Case 3:18-cv-04865-EMC Document 352 Filed 01/11/22 Page 1 of 29
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`LEVI & KORSINSKY, LLP
`Adam M. Apton (SBN 316506)
`Adam C. McCall (SBN 302130)
`75 Broadway, Suite 202
`San Francisco, CA 94111
`Tel.: (415) 373-1671
`Email: aapton@zlk.com
`amccall@zlk.com
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`Attorneys for Plaintiff and Counsel for the Class
`[Additional Counsel on Signature Block]
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
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`IN RE TESLA, INC. SECURITIES
`LITIGATION
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`Case No. 3:18-cv-04865-EMC
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`PLAINTIFF’S NOTICE OF MOTION
`AND MOTION FOR PARTIAL
`SUMMARY JUDGMENT;
`MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT
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`ORAL ARGUMENT REQUESTED
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`Date: March 10, 2022
`Time: 1:30 p.m.
`Location: Courtroom 5, 17th Floor
`Judge: Hon. Edward Chen
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`***REDACTED VERSION***
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`PLAINTIFF’S NOTICE OF MOTION AND
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`CASE NO. 3:18-CV-04865-EMC
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`Case 3:18-cv-04865-EMC Document 352 Filed 01/11/22 Page 2 of 29
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`TABLE OF CONTENTS
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`NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT ................ 1
`ISSUES TO BE DECIDED ........................................................................................................... 1
`MEMORANDUM OF POINTS AND AUTHORITIES ............................................................... 2
`INTRODUCTION ......................................................................................................................... 2
`STATEMENT OF UNDISPUTED FACTS .................................................................................. 6
`A.
`Tesla Background. ................................................................................................. 6
`B.
`July 31, 2018 Meeting with the Saudi Arabia Public Investment Fund. ............... 6
`C.
`“Offer to Take Tesla Private at $420.” .................................................................. 7
`D.
`August 7, 2018 Statements. ................................................................................. 10
`E.
`The Public’s Response to Musk’s Tweets. .......................................................... 12
`F.
`Musk’s Attempts to Secure Funding and Confirm Investor Support. ................. 13
`G.
`Musk Announces the Withdrawal of the Going-Private Transaction. ................ 15
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`LEGAL STANDARD ................................................................................................................. 16
`ARGUMENT .............................................................................................................................. 17
`Plaintiff Is Entitled to Summary Judgment as to the Elements of Falsity and
`A.
`Scienter. ............................................................................................................... 17
`1. “Am considering taking Tesla private at $420. Funding secured.” ............... 17
`2. “Investor support is confirmed.” ................................................................... 21
`3. “Only reason why this is not certain is that it’s contingent on a shareholder
`vote.” ............................................................................................................. 22
`4. “I have continued to communicate with the Managing Director of the Saudi
`fund. He has expressed support for proceeding subject to financial and other
`due diligence and their internal review process for obtaining approvals. He
`has also asked for additional details on how the company would be taken
`private, including any required percentages and any regulatory
`requirements.” ............................................................................................... 23
`Plaintiff Is Entitled to Summary Judgment as to the Element of Reliance. ........ 24
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`B.
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`CONCLUSION ........................................................................................................................... 25
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`PLAINTIFF’S NOTICE OF MOTION AND
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`Case 3:18-cv-04865-EMC Document 352 Filed 01/11/22 Page 3 of 29
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`TABLE OF AUTHORITIES
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`Cases
`In re Apple Sec. Litig.,
`No. 19-cv-02033-YGR, 2020 U.S. Dist. LEXIS 206298 (N.D. Cal. Nov. 4, 2020) ................ 22
`Amgen Inc. v. Conn. Ret. Plans & Tr. Funds,
`568 U.S. 455 (2013) ................................................................................................................. 23
`Anderson v. Liberty Lobby, Inc.,
`477 U.S. 242 (1986) ................................................................................................................. 16
`Berson v. Applied Signal Tech., Inc.,
`527 F.3d 982 (9th Cir. 2008) .................................................................................................... 17
`In re Celestica Inc. Sec. Litig.,
`No. 07 Civ. 0312 (GBD), 2014 U.S. Dist. LEXIS 116562 (S.D.N.Y. Aug. 20, 2014) ........... 24
`Erica P. John Fund, Inc. v. Halliburton Co.,
`563 U.S. 804 (2011) ................................................................................................................. 23
`Halliburton Co. v. Erica P. John Fund, Inc.,
`573 U.S. 258 (2014) ................................................................................................................. 23
`In re Infineon Techs. AG Sec. Litig.,
`266 F.R.D. 386 (N.D. Cal. 2009) ............................................................................................. 24
`Kaplan v. Rose,
`49 F.3d 1363 (9th Cir. 1994) .................................................................................................... 23
`Livid Holdings Ltd. v. Salomon Smith Barney, Inc.,
`416 F.3d 940 (9th Cir. 2005) .................................................................................................... 17
`McCrary v. Elations Co. LLC,
`No. EDCV 13-0242 JGB (SPx), 2014 U.S. Dist. LEXIS 190468 (C.D. Cal. Dec. 8, 2014) ... 24
`S.E.C. v. Platforms Wireless Int'l Corp.,
`617 F.3d 1072 (9th Cir. 2010) ........................................................................................... passim
`S.E.C. v. Sourlis,
`851 F.3d 139 (2d Cir. 2016) ..................................................................................................... 20
`In re Tesla, Inc. Securities Litig.,
`477 F. Supp. 3d 903 (N.D. Cal. 2020) ................................................................................. 2, 17
`Rules
`FED. R. CIV. P. 56 .................................................................................................................. 16, 25
`Regulations
`17 C.F.R §240.10b-5 ................................................................................................................... 22
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`PLAINTIFF’S NOTICE OF MOTION AND
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT
`PLEASE TAKE NOTICE that on March 10, 2022 at 1:30 p.m., or as soon thereafter as
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`this matter may be heard, in Courtroom 5 – 17th Floor of the United States Courthouse located at
`450 Golden Gate Avenue, San Francisco, CA 94102, the Honorable Edward M. Chen presiding,
`Plaintiff Glen Littleton, by his counsel, will move, and hereby does move, to enter partial
`summary judgment in favor of Plaintiff and against Defendants Tesla, Inc., Elon Musk, Brad W.
`Buss, Robyn Denholm, Ira Ehrenpreis, Antonio J. Gracias, James Murdoch, Kimbal Musk, and
`Linda Johnson Rice (“Defendants”) pursuant to Federal Rule of Civil Procedure 56.
`PLEASE TAKE FURTHER NOTICE that Plaintiff seeks partial summary judgment
`against Defendants on the following elements of his alleged violations of Securities Exchange
`Act §10(b), 15 U.S.C. §78j(b), and SEC Rule 10b-5, 17 C.F.R. §240.10b-5: (1) material
`misrepresentations or omissions; (2) scienter; and (3) reliance upon the misrepresentations or
`omissions.
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`PLEASE TAKE FURTHER NOTICE that this motion is based on the Memorandum of
`Points and Authorities below, the Declaration of Adam M. Apton and the exhibits attached
`thereto, the arguments of counsel, and any other matters properly before this Court. Pursuant to
`Paragraph 11 of the Court’s Civil Standing Order – General, Plaintiff also submits herewith a
`proposed order.
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`ISSUES TO BE DECIDED
`Should the Court grant partial summary judgment in Plaintiff’s favor against
`1.
`Defendants where the record indisputably shows that Elon Musk falsely represented with scienter
`“Funding secured,” “Investor support is confirmed,” and “Only reason why this is not certain is
`that it’s contingent on a shareholder vote” on August 7, 2018 and made materially misleading
`statements with scienter in his blog post on August 13, 2018?
`Should the Court grant partial summary judgment in Plaintiff’s favor against
`2.
`Defendants on the element of “reliance” where the record indisputably shows that Plaintiff has
`established the presumption of reliance set forth in Basic Inc. v. Levinson, 485 U.S. 224 (1988)
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`PLAINTIFF’S NOTICE OF MOTION AND
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`and this presumption has not, and cannot, be rebutted?
`MEMORANDUM OF POINTS AND AUTHORITIES
`INTRODUCTION
`On August 7, 2018, at 9:48 a.m. PDT, Elon Musk (“Musk”), Chairman and Chief
`Executive Officer of Tesla, Inc., shocked its investors and the public by announcing through his
`Twitter account: “Am considering taking Tesla private at $420. Funding secured.” No one
`expected this announcement, including Tesla’s Board of Directors and its management who
`instantly scrambled to respond to media and investor inquiries. Tesla’s stock price immediately
`rocketed upwards leading to a temporary suspension of its trading by NASDAQ. Musk followed
`up his earlier tweet by tweeting at 12:36 p.m. PDT: “Investor support is confirmed. Only reason
`why this is not certain is that its contingent on a shareholder vote.” Tesla’s stock continued its
`rise, closing on August 7, 2018 at $379.57 per share, 6.36% higher than its price at 9:47 a.m. PDT
`immediately before Musk’s tweets. As this Court noted in its opinion denying Defendants’ motion
`to dismiss the complaint: “The statement could be read by a reasonable investor to mean complete
`funding for the transaction was unconditionally secured” and “as something more than a
`speculative amorphous opinion about future possibilities” but instead “implying a more concrete
`state of affair.” In re Tesla, Inc. Securities Litig., 477 F. Supp. 3d 903, 922-25 (N.D. Cal. 2020).
`Musk’s tweets created a frenzy of media and investor attention on Tesla and his proposal.
`In the following ten days, over 2400 articles were published concerning it. After providing a
`further “update” on August 13, 2018 that continued to omit key information regarding the
`proposed transaction’s structure, funding, and level of investor support, Musk sat for an interview
`with the New York Times, published on August 16, 2018, which revealed that funding was not
`secured, investor support was far from confirmed, and the basic feasibility of the transaction was
`still uncertain. Tesla’s stock price plummeted and analysts quickly discounted completely the
`likelihood of any going private transaction. On August 23, 2018, Musk informed Tesla’s Board
`that he was no longer pursuing the transaction, just 16 days after his tweet that the only remaining
`step to finalizing the transaction was a shareholder vote.
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`PLAINTIFF’S NOTICE OF MOTION AND
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`The evidence shows that Musk’s August 7, 2018 tweets were false at the time they were
`made. Specifically, the undisputed facts, based almost exclusively on testimony and documents
`from Musk and other members of Tesla management are:
`1. Funding was not secured on August 7, 2018. Musk had one 30-minute conversation
`about potentially taking Tesla private with the Saudi Arabia Public Investment Fund (“Saudi
`PIF”) on July 31, 2018. No price was discussed, no structure for the transaction was proposed, no
`amount of funding was agreed. There was no legally binding agreement and no recourse to Musk
`or Tesla if the Saudi PIF backed out. The Saudi PIF representatives left the meeting expecting
`further information about a potential transaction. Musk and Tesla never provided this additional
`information and never intended to use the Saudi PIF to fund more than 25% of any going private
`transaction. Following the tweet, Musk and his financial advisors spent two weeks developing a
`plan to obtain funding from numerous sources. This plan would have been completely
`unnecessary if funding was “secured” on August 7, 2018.
`2. Investor support was not confirmed by August 7, 2018. Musk had not discussed
`taking Tesla private at $420 per share with any outside Tesla investor prior to his tweets on August
`7, 2018. Under no circumstance could investor support have been confirmed when Musk had not
`communicated even the potential of a going private transaction to outside investors, aside from
`the Saudi PIF. Only after his tweet did Musk begin discussing the going private transaction with
`investors and he discovered that most opposed rather than supported it.
`3. A shareholder vote was not the only contingency for the proposed transaction.
`Tesla going private would be one of the largest corporate transactions in American history. In
`addition to a shareholder vote, it would require extensive deliberation by Tesla’s Board,
`independent legal and financial advice, negotiation of comprehensive legal documentation, and
`extensive regulatory approval. By August 7, 2018, none of this had happened. Musk had merely
`started discussions with Tesla’s Board by email on August 2, 2018 and at a meeting held on
`August 3, 2018 but the Board did not have a formal proposal to evaluate, let alone something that
`could be presented for a shareholder vote. Neither Musk nor the Board had retained legal or
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`PLAINTIFF’S NOTICE OF MOTION AND
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`financial advisors and the proposed structure of any going private transaction was still
`undetermined.
`These undisputed facts show that the statements made by Musk in his August 7, 2018
`tweets were false when made. The immediate market reaction as well as the intense media and
`investor scrutiny over the ensuing ten days, allows no dispute over their materiality. Finally, there
`is no dispute that Musk knew every fact that rendered his statements untrue: he was present at the
`July 31, 2018 conversation with the Saudi PIF and knew there was no funding secured; he knew
`he had not discussed taking Tesla private at $420 per share with any outside Tesla investor and,
`accordingly, investor support could not possibly be confirmed; and he knew that Tesla going
`private was contingent on much more than a shareholder vote. Yet on August 7, 2018, he
`nevertheless made these tweets to his then over 22 million followers.
`Musk has stated that the August 7, 2018 tweets were not misleading or fraudulent because
`he subjectively believed they accurately represented his thinking at the time they were made. But
`this subjective belief is legally insufficient to avoid liability under Rule 10b-5. If Musk’s
`subjective belief were sufficient, there could be never be liability for making a false statement
`absent a complete confession of guilt. The law imposes an objective standard for assessing falsity
`and holds defendants liable when they know the facts that render their statements objectively
`false. Objectively, Musk knew his statements here were false.
`Similarly, the August 13, 2018 blog post authorized by Musk and published by Tesla
`purportedly giving an update on the proposed going private transaction omitted material
`information about it. It represented that discussions with the Saudi PIF were continuing and
`consensual whereas Musk had numerous arguments with its principal and just the day before had
`sought to cut them out from the deal entirely. Further, at the time of the blog post, the structure
`of the proposed transaction was still uncertain, the amount of funding needed was still unknown,
`and Musk was still assembling his team of legal and financial advisors. Discussions with investors
`had commenced, but support was lukewarm and still far from confirmed. These critical facts were
`omitted from the blog post which continued to present certainty that the transaction would
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`PLAINTIFF’S NOTICE OF MOTION AND
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`Case 3:18-cv-04865-EMC Document 352 Filed 01/11/22 Page 8 of 29
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`proceed. Once again, Musk was in full possession of the contradictory and omitted facts but chose
`not to disclose them.
`Finally, Plaintiff is entitled to summary judgment on the element of reliance. Plaintiff
`invokes the fraud-on-the-market doctrine to create a presumption of reliance by every class
`member on the public statements alleged to be misleading in this case. Under binding Supreme
`Court precedent, reliance is presumed on material public statements made regarding a security
`that trades in an efficient market. Tesla’s securities are some of the most highly traded on the
`NASDAQ and Tesla is one of the most closely followed companies in the world. If there were
`any doubt regarding the efficiency of the market for its securities, Plaintiff’s expert, Dr. Michael
`Hartzmark, conducted a detailed analysis of the trading in Tesla securities during the class period
`and concluded they traded in an efficient market. Defendants have offered no testimony or
`evidence, expert or otherwise, to the contrary. Accordingly, Plaintiff is entitled to summary
`judgment on this element of his claim.
`From August 7, 2018 to August 17, 2018, Musk’s tweets that he had a fully funded
`proposal to take Tesla private at $420 per share with confirmed investor support roiled the market
`for Tesla stock and other securities. No part of this unconventional announcement was true: Musk
`had not secured funding to take Tesla private at $420 per share nor confirmed investor support.
`Furthermore, Musk knew that, as of August 7, 2018 when he impulsively tweeted to over 22
`million followers, his going private proposal was little more than a preliminary, half-baked
`concept. When the truth about the haphazard and misleading nature of the statements was
`revealed, Tesla’s investors lost billions of dollars. Based on the evidentiary record in this case, no
`reasonable juror could conclude that the August 7 and August 13, 2018 statements were not
`materially false and misleading, that Musk did not make those statements with scienter, and that
`class members did not rely on those statements. Partial summary judgment should be entered in
`Plaintiff’s favor.
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`PLAINTIFF’S NOTICE OF MOTION AND
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`Case 3:18-cv-04865-EMC Document 352 Filed 01/11/22 Page 9 of 29
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`STATEMENT OF UNDISPUTED FACTS
`Tesla Background.
`A.
`In July 2018, Tesla was a NASDAQ-listed company with approximately $50 billion in
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`market capitalization.1 Musk served as its Chairman and Chief Executive Officer.2 Its Board of
`Directors consisted of Defendants Brad W. Buss, Robyn Denholm, Ira Ehrenpreis, Antonio J.
`Gracias, James Murdoch, Kimbal Musk, and Linda Johnson Rice.3 On July 31, 2018, Tesla’s
`stock price closed at $298.14.4
`July 31, 2018 Meeting with the Saudi Arabia Public Investment Fund.
`B.
`On July 31, 2018, Musk met with the Saudi PIF at the Tesla Fremont Factory.5 Musk’s
`Executive Assistant, Sam Teller, also attended the meeting and Tesla’s Chief Financial Officer,
`Deepak Ahuja, attended for the last ten minutes; no one else from or on behalf of Tesla was
`present.6 On behalf of the Saudi PIF, Yasir Al-Rumayyan, Saad Al Jarboa, and Naif Al-Mogren
`attended.7 Al-Mogren took contemporaneous notes of the meeting.8 The meeting lasted
`approximately 30 minutes. During the meeting, Al-Rumayyan expressed support for Tesla and
`said he “would like to listen more about [Musk’s] plan to take it private.”9 As Al-Rumayyan
`described the meeting in subsequent texts sent to Musk on August 11 and 12: “We would like to
`explore investing in Tesla subject to being able to create a Tesla production hub in the Kingdom
`of Saudi Arabia . . . . Therefore, as discussed, we would like our teams to start working together
`in a confidential manner to explore a potential transaction” and “the agreement as was minuted
`by my people is to wait for the information to be sent be [sic] you within a week, on how we will
`
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`1 M. Hartzmark Dep. at 34:8-36:15; see also Hartzmark Report (ECF No. 291-1) at ¶51 &
`Appendix C; Defendants’ Answer to Consolidated Complaint for Securities Fraud (“Answer”)
`(ECF No. 264) at ¶16.
`2 Answer at ¶17.
`3 Id. at ¶¶ 20-26.
`4 Hartzmark Report (ECF No. 291-1) at Appendix C.
`5 E. Musk Dep. at 89:19-24, 99:7-14; E. Musk SEC Tr. at 143:10-13.
`6 E. Musk Dep. at 99:4-6; Teller Dep. at 131:3-9, 163:13-17; Ahuja Dep. at 82:6-11.
`7 Teller Dep. at 132:2-17; E. Musk SEC Tr. at 110:8-10; Exhibit 80.
`8 Teller Dep. at 143:24-144:3, 148:21-24; Ahuja Dep. at 278:14-20.
`9 Teller Dep. at 134:18-23, 156:16-157:16; Exhibit 80.
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`PLAINTIFF’S NOTICE OF MOTION AND
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`CASE NO. 3:18-CV-04865-EMC
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`Case 3:18-cv-04865-EMC Document 352 Filed 01/11/22 Page 10 of 29
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`move forward together.” 10 At the close of the meeting, Al-Rumayyan asked Musk to share his
`thoughts on the structure for the transaction, the percentage of ownership that would be needed
`to complete the deal, and his “financial calculations to take it private.”11 Although Musk did not
`communicate it to the Saudi PIF, he had no intention of letting the Saudi PIF obtain majority
`control of Tesla and wanted to limit its investment stake to 20 to 30 percent.12
`Importantly, critical terms were not discussed with the Saudi PIF on July 31, 2018. The
`price to be paid for Tesla stock in a going private transaction, later proposed by Musk as $420 per
`share, $120 or 40% higher than its closing price on July 31, 2018, was never discussed.13 The
`percentage of any private Tesla that the Saudi PIF might own was not discussed, nor was the
`overall structure of the transaction.14 The total amount of funding, or even a range, was also not
`discussed.15 Indeed, as Ahuja testified, this could not be discussed until the structure of the
`transaction was “refined further by Elon and his team.”16 No legally binding document was
`created as a result of the July 31, 2018 meeting with the Saudi PIF; Musk conceded he had no
`legal recourse against the Saudi PIF if they refused to provide funding and that funding might not
`be available at certain price levels.17
`“Offer to Take Tesla Private at $420.”
`C.
`Musk never provided any further information to the Saudi PIF. On August 2, 2018,
`however, Musk sent an email to Tesla’s Board with the subject line reading: “Offer to Take Tesla
`Private at $420.”18 Musk did not provide any additional information or terms for the transaction,
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`10 Exhibit 121; Teller Dep. at 145:7-21; Ahuja Dep. at 97:7-98:1; E. Musk Dep. 225:11-230:23,
`249:12-250:7; see also Exhibit 80 (notes indicating that Al-Rumayyan concluded the meeting by
`saying, “I would like to listen to your plan Elon and what are the financial calculations to take it
`private in the next week and if I did not receive anything, I will call you.”).
`11 Ahuja Dep. at 97:18-98:1; Teller Dep. at 145:7-21.
`12 E. Musk Dep. at 125:9-25.
`13 E. Musk Dep. at 109:23-110:1; E. Musk SEC Tr. at 231:22-232:10; Ahuja Dep. at 100:22-
`101:14; Ahuja SEC Tr. at 93:20-24.
`14 E. Musk Dep. at 112:3-16; Ahuja SEC Tr. at 104:20-25.
`15 E. Musk Dep. at 110:22-24; E. Musk SEC Tr. at 136:9-13; Ahuja Dep. at 84:2-6; 102:14-16;
`Ahuja SEC Tr. at 93:3-5; Teller Dep. at 164:20-24.
`16 Ahuja Dep. at 104:21-105:5.
`17 E. Musk Dep. at 132:24-133:13; 220:7-11; Ahuja Dep. at 108:22-110:8.
`18 E. Musk Dep. at 129:14-131:1; Exhibit 81.
`PLAINTIFF’S NOTICE OF MOTION AND
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`CASE NO. 3:18-CV-04865-EMC
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`Case 3:18-cv-04865-EMC Document 352 Filed 01/11/22 Page 11 of 29
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`such as the structure or source of funding.19 There is no discussion of the price or how it was
`determined in the body of the email; it is solely referred to in the subject line.20 Musk also wrote
`that the “offer expires in 30 days.”21 Musk drafted this email by himself without any help, review,
`or advice from counsel.22 The “offer” price referenced in the subject line represented a 20%
`premium to the then-market price, rounded up to $420 “for karma.”23 The premium was
`calculated based on the market price for Tesla stock on August 2, 2018 which had risen
`substantially following Tesla’s second quarter earnings call held on August 1, 2018.24
`On August 2, 2018, after receiving Musk’s email, the Board convened a special telephonic
`meeting (excluding Musk and his brother, Kimbal Musk).25 During the meeting, Tesla’s General
`Counsel, Todd Maron, told the Board that Musk did not intend to buy out all of Tesla’s
`shareholders, “but instead to have a private structure with as many existing Tesla shareholders
`remaining shareholders as possible, and with any shareholders who did not want to be part of a
`private company being bought out.”26 The Board asked Maron to schedule a further meeting at
`which time Musk would “provide additional details regarding his proposal and explain to the
`Board his thinking.”27 Ahuja also provided some context for the proposal contained in Musk’s
`email but testified that the transaction “was in the very, very early days.”28 Given the absence of
`material terms from Musk’s email, this was not a formal proposal for the Board to evaluate and
`analyze.29
`On August 3, 2018, Tesla’s Board convened a meeting with Musk to discuss his email.30
`Musk did not provide any further details in terms of the funding or structure for the transaction,
`
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`19 Exhibit 81.
`20 Id.
`21 Id.
`22 E. Musk Dep. at 129:20-130:9.
`23 Id. at 131:25-132:5.
`24 Id. at 137:24-138:2; E. Musk SEC Tr. at 178:16-179:25.
`25 Exhibit 82.
`26 Id.
`27 Id.
`28 Ahuja Dep. at 131:17-132:5.
`29 E. Musk Dep. at 159:6-10, 213:8-12; see also Denholm Dep. at 44:25-45:16.
`30 Exhibit 83.
`PLAINTIFF’S NOTICE OF MOTION AND
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`Case 3:18-cv-04865-EMC Document 352 Filed 01/11/22 Page 12 of 29
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`except that he wanted “current shareholders . . . to remain shareholders” after the transaction if
`they desired while those that did not could be “bought out at an appropriate premium.”31 With
`regard to the premium, Musk reiterated his proposed price of $420 per share which was “about a
`20% premium over the current price of the stock, which had just undergone a recent run up after
`the [Tesla’s] Q2 earnings call.”32 The Board told Musk that “a detailed proposal regarding a going
`private transaction had not yet been made and that one would be needed in order for the Board to
`properly analyze and evaluate it.”33 Finally, the Board authorized Musk “to have initial,
`conceptual conversations with a few of the Company’s top shareholders to explore their interest
`and gauge their reaction to a private corporate structure.”34
`
`Musk did not have any communications with the Saudi PIF or any other Tesla investor
`immediately following the August 3, 2018 Board meeting.35 In fact, Musk had not even received
`Tesla’s capitalization table showing its largest institutional and retail shareholders as of August
`7, 2018.36 Nor did he formally retain any advisors to assist him with the going private transaction
`at any point between July 31, 2018 and August 7, 2018.37 In fact, the only conversations he had
`about the transaction during this time frame were short conversations with (i) Michael Dell of
`Dell Technologies, (ii) Steve Rosenblum from Wachtell, Lipton, Rosen & Katz, and (iii) Egon
`Durban from Silver Lake Partners. On August 4, 2018, Musk spoke with Dell briefly about his
`experience on taking Dell private and obtained from Dell the names of his advisors when he took
`Dell Technologies private.38 Dell told Musk that he was “glad . . . to have taken Dell Computer
`private” but that it was “a very difficult process” that took “something like a year” to complete.39
`
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`31 Id.
`32 Id. at 2.
`33 Id. at 3.
`34 Id. at 3; E. Musk Dep. at 159:20-160:2.
`35 Musk’s Amended and Supplemental Responses to Lead Plaintiff’s First Set of Interrogatories
`dated September 10, 2021 (“Musk Interrogatory Responses”) at 27, 28, 30, and 35; E. Musk Dep.
`at 165:15-17, 189:10-16; Ahuja Dep. at 172:8-173:1; Viecha Dep. at 159:6-161:17; see also
`Exhibits 121, 151, 165.
`36 Exhibit 91; Ahuja Dep. at 224:10-224:19.
`37 E. Musk SEC Tr. at 165:1-5.
`38 E. Musk Dep. at 167:7-169:10.
`39 Id. at 167:14-168:14; E. Musk SEC Tr. at 161:6-21.
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`PLAINTIFF’S NOTICE OF MOTION AND
`MOTION FOR PARTIAL SUMMARY JUDGMENT
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`CASE NO. 3:18-CV-04865-EMC
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`Case 3:18-cv-04865-EMC Document 352 Filed 01/11/22 Page 13 of 29
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`Dell suggested to Musk that he speak with his counsel, Rosenblum, which Musk did shortly
`afterwards, and Durban.40
`During their conversation on August 6, 2018, Musk indicated to Durban his interest in
`taking Tesla private at a 20% premium and allowing current investors to remain investors after
`the transaction despite having to keep the number of shareholders below 300.41 Musk also told
`Durban that he preferred to have a “broader investor base” in a private Tesla and wanted to limit
`the Saudi PIF to “something on the order of 15 percent, maybe up to 20 percent.”42 Durban
`regarded Musk’s intended structure for the transaction as “unprecedented.”43 With regard to
`funding, Durban’s notes of his conversation with Musk refer to “Saudis & UAE” but do not
`indicate that there was any commitment from the Saudi PIF to provide funding for Tesla going
`private.44 Durban understood that there was no binding legal contract for any entity to provide
`funding to Musk to take Tesla private as of August 6, 2018, something Silver Lake requires before
`it describes funding as “secured.”45
`August 7, 2018 Statements.
`D.
`On August 7, 2018 at 9:48 a.m. PDT, Musk tweeted “Am considering taking Tesla private
`at $420. Funding secured.”46 Musk included the $420 per share price to “make it clear that funding
`was secured at that level.”47 At 10:40 a.m. PDST, Musk tweeted “I don’t have a controlling vote
`now & wouldn’t expect any shareholder to have one if we go private. I won’t be selling in either
`scenario.”48 At 11:00 a.m. PDT, Musk tweeted “My hope is *all* current investors remain with
`Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla.
`Already do this with Fidelity’s SpaceX investment.”49 At 11:13 a.m. PDT, Musk tweeted
`
`
`40 E. Musk Dep. at 169:11-23; E. M