Latest / Elon Musk Podcast / Federal Judges Deal Elon Musk Two Legal Setbacks in a Single Day

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Federal Judges Deal Elon Musk Two Legal Setbacks in a Single Day · Elon Musk Podcast

• 0:01
  Hey everybody, welcome back to the Elon Musk Podcast.
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  This is a show where we discuss the critical crossroads that
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  shape SpaceX, Tesla X, The Boring Company, and Neurolink.
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  I'm your host Will Walden. 2 separate federal court rulings
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  have struck legal and financial blows against Elon Musk and his
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  businesses. This raises questions about
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  whether the world's richest man is losing leverage in the court
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  system he's long relied on to defend his corporate strategies.
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  On Monday, a judge in Delaware formally invalidated Musk $56
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  billion Tesla compensation package, denying the company's
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  request to move its incorporation to Texas.
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  That same day, a federal judge in California ruled against
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  Musk's attempt to dismiss a lawsuit accusing him of
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  illegally firing employees at SpaceX who had circulated an
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  internal letter criticizing his behavior.
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  The Delaware decision directly affects the most valuable CEOP
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  package ever created. The judge denied Tesla's motion
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  to transfer its incorporation from Delaware to Texas, which
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  the company had hoped would retroactively affirm shareholder
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  approval of Musk's compensation. She ruled that the original
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  shareholder vote on Musk's 2018 pay package had not been fully
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  informed due to undisclosed conflicts of interest among
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  Tesla's board members. Now, Tesla attempted to shift
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  its corporate charter after McCormick voided the pay package
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  in January, stating that Musk had undue influence over the
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  supposedly independent directors who approved it.
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  Monday's ruling now cements her earlier opinion keeping Tesla
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  under Delaware jurisdiction in invalidating the proposed Texas
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  move. Tesla claimed that 77% of
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  shareholders voted in favor of reincorporating to Texas, and
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  McCormick concluded that such votes did not repair the flawed
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  process used to approve Musk's compensation.
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  She said that the Texas vote did not constitute a ratification of
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  the original pay package because shareholders still lacked full
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  information at that time. But in California, Judge Maggie
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  B Corley rejected Musk's request to throw out a wrongful
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  termination lawsuit filed by eight former SpaceX employees.
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  These workers claimed they were fired after distributing a
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  letter calling Musk's online behavior damaging to the
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  company's culture. Musk's lawyer argued that the
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  letter itself disrupted Spacex's mission and violated internal
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  policies. Corley dismissed those
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  arguments, though she stated that the terminated employees
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  had exercised protected rights under the National Labor
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  Relations Act. She ruled that Musk's defense
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  failed to show that the firings were lawful or that the internal
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  letter disrupted business operations to a degree that
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  would justify dismissal. California ruling moves the case
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  towards trial and also affirms the position of the National
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  Labor Relations Board, which had supported the fired workers
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  claims since 2022. Now if SpaceX loses at trial,
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  the company could face orders to reinstate the employees or pay
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  multiple hundreds of $1,000,000 in damages.
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  Now the dual ruling came just hours apart though neither
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  involved criminal charges, but both potentially carry long term
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  consequences. Musk could lose 10s of billion
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  dollars in stock options if the test the compensation packets
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  remains void. He also risks reputational harm
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  and scrutiny to labor practices and all of his companies, not
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  just SpaceX, because the way that he and SpaceX treated those
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  employees. Now, the Delaware ruling may
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  increase shareholder pressure on Tesla's board to renegotiate
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  Musk's compensation money. Several investors have raised
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  concerns about the pay packages scale, the biggest of all time,
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  and the influence that Musk holds over all the board
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  members. You know.
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  The board has not signaled plans for a revised compensation deal.
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  The California decision draws attention to Musk's management
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  style and public conduct, which critics say can alienate workers
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  and investors. The internal letter cited
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  examples of Musk's tweets and online behavior as distractions
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  that conflicted with Spacex's workplace values.
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  Musk's legal team has not yet announced plans to appeal to
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  either ruling. But I'm sure they will.
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  Tesla has not released a statement following the Delaware
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  court's decision, and SpaceX declined US for a comment on the
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  wrongful termination case. Now, these rulings arrive during
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  a period when Musk is attempting to balance leadership roles
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  across multiple companies. He is the CEO of Tesla and
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  SpaceX, Leeds, XAI, and also X, amongst other things.
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  So he has a lot on his plate, and the outcome of both of these
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  legal cases will shape how Musk negotiates power within his
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  company and manages his shareholders and his employees
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  going forward. Now that he is put on a blast
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  and people know that the court system is after him, he will of
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  course deny any charges and so will Tesla and SpaceX.
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  And the court decisions restrict his ability to use corporate
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  governance maneuvers or at will employment defenses without
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  deeper oversight. So going forward, Musk and his
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  companies will have to abide by those rules.
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  So Musk's public responses to lawsuits often include dismissal
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  of the judiciary or personal attacks on the plaintiffs.
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  He's a very spiteful person. And I'm just saying this as
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  somebody who does a podcast about Elon Musk.
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  He is very ruthless and he doesn't put up with anything,
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  thinks he's right most of the time in these, you know, in
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  these sort of situations. So we're going to see where this
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  goes. But so far he has made no
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  remarks regarding either ruling because I'm sure if he did, he
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  would they'd rule against him because, you know, he kind of
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  has a loud mouth. As we all know.
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  He's kind of a kind of those people that just talks and then
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  doesn't regret it later because he has all the money in the
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  world to protect himself. Let's be honest here.
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  Where is the lie? It's the truth and I'm a big
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  proponent of Elon and his companies.
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  So I'm just telling you how I feel about this.
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  You know, he's got some moves coming up he might fight or
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  SpaceX and Tesla could settle. I don't think they're going to
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  settle though, because if they settle, they're going to show
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  that they were wrong. And going forward, there will be
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  a multiple lawsuits because people know that they can win a
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  bunch of money. So if you're a just think about
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  it like this, you're a low level or even mid level Tesla
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  employee, you're making about $120,000 a year, which is pretty
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  good money. And you know that, you know, if
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  you act up a little bit, you send a note around saying that
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  Elon is harming the, you know, harming Tesla by the things he
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  does online and then you get fired instead of your $120,000 a
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  year paycheck, which is great money.
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  It's good money. What if you're getting a couple
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  million just for doing that? Just the chance that you could
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  win $5,000,000 and then it would be life changing money for you.
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  So if they settle, there could be more lawsuits like this.
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  Tesla and SpaceX both have to protect themselves in this, so
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  we're going to see what happens. I'll keep you abreast of all the
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  latest changes in these and see what the outcomes are.
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  But for now, nothing from Tesla, nothing from SpaceX, nothing
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  from Elon. We've asked them all.
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  No one's responded. Of course it's a legal matter.
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  They're not going to, you know, the, the people that were saying
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  that Elon fired them without cause.
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  They can get a bunch of money. So they might become rich really
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  quick. Hey, thank you so much for
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  listening today. I really do appreciate your
• 8:32
  support. If you could take a second and
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  hit the subscribe or the follow button on whatever podcast
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  platform that you're listening on right now, I greatly
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  appreciate it. It helps out the show
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  tremendously and you'll never miss an episode.
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  And each episode is about 10 minutes or less to get you
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  caught up quickly. And please, if you want to
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  support the show even more, go to Atreoncom Stage Zero.
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  And please take care of yourselves and each other.
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  And I'll see you tomorrow.