Tesla Inc. shareholders who are suing Elon Musk’s 2018 tweet about the company’s IPO say they won a major decision in the run-up to a fraud trial with billions of dollars in damages at stake.

Investors said a federal judge agreed with them that “no reasonable jury could find Musk’s August 7, 2018 tweets accurate or non-deceptive,” according to a court filing on Friday. The filing describes an April 1 order from the judge that is not listed on the docket.

Alex Spiro, attorney for Musk and Tesla, said that “nothing will change the truth, which is that Elon Musk was thinking about taking Tesla private and could have.”

“All that’s left half a decade later is the lawyers of random plaintiffs trying to make money and others trying to stop that truth from coming out, all to the detriment of free speech,” he said Saturday.

The decision – if not appealed – will put the electric car maker at a huge disadvantage in a jury trial in San Francisco, scheduled for late May, because Tesla will not be able to argue that the controversial Twitter post was true. This will allow investors to primarily focus on connecting Musk’s statement to losses in the stock market.

The decision is also a blow to the credibility of the world’s richest person, who continues to fight legal battles that other chief executives would avoid or resolve. To add to the spectacle, Musk is making a hostile attempt to take control of Twitter Inc. with the promise of making the platform a bastion of freedom of expression.

Musk told a New York federal judge in early March that he would “never lie to shareholders.” He is asking the judge to release him from the social media restrictions he agreed to after the Securities and Exchange Commission sued him for fraud in the 2018 tweets.

In San Francisco, shareholders suing for securities fraud are asking U.S. District Judge Edward M. Chen to bar Musk from making further public comment on his “interpretation and opinions” of the allegations in his lawsuit until the trial ends. .

Investors specifically pointed to comments Musk made during a TED event this week in Vancouver. He said he “was forced to yield to the SEC illegally” and settle the agency’s lawsuit over the 2018 “secured funding” tweet.

Shareholders argue that Musk’s “arguably false” August 2018 tweet and accompanying Twitter posts cost them billions of dollars amid wild swings in Tesla’s stock price, while his lawyers countered that the post for their millions of followers was “entirely true”.

To ward off allegations that the missive was fraudulent, Musk’s lawyers maintained the argument that Saudi Arabia’s sovereign wealth fund agreed to support his attempt to take Tesla private.

What Bloomberg Intelligence Says

Theoretical damages could be as high as $12 billion, but we think the settlement value could be anywhere from $260 to $380 million. — Holly Froum, Litigation Analyst