New disclosures reveal that Judge Reed O’Connor, based in Fort Worth, Texas, holds an investment in Tesla valued between $15,001 and $50,000. This comes as he oversees a significant legal case involving X, a company owned by CEO Elon Musk. The information has sparked debate over potential conflicts of interest. Critics suggest the judge’s financial ties to Tesla may influence his impartiality in proceedings related to Musk’s ventures.
The legal matter revolves around a lawsuit filed by Musk’s X against the advocacy group Media Matters. Musk claims the group published a misleading report that damaged the reputation of X, formerly known as Twitter. Musk’s legal team asserts the report led to an advertising boycott, potentially affecting the platform’s revenue. The case has drawn attention due to the judge’s investment in Tesla, another Musk-owned company.
The Northern District of Texas is handling the lawsuit, aligning with X’s terms of service, which stipulate legal disputes occur there. This decision has led to allegations of “judge shopping.” Critics argue filing in this district may give Musk a favorable setting. Other parties involved in the case are not based in Texas, but X’s legal team notes that the platform has many users in Texas, justifying the case’s location.
O’Connor’s investment was revealed through a financial disclosure form required for federal judges. The form, covering 2023, shows O’Connor bought and sold Tesla stocks that year before taking on the current lawsuit in November. After accepting the Media Matters case, O’Connor made no Tesla-related transactions in 2023 or early 2024. The judge’s stock holdings have raised questions about potential financial interests that could impact his rulings.
Legal ethics experts have called for O’Connor to recuse himself from the case due to his connection to Tesla. They highlight federal laws mandating recusal when a judge or their family stands to benefit financially from the case’s outcome. The possibility that Tesla’s stock price could be influenced by the lawsuit’s findings is a central concern. However, O’Connor has dismissed requests for him to step aside, ruling that his Tesla stock does not affect the case.
In August 2024, O’Connor rejected Media Matters’ motion to dismiss the lawsuit. He ruled that Musk’s attorneys had shown the group acted with “actual malice” in their report. This ruling allowed X’s legal team to proceed, requesting numerous internal documents from Media Matters. The judge also denied a request from Media Matters asking X to disclose parties potentially benefiting from the lawsuit’s outcome.
O’Connor, who has faced scrutiny for his investment, defended his position in remarks at a Federalist Society conference in Fort Worth. He emphasized the fairness of Fort Worth’s judicial system, dismissing allegations of judge shopping. Critics argue the practice of filing lawsuits in districts perceived as sympathetic to certain litigants poses a problem for the judiciary.