A California judge on Wednesday rejected a gag order request from Tesla shareholders suing CEO Elon Musk over his 2018 tweet saying he would take the company private because he had the funding.
Shareholders had asked U.S. District Judge Edward Chen in the Northern District of California to implement a gag order that would have prevented Musk from talking about the lawsuit after he discussed the case during an April 14 TED talk.
Chen rejected the request hours after Musk attorney Alex Spiro filed documents saying it would violate his client’s free speech rights.
In his ruling, Chen said the trial is scheduled for January 2023 and the jury pool would be large. In the absence of a clear and present danger or imminent threat, he denied the motion.
“It is worth noting that the substance of Mr. Musk’s recent comments are consistent with the public positions that he has already taken during this litigation, including at summary judgment,” Chen wrote.
Musk’s notorious 2018 tweet suggested plans to take Tesla private for $420 a share. The Tesla and SpaceX CEO said he had “funding secured” for the bid.
Shareholders sued, arguing the tweets manipulated the stock market and caused them to lose money.
Musk’s tweet was also investigated for fraud by the federal government. Musk settled for $20 million with the U.S. Securities and Exchange Commission and agreed to step down as chairman of Tesla.
In the shareholder trial, the gag order request centers on Musk’s April 14 comments at a TED talk.
According to court documents, the entrepreneur said “funding was actually secured – I want to be clear about that – in fact that gives me a good opportunity to clarify that – and funding was indeed secured.”
Shareholders claimed they would face “irreparable harm” in jury selection and the upcoming trial if “Musk is allowed to continue making statements about the case and its underlying facts in the public sphere.”
Musk’s attorney, Spiro, said in court documents that his client’s speech could not be restricted “based on speculation” and argued there was no clear and present threat to the lawsuit or for an impartial case that justifies silencing his client.
Last week, Chen ruled that Musk made knowingly false statements when he tweeted that he had funding secured, according to court documents.
The news comes as Musk is embroiled in a takeover bid of Twitter. The social media company adopted a poison pill tactic last week to dilute shares and prevent a hostile takeover.