doug

Thanks again, Arnold, for taking the time to provide your educated analysis.

Again, I haven't read the motions, and likely won't get a chance to any time soon. However, I got the sense from Elon's blog post that he was suggesting Martin's "two refrigerators" post was evidence of continued disparagement against TM.

Elon posted, "... Eberhard wrote a well publicized and needless (a fix was already in progress) negative blog piece regarding the battery coolant pump soon after receiving the car."

I saw Martin's post as more informative than negative, but could it be seen by a judge as disparagement?

Btw, there is a new TM blog post today by Michael Marks. Perhaps the timing of this is to demonstrate that he is still on good terms with the company.

Arnold Panz

Sorry for the confusion, but there was a lot to unpack and I didn't want to post to be even longer than it was. ME's status as a "public figure" solely relates to the defamation claim -- there are two standards to sustain a claim of defamation, one for "public figures" and one for non-public figures. Because public figures have access to the press and can better defend themselves, there is a much higher standard that plaintiffs (like ME) are held to in order to sustain a claim of defamation than if they are non-public figures and have been defamed.

The public interest piece is only relevant to the anti-SLAPP counterclaim by EM, and has to do with whether the statements that EM (allegedly) made were about a topic in the public interest. If they were, then ME's very act of bringing the lawsuit is a violation of the law. It's to discourage people from bringing lawsuits against people opining or discussing in public issues important to the general public. I hope that helps clear that up.

Not so much a typo as an inappropriate use of pronouns. If I were representing EM, I would have argued, as they did, that ME is a "public figure" and therefore in order for EM to have defamed him, it had to be a recklessly false statement by EM made with malice. However, EM's lawyers didn't really address directly the possibility that ME is not a public figure. If ME isn't a public figure, the standard for defamation is much lower (a knowingly false statement that causes the plaintiff damage -- you don't need the "recklessness" or "malice" for a non-public figure, which is essentially an intention to spread lies about someone). They sort of made the argument in subsequent sections of the motion, but didn't directly address the idea that the court might not consider ME to be a public figure, which would subject ME's claims to the much higher burden on his defamation claim.

I hope that clears that up.

Arnold Panz

AMEN!! I know Sonsini is on the BoD of Tesla, so it's not at all surprising that they're representing them here, but for a case like this in the Bay Area (or anywhere in California), I'd much more likely use one of the employment law boutiques with strong offices in California like Littler Mendelson. Unlike Wilson Sonsini, which is primarily a corporate law shop with a few employment attorneys sprinkled in to handle offshoot cases like this one for clients, those firms are dedicated solely to these types of claims, and have dozens of lawyers who specialize in these types of cases for half the price of a typical Wilson Sonsini lawyer.

(Full disclosure -- I am an in-house attorney and regularly hire law firms of all types, so this is not an endorsement one way or another of any particular firm, but an observation as someone who spends tens of millions a year on outside counsel)

Arnold Panz

In the motion just filed by EM and TM, the "disparagement" alleged is that ME criticized TM for "the large number of Tesla Motors employees terminated...and...that these employees were unfairly treated by Tesla Motors." (page 9 of the Demurrer). What's very strong about this argument is that they're quoting ME's Complaint! ME's counterargument was that these statements weren't false, which unfortunately for him is completely irrelevant to whether or not they're disparaging, which ME basically admits that they are in his Complaint. He basically argues that it wasn't that big a deal, and he took the post down when requested. As I said, it's a technical violation of the severance agreement, but if I had been advising TM at the time I definitely would not have advised stopping payments over this because it's petty and will look as such more often than not to many judges.

Serge

Arnold, is it implied that voicing any criticism amounts to disparagement? I can understand how criticism based on false information is unjust, but not when it's based on factually correct information.

Arnold Panz

Completely -- it's the entire point of a non-disparagement clause in a severance agreement. The point for the company is that they don't want former employees, especially former executives (or in this case, CEOs), going around saying bad things about the company, it's product(s), people etc. The whole reason TM wanted that clause in the severance agreement was to avoid precisely what ME did, which is to make negative comments (even if arguably or even objectively true) that would be given great weight by interested parties (potential investors, customers, etc.) precisely because of his prominent former role within the company. Because TM was paying him money, they have the right to restrict his speech in this manner (n.b., for anyone wondering about ME's 1st Amendment rights to free speech, that amendment only protects you from the government restricting your speech, not a private party. If ME wanted to say whatever he wanted about TM after he left, he needn't have accepted their severance money).

Usually, a former employee will want to make this clause mutual, meaning that the company can't say anything negative/disparaging about the employee. So, for example, another potential employer calling for a reference doesn't get any information out of the former employer. Even if the former employer thinks the former employee stinks and is a waste of space, they can't say that (even if it's "true") because it's negative/disparaging. I believe ME's clause was mutual, but once he "broke the seal", the deal was off (at least in TM's mind), so they could say whatever they wanted (as long as it isn't knowingly false).

JRP3

Ignoring the potential philosophical debate regarding "if I was ME" but ME, (Martin), is not paying Wilson Sonsini. EM, or actually TM, is. Maybe you mixed up the initials.
*Edit: Or maybe I missed your point and you were saying if Martin looses and has to pay the bills.

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AnOutsider

That's how I read the post. I'd really like to see the whole thing dropped. Whether he sucked as a CEO or not, ME's been dragged through the coals a bit (even with his fanatical support) and it would suck to see him bankrupted on huge legal bills over a weak (and petty) case.

Picasso

Ya after reading everything I think it will be ME (Martin), who will end up footing the bill for both partys. And I do agree the best thing for both at this point would be to drop it. I fear Wilson Sonsini and those guys are on my side I pay them! A good number of the angel investors in the bay use them. I wonder if those guys did the spacex articals of incorperation? I find it odd Tesla reused spacex's 99% of it is boiler plate im sure but did ME and the other founders review it? If it was done by Wilson Sonsini I'm sure it has some fun clauses in favor of investors. Those guys love to get in on early rounds and offer them selfs as counsel in exchange for some stock. A payment for services after next round. A company I "co-founded" and later sold and had a small investor vs founder fight forced them to step down as counsel. It knowingly played both sides till we said something. Good times! Wilson Sonsini needs to bring back the free cafe.

dpeilow

The Associated Press: Another bump in the road for Tesla Motors