Musk Seeks Recusal of Judge in Tesla Shareholder Lawsuits

Elon Musk has formally requested that Delaware Chancellor Kathaleen McCormick recuse herself from two shareholder lawsuits against him and Tesla, alleging bias after she appeared to support a LinkedIn post critical of him. The dispute stems from a recent jury verdict where Musk was found liable for attempting to manipulate Twitter's stock price during his 2022 acquisition attempt.

According to court filings, Musk's lawyers argue that McCormick's actions created a perception of bias, which they claim is part of a broader pattern. The LinkedIn post in question celebrated the verdict against Musk and suggested it could cost him upwards of $2 billion for defrauding Twitter investors.

McCormick denied supporting the post in her own filing, stating that she either did so accidentally or not at all. She reported the incident as suspicious activity to LinkedIn. Despite denying the motion for recusal, McCormick agreed to reassign three Musk-related cases to other judges to avoid unnecessary media attention.

These lawsuits are part of ongoing legal battles between Musk, Tesla, and shareholders over various issues including executive compensation and fiduciary duties. McCormick has presided over several high-profile cases involving Musk in the past, including one where she struck down his $56 billion Tesla pay package.

Musk's request for recusal comes amid a history of public criticism against McCormick, whom he accused of bias during the Twitter acquisition litigation. The judge has placed the two shareholder cases on pause while considering Musk's request.

A federal judge ruled that former Twitter investors who accused Elon Musk of defrauding them by waiting too long to disclose his initial investment in the social media company may pursue their case as a class action. The decision by U.S. District Judge Andrew Carter in Manhattan exposes the world's richest person to potentially greater damages than if investors were forced to sue individually.

Investors led by the Oklahoma Firefighters Pension and Retirement System said Musk ignored a March 24, 2022 deadline set by U.S. Securities and Exchange Commission rules to reveal he owned 5% of Twitter shares, and waited 11 more days before disclosing a 9.2% stake. The investors said Musk saved more than $200 million, and cheated them because they sold Twitter shares at depressed prices during the 11-day period.

Investors said they relied on two March 26, 2022 tweets where Musk said he was 'giving serious thought' to creating a Twitter rival, and said 'Haha that would be sickkk' after someone suggested he buy Twitter and change its bird logo to a doge image. In opposing class certification, Musk argued investors could not prove they relied on his alleged fraud.

However, Judge Carter ruled that Musk did not overcome the presumption that his alleged misrepresentations affected Twitter's share price, and that the investors relied on his silence. The case is separate from a lawsuit in San Francisco federal court where a jury found Musk liable for trying to drive the takeover price down by questioning whether Twitter was overrun by fake and spam accounts or bots.