Stetson Law Review

By   Joan MacLeod Heminway *

What would it be like to represent Elon Musk on business law matters or work with him in representing a business he manages or controls? This Article approaches that issue as a function of professional responsibility and practice norms applied in the context of publicly available information about Elon Musk and his business-related escapades. Specifically, the Article provides a sketch of Elon Musk and considers that depiction through a professional conduct lens, commenting on the challenges of representing or working with someone with attributes and behaviors substantially like those recognized in Elon Musk. 

Ultimately (and perhaps unsurprisingly, for those who have followed Elon Musk’s interactions with the law in a business setting), the Article concludes that representing Elon Musk or one of his controlled businesses would be a tough professional assignment, raising both typical and atypical professional responsibility issues. Taking on an engagement in which Elon Musk is the client or a control person would require deliberate lawyer leadership, including (among other things) patience, mental toughness, and empathy. As a result, the lawyer would be required not only to have the required legal expertise, sensitivity to professional conduct regulation, and practical experience to carry out the representation, but also to understand and know how to employ their talent, personality, and character strengths and leadership style in a demanding and mutable lawyering context. 

By  Carliss Chatman & Carla L. Reyes*

In 2022, Elon Musk publicly announced that he would purchase Twitter after acquiring a five percent stake in the company. His failure to report this acquisition—and the company’s failure to notice—allowed Musk to continue purchasing stock at a deflated price, costing the company more than $156 million. After the signing of a merger agreement, the details of the transaction caused wild fluctuations in Tesla’s stock price. Musk’s complaints about the management of Twitter and the existence of bots on the platform led Twitter’s stock to also drop in value, as did Musk’s attempts to withdraw from the transaction. Even after the deal closed, many commentators noted their concern that the shareholders of two corporations saw the value of their investments impacted by the whims of one billionaire. But is that the whole story? 
At some point in the Musk-Twitter saga, Musk claimed that the number of bots on the Twitter platform devalued the company sufficiently that he should be let out of the transaction altogether. At the time, most observers did not take Musk’s complaints about bots seriously. But what if, instead of just being a silly excuse, Musk’s complaints about bots on Twitter were a tell? What if, they were a hint about a deeper business strategy with a potential to impact capital markets in as yet unanticipated ways? This Article examines the connections between Musk’s many business ventures and argues that Musk’s emphasis on bots on Twitter points toward the one, nearly stealth connecting factor in his businesses: data collection and monetization. By uncovering Musk’s data empire, the Article also reveals key data blind spots in the federal laws meant to govern capital markets and argues that state law offers a better avenue for reigning in the negative externalities of data-driven mergers—mergers and acquisitions undertaken primarily to gain access to the data and data exhaust produced by the target company. 

By  Sierra Van Allen*

This Article analyzes the statutory language of the PACT Act, passed in 2019, and applies the law to force-feeding ducks and geese on foie gras farms. While the PACT Act contains an exception for “customary and normal” agricultural husbandry, this Article argues that the force-feeding performed on foie gras farms is neither customary nor normal. This Article then argues that without the application of this exception, force-feeding for foie gras inflicts serious bodily injury on ducks and geese that is prohibited under the PACT Act. Thus, the Department of Justice should enforce the PACT Act by creating a Deferred Prosecution Agreement, allowing foie gras farms time to remove force-feeding from their practices before they are criminally prosecuted.

By Kenya J.H. Smith*

This Article begins with a focused survey of the gubernatorial pardon power provided in the four most populous American states: California, Texas, Florida, and New York. This Article then continues by discussing the theoretical bases supporting applicability of the gubernatorial pardon power to corporations and other juridical persons, focusing on the acknowledged and generally accepted concept of criminal culpability, the at least tacit acknowledgement of the corporate pardon potential embedded in certain state laws, and the analogous acceptance of the posthumous pardon—removing the formerly sacrosanct acceptance requirement imposed on the party receiving the pardon. This Article then analyzes the potential impact and ripple effects of applying the gubernatorial pardon power to corporate criminal culpability and concludes by highlighting certain prophylactic mechanisms that might dissuade a state’s chief executive from the temptation to utilize the pardon power to benefit a corporation in which the executive might have an economic interest.

By David Rosenfeld*

Elon Musk doesn’t much like the SEC. He has said publicly that he does “not respect the SEC” and called them “bastards.” He has repeatedly claimed that the SEC coerced him into a settlement over his “Taking Tesla Private” tweets by putting a gun to his child’s head. Musk has also pushed the envelope, testing the limits of the settlement agreement. So, what should the SEC do about Musk, a man routinely described as ii “incorrigible”? So far, the SEC has shown a certain amount of restraint in the face of Musk’s provocations, although Musk clearly doesn’t see it that way. It hasn’t been easy for the agency to show restraint, and it has been widely criticized for not standing up to the world’s richest man. But sometimes, restraint is the better part of wisdom. There are times when the remedy can be worse than the disease. Too often, the SEC acts reflexively when it comes to enforcement and seeks to impose the maximum sanctions available without considering all the collateral consequences. Indeed, a look back at the events surrounding the original settlement shows that the SEC may have acted a bit rashly when it filed a lawsuit seeking to bar Musk from serving as an officer or director of a public company. The SEC’s enforcers have many tools at their disposal and need to be guided by the overarching goal of investor protection. In the case of Musk, that may mean holding their noses a bit by letting investor protection take precedence.

By Nicole G. Iannarone 

This Symposium edition has been devoted to Elon Musk and business law. The subject presents multiple opportunities to discuss law. This Articles describe how and why the author uses the preliminary stages of the Twitter takeover as a case study to bring business law concepts and related professional responsibility concerns to life. In the context of a Business Organizations course, the Twitter takeover demystifies business law and engages students. In a Professional Responsibility course, Elon Musk presents an opportunity to discuss commencing and terminating client-attorney relationships, social media in law practice, diminished capacity and impairment, and professional identity formation.

 By Angela N. Aneiros & Karen Woody 

The influence that “superstar” CEOs have over a company’s board of directors can be alarming. Among other things, Elon’s ability to skirt personal liability for seemingly obvious breaches of duty has raised concerns within the realm of corporate governance and corporate regulation. While much has been written on Elon’s influence on Tesla’s board of directors, one area of the law that often gets overlooked that has exacerbated Elon’s corporate governance issues is that of directors and officers (D&O) liability insurance. While personally insuring board members seems like a very “Elon” move, it could have broader implications beyond Elon. Are “superstar” CEOs above the law? What are the effects on corporate law? How can we safeguard accountability of fiduciary duties?

This Article narrates the behavior of Elon, as CEO, Chairman, and a director of Tesla, which led to several lawsuits and SEC sanctions. Undoubtably, his behavior and resulting litigation had an impact on Tesla’s D&O insurance rates, leading to Tesla to forgo traditional ways of insuring, resulting in Elon personally insuring the directors. However, this demonstrates the tension that can occur when a conflict arises and a director, as a corporate fiduciary, is required to put the interests of the company above the interest of themselves and the interest of the CEO. This Article explores the importance of D&O insurance and its impact on corporate fiduciary duties by shedding light on the concerns and potential consequences of Tesla-Elon type D&O agreements on corporate governance and corporate law.

By Justice John D. Couriel 

In his keynote speech, Justice John D. Couriel of the Florida Supreme Court argues that state constitutions supply valuable answers to the toughest problems lawyers face today, but that too often, they are overlooked. Citing examples of underdeveloped areas of state constitutional law—principally in the context of free speech—Justice Couriel advises practitioners to look to their state constitutions for novel solutions to their clients’ problems.