© Reuters. FILE PHOTO: Tesla CEO Elon Musk gestures as he visits the construction site of Tesla’s Gigafactory in Gruenheide near Berlin, Germany, August 13, 2021. Patrick Pleul/Pool via Reuters
By Jonathan Stempel
(Reuters) – Elon Musk on Wednesday urged a federal judge not to prevent him from publicly discussing a lawsuit accusing him of deceiving Tesla (NASDAQ:) Inc shareholders by tweeting in 2018 about taking his electric car company private.
In a filing with the federal court in San Francisco, Musk and Tesla said the shareholders’ request for an overbroad “gag order” could not be reconciled with the U.S. Constitution’s guarantee of free speech.
They also said the proposed restrictions could block Musk from communicating with Tesla shareholders, discussing his proposal to buy Twitter Inc (NYSE:), and trying to end his consent decree with the U.S. Securities and Exchange Commission, which requires Tesla lawyers to vet some of his tweets.
The shareholders’ request “evokes a level of censorship entirely incompatible with our justice system and the basic tenets of free speech,” lawyers for Tesla and Musk wrote.
Lawyers for the shareholders did not immediately respond to requests for comment.
The lawsuit stemmed from volatility in Tesla’s shares after Musk tweeted on Aug. 7, 2018, that he had “funding secured” to potentially take Tesla private at $420 per share.
Shareholders on April 15 sought a temporary restraining order blocking Musk from publicly discussing his “interpretation and opinions” of their case until after a trial. Their request came after they said U.S. District Judge Edward Chen agreed with them that the tweet was “false and misleading.”
It also came one day after Musk, the world’s richest person according to Forbes, told the TED conference in Vancouver that funding to take Tesla private was secured at the time he tweeted, but the SEC sued him for fraud anyway.
Chen’s April 1 order has not been made public.
It would prevent Musk from arguing that his tweet was truthful, and let shareholders focus on whether the fallout caused losses in Tesla stock.
Musk has defended the tweet’s accuracy, and said he would never lie to shareholders. He has offered to buy Twitter for $54.20 per share.
The case is In re Tesla Inc Securities Litigation, U.S. District Court, Northern District of California, No. 18-04865.