U.S. Federal Judge Reed O’Connor has been a long-time active member of the Federalist Society. In 2018, he spoke on a panel at the Texas Chapter’s annual conference.
Federalist Society/NPR screenshot
hide title
Switch title
Federalist Society/NPR screenshot
Billionaire Elon Musk appears to have found a new favorite federal judge: Reed O’Connor of Fort Worth, Texas.
Musk’s social media company
O’Connor’s shocking decision to support Musk has attracted widespread attention so far.
Less attention-grabbing: O’Connor’s investment in Tesla, with shares worth “between $15,001 and $50,000,” according to his most recent financial disclosures.
The investment raises questions about O’Connor’s impartiality as a judge as the outcome of a lawsuit filed by Musk’s X could affect his business empire.
James Sample, a professor at Hofstra University School of Law who specializes in judicial ethics, said: “It is inappropriate to question a judge’s impartiality in a situation where the parties and interests are principally responsible for a company in which the judge holds stock. Absolutely reasonable.
Others have questioned whether Musk’s legal team intentionally brought the case to the O’Connor court — known as “forum shopping” — in hopes of obtaining a sympathetic outcome.
The practice is controversial but not illegal. Federal rules governing where lawsuits can be filed are broad, said Jennifer Ahearn, senior counsel at the Brennan Center’s Justice Program.
“They’re taking advantage of these openings in a way that they don’t often see,” Ahearn said. “The reason you don’t see more is because you often find that the judge is unwilling to accept the situation and the parties are unwilling to accept the outrage of the judge doing this.”
But according to Ahearn, the judge appears to be doing just the opposite: willing to take cases in his Texas district that wouldn’t normally be heard there.
O’Connor, a member of the influential conservative legal group the Federalist Society, was appointed in 2007 by former President George W. Bush. And has a reputation, especially for overturning the Affordable Care Act and striking down federal gun regulations.
Now, O’Connor has taken on two cases from another conservative, who happens to be the richest man in the world, and who uses O’Connor’s court to attack perceived enemies.
O’Connor did not respond to multiple requests for comment. Neither does Musk.
Musk’s lawsuits are draining media affairs of cash
O’Connor now oversees two of Musk’s most high-profile legal actions.
One of the lawsuits filed this week by Musk’s X alleges that a consortium of advertisers who pulled ads from the platform illegally conspired to target the social media site.
The impact of the case was almost instantaneous.
The World Federation of Advertisers said on Friday it was disbanding its brand safety initiative, the Global Alliance for Responsible Media, amid concerns that litigation would drain its finances.
Brands including Unilever, Mars, CVS and Orsted are also named as defendants.
The second lawsuit, filed in November by Musk’s X Corporation, claimed that the liberal watchdog group Media Matters published a deceptive report about major advertisers appearing alongside pro-Nazi posts. The lawsuit cited breach of contract and trade libel, the legal term for derogatory statements that harm a company.
The cost of turning over the trove of documents in the case, a process known as “discovery,” has cost the nonprofit, which has about 100 employees, millions of dollars and forced it to lay off about 14 employees.
Media lawyers wrote in an email to Musk’s legal team that the production of the documents so far has been “extensive and intrusive,” likening the effort to “harassment,” according to the legal filing. According to reports, Musk’s legal team requested Musk’s personal bank records.
Five months ago, media lawyers asked O’Connor to rule on the lawsuit’s first major hurdle: a motion to dismiss to determine whether Musk’s lawsuit had any merit.
O’Connor gave the green light to discovery proceedings, but he still has not ruled on the substance of the lawsuit.
Musk accused of “forum shopping”
As in the Media Matters case, neither X, who is listed as a Nevada corporation in the lawsuit, nor any of the defendants are located in Texas.
But Musk’s legal team defended filing the Media Matters case in Texas, saying the nonprofit “regularly contacts” Texans asking them to subscribe to the group’s content, and in the second case, the ad The businessman has a “substantial presence” in Texas.
Forum shopping allegations have recently come under scrutiny in the North Texas District, in part because the district is unique.
In most of the country, lawsuits are assigned to judges at random. But in North Texas, judges decide based on which division of the district the case is filed.
“This is particularly extreme,” Ahearn said of Forum shopping in North Texas. “This has become an issue for the judiciary like it never has in the past.”
The Texas case is also unique in that laws protecting individuals and groups from baseless lawsuits do not apply in Texas federal courts, according to a 2019 appeals court ruling. This effectively means that if Musk loses the case, he won’t have to pay the defendants’ attorney fees, as he does in many states.
Records show Judge O’Connor is Tesla investor
Another issue has legal ethics experts worried: O’Connor appears to be an investor in Tesla, another company Musk owns.
It’s unclear whether O’Connor has sold up to $50,000 of his Tesla stock investment because the judge’s disclosure form covering the 2023 calendar year has not been made public. He has requested an extension to the filing, according to a U.S. Administrative Office of Courts official who was not authorized to speak publicly.
In May, an NPR investigation found that judges’ disclosure forms were often missing or late for a variety of reasons. As a result, potential conflicts of interest, such as stock holdings or even gifts of luxury travel, are hidden from public view.
Media lawyers seized on O’Connor’s disclosure, saying the judge’s ruling on what evidence to allow in the case could affect Tesla’s stock price. They argue that testimony or documents revealing Musk’s decision-making process could be made public.
“Such evidence has the potential to directly undermine investor confidence in Musk, thereby driving down Tesla’s stock price. This is not speculation: History shows that when Musk speaks, Tesla’s stock price reacts.
Josh Blackman, an adjunct scholar at the right-leaning Cato Institute, had a different view, saying O’Connor’s previous cases involved X, not Tesla.
“If the judge owns stock in X, if it’s a public company, then the case is simple,” Blackman said. “This is a novel case because it requires a series of inferences to derive Tesla from X.”
But judicial ethics scholar Thumper maintains that bias alone would be enough to exclude O’Connor from the case.
“Let another competent judge handle these cases and not raise serious questions about these cases,” he said.
