Judge Who Owned Tesla Stock Recuses Himself From X Lawsuit

X has argued that Tesla and its shareholders are not interested parties in its lawsuits.

'X' logo on the top of the headquarters of the social media platform X, formerly known as Twitter, in downtown San Francisco on July 30, 2023. Carlos Barria/Reuters

A federal judge overseeing a lawsuit by Elon Musk’s social media platform X against an advertising trade group has removed himself from the case amid claims that he is financially interested in the case.

In its antitrust suit, X accused World Federation of Advertisers of illegally colluding to stop ad campaigns on the platform, formerly called Twitter. It is playing out in the U.S. District Court for the Northern District of Texas, where Judge Reed O'Connor was assigned to the case.

In an Aug. 13 notice, O'Connor recused himself without giving a reason. Judge Ed Kinkeade will be taking over the case.

For now, O'Connor remains the judge in a separate lawsuit filed this past November by X against Media Matters for America, a progressive advocacy group that published a report claiming advertisers’ paid posts on X were featured next to what it deemed “Neo-Nazi and white-nationalist content.” X dismissed that report as misleading and defamatory, accusing Media Matters of trying to harm the company’s business.

In June, Media Matters filed a motion alleging that O'Connor hearing the case could present a conflict of interest.

The motion cited the federal court’s most recent publicly available financial disclosure, which suggests that O'Connor held somewhere between $15,001 and $50,000 of Tesla stock by the end of 2022, an amount that would require recusal if Tesla is deemed an interested party.

Although Tesla is not involved in the lawsuit, Media Matters insisted that it is an interested party in this matter, given that Musk, the CEO of Tesla, exercises “extraordinary personal control” over the automaker and privately owns the social media platform.

“In light of the public’s reasonable perception that both X and Tesla are stand-ins for Musk, Tesla’s financial interest in this lawsuit is clear,” the group argued. “X’s victory or defeat will necessarily impact Tesla, including the price of its stock.”

In response to the motion, X rejected Media Matters’ call to acknowledge Tesla and its shareholders as interested parties. Just because Musk controls both X and Tesla, it said, doesn’t necessarily mean every Tesla shareholder has a stake in this lawsuit.

“Even assuming that this litigation could have some future indirect effect on Tesla shareholders by virtue of Musk’s financial interest in Tesla, that indirect relationship is far too remote, contingent, and speculative to provide any colorable ground for recusal,” the social media giant argued.

The judge’s court deputy did not return a request for comment.