WILMINGTON, Delaware - Chancellor Kathaleen McCormick of the Delaware Court of Chancery announced she will transfer three pending lawsuits that involve Elon Musk and certain Tesla board members, saying the move is intended to prevent unnecessary media attention and preserve the administration of justice.
The three matters, which the court described as potentially carrying multi-billion-dollar stakes, were the subject of a request by defendants who argued McCormick had signaled support for a LinkedIn post praising a jury verdict in an unrelated securities fraud case against Musk. The defendants submitted a screenshot that showed McCormick’s personal LinkedIn account had "supported" the post, which congratulated the litigants who prevailed in that federal matter.
In a letter filed with counsel in the three suits, McCormick said the motion to recuse was premised on the incorrect assumption that she had actively reviewed and endorsed the LinkedIn post. She wrote that she had not read the post and characterized the account activity as suspicious, reporting it to LinkedIn as such. McCormick emphasized in her communication that she was not biased against the defendants.
"As should be obvious, disproportionate media attention surrounding a judge’s handling of an action is detrimental to the administration of justice," McCormick wrote to the attorneys in the cases while explaining why she would move forward with reassignment. She added that she would set a date for the reassignment and invited the attorneys who requested the transfer to attend to "witness what they requested."
Shortly after McCormick's letter was placed on the court docket, one of the plaintiffs, Tesla shareholder David Wagner, voluntarily dismissed his complaint. Wagner's suit, filed in 2022, alleged that Tesla's board failed to enforce a 2018 agreement with the Securities and Exchange Commission that required Musk to obtain company approval before making social media statements about Tesla.
The three reassignments come as the parties in the remaining cases await the chancellor’s ruling on motions by the defendants to dismiss the claims before trial. Those legal claims assert that Musk’s acquisition of Twitter - now known as X - and his work with the artificial intelligence company xAI diverted time or corporate opportunity away from Tesla. Among the remedies sought by shareholders is an order that Musk disgorge his equity stake in xAI.
Defendants have denied the allegations, arguing that Tesla has prospered under Musk and that his outside activities did not unfairly harm the automaker. Attorneys for the shareholders and for the defendants did not immediately respond to requests for comment on the reassignment and related filings.
The reassignments follow a period of heightened litigation between Musk and Delaware courts. In 2024, McCormick found that Tesla’s board breached its fiduciary duties by approving a record pay package for Musk and stripped him of that award. The Delaware Supreme Court later reinstated the compensation package, valued at more than $100 billion, in December. After McCormick’s 2024 ruling, Musk led corporate moves to reincorporate several of his companies, including SpaceX and Tesla, outside of Delaware. Not long before Tesla’s departure from the state, shareholders filed claims against the company’s board in the Court of Chancery - including the suits McCormick has now reassigned.
McCormick’s reassignment order arrives amid competing procedural postures: defendants seeking dismissal before trial, shareholders pursuing claims tied to alleged diversions of corporate opportunity, and lingering questions about whether social media account activity related to a judge can be construed as evidence of bias. The chancellor signaled that she intended to remove the three matters from her docket to limit the media attention she said was harmful to court proceedings, while affirming her own lack of partiality.
Contextual note - The cases remain active in Delaware’s Court of Chancery while parties await further procedural rulings; one shareholder plaintiff has already dismissed his suit following the chancellor’s posting.