Judge in Elon Musk’s Texas lawsuit owns Tesla stock but will still hear the case [Update]

Instead of focusing on Tesla’s profits and sales plummetCEO Elon Musk is busy suing various companies and organizations for argue about his stubbornness. The lawsuits are generally funny, but he has an ace up his sleeve — a Texas judge who has proven incredibly friendly to Musk. NPR reported The judge also owns thousands of dollars in Tesla stock, but apparently that’s not enough of a conflict of interest to get him out of Musk’s lawsuits.

[[[[Update: ArsTechnica reports that Judge Reed O’Connor has recused himself from Musk’s lawsuit against advertisers. However, it doesn’t appear that his Tesla stock is a conflict of interest. Instead, it’s likely because he also owns stock in Unilever, one of the companies named in Musk’s lawsuit. The case has now been assigned to U.S. District Judge Ed Kinkeade. Both judges were appointed by President George W. Bush, but Kinkeade doesn’t appear to be a member of the Federalist Society, which is always good news. O’Connor is still handling 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 appearing under posts arguing that we should execute all illegal immigrants and gay people. Media watchdogs also noted the rise in anti-Semitic, pro-Nazi content. Musk’s response was to tell advertisers to “fuck off,” and he then began suing advertisers for leaving, as well as Media Matters for its anti-Semitic reporting. Similar lawsuits would likely be a colossal waste of time for any other company, but luckily for Musk, he was able to find Judge Reed O’Connor, a notoriously right-wing Texas judge with a habit of bending the law to fit whatever Republicans wanted.

So O’Connor was about to biased towards Musk loves TrumpBut beyond the usual corruption you get from a publicly partisan Federal hacker, he 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 sounds like a pretty obvious conflict of interest, but he’s allowed to try cases anyway. Given what Texas Attorney General Ken Paxton has been able to get away with, that’s hardly surprising, but that doesn’t make O’Connor’s refusal to recuse himself any less moral.

Now, it’s entirely possible that O’Connor sold his Tesla shares before these lawsuits were filed, but we can’t say for sure since he requested an extension and has yet to file his 2023 financial statements. He also declined to comment despite NPR’s repeated contact with him, suggesting that he may have not sold his Tesla shares to avoid any accusations of impropriety.

Now, some people will argue that because Twitter X and Tesla are different companies, no big deal. Josh Blackman, a fellow at the Cato Institute — a think tank for pro-marijuana Republicans — told NPR, “If the judge owned stock in X, if it was a public company, it would be an easy case. This is a novel case because it requires a chain of reasoning to go from X to Tesla.”

Media Matters disagrees, arguing that any evidence related to Musk that is revealed in the case would likely impact Tesla’s stock price. As one of Media Matters’ attorneys put it, “Such evidence would likely directly damage investor confidence in Musk—and thus depress Tesla’s stock price. This is not speculation: History has shown that when Musk speaks out, Tesla’s stock price responds.”

Cases like this also raise the question of why judges are allowed to hold individual company stocks in the first place. I do not and probably never will invest in anything other than an index fund because I never know when something I write might be relevant to one of the companies or industries I invest in, and I am just a writer about cars. You would think that the standard of ethical behavior expected of a federal judge would be considerably higher.

Hofstra University Law School professor James Sample, who focuses on judicial ethics, agreed, telling NPR, “It’s perfectly reasonable to question his impartiality in a case where the party and interest is a major party in a company in which the judge owns stock.” Sample added that the mere appearance that he might be biased is reason enough for O’Connor to disqualify himself, saying, “Let another competent judge handle these cases without the serious questions surrounding them.”