CALIFORNIA

The San Francisco-based 9th U.S. Circuit Court of Appeals rejected arguments made by lawyers for Tesla investors, who had sought a new trial, claiming that the jury instructions given by the presiding judge were flawed and impermissibly heightened the burden of proof for the shareholders.

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The case, which was filed in 2018, centred around Musk's tweets on August 7, 2018, where he stated that he was considering taking Tesla private at USD 420 per share, and that he had "funding secured." These tweets caused Tesla's stock price to soar, only to fall again after it became clear that the buyout would not happen.

The shareholders' lawyers had accused Tesla and Musk of misleading investors, costing them billions of dollars. However, the three-judge panel of the appeals court disagreed with the plaintiffs' arguments, stating that while Musk had been found to have tweeted recklessly, the question of whether he acted knowingly was still relevant in determining the apportionment of damages between the defendants, which included Tesla directors.

Ellyde Thompson, a lawyer for Musk and Tesla, welcomed the decision, while the plaintiffs' lawyer did not respond to requests for comment.

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The case has been closely watched as it highlights the challenges companies and their executives face in navigating the increasingly complex and scrutinised social media landscape. The decision is seen as a major victory for Musk and Tesla, who have faced numerous legal battles and regulatory scrutiny over their public statements and conduct.

The ruling also underscores the high bar that shareholders must meet in proving that company officials knowingly made false statements, even in cases where the statements themselves have been found to be inaccurate or reckless.

As Tesla and Musk continue to navigate the ever-evolving electric vehicle market and the public's attention, this legal victory may provide them with some respite from the constant scrutiny they have faced in recent years. However, the company and its CEO remain under intense scrutiny from regulators, investors, and the public, ensuring that the spotlight on their actions and communications will likely continue for the foreseeable future.