Elon Musk’s Ridiculous SLAPP Suit Gets Green Light from Partisan Judge

Legal Issues

from the free-speech-attack dept

When it comes to Judge Reed O’Connor, the only thing more predictable than his partisan rulings is the Supreme Court overturning them. But that hasn’t stopped him from giving the green light to Elon Musk’s ridiculous SLAPP suit against Media Matters. O’Connor’s problematic decision basically means that Elon has won. Even if the eventual case goes against Elon and rightly points out that Media Matters did nothing wrong, the cost of the case and the wider impact on speech has been a disaster.

When Elon sued Media Matters for publishing an article that everyone (including Elon) admits is true, people pointed out the many reasons why the case was terrible and should get tossed out. But first among them was the question of venue.

The case was filed in the Texas courtroom of Judge Reed O’Connor, even though none of the parties had any clear connection to Texas. The plaintiff was X Corp, a Nevada entity that (at the time) was headquartered in California (it has since announced it is closing down its headquarters there, but still), suing Media Matters (based in Washington DC), its CEO Angelo Carusone (based in DC) and one of its writers, Eric Hananoki (based in Maryland).

There is no connection to Texas other than that Elon Musk (who was not a direct party to the case) has other companies there. But Judge O’Connor just recently ruled in this very same case that you can’t assume that just because Elon controls both Tesla and ExTwitter that the companies are connected. So, you would think that this would further extend to saying Elon’s presence in Texas is meaningless.

Just last week, another judge, Amit Mehta in Washington DC, called out that a related investigation by Missouri AG Andrew Bailey (kicked off in response to a request from Elon Musk to pile on against Media Matters) was clearly and obviously an unconstitutional attack on Media Matters’ protected speech.

But Judge O’Connor marches to the beat of his own partisan piper. Recently, Joe Patrice at AboveTheLaw gave a short summary of Judge O’Connor’s history of extremist partisan decisions that even this Supreme Court felt the need to overturn:

Judge Reed O’Connor is, by all accounts, a joke. Elevated to the federal bench by the grace of the Federalist Society vetting machine, O’Connor has spent his tenure striking down Obamacare — and getting overturned by the Supreme Court — striking down other parts of Obamacare — and getting overturned by the Supreme Court — striking down the Indian Child Welfare Act — and getting overturned by the Supreme Court — inventing a constitutional right for crybaby anti-vaxxers — and, well, you’re not going to believe this, but he got overturned by the Supreme Court on that too.

While it wasn’t a huge surprise that O’Connor refused to recuse himself from the case over his Tesla shares, it’s still been bizarre to watch him act as if there’s a credible complaint here. First, O’Connor allowed discovery to go ahead before the motion to dismiss was decided (which isn’t entirely uncommon but in a case like this was still aggressive). And then last week he rejected the motion to dismiss entirely.

Media Matters had pointed out the very clear flaws in the claimed Texas jurisdiction and venue. But O’Connor comes up with a nonsensical excuse that most other judges would have laughed at: that because Hananoki’s articles mentioned Oracle’s ads, and Oracle is (temporarily) headquartered in Texas, there is jurisdiction over Hananoki.

Notably, Oracle only moved its headquarters to Texas during the pandemic and recently announced it was moving them again to Nashville. It’s also a meaningless point, given that Oracle allows employees to be remote, its founder (Larry Ellison) works mostly from Hawaii, its CEO, Safra Catz, lives in Florida, and many other execs remain at its original headquarters in California. The Texas HQ has always been more of a paper move than anything real.

But it’s enough for Judge O’Connor, even though Oracle is not a party to the action:

The body of the Hananoki articles targeted, among others, Oracle, a Texas-based company that placed ads on Plaintiff’s platform. Indeed, the Hananoki Original article included Oracle in the headline.

Judge O’Connor then also points out that this means that “the harm suffered” may have occurred in Texas:

This targeting of the alleged tortious acts at the headquarters of Texas based companies is sufficient to establish specific jurisdiction in Texas. See Johnson v. TheHuffingtonPost.com, Inc., 21 F.4th 314, 318 (5th Cir. 2021) (“The key question, under Calder, is whether the forum state was ‘the focal point of the [alleged libel] and of the harm suffered.’” (quoting Calder v. Jones, 465 U.S. 783, 789 (1984))). As just described and as set out below, each Defendant engaged in the alleged tortious acts which targeted harm in, among other places, Texas.

But… that’s wrong? I mean, just fundamentally. The harm alleged in the complaint is not to any of the “Texas-based companies.” Rather it’s X Corp., which, at the time, was not a Texas-based company in any sense. Doesn’t matter according to O’Connor.

Accordingly, the evidence taken as true shows Hananoki targeted his conduct at Texas.Because Defendant Hananoki “purposefully directed [his] activities” at Texas, and Plaintiff’s claims against Hananoki are “deriving from, or [are] connected with” those activities, specific jurisdiction exists

I’ve seen plenty of weird jurisdiction and venue cases in my two and a half decades covering the internet (internet jurisdiction questions can be crazy…) but I’ve never seen a justification quite like this one.

Judge O’Connor says that Media Matters itself as an entity would avoid jurisdiction in Texas if the site was “passive” but if it’s “interactive” then it’s fine. I’ve never heard this distinction before, and it makes no sense.

Defendant’s affidavit describes the website as interactive. Since the website is interactive, the traditional jurisdictional rules apply. Johnson, 21 F.4th at 319 (website is interactive if it solicits information, makes purchases, and click on ads.) These rules seek to determine whether Plaintiff’s suit results from Media Matters purposefully targeting Texas. Id. For the reasons stated above, Media Matters targeted Texas…

He then quotes another case to say that “a defendant who targets a Texas company with tortious activity has fair warning that it may be sued there”:

(“if you are going to pick a fight in Texas, it is reasonable to expect that it be settled there.”)

Except that… no one picked a fight in Texas. This is a made-up thing. Again, literally none of the parties were based in Texas.

Getting past the jurisdiction questions first, there’s still the issue of venue (i.e., is this the right place to file this lawsuit). And the obvious answer again here is “absolutely fucking not.” But, this is Judge O’Connor, so of course he thinks it makes sense.

Plaintiff sufficiently alleges a substantial part of the events occurred within the Northern District of Texas. Plaintiff alleges that Defendants waged a campaign against X’s blue-chip advertisers. It alleged AT&T, headquartered in the Northern District, was one of its blue-chip advertisers targeted by Defendants. The gravamen of Plaintiff’s claims are that Defendants intended to negatively impact Plaintiff’s blue-chip clients, including a client based in this district. This sufficiently establishes that a substantial part of the events at issue in this lawsuit occurred here.

Judge O’Connor rushes through the rest of the motion to dismiss. On the issue of no breach of contract because there was no such contractual breach, Judge O’Connor says that in Texas you can have tortious interference in merely getting someone to end a contract even without a breach (which is quite incredible).

Judge O’Connor does the judicial equivalent of a “who can really say” shrug regarding the argument that any harm of ExTwitter allowing ads next to neo-Nazis on ExTwitter came from ExTwitter, not Media Matters accurately pointing out the ads next to neo-Nazis:

Finally, Plaintiff plausibly alleges that Defendants proximately caused their harm. Proximate cause requires proof of both cause-in-fact and foreseeability. Defendants present a compelling alternative version of events to Plaintiff’s. However, the Court will not “choose among competing inferences” at this stage. … Accordingly, Plaintiff’s Amended Complaint alleges sufficient facts to state a claim of tortious interference with contract.

Media Matters had (correctly) pointed out that the claim of business disparagement requires there to be “false and disparaging information published” and that it has to have been done with actual malice (a pretty high standard, which includes that Media Matters knew or highly suspected the material was false at the time).

Incredibly, Judge O’Connor apparently writes the “false” part out of this requirement altogether, saying that disparaging is enough. His analysis of “malice” ignores the actual standard (which is reckless disregard for the truth), and says (incorrectly) that the frequency and tenor of the statements supports malice (which is not the standard, according to the Supreme Court, which seems to need to keep correcting O’Connor).

First, construing the facts pled by Plaintiff in the light most favorable to it, that Defendants manipulated and intended to deceive Plaintiff’s advertisers is sufficient to support the first element. Plaintiff alleges Defendants acted with malice and without privilege by asserting Defendants’ reporting was false and the “frequency and tenor of Media Matters’ statements disparaging X and the safety of advertising on the X platform” supports an inference of actual malice. And finally, Plaintiff has pled a plausible claim regarding special damages in that Defendants tortious acts undermined “advertisers’ faith in X Corp.’s abilities to monitor and curate content.

Almost every similar case I can think of dismisses on the actual malice point by pointing out that merely claiming “actual malice” does not make it actual malice. You have to show the reckless disregard for the truth. But here, O’Connor not only ignores the fact that ExTwitter admits in its complaint that nothing is false, he ignores the requirements of actual malice.

This is pretty stunning.

Unfortunately, this fits with O’Connor’s priors, in which he appears to bend over backwards to come up with excuses to support “his side.” If that means ignoring the Supreme Court standard, so be it. Tragically, all this is going to do is add (massively) to the costs facing Media Matters, as with the discovery order and O’Connor’s fee shifting order about whether or not he needed to recuse over his ownership of Tesla stock.

The non-profit has already laid off a bunch of employees because of the costs of this lawsuit. This decision more or less guarantees an approximately ten-fold increase in costs (after the motion to dismiss is when things get ridiculously expensive).

In other words, even if Media Matters were to win this case down the road, it has already lost. The cost of this kind of lawsuit is punishment, and O’Connor has now made multiple rulings that exact that type of punishment at soul-crushing levels.

And thus, Elon has successfully suppressed Media Matters’ speech. Never, ever, let anyone tell you he supports free speech after engaging in this kind of activity. He is actively abusing the judicial system to suppress speech. And he’s doing it gleefully with support from fans who also, falsely, insist they favor free speech.

Elon isn’t letting up either. Almost before the ink was dry on the order denying the motion to dismiss, ExTwitter filed a motion to compel Media Matters to hand over all sorts of confidential “donor-related documents.” Remember when Republicans absolutely hated any move to force non-profits to disclose donors? Apparently, that only applies to organizations that support Republicans. If you work against them, you should be forced to reveal your donors.

This ruling is, itself, an attack on free speech, in a case brought by someone who falsely claims to be a free speech absolutist. The end result is a travesty and a disaster for speech.

Filed Under: actual malice, breach of contract, business disparagement, elon musk, jurisdiction, reed o'connor, slapp suit, texas, venue
Companies: media matters, oracle, twitter, x