Before Elon Musk spent September combating Brazil’s online disinformation regulations, he focused his energy on challenging a fundamental aspect of US corporate law. When a Delaware judge nullified his unprecedented $56 billion compensation package, Musk responded by criticizing the state, relocating Tesla to Texas, encouraging shareholders to reaffirm the deal, and urging the judge to reinstate it. Essentially, Musk seeks to overturn a significant court decision through sheer persistence.
Musk’s recent altercation with a Brazilian judge over anti-government posts on his platform, X, may seem to indicate a preference for confrontation when conventional wisdom advises caution. As Musk famously told biographer Walter Isaacson, “the only rules are the ones dictated by the laws of physics. Everything else is a recommendation.” Although Musk hasn’t quite broken the laws of physics, he has managed to stretch them. Tesla popularized electric cars, Starlink aims to connect the globe, SpaceX successfully lands rockets on offshore platforms, and PayPal has become ubiquitous in online transactions.
The catch lies in how Musk has also bent legal boundaries. In numerous disputes encompassing roadways, financial markets, labor issues, and digital realms, Musk’s approach has not been merely defensive but has also questioned the legitimacy of courts and regulatory agencies. According to Southern Methodist University law professor Carliss Chatman, “it seems like every single time he eventually just gets away with it.”
These actions raise critical questions about the application of law to immensely wealthy and influential individuals like Musk. By continually pushing legal limits, Musk exposes gaps in regulations that many assume are infallible. Although he might have met his match in Brazil’s Alexandre de Moraes for now, similar figures are absent in the US legal landscape.
In the past, Musk defied local Covid-19 lockdown restrictions to reopen a Tesla factory, has challenged the constitutionality of the National Labor Relations Board, and faced European digital authorities with scant responsiveness to their fines related to misinformation on X. This is only a partial list of his confrontations.
Is Musk’s defiance a justifiable use of his significant resources? Does his unprecedented wealth serve as his “superpower,” or is it merely unparalleled hubris? Addressing him through unconstitutional means to mitigate potential collateral damage becomes an intriguing question.
According to Columbia University law professor Eric Talley, Musk’s continuous efforts to reshape the law cater “to fit the Elon Musks of the world,” though he is a unique case. Unlike other billionaires who might be restrained by capital markets or public opinion, Musk’s defiance appears unscathed even when his extreme stances cause advertisers to abandon X. He counters these setbacks by filing antitrust lawsuits claiming illegal boycotts.
Despite Tesla’s fluctuating stock, Musk retains unwavering support from retail investors, whom Talley describes as “deacons in the church of Musk.” This fervent support allows him to mobilize a defender base in ways that other billionaires cannot. For example, when Delaware Chancellor Kathaleen St. J. McCormick invalidated his pay package, Musk’s criticisms prompted his followers to attack her ruling.
Delaware’s Chancery Court, where McCormick presides as the chief judge, operates as a court of equity with the authority to transcend legal constraints. McCormick determined that even within this adaptable structure, Musk’s pay package was excessive. Musk’s call for a shareholder ballot to overturn that decision suggests a disregard for any rules he finds inconvenient.
In Brazil, Musk encountered a relentless enforcer, yet even stringent penalties on objectionable political speech would be difficult to implement in the US. Banning X is also not a viable solution. According to Chatman, “states are scarier than people,” underlining the complexity of regulating powerful individuals like Musk.
Ultimately, the law can only be stretched to a certain point before it reaches a breaking point. For a comprehensive analysis, readers can refer to the original article on Bloomberg Law.