, and also to preserve the rainforest.

Musk has accused his critics of playing politics after declaring his opposition to “woke” progressive policies.

“The attacks against me should be viewed through a political lens—this is their standard (despicable) playbook—but nothing will deter me from fighting for a good future and your right to free speech,” Elon Musk posted.

The tech CEO, with his typical sense of humor, quickly added: “Finally, we get to use Elongate as scandal name. It’s kinda perfect. ? https://t.co/qSNH7lsn72”

The Associated Press and Reuters have contributed to this report.