Vindictive Nonsense: Tesla Threatens To Fire Law Firm Over Expert’s Amicus Brief (original) (raw)

from the thus-proving-the-point dept

It’s no secret that Elon Musk can be petty and vindictive over the dumbest shit. You may have heard that he fired the entire Supercharger team a few weeks ago entirely due to him getting upset at what the woman who led that team told him (he’s now scrambling to try to rehire the team he fired — another thing that’s happened before).

Sometimes it gets even sillier. You may recall a couple of years ago when Tesla demanded that law firm Cooley LLP fire a lawyer who happened to have worked at the SEC back when Elon was fined for tweeting about his supposed plans to take the company private.

Pressuring law firms is apparently becoming a pattern.

Charles Elson, a retired Finance Professor at the University of Delaware, is a well-recognized authority on corporate governance issues. And it seems that Elon is terrified he might give his opinions to the Delaware Court of Chancery that is handling his compensation lawsuit.

In the past, I’ve explained how this whole lawsuit doesn’t make that much sense to me. It’s one case where I think Elon’s argument is actually entirely plausible. I wouldn’t vote in favor of his $55 billion pay package, but I can see why some people might not find it problematic. But, it seems that Elon is really, really scared about losing that payday. Hell, Tesla, which is famous for not advertising anything, is advertising to shareholders to tell them to vote to reinstate Elon’s pay package.

Still, even if I find the lawsuit a bit perplexing, it seems that Musk wants to handicap the opposition.

Elson filed one hell of a motion, asking for leave to file his expected amicus brief, noting that the Musk Team started playing hardball to try to force him not to file.

Professor Elson, a leading authority on corporate law, moves for leave to submit a second proposed amicus curiae brief in this action. Professor Elson previously submitted an amicus brief concerning the development and goals of equity-linked executive compensation during the post-trial briefing stage of this action, which the Court found “persuasive.” Professor Elson now writes to provide the Court with additional context and analysis in connection with the Tesla Board’s unprecedented attempt to seek a post-trial stockholder vote to ratify the Award.

Additional context, you say? What sort of context? Perhaps some of it has to do with how badly Elon doesn’t want Elson to say anything.

It’s pretty typical for parties to consent to amicus briefs being filed as a matter of course. Even if they know the briefs will challenge or disagree with their arguments. It’s just professional courtesy, and courts expect it. Opposing efforts to file an amicus brief can raise eyebrows. And Tesla went all in trying to block Elson:

Plaintiff consents to this motion. Defendants do not and Musk was willing to go to extraordinary—and appalling—lengths to prevent this Court from reading the Brief.

Early Friday morning, Professor Elson’s counsel emailed a copy of the Brief to counsel for the parties, asking whether they would consent to a motion for leave to file it. Plaintiff’s counsel responded that they did not oppose its submission. Tesla’s counsel from DLA Piper telephoned Professor Elson’s counsel to assert, without further explanation, that Professor Elson “may have a conflict” and asked counsel to hold off on filing the brief.

Soon after, Professor Elson received an email from Holland & Knight LLP, a law firm with which Professor Elson had a consulting relationship. Holland & Knight informed Professor Elson that the firm represents Tesla in certain unrelated matters and that Tesla had threatened to fire Holland & Knight if Professor Elson submitted this amicus brief.

The assertion that Professor Elson was conflicted is risible—which is presumably why Tesla’s then-counsel raised no objection when Professor Elson submitted his prior amicus brief in this matter. The rules of professional conduct prevent a lawyer from representing a client if the representation of one client will be directly adverse to another client. None of those elements was present here:

I mean, all of this is incredible. The threat. The weak ass claims of a “conflict.” But, most of all, the very fact (as Elson points out) that his argument is actually in support of Tesla which benefits by not having to give out this massive pay package if Elon loses.

To avoid having his professional associates suffer because of Elon’s petty vindictiveness, Elson chose to resign from Holland & Knight, “ending a relationship of nearly thirty years.”

This is doubly ridiculous given all of the conflicts that Elon has between his various companies, and the fact that he’s been claiming that he “deserves” this $55 billion pay package for all his hard work. Does Elson not then deserve to continue his relationship with H&K for all of his work? Of course not. The primary motive of everything Elon is “what benefits Elon?”

And, of course, the whole thing acts as a kind of Streisand Effect highlighting the key point that Elson was trying to raise. Tesla and Elon’s interests are averse here, yet the company is acting as if they’re aligned, which at least gives pretty strong credence to the idea (at the heart of the lawsuit) that the board is focused on helping Musk, rather than looking out for Tesla’s best interests.

The Court should have no illusions about what happened here. The frivolous assertion of a conflict was a fig leaf for Musk, acting through Tesla, to try to bully a law professor by making a serious economic threat to a law firm with which the professor had a consulting relationship. This is not the first time that Tesla has threatened to fire a law firm for employing someone who annoyed Elon Musk by doing his job. That it did so again here only emphasizes the correctness of the Court’s conclusion that Musk controls Tesla

And, of course, it’s giving everyone yet another glimpse into the ways in which Musk will let any slight turn him into a vindictive asshole.

Meanwhile, at the very end of the week, Tesla filed with the court to “reject the amicus’s motion that it is ‘appalling’ or ‘bullying…” but still admitting that they did, in fact, everything that Elson said, though they claim they were just raising “a potential conflict issue.”

Um. No. Again, Elson’s brief was on behalf of Tesla suggesting that they shouldn’t have to pay Musk his huge compensation. If there’s any “potential conflict issue” here, it seems to be on the lawyers ostensibly representing “Tesla” but instead advocating for something that would harm Tesla, while benefiting Elon Musk.

Filed Under: amicus brief, charles elson, compensation, delaware court of chancery, elon musk, threats
Companies: holland & knight, tesla