Judge In Elon Musk's Texas Lawsuits Owns Tesla Stock But Will Hear The Cases Anyway [Update]

Instead of focusing on Tesla’s plummeting profits and sales slump, CEO Elon Musk is busy suing various companies and organizations for taking issue with his bigotry. The lawsuits are generally laughable, but he does have an ace up his sleeve — a Texas judge who’s proven to be incredibly friendly to Musk. NPR reports the judge also owns thousands of dollars in Tesla stock, but apparently, that’s not enough of a conflict of interest to get him off Musk’s cases.

Tesla Had A Very Interesting Week

[Update: ArsTechnica reports that Justice Reed O’Connor has recused himself from Musk’s lawsuit against advertisers. That said, it doesn’t appear to be because his Tesla stock is a conflict of interest. Instead, it’s most likely because he also owns shares of Unilever, one of the companies named in Musk’s lawsuit. The lawsuit has now been assigned to District Judge Ed Kinkeade. Both judges were appointed by President George W. Bush, but it doesn’t appear that Kinkeade is a member of the Federalist Society, which is always good news. O’Connor is still hearing Musk’s lawsuit against Media Matters.]

After Musk bought Twitter and turned it into a cesspool of far-right hate, advertisers understandably decided they didn’t want their ads showing up under posts arguing that we should execute every illegal immigrant and queer person. Media watchdogs also noted the rise in antisemitic, pro-Nazi content. Musk’s response was to tell advertisers to “go fuck themselves,” and he then started suing advertisers for leaving, as well as Media Matters for its antisemitism report. Similar lawsuits would probably be a giant waste of time for any other company, but luckily for Musk, he was able to find Justice Reed O’Connor, a notoriously right-wing judge in Texas with a habit of twisting the law to fit whatever Republicans want.

So O’Connor was already going to be partial to Trump-loving Musk, but in addition to the standard corruption you get from an openly partisan Federalist Society hack, he also has another incentive to rule in Musk’s favor — according to his most recent financial disclosure, O’Connor owns between “$15,001 and $50,000” in Tesla stock. That sure sounds like a pretty clear conflict of interest, and yet, he’s been allowed to hear the cases anyway. Considering what Texas Attorney General Ken Paxton was able to get away with, that shouldn’t be surprising, but that doesn’t make O’Connor’s refusal to recuse himself any less unethical.

Now, it’s entirely possible O’Connor sold his Tesla shares before taking these cases, but we can’t say for certain because he requested an extension and still hasn’t filed his 2023 financial disclosure. He also refused to comment even though NPR contacted him multiple times, suggesting that he probably hasn’t sold his Tesla shares to avoid any accusations of impropriety.

Now, some would argue that because Twitter X and Tesla are different companies, it’s no big deal. Josh Blackman, a member of the Cato Institute — a think tank for Republicans who are cool with weed — told NPR, “If the judge owned stock in X, if it were a public company, it’s an easy case. It’s a novel case because it requires a chain of inferences to get from X to Tesla.”

Media Matters disagrees, arguing that any Musk-related evidence revealed in the case will likely influence Tesla’s stock price. As one of Media Matters’ lawyers put it, “Such evidence has the potential to directly harm investor confidence in Musk — and thereby drive down Tesla’s share price. This is not speculation: History has shown that when Musk speaks, Tesla’s stock price responds.”

Cases like this also raise questions about why judges are even allowed to hold stock in individual companies in the first place. I don’t and probably never will invest in anything other than index funds because there’s no telling when something I write about could have something to do with one of the companies or industries I’m invested in, and I’m just a little ol’ car writer. You’d think the bar for ethical behavior expected from a federal judge would be significantly higher.

Hofstra University Law School Professor James Sample, who focuses on judicial ethics agrees, telling NPR, “It is absolutely reasonable to question his impartiality in a case where the party and interest is a principal in a company the judge owns stock in.” Sample also added that just the appearance that he might be biased is enough of a reason for O’Connor to recuse himself, saying, “Let another competent judge handle these cases without serious questions surrounding them.”