In re: Tesla, Inc. Securities Litigation

CASE NAME: In re: Tesla, Inc. Securities Litigation

TYPE OF CASE: Securities fraud

COURT: U.S. Northern District

JUDGE(S): U.S. District Judge Edward M. Chen

DEFENSE LAWYERS: Quinn Emanuel Urquhart & Sullivan LLP, Alexander B. Spiro, Andrew J. Rossman, William C. Price, Ellyde R. Thompson, Michael T. Liftak, Jesse Bernstein, Kyle K. Batter, Alex Bergians, Stephanie Kelemen

PLAINTIFF LAWYERS: Levi & Korsinsky LLP, Nicholas I. Porritt

In a rare securities class action that actually went to trial, a Quinn Emanuel Urquhart & Sullivan, LLP team led by Alex B. Spiro persuaded jurors to deliver a complete defense verdict for Elon Musk and Tesla after only two hours of deliberation. How rare was it? Between 1997 and 2022, only 19 such cases went to trial, one study showed. It was the first jury verdict win for the defense in a securities class action in more than 15 years.

"It was so unusual to find a corporation willing to stand up for itself this way," said Spiro, who said representing a company in a securities class action trial was a first for him. "But as in any case, when I set upon it I look for what the guardrails are and figure out a way to get out of the cave."

WILLIAM C. PRICE

The spotlight was on the case from the first, not only because the parties took the matter all the way to the courtroom, but because the dispute involved several Musk tweets claimed by the plaintiffs to have cost Tesla shareholders up to $12 billion in losses.

The jury held that Musk had not committed securities fraud when he tweeted in 2018 that he had secured funding to take Tesla private.

Compounding the challenge for the Quinn Emanuel team was a pretrial summary judgment order that found for the plaintiffs on the issues of falsity and scienter. The judge ruled that no such funding was in place -- but left it to jurors to decide whether Musk's words harmed investors by artificially inflating Tesla's stock price.

"When someone is accused of fraud, it's essential to show there was no ill will in their heart and mind," Spiro said. He put Musk on the stand to testify that he considered a verbal pact and a handshake with the managing director of Saudi Arabia's public investment fund the equivalent of a done deal and that his tweets were an effort to do the right thing by keeping shareholders informed. In re: Tesla Securities Litigation, 3:18-cv-04865 (N.D. Cal., filed Aug. 10, 2018).

ELLYDE R. THOMPSON

"There were layers of complexity beneath that, but the jurors obviously agreed with Mr. Musk," Spiro said.

Lead plaintiff lawyer Nicholas I. Porritt did not return a message seeking comment.

--John Roemer