Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—N.D. Cal.: One Musk tweet didn't cause losses, but his bid for new trial rejected, (Jul 7, 2026)

By R. Jason Howard, J.D.

Although there was substantial evidence that went both ways on some of the issues, it is not the court’s place to substitute its evaluations for those of the jurors.

The Northern District of California has granted Elon Musk’s motion for a judgment as a matter of law relating to a May 17, 2022, tweet but denied his motion to decertify the class and declined to grant a new trial in a shareholder class action representing all sellers of Twitter stock between May 13 and October 4, 2022, in what the sellers argued was a months-long scheme by Musk to artificially depress Twitter’s share price (Pampena v. Musk, No. 3:22-cv-05937-CRB (N.D. Cal. July 6, 2026)).

Twitter purchase. In April 2022, Musk sought to buy Twitter, Inc., and take it private. On May 13, despite waiving due diligence, he tweeted that the deal was temporarily on hold until he received more details on how Twitter calculated the level of bots/spam on its platform. Despite his public statement, the deal was not on hold and he had been aware of the bot issues on Twitter since before he made his tender offer. The Twitter share price dropped immediately and significantly. On May 17, Musk made a similar tweet about the number of bots on Twitter and stated that the deal could not move forward until he received more information. The Twitter share price remained low until October 4, when Musk announced that he would go through with the deal. On that day, the price spiked.

Trial. The plaintiffs sued, alleging that Musk's two tweets and a separate statement made on May 16 were part of a months-long scheme by Musk to artificially depress Twitter’s share price. After a two-week trial and more than three days of deliberations, a jury unanimously found that Musk’s two tweets were false and that the investing public was damaged.

Post-trial motions. In his motion, Musk sought to set aside this verdict and moved for a judgment as a matter of law or, alternatively, for a new trial. He also asked the Northern District to decertify the class based on the general nature of the verdict. The plaintiffs also filed post-trial motions seeking an award of prejudgment interest and approval of their class notice of the verdict and proposed claims administration process.

Musk’s motion. In his motion for judgment as a matter of law or, in the alternative, a new trial, Musk asserted that the plaintiffs failed to prove (1) loss causation, (2) material falsity, (3) scienter, (4) reliance, and (5) damages.

The court addressed each argument in turn beginning with Musk’s challenge to the sufficiency of the evidence that his May 13 and 17 tweets caused the class to suffer a loss in the market. Musk asserted that the plaintiffs failed to prove (1) proximate causation, (2) that the market perceived his statements as true, (3) that there was a corrective disclosure, and (4) that the misrepresentation caused loss after his July 8 termination letter.

The court agreed with Musk’s argument that the lack of market reaction to the May 17 tweet meant that there was no loss causation attributable to it after finding that the plaintiffs did not provide an expert opinion that the May 17 tweet maintained the deflation of share value from the May 13 tweet. Absent an expert opinion on price maintenance, the plaintiffs lacked substantial evidence to support a finding of loss causation with respect to the May 17 tweet, the court concluded.

Musk also called for a new trial, arguing that (1) the verdict was contrary to the weight of the evidence, (2) there was juror bias, (3) there was taint from plaintiffs’ unsuccessful theory of scheme liability, and (4) there was cumulative error from trial.

His call for a new trial was unsuccessful, however, as the court found that the verdict was not contrary to the weight of the evidence and stated that although there was substantial evidence that went both ways on some of the issues, it is not the court’s place to substitute its evaluations for those of the jurors. The court also found that any issues with the jury pool did not deprive Musk of a fair trial and that a reversal on grounds of attorney misconduct “is warranted only if counsel’s misconduct affected the verdict,” which it did not as the jury found in Musk’s favor on two of the four claims. The court rejected Musk’s remaining arguments.

Conclusion. The court granted Musk’s motion for judgment as a matter of law for his May 17 tweet and denied the remainder of the motion. The court also denied Musk’s motion to decertify the class and granted both plaintiffs’ motion for prejudgment interest and motion for approval of class notice of verdict and claims administration procedure.

The case is No. 3:22-cv-05937-CRB.

Judge: Breyer, C.

Attorneys: Mark Cotton Molumphy (Cotchett, Pitre & McCarthy, LLP) for Giuseppe Pampena, The Twitter Investor Group, Steve Garrett, Nancy Price, John Garrett and Brian Belgrave. Stephen Andrew Broome (Quinn Emanuel Urquhart & Sullivan, LLP) for Elon Musk.

Companies: The Twitter Investor Group

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