Those familiar with the career of Elon Musk and his use of tongue-in-cheek conventions (such as tweeting about taking Tesla private at $420 a share), were probably not surprised, based on the many reports of actions he took relating to Dogecoin, that the new government commission he has been tasked with co-leading has the acronym DOGE (Department of Government Efficiency). And, within days of the report of the creation of DOGE, the plaintiffs who brought a securities class action against Musk relating to Dogecoin agreed to drop their appeal of the district court’s decision dismissing that lawsuit.
The lawsuit was initially brought in June 2022 and accused Musk of insider trading with respect to Dogecoin. The complaint was amended numerous times. In August 2024, district judge Alvin Hellerstein of the Southern District of New York dismissed the fourth amended complaint with prejudice. His Order summarized Musk’s statements giving rise to the lawsuit as follows:
Statements by Musk on “Twitter” to the effect that Dogecoin might be his favorite currency and that he had purchased some for his son, that Dogecoin is the people’s crypto and the future currency of Earth, that Dogecoin might become the standard for the global financial system and the currency of the internet, that Musk agreed to become Dogecoin’s CEO, and that Musk might put a “literal” Dogecoin in SpaceX and fly it to the moon and that Dogecoin would pay for the mission, that Tesla vehicles could be bought with Dogecoin, and the like.
The judge ruled that “these statements are aspirational and puffery, not factual and susceptible to being falsified. They cannot be the basis of 10b-5 lawsuit and no reasonable investor could rely upon them. As to the alleged “pump and dump” scheme, Judge Hellerstein ruled that it was not possible to understand the allegations that formed the basis of that claim.
Plaintiffs appealed the dismissal to the Second Circuit Court of Appeals. Defendants thereafter filed a motion with the district court to amend the judgement, essentially seeking sanctions and an award of attorneys’ fees under Rule 11 because of the baseless nature of the lawsuit. Plaintiff met that request with a cross-motion for sanctions and to disqualify Musk’s lawyers.
On November 14, 2024, the parties filed a Stipulation to end the case (though it must be so-ordered by the district court). Under the Stipulation, Defendants agreed to withdraw their motion to amend the judgment. Plaintiffs will withdraw their Notice of Appeal and inform the Second Circuit that they will not perfect the appeal. Plaintiffs also agreed not to file any additional motions for any further post-judgment relief, in the district court or Second Circuit, and agreed they will not challenge Judge Hellerstein’s order dismissing the fourth amended complaint with prejudice.
