Tesla CEO Elon Musk’s legal team has taken a bold step by filing a motion demanding that Delaware Chancellor Kathaleen McCormick recuse herself from an ongoing Tesla shareholder lawsuit. The motion, submitted on March 25, points to an alleged LinkedIn “support” reaction from McCormick’s account to a post celebrating a $2 billion jury verdict against Musk in a separate California securities-fraud case.
This latest development adds fuel to the fire in the already tense relationship between Musk, Tesla, and the Delaware judiciary. McCormick had previously overseen the landmark challenge to Musk’s record $56 billion 2018 compensation package. In that case, she ruled that the performance-based stock-option grant, which could have been worth $56 billion at the time and is now valued even higher, was invalid. She found that Musk had too much control over Tesla as a controlling stockholder, the board lacked independence, and proxy disclosures were deficient.
The LinkedIn post in question was authored by Harry Plotkin, a jury consultant who assisted plaintiffs in a case against Musk over tweets he made in 2022 about his Twitter acquisition. Plotkin praised the trial team for standing up against the richest man in the world. The post featured a banner stating “Katie McCormick supports this,” using LinkedIn’s “support” icon, which Musk’s legal team argues creates a perception of bias against him and warrants McCormick’s recusal to ensure judicial impartiality.
McCormick, however, swiftly denied intentional endorsement, stating in a letter to attorneys that she was unaware of the interaction until LinkedIn notified her. She claimed that she either did not click the “support” icon at all, or did so accidentally, though she does not believe it was accidental. Critics, including Musk allies, find her explanation implausible given the deliberate nature of the LinkedIn interface.
The stakes are high in this case, as McCormick’s previous ruling on Musk’s compensation package had significant implications. After initially ruling the package invalid, the Delaware Supreme Court later reversed the decision, restoring the package but awarding the plaintiff only nominal damages. The current recusal motion presents a new challenge for McCormick and could have broader implications for Delaware’s reputation as a hub for corporate governance disputes.
As the decision on the recusal motion looms, the episode serves as a reminder of the delicate balance between judicial independence and public confidence in high-profile litigation. The outcome will not only impact the ongoing Tesla shareholder lawsuit but could also influence the perception of Delaware’s specialized courts in handling corporate governance disputes. Stay tuned for updates as this legal drama unfolds.