Elon Musk pays to settle defamation lawsuit by Tesla critic

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Elon Musk agreed to pay US$10,000 to settle a defamation lawsuit by a Tesla critic who became a hero to short-sellers with his Twitter posts and then accused the CEO of smearing him with false allegations, according to lawyers for the plaintiff.

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The accord, announced months ahead of a scheduled trial, marks a rare truce for the world’s second-richest person. Musk, the chief executive officer of SpaceX and Twitter in addition to Tesla, is both a magnet for and a source of extensive litigation, and has shown a penchant for taking his showdowns to trial instead of settling.

Musk’s tangle with Randeep Hothi grew out of the graduate student’s prolific tweeting about Tesla’s troubles in 2018 ramping up its Model 3 sedan production. While many critics of the electric-car maker are finance types who pour over the company’s earnings calls and regulatory filings, Hothi made a name for himself under the Twitter handle “Skabooshka” by monitoring production output using cameras and drones and catching the attention of several hedge funds with his on-the-ground research.

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In 2019 Tesla sought a restraining order against Hothi over claims he stalked its factory and harassed its employees — including dangerously swerving his car toward a Model 3 that was on a freeway test-drive and injuring a Tesla security guard in a hit-and-run on company property.

Hothi, who grew up in Fremont near the factory, denied those allegations, and Tesla dropped its court complaint. But Hothi claimed in a 2020 defamation suit that Musk’s public criticism of him triggered an online hate campaign in which he was accused of being “a liar, a murderer, a terrorist, and a deranged maniac.”

Hothi said in a statement issued by his lawyers Monday that the settlement achieves his goal to clear his name. He also tweeted about being vindicated.

Musk and his lawyers, Adam Cashman and Adam Mehes, didn’t respond to emails and calls seeking comment. Gil Sperlein, one of Hothi’s attorneys, said in the statement his client accepted Musk’s offer to settle the case. A court filing Monday indicates Hothi is dropping the case, but doesn’t disclose the terms of settlement. [Update: A tweet from Tesla itself seems to contest Hothi’s suggestion the settlement vindicates his case, arguing instead that it marks an “admission of defeat” for the critic. —Ed.]

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The case was scheduled to go to trial in October in Alameda County Superior Court in Hayward after a judge and an appeals court rejected Musk’s argument that Hothi’s complaint was baseless and should be thrown out as an attempt to silence the billionaire’s free speech.

Musk also lost an attempt to redirect blame for the alleged defamation to a data journalist who publicly posted an email in which the Tesla CEO accused Hothi of actively harassing and “almost killing” Tesla employees.

The Tesla CEO, who has has churned through several general counsels, has vowed to build a “hardcore litigation department” at the company.

The Hothi settlement was reported earlier by the Los Angeles Times. The case is Hothi v. Musk, RG20069852, California Superior Court, Alameda County (Hayward).