[00:00:00] Speaker 00: May I proceed, Your Honour? [00:00:02] Speaker 00: I would like to preserve three minutes for rebuttal. [00:00:06] Speaker 00: May I please the Court, Nicholas Porritt of Levy and Kaczynski, on behalf of the plaintiff and the class. [00:00:12] Speaker 00: This appeal is based on two fundamental flaws contained in a jury verdict in favour of defendants in a securities class action. [00:00:20] Speaker 00: The first flaw is that the District Court gave an improper and prejudicial instruction to the jury on the critical issue of Cienta, [00:00:30] Speaker 00: Santa being a central issue in any securities fraud case. [00:00:34] Speaker 00: In its instruction, the court misstated the law and imposed a higher burden on plaintiff than what is required. [00:00:42] Speaker 00: It did this by requiring plaintiff prove by a preponderance of the evidence that Elon Musk acted knowingly when he published false tweets about taking Tesla private in August 2018. [00:00:55] Speaker 00: This was especially prejudicial, as before trial, the district court had awarded summary judgment against Mr. Musk and in favor of plaintiff on the issue of Sienta by finding Mr. Musk acted with deliberate recklessness, which meets the required standard under the Ninth Circuit precedent for Sienta. [00:01:13] Speaker 03: And that is, in fact, something that was communicated to the jury. [00:01:17] Speaker 00: It was communicated to the jury. [00:01:20] Speaker 00: in the words that they were to assume that he acted with deliberate recklessness. [00:01:24] Speaker 00: But then in the next sentence, the court instructed the jury that they still had to consider whether he acted knowingly. [00:01:30] Speaker 00: And this was in the context. [00:01:31] Speaker 03: And that wasn't incorrect, perhaps not with regard to see enter, but it was a proper instruction with regard to a question that the jury might have to face later in terms of apportionment. [00:01:42] Speaker 00: But first, it was in the context of a see enter instruction. [00:01:46] Speaker 00: So that in itself is at a minimum confusing, I would say, [00:01:49] Speaker 00: a misstatement of the law. [00:01:50] Speaker 03: Did he ask a question about it? [00:01:52] Speaker 00: The jury did not ask a question about it. [00:01:54] Speaker 00: I'm not sure a jury question is required to show that a jury instruction isn't confusing or a misstatement of the law. [00:02:00] Speaker 03: But it wasn't really that confusing. [00:02:02] Speaker 03: I mean, there was a supplemental instruction given during the trial using very similar language to which your client did not object. [00:02:10] Speaker 00: Well, we did object to that, but that was not the instruction that we sought at that particular time. [00:02:14] Speaker 00: The jury instruction [00:02:16] Speaker 00: both at the end of trial and the curative instruction during trial, said explicitly, the plaintiff has the burden of proof to prove that Elon Musk acted knowingly when he made those tweets. [00:02:30] Speaker 00: That is a false statement of the law. [00:02:32] Speaker 00: Plaintiff had no burden to try. [00:02:34] Speaker 03: Where does that say? [00:02:35] Speaker 03: I mean, I'm looking at the instruction. [00:02:37] Speaker 03: It doesn't quite say what you just said. [00:02:39] Speaker 00: Well, if you're looking at the jury instruction on Cienta, the closing jury, the final jury instructions, [00:02:44] Speaker 00: It starts off by saying, plaintiffs must prove by preponderance of the evidence that Elon Musk and or Tesla acted with a necessary state of mind. [00:02:52] Speaker 00: And then it concludes, you must still decide whether Mr. Musk acted knowingly. [00:02:56] Speaker 00: That's in the context of that jury instruction. [00:02:58] Speaker 00: I don't think it's possible to read that. [00:03:01] Speaker 00: A reasonable construction of that jury instruction is that plaintiff must prove by preponderance of the evidence that Mr. Musk acted knowingly. [00:03:09] Speaker 03: I can read it that way. [00:03:10] Speaker 03: You must also assume Mr. Musp asked with reckless disregard for whether the statements were true. [00:03:16] Speaker 03: And they just said reckless disregard is a basis for finding C. enter. [00:03:21] Speaker 00: As I said, I think it's well, the fact that the court contradicts itself within two sentences as to whether it's found or whether the court, the jury needs to consider the issue in the context of this jury instruction. [00:03:32] Speaker 00: If this had been in, there was a later instruction on apportionment. [00:03:35] Speaker 00: So if this statement in, [00:03:38] Speaker 00: a jury instruction on apportionment may not have been objectionable. [00:03:42] Speaker 00: It would have to depend on what the plaintiff's burden was. [00:03:43] Speaker 00: But in the context of the CNTA instruction, which again starts off as in the elements of the case, it was also repeated earlier on in jury instruction number six in a very similar language where we said the plaintiff had the burden to prove all the elements and stated once again that the court, in that context, that the jury must consider [00:04:03] Speaker 00: the question of Mr. Musk acting knowingly, and in the context of the curative instruction given that plaintiff explicitly stating plaintiff had the burden of proof to prove that Mr. Musk acted knowingly, and, sorry. [00:04:17] Speaker 04: Mr. Port, did you, you didn't object to the we must assume line itself, did you? [00:04:23] Speaker 00: We did object to the we must assume. [00:04:25] Speaker 00: There was a lot of back and forth in the jury instructions. [00:04:28] Speaker 04: So what was your problem with the we must assume? [00:04:30] Speaker 00: I don't think it gave full credit to the import of summary judgment. [00:04:35] Speaker 00: So we initially, our initial proposed jury instruction said that you must find that this element has been established as a matter of law. [00:04:45] Speaker 00: And then there were various, the court rejected that instruction. [00:04:48] Speaker 00: There were at least two or three rounds of drafting this jury instruction. [00:04:53] Speaker 00: There was a lot of back and forth on this. [00:04:55] Speaker 00: And the court persisted in the we must assume, and we pushed back on it every single time. [00:05:00] Speaker 00: I think even including in our final jury instruction, objection to the final jury instruction, which was filed on July 31st, the very day, the day before the jury instruction was actually given to the court. [00:05:10] Speaker 04: I took your proposed jury instruction to seem not that different than the final jury instruction that was given. [00:05:16] Speaker 04: Was it not you must still decide whether Mr. Musk knew that the statements were false? [00:05:23] Speaker 04: Wasn't that your proposed jury instruction alternative? [00:05:27] Speaker 00: Not in the final set of jury instructions filed on July 31st. [00:05:32] Speaker 00: So our final set of jury instructions [00:05:36] Speaker 00: And if I may, Your Honor, if I can refer to the record, I can. [00:05:38] Speaker 03: There's a lot here. [00:05:39] Speaker 03: We could use the help. [00:05:40] Speaker 03: I mean, I keep confusing the multiple instructions, including the early one given during trial. [00:05:47] Speaker 00: There was a lot of back and forth, Your Honor. [00:05:52] Speaker 00: So if you bear with me, it's at. [00:06:04] Speaker 00: Our final proposed due instruction on CNTA is contained at the volume 7 of the Excerpt of Record at page 1468. [00:06:16] Speaker 00: Our proposed due instruction was, before this trial began, the court decided that the statements, funding secured and investor support is confirmed, were untrue. [00:06:25] Speaker 00: The court also decided that Mr. Musk acted recklessly when making these statements. [00:06:30] Speaker 00: You must treat these elements as having been proven by preponderance of the evidence. [00:06:34] Speaker 00: therefore your deliberation is limited to whether these untrue statements were material. [00:06:40] Speaker 00: That was our proposed final jury instruction. [00:06:44] Speaker 00: It was different from ones we proposed pre-trial. [00:06:46] Speaker 00: It reflected the fact of the way that evidence and argument had been presented to the jury during trial, which is why final jury instructions are not settled until after the evidence comes in. [00:06:55] Speaker 00: We asked for the [00:06:57] Speaker 00: initial curative instruction? [00:06:59] Speaker 04: So how would you handle the separate need for the jury to determine knowing for purposes of apportionment? [00:07:09] Speaker 04: What did you propose in order to have the jury entertain that issue? [00:07:12] Speaker 00: We had a separate jury instruction on apportionment. [00:07:16] Speaker 00: Most importantly, the plaintiff doesn't bear the burden on proving knowledge on apportionment. [00:07:20] Speaker 00: It's unclear, actually, who has the burden. [00:07:22] Speaker 00: I don't think it's the plaintiff. [00:07:23] Speaker 00: I think the defendant has the burden to prove apportionment. [00:07:25] Speaker 00: on apportionment and knowingness. [00:07:28] Speaker 04: So your concern was lumping it in together here might have confused the jury as to whose burden it was to show. [00:07:36] Speaker 00: And whether state of mind was irrelevant for liability before even getting to apportionment. [00:07:42] Speaker 00: Apportionment was at the end of the jury form. [00:07:44] Speaker 00: It's at the end of the jury instructions because it only applies once you have liability. [00:07:49] Speaker 00: So the structure of the jury instructions and the jury verdict form followed the model jury instructions, which starts off with the elements, then goes through and then leads to apportionment at the end, which makes logical sense. [00:08:04] Speaker 00: And so we wanted to make it very clear that knowledge or state of mind of Mr. Musk was not an issue at trial. [00:08:12] Speaker 00: We had no burden to prove any state of mind for Mr. Musk at any aspect of the trial. [00:08:17] Speaker 02: Can you deal with prejudice because I did see several places in the closing arguments where arguably this issue was clarified that the center element for the purposes of liability was established. [00:08:31] Speaker 00: Well I think it was first of all I don't think I don't think council argument can fix. [00:08:37] Speaker 00: a legally erroneous jury instruction, that court has the duty and authority to- Well, we can speak to whether there was prejudice. [00:08:43] Speaker 03: That's the question that Judge Sung has posed. [00:08:45] Speaker 03: And I have to say, I've got the same concern. [00:08:48] Speaker 03: My sense is not that the jury's verdict turned on C. Enter, because that wasn't what was really teed up for them to consider. [00:08:56] Speaker 03: The argument suggests that they're much more afraid over materiality. [00:08:59] Speaker 03: So why should we assume that what you've described as a defective instruction on C. Enter was the problem? [00:09:07] Speaker 00: Well, because defence counsel literally said that is what this entire case is about, is Mr Musk's state of mind. [00:09:13] Speaker 00: That was in his closing argument. [00:09:15] Speaker 00: Mr. Musk's counsel. [00:09:16] Speaker 00: So we asked for the curative jury instruction initially based on his opening statement, which introduced ideas of state of mind, contrary to the court summary judgment motion. [00:09:24] Speaker 03: And there was the supplemental instruction given. [00:09:27] Speaker 03: Was it immediately before his testimony, or was it after? [00:09:30] Speaker 00: It was before, or maybe it just started. [00:09:33] Speaker 00: I can't remember exactly where it was, because his testimony went over several days. [00:09:36] Speaker 00: But so we had that. [00:09:37] Speaker 00: We did issue another emergency motion for curative instruction just before the close of evidence. [00:09:43] Speaker 00: citing repeated evidence introduced by defendants going to his state of mind. [00:09:48] Speaker 00: That request was denied by the court. [00:09:51] Speaker 00: We then had during closing, and we then objected to the final jury instructions, then during closing we had repeated statements, again saying as far as by Mr. Must's counsel, saying in that moment Mr. Must did not form some intention to deceive. [00:10:11] Speaker 00: He doesn't think ahead of time that this can be interpreted differently than what it means to him. [00:10:15] Speaker 00: That is what this whole case is about. [00:10:18] Speaker 00: It is unmistakably true in his mind. [00:10:22] Speaker 00: We have plaintiff of every burden, including Sienta. [00:10:25] Speaker 00: What illicit intention did Mr. Musk have? [00:10:28] Speaker 00: All of that goes directly to state of mind. [00:10:30] Speaker 00: It's not relevant at all to materiality. [00:10:33] Speaker 00: And so with a general verdict form, with an erroneous legal jury instruction, prejudice is presumed. [00:10:41] Speaker 00: It's particularly presumed when it increases the burden placed on plaintiff. [00:10:44] Speaker 03: Well, I'm not sure that I agree with the proposition. [00:10:47] Speaker 03: But how did we come to have a general verdict form? [00:10:50] Speaker 03: I used to try cases, complicated cases. [00:10:52] Speaker 03: I don't recall ever having a form as simple as this. [00:10:58] Speaker 03: Who proposed a general verdict form here? [00:11:00] Speaker 00: I think both parties agreed that there would be a general verdict form. [00:11:04] Speaker 00: I mean, the general verdict form, we didn't object to the form of the verdict form. [00:11:07] Speaker 00: Certainly on appeal, I don't think there was defendants in the end objected to the general verdict for me. [00:11:11] Speaker 03: The problem for us is trying to decipher a verdict when we don't have anything that really tells us. [00:11:17] Speaker 03: We hear the argument that we've heard from you. [00:11:19] Speaker 03: I'm sure we're going to hear something different from your colleague across the aisle. [00:11:23] Speaker 03: But as I looked through the record of the trial, it seemed to me that much more focus was on materiality. [00:11:33] Speaker 03: Now, I may have been led to that because the argument here in the briefs on appeal is that whole separate issue with regard to materiality. [00:11:41] Speaker 03: But how can we conclude there was prejudice if there's such a plausible explanation for why the jury might have rendered a general verdict? [00:11:53] Speaker 00: Well, but that's not the standard, Your Honor. [00:11:55] Speaker 00: I mean, the standard is that once we establish that there was an harmonious jury instruction, it's a matter of law, prejudice is presumed [00:12:02] Speaker 00: That's under Caballero, very clear authority of this court. [00:12:06] Speaker 03: You're starting with the premise that erroneous has distinguished from confusing. [00:12:11] Speaker 03: And I'm not sure confusing produces the same result that you're impending. [00:12:16] Speaker 00: Well, the decision we decided in Gantt, which was really a more element of, I mean, I think, you know, [00:12:22] Speaker 00: spectrum between where confusing blends into erroneous. [00:12:24] Speaker 00: But in Gantt, we had a confusion about, again, a state of mind instruction about whether intent to deceive versus negligence. [00:12:31] Speaker 00: And there, this court found that that was sufficiently confusing the way it was stated, was sufficiently confusing that therefore it required reversal in a new trial. [00:12:41] Speaker 00: And again, prejudice resulting from that jury instruction is presumed and burden shifts to defendant to show essentially a complete absence of proof on any element [00:12:52] Speaker 00: So they must show that plaintiff failed to provide any evidence on necessary elements of our claims, and they failed to do that. [00:13:01] Speaker 00: We obviously presented evidence on every single element of the 10B5. [00:13:05] Speaker 00: Now, and that's a different standard than the sufficiency of evidence. [00:13:08] Speaker 00: They had competing evidence on some of these elements, but that's not the test when considering prejudice under a jury instruction, because here they have the burden, and they've failed to do so. [00:13:17] Speaker 00: We've cited cases such as Hunter, where [00:13:20] Speaker 00: that this court reversed a jury where there was an erroneous jury instruction, even though there was competing evidence and sufficient evidence to support a jury verdict, if properly instructed. [00:13:31] Speaker 00: And that's the key. [00:13:31] Speaker 00: So the answer is, we don't really know what was in the jury's mind. [00:13:34] Speaker 00: And this court should not inquire and cannot inquire into that state of mind. [00:13:40] Speaker 00: Moving on to. [00:13:44] Speaker 00: You're out of minutes and a half, do you want us? [00:13:47] Speaker 00: Oh, was that from 15 minutes? [00:13:50] Speaker 00: So I'll be very brief on the 50B, on the materiality. [00:13:57] Speaker 00: Different standard, but there was no substantial evidence to support any finding other than that these statements were material. [00:14:05] Speaker 00: And the court inappropriately denied our motions for that. [00:14:09] Speaker 00: Judgment should be entered in our favor on the question of materiality, which also means reliance, because they're the same inquiry. [00:14:16] Speaker 00: And so that is a separate ground to require reversal and remand on that ground. [00:14:21] Speaker 02: I'll give you a couple minutes on rebuttal. [00:14:23] Speaker 00: Thank you very much, Ewan. [00:14:31] Speaker 01: May it please the court, Elodie Thompson, Quinn Emanuel, or Carden Sullivan on behalf of defendants. [00:14:36] Speaker 01: I'm going to correct a few things in the chronology here because I think it's very important as to a threshold question, which is preservation. [00:14:45] Speaker 01: And that is that plaintiff did not preserve the objection. [00:14:48] Speaker 01: They are now raising an appeal here. [00:14:50] Speaker 01: If you look at nothing else, I asked you to look at supplemental excerpt of record, page 68. [00:14:55] Speaker 01: That is the first page of the court's proposed final jury instructions that were provided to the parties on the docket on January 6th, 2023. [00:15:04] Speaker 01: I think my colleague made a sudden — July, it was all January. [00:15:08] Speaker 01: But on January 6th, 2023, on the first page, supplemental excerpt of record, page 68, the court says [00:15:16] Speaker 01: The parties shall file objections by January 11, 2023. [00:15:22] Speaker 01: Both parties did, in fact, file objections on that day, but plaintiff did not file objections as to what now is challenged on appeal. [00:15:31] Speaker 01: Instead, on that day, plaintiffs specifically proposed [00:15:36] Speaker 01: As to the CNTA instruction, that the court instructs the jury, quote, you must still decide whether he acted knowingly. [00:15:45] Speaker 01: That is supplemental excerpts of record, page 65. [00:15:51] Speaker 01: dooms any argument that plaintiffs are trying to raise here that there was a legal error in the Sianto instruction because of that little line. [00:15:58] Speaker 01: That is the exact last line that the court adopted in its final Sianto instruction. [00:16:03] Speaker 01: That's at Excerpts of Record, page 48. [00:16:05] Speaker 01: And what plaintiff now challenges on appeal is what plaintiff adopted and proposed on January 11, 2023. [00:16:13] Speaker 01: The challenge is not preserved. [00:16:17] Speaker 03: Instead, if plaintiff... [00:16:20] Speaker 03: SCR 65, which I take it is the plaintiff's objections, and I confess I've gotten confused because there's so many versions of the instructions, sometimes I need a scorecard. [00:16:33] Speaker 03: I understand your point and have noted that, but there is an objection there to the you must assume language suggesting that that's not strong enough. [00:16:42] Speaker 03: And the concern I hear expressed by plaintiff's counsel is that [00:16:47] Speaker 03: Because that's not strong enough, they read the last sentence to modify the rest of the instruction to take back or to open the door to an argument that their alternative language for you must assume would have closed. [00:17:05] Speaker 01: Well, Your Honor, the district court addressed this issue. [00:17:08] Speaker 01: And first of all, there's no legal error as to saying assume or the court decided. [00:17:13] Speaker 01: That's fully within the discretion of the district court. [00:17:17] Speaker 01: But also, the district court was very clear with the jury, with the jury instructions, and with the instructions during evidence that materiality had not yet been decided. [00:17:29] Speaker 01: And the reason why these instructions were given during testimony, during the testimony from Mr. Musk, [00:17:34] Speaker 01: is because testimony that Mr. Mus was given was relevant to materiality, and then of course there's also the knowing aspect as to apportionment. [00:17:43] Speaker 01: And so there can be no legal error as to the assume formulation, but I think as Your Honor said, in fact, the jury instruction that the court gave was correct and wasn't confusing at all. [00:17:57] Speaker 01: In fact, when plaintiff changed its mind and belatedly objected, and I do think the timing is important here because we have this adoption and proposal of the challenge language on January 11th, it's 20 days later on January 31st that plaintiff finally objects and changes its mind. [00:18:16] Speaker 01: That is the day before the court reads the instructions to the jury. [00:18:21] Speaker 01: After the court said that objections had to be filed by January 11th. [00:18:25] Speaker 04: Well, counsel, don't our cases say that an objection can still be timely even if made before the instructions get to the jury? [00:18:34] Speaker 04: So I take your point. [00:18:36] Speaker 04: It was after the court indicated when he wanted objections, but why isn't it timely under our case law? [00:18:43] Speaker 01: Well, because, Your Honor, first, this was not a new instruction. [00:18:46] Speaker 01: This was not something that only came up the day before the instructions went to the jury. [00:18:51] Speaker 01: It had been proposed by the court on January 6th. [00:18:54] Speaker 01: And the court set a specific deadline for objecting to that. [00:18:58] Speaker 01: So there are those two reasons. [00:19:00] Speaker 01: One, it wasn't prom. [00:19:01] Speaker 04: Did the court say, well, you didn't submit it by January 11th, so I'm not going to consider your later objections? [00:19:08] Speaker 01: Actually, standing here today, we don't even know if the court even read that filing before the instructions were given the following day. [00:19:15] Speaker 01: Why? [00:19:15] Speaker 01: Because the court had held a huge procedure. [00:19:19] Speaker 01: Proposed jury instructions were filed back in September of 2022. [00:19:23] Speaker 01: There was a lot of back and forth. [00:19:26] Speaker 01: There were instructions from the court on January 6th. [00:19:29] Speaker 01: On January 11th, objections were due. [00:19:32] Speaker 01: there was a conference with the court in which certain instructions were discussed, and at no point from January 11th until January 31st, the night before the instructions were read to the jury, was this issue raised. [00:19:47] Speaker 01: But again, there can be no claim of legal error when the party challenging it as legal error adopted and proposed that instruction as plaintiffed on January 11th. [00:19:57] Speaker 02: Well, to take Judge Clifton's point, he didn't propose, I mean, you have to read it in context, what they proposed. [00:20:05] Speaker 02: So he didn't propose the exact, they may have proposed the sentence, but they didn't propose that sentence in the same context in which they were delivered to the jury, did they? [00:20:16] Speaker 01: They didn't propose that exact sentence with the assume at least reckless disregard. [00:20:24] Speaker 01: That is correct. [00:20:25] Speaker 01: But when actually we look at the context of the jury instruction, that specific instruction, and the jury instructions as a whole, as this court is required to do, they were absolutely correct. [00:20:36] Speaker 01: The instructions correctly stated the lawn center. [00:20:39] Speaker 02: I understand your argument is that they're correct, but you are also arguing that they [00:20:44] Speaker 02: They proposed them themselves. [00:20:46] Speaker 02: I just want to be very clear. [00:20:48] Speaker 02: They proposed one sentence, but in a different context, and you're not representing that they ever proposed them in the final form that they were actually given to the jury, did they? [00:20:59] Speaker 01: They were not the exact final form. [00:21:02] Speaker 01: No, but there were many elements in the final form that were exactly what plaintiff proposed, including the disjunctive either-or formulation. [00:21:10] Speaker 01: When plaintiff proposed jury instructions back in September of 2022, plaintiff proposed that the court instruct the jury that CNTRA could be established by either [00:21:22] Speaker 01: knowledge that the statement is false or reckless disregard. [00:21:26] Speaker 01: And in fact, that is on page supplemental excerpts of record 83. [00:21:30] Speaker 01: That is the proposal of the disjunctive format. [00:21:33] Speaker 01: It's not, this element has been satisfied during nothing for you to do here. [00:21:38] Speaker 01: Now, the final instruction that the court gave embodies that disjunctive format. [00:21:44] Speaker 01: It says, Sienta may be established by showing either, one, the defendant knew his untrue statement was false, or two, the defendant had reckless disregard for whether the statement was true. [00:21:56] Speaker 01: That's the standard in this court. [00:21:58] Speaker 01: The district court probably gave the instruction as to the element of Sienta on a 10b5 claim. [00:22:04] Speaker 01: The district court always used the either-or proposition that either reckless disregard or knowledge would satisfy it, and that distinguishes this case from the Gantt case that plaintiff cites in which it was supposed to be disjunctive, but the court neglected that either-or formulation. [00:22:20] Speaker 01: So that Gantt case doesn't help plaintiff here. [00:22:22] Speaker 01: But then here, of course, the district court informed the jury that the element had been met. [00:22:29] Speaker 01: Far from ratcheting out plaintiff's burden of proof, the district court told the jury that Mr. Musk had acted with at least reckless disregard for whether the statements were true. [00:22:41] Speaker 01: The jury instruction expressly conveyed that Sandra had been established for the 10b-5 claim. [00:22:46] Speaker 01: That's why the district court post-trial called plaintiff's objection nonsensical. [00:22:51] Speaker 01: It would make no sense to find an instruction erroneous for admitting a possible path that the judge expressly directed the jury to take. [00:23:01] Speaker 01: And as a district court explained post trial and as everyone recognized, knowledge was relevant as to apportionment. [00:23:09] Speaker 01: So even when plaintiff belatedly objected to the instruction, plaintiff didn't say this is a legal error, plaintiff said move it to the apportionment instruction. [00:23:19] Speaker 01: The instructions as a whole were correct. [00:23:22] Speaker 01: Now, there's also the issue that which has been raised that Mr. Port, during his closing argument, repeatedly told the jury without contradiction that this element had been met. [00:23:34] Speaker 01: And this court's case law is very clear that arguments from counsel are to be considered in determining whether there is any confusion as to jury instruction. [00:23:44] Speaker 01: direct the court's attention to excerpts of record pages 607 and 608. [00:23:50] Speaker 03: So your colleague has pointed to statements by, take it the closing argument on behalf of defendants, that focused attention, he argues, back on the sienter or knowing element. [00:24:03] Speaker 03: And in fact, there were statements about what Mr. Musk did and did not know and intend. [00:24:10] Speaker 01: Your Honor, I think when the court reads those statements in context of the closing arguments, it is actually apparent that the argument goes to either materiality or as knowledge as to Mr. Musk, Tesla, and the directors. [00:24:24] Speaker 01: For instance, there's a discussion as to motive or intention. [00:24:31] Speaker 01: But when it's discussed there, it says, with all these lawyers and consultants and board members, [00:24:36] Speaker 01: Those are the people among who the apportionment decision is made. [00:24:40] Speaker 01: And so knowledge is relevant to that determination. [00:24:43] Speaker 01: And of course, it was fair to argue knowledge as to Mr. Musk, as to Tesla, and as to the board of directors. [00:24:50] Speaker 01: But the crux of the evidence at the trial focused on materiality. [00:24:55] Speaker 01: And what was unique about this case is that the district court determined at the summary judgment stage that the statements were [00:25:02] Speaker 01: factually inaccurate, but did not determine that they were material. [00:25:07] Speaker 01: And so one of the questions for the jury was whether the statements were material, meaning whether the delta between the true state of affairs and what was posted in those tweets was large enough that it would affect a reasonable investor's investment decision. [00:25:24] Speaker 01: That was the question. [00:25:25] Speaker 01: And there was tons of evidence from witnesses, Mr. Musk included, [00:25:32] Speaker 01: Mr. Dease, Mr. Durbin, analysts from all over, about what people thought this phrase, funding secured, meant. [00:25:41] Speaker 01: Because it's not a term of art, and as the district court noted in its summary judgment decision, there's a softness to the term. [00:25:47] Speaker 01: So it was relevant to assessing materiality, how people interpreted that term, [00:25:53] Speaker 01: versus what actually the true state of affairs were. [00:25:57] Speaker 01: And that's why the court allowed testimony from these witnesses, including Mr. Musk, as to what was going on at the time. [00:26:06] Speaker 01: What were the meetings that were happening? [00:26:08] Speaker 01: What was promised to be done? [00:26:11] Speaker 01: Or what was the intent of what was going to be given? [00:26:14] Speaker 03: In our world, which isn't the same as the necessarily investor's world, secured as in [00:26:20] Speaker 03: secured transactions does suggest a firmness, a certainty that it appears it was argued was not either intended or conveyed by those two words in the tweet. [00:26:39] Speaker 03: Why should we accept the soft version? [00:26:43] Speaker 01: Well, the question in this, I think, gets to the Rule 50B as to materiality. [00:26:48] Speaker 01: And that is simply inferences drawn in favor of the verdict, in favor of defendants here, as to whether that plaintiff proved materiality. [00:26:58] Speaker 01: preponderance of the evidence. [00:27:00] Speaker 01: What the evidence at the trial actually showed was that people understood that phrase, funding secured, to mean Mr. Musk was in touch with the capital required or had a line of sight toward funding. [00:27:13] Speaker 01: That's supplemental excerpts of record 358. [00:27:15] Speaker 01: There was ample funding available for the transaction. [00:27:19] Speaker 01: Mr. Littleton said that when on August 13th there was a blog post that said, here's why, Mr. Musgrove, here's why I said funding secured, Mr. Littleton testified that that [00:27:35] Speaker 01: blog post, which an expert for plaintiff said was a corrective disclosure, confirmed for Mr. Littleton one version of funding secured. [00:27:44] Speaker 01: That's supplemental excerpts of pages 191 to 92. [00:27:48] Speaker 01: And so here, the error that they're claiming now was not preserved. [00:27:53] Speaker 01: There was no legal error anyways. [00:27:56] Speaker 01: And even if there was an error, it was absolutely harmless. [00:27:59] Speaker 01: Thank you very much. [00:28:00] Speaker 01: If there are no further questions, we ask the court to affirm. [00:28:03] Speaker 03: Do you want to say anything on the second issue that is materiality as a matter of law is distinguished from materiality? [00:28:11] Speaker 03: as a factor of prejudice for the alleged misstatement of the CNTER instruction? [00:28:18] Speaker 01: Well, again, I think the representation from plaintiffs' counsel as to what the standard is, the delta between sufficiency of the evidence and that it's more probable or not that the verdict would have been the same, it was not accurate. [00:28:33] Speaker 03: That's the prejudice issue. [00:28:35] Speaker 03: I'm really curious if we would reach it, and we may not reach it, is there something that you would [00:28:41] Speaker 03: I confess I probably should have asked Plaintiffs' Council. [00:28:44] Speaker 03: It's still not entirely clear to me what it is they're seeking. [00:28:47] Speaker 03: I take it they're not actually seeking a judgment as a matter of law generally. [00:28:51] Speaker 03: They're not asking for a verdict in their favor. [00:28:53] Speaker 03: So I understand that they are asking if there is a new trial that an instruction that we direct the giving and of instruction that takes materiality off the table telling them that they're supposed to assume that's been established too. [00:29:07] Speaker 03: As to that latter version, is there anything further you want to point us to? [00:29:11] Speaker 01: Well, again, this is a case where a plaintiff is making a Rule 50B motion, but failed to move on all of the elements of the claim. [00:29:19] Speaker 01: And so there's a procedural bar here, which is that a litigant, a plaintiff can't litigate his case piecemeal. [00:29:26] Speaker 01: I'm going to go to the district court. [00:29:28] Speaker 01: I'll allege an instructional error and appeal, and then you can give me this element, and I'll go back and I'll try the rest. [00:29:33] Speaker 01: It has to be as to all of the elements if you're a plaintiff. [00:29:36] Speaker 01: Different, obviously, if you're a defendant, because you can secure a verdict in your favor if a single element is not met. [00:29:43] Speaker 01: But for a plaintiff, they had to move on Rule 50B as to all elements. [00:29:47] Speaker 01: Of course, they did not move as to loss causation. [00:29:50] Speaker 01: And so even on appeal, they're only moving us to materiality. [00:29:54] Speaker 01: If there is a new trial, it would obviously be an entirely new record. [00:29:57] Speaker 01: And materiality would have to be assessed on that new record in that new trial. [00:30:03] Speaker 01: Thank you very much. [00:30:15] Speaker 00: Thank you, Your Honor. [00:30:17] Speaker 00: If I could just briefly go back and just correct something that my friend Ms. [00:30:21] Speaker 00: Thompson has just advised the court, which she said at no point was the question of c-enter and the instruction of c-enter to the jury raised between January 11th and January 31. [00:30:33] Speaker 00: And she described it as a belated too late objection. [00:30:36] Speaker 00: First of all, some important things happened between January 11th and January 31, which is that we had 10 days of testimony in front of the jury. [00:30:44] Speaker 00: as well as opening arguments on behalf of counsel. [00:30:47] Speaker 00: And so obviously the final jury instructions are not settled until the end of trial because they're affected by the evidence that comes in at trial. [00:30:54] Speaker 00: You're not entitled to a jury instruction that is not supported by the evidence at trial. [00:30:58] Speaker 00: And that is why rule 51 is very explicit and this court's jurisprudence is very explicit that an objection to the jury instruction may be made at any time before the jury retires. [00:31:07] Speaker 00: Not even before the jury instructions are given but before the jury retires. [00:31:10] Speaker 00: And here they were given [00:31:12] Speaker 00: well before the jury retired, several days, which is an eternity at trial, and a day before the jury instructions were actually delivered to the jury. [00:31:24] Speaker 00: And it's also incorrect to say it wasn't raised between January 11th and then it came out of nowhere on January 31, as I explained. [00:31:30] Speaker 00: January 20, we made the initial request for a curative instruction after the opening statement by Council raised and presented to the jury, the question of Mr. Musk's state of mind. [00:31:40] Speaker 00: January 26, we asked for an additional curative instruction pointing to- What are your ER sites for these? [00:31:48] Speaker 00: Oh, for the- if you may bear with me, sorry. [00:31:55] Speaker 00: January 20, so the actual instruction was given on [00:32:01] Speaker 00: two experts of records, 285 to 86. [00:32:06] Speaker 00: The colloquy [00:32:07] Speaker 00: And our objection, the real objection to the curative instruction from our perspective, it was on the burden of proof, and that was interjected by the court at the last minute. [00:32:18] Speaker 00: We didn't even saw a proposed curative instruction that contained the burden of proof. [00:32:21] Speaker 00: It was a suggestion by defense counsel. [00:32:23] Speaker 00: You can see it on the transcript at supplemental excerpt of records, pages 206 to 208. [00:32:29] Speaker 00: So we never even got to see that. [00:32:30] Speaker 00: The court just announced it was going to do it, and then the jury came in and he just gave the instruction. [00:32:36] Speaker 00: The request for curative instruction is at volume seven, excerpts of records, page 1453, that's the opening page. [00:32:43] Speaker 00: Then our final objections are at seven, excerpts of records, 1471. [00:32:48] Speaker 00: I think that 1471 is the explicit one on CNTA. [00:32:52] Speaker 00: So this objection is preserved, and then we rest, once again, I didn't hear anything [00:33:00] Speaker 00: questioning that they have the burden to prove that they have to show an absence of evidence on any particular element. [00:33:07] Speaker 00: And all I heard was just arguing about the sufficiency of evidence. [00:33:10] Speaker 00: We presented evidence on materiality and reliance, which are the two issues that they point to, and loss causation throughout the trial. [00:33:19] Speaker 04: Mr. Porter, I mean, I guess what it boils down for me is, on C-Inter, [00:33:26] Speaker 04: Recklessness or knowledge are the two options and the jury was instructed on both. [00:33:33] Speaker 04: So it seems then your argument is boiled down to that we must assume that that's the basis for your error. [00:33:40] Speaker 00: No, Your Honour, with respect. [00:33:42] Speaker 00: Although we didn't like the objective that we must assume language too, we didn't apply that. [00:33:46] Speaker 00: The error here is basically, if they initially instructed in the disjunctive, which is consistent with case law, and that's in the model jury instructions, and then he went on to say, assume reckless, fine, and then said, then now you must consider knowledge. [00:34:01] Speaker 00: So essentially, while it was disjunctive when he initially stated the standard, he then conflated it and said, essentially, plaintiff needs to show both. [00:34:08] Speaker 00: That's how [00:34:09] Speaker 00: I understand that's what the jury instruction reads. [00:34:12] Speaker 00: I think that's the only really reasonable reading of it. [00:34:15] Speaker 00: At a minimum, it's confusing. [00:34:16] Speaker 04: So you believe the jury instruction required the jury to find, well, to assume recklessness and find knowledge meant you have to find both? [00:34:24] Speaker 04: Yes. [00:34:26] Speaker 02: So I see in your proposed instruction you said you wanted something that clearly stated they have to treat the enter element as having been proven. [00:34:34] Speaker 00: Correct. [00:34:36] Speaker 02: And that was never, there was nothing else in the instructions. [00:34:41] Speaker 02: The court never told the jury that they had to assume that element had been met. [00:34:45] Speaker 00: Well, it just said you had to assume that Mr. Musk acted with a little bit of recklessness. [00:34:49] Speaker 02: Just recklessness, but not that the center had been met. [00:34:52] Speaker 00: Not that that element had been met. [00:34:54] Speaker 00: I think we were fairly consistent in making that objection, as counsel suggested, and as court has heard, there's a lot of back and forth in connection with the jury instructions. [00:35:04] Speaker 00: Two other very quick points. [00:35:09] Speaker 00: First of all, Your Honor, you're correct in terms of what we're seeking in terms of the 50B. [00:35:17] Speaker 00: We would seek judgment. [00:35:18] Speaker 00: I think the court can read that issue. [00:35:20] Speaker 00: I think rule 50, there is no procedural bar, as counsel for defendants suggested. [00:35:28] Speaker 00: They cite no authority if there's any bar. [00:35:31] Speaker 00: Um, all that's required is that you don't, you cannot add grounds that you have to, you know, 50B is a renewed motion under 50A and you cannot add grounds. [00:35:39] Speaker 00: We didn't add any grounds. [00:35:40] Speaker 03: I'll just be clear. [00:35:41] Speaker 03: You are not seeking from us a verdict. [00:35:45] Speaker 00: Correct. [00:35:46] Speaker 00: Yes, correct. [00:35:47] Speaker 00: Under either of our issues. [00:35:48] Speaker 03: I confess, I was confused as I went through the papers about that. [00:35:51] Speaker 03: But just to be clear, at this point, your argument is that not that you're entitled to a verdict, you argue that if you obtain a new trial, you're entitled basically to a directed summary judgment with regard to materialities such that the jury in a new trial would be instructed to assume or whatever term is used. [00:36:12] Speaker 03: that materiality has been established. [00:36:14] Speaker 00: Correct. [00:36:14] Speaker 00: I mean, the only remaining issue would be loss, causation, and damages on an even new trial, at least as regards to the mask. [00:36:18] Speaker 04: Is there a case that would allow plaintiffs to move for judgment as a matter of law on one of the elements of their claims? [00:36:27] Speaker 04: Because I tend to think that this would be procedurally barred. [00:36:30] Speaker 04: It's a very unusual request. [00:36:32] Speaker 00: There is no direct case on point, Your Honor. [00:36:35] Speaker 00: It's explicit in Rule 50A, says you can move on any issue or claim. [00:36:40] Speaker 00: So that's explicit, Rule 50B says you renew on it, you know, cites back to 50A. [00:36:44] Speaker 00: It's also read together with Rule 56, summary judgment is essentially the same standard, same rule, same procedure, and there, summary judgment is given on issues all the time. [00:36:54] Speaker 00: So it's unusual, but I think it's allowed under Rule 50A and Rule 50B, and so I think we preserved it, and that's what we'll be asking. [00:37:03] Speaker 00: I think it's properly before the court, and I think the court, you know, [00:37:09] Speaker 00: If you order a new trial on erroneous due instruction, you may not have to reach this issue, but I think you should, because just for the efficiency, it's right before the court. [00:37:17] Speaker 00: And the evidence here is simply so overwhelming and inarguable. [00:37:21] Speaker 00: We cite to SEC v. Murphy that some statements are so obviously material that it's really inarguable. [00:37:26] Speaker 00: And I think stating that funding is secured and investor support is confirmed for a $60 billion Go private transaction for a public company [00:37:33] Speaker 00: is the sort of thing that this court would agree is just material on its face. [00:37:38] Speaker 00: So it's not really arguable. [00:37:41] Speaker 00: You can read the brief. [00:37:42] Speaker 00: There's pages and pages, as your honor knows, of record sites showing, demonstrating that it was material. [00:37:48] Speaker 00: We present it. [00:37:49] Speaker 00: It's really something that is subject to expert testimony. [00:37:53] Speaker 00: The only expert testimony was from plaintiffs saying that it was material and the loss causation was established. [00:37:58] Speaker 00: No expert, no witness testified that, as Miss Thompson suggested, that it was a full corrective disclosure on August 13 or that it wasn't material. [00:38:07] Speaker 00: Every witness consistently said that these statements were material. [00:38:10] Speaker 02: Okay, counsel, thank you very much. [00:38:17] Speaker 02: Thanks to both counsel for your helpful arguments. [00:38:20] Speaker 02: This matter is submitted.