Greenspan v. Qazi

Background

Aaron Greenspan, who was proceeding without a lawyer, filed a third amended complaint against Elon Musk, Tesla, Inc., Omar Qazi, and Smick Enterprises, Inc. The complaint asserted nine counts involving defamation, civil stalking, copyright infringement, violations of the Digital Millennium Copyright Act, securities fraud, and market manipulation. The defendants filed motions to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to state a legally plausible claim. The Qazi defendants also moved to strike Greenspan’s state-law claims under California’s anti-strategic-lawsuit statute.

The court noted that the third amended complaint was 428 pages long with exhibits, despite the requirement that a complaint provide a short and plain statement of the claims. Although the court said it could dismiss the complaint for violating that requirement, it instead considered whether the federal claims were adequately pleaded. The court also considered the state-law claims against Musk and Tesla, but declined to exercise supplemental jurisdiction—the court’s authority to hear related state-law claims—over the state-law claims against Qazi and Smick.

Claims Against Musk and Tesla

The court dismissed the state-law claims against Musk and Tesla. It held that the allegations did not plausibly show that Qazi or Smick acted as agents of Musk or Tesla, so Musk and Tesla could not be held responsible for Qazi’s alleged conduct on a vicarious-liability theory. The allegations that Musk praised Qazi’s Twitter account, signed Qazi’s Tesla, and that Qazi used the name “@tesla_truth” did not plausibly establish an agency relationship.

The civil-stalking allegations also did not plead the required elements, including a restraining-order violation or a credible threat intended to place Greenspan or a family member in reasonable fear for safety. The defamation allegations were inadequate because the statements attributed to Musk—such as calling Greenspan “crackers, bananas, barky & ten cards short of a full deck” and suggesting that he belonged in a “psych ward”—were, in context, opinions or colorful figurative language rather than verifiable statements of fact. The court likewise found no plausible factual basis for treating Musk’s “fake charity” comment as a factual statement about Greenspan’s conduct or the tax status of his organization.

The court dismissed the securities-fraud claims under Section 10(b) of the Securities Exchange Act, Rule 10b-5, and related provisions. It found that the complaint did not identify allegedly misleading statements and omissions with the particularity required by the Private Securities Litigation Reform Act and Rule 9(b). The allegations concerning Tesla’s finances, vehicle deliveries, residual values, safety statements, alleged conspiracies, and other matters were generally vague, speculative, or not tied to objectively verifiable misleading statements. The court also found that the complaint did not adequately plead “scienter,” meaning an intent to defraud or deliberate recklessness about whether statements were false. The related market-manipulation claim was dismissed because the Section 10(b) violation was not adequately pleaded.

Claims Against Qazi and Smick

The court dismissed the copyright-infringement claim. Greenspan alleged that Qazi posted portions of Greenspan’s autobiography online in “fake reviews.” The court concluded that the allegations described commentary and criticism, which supported a finding of fair use. The autobiography was described as nonfiction, the allegations did not show commercial use, and Greenspan did not plausibly allege harm to a market for the autobiography. The amount copied was treated as neutral because the complaint did not provide enough information to determine whether the copying exceeded what was reasonably necessary for commentary.

The court dismissed the claim that Qazi and Smick improperly removed copyright-management information from a photograph because the complaint did not allege facts showing that they knew the removal would enable, facilitate, or conceal copyright infringement. It also dismissed the claims concerning false statements in Digital Millennium Copyright Act notices and counternotices because the complaint did not plausibly allege that Qazi knowingly and materially misrepresented the copyright status of the material or acted in bad faith.

The court dismissed the market-manipulation claim against Qazi and Smick. Their enthusiastic social-media promotion of Tesla and its products did not, by itself, plausibly show market manipulation or the required fraudulent intent. The court also found that the complaint did not plausibly allege that Qazi and Smick were acting as shills or as agents of Tesla and Musk.

Disposition

The court dismissed all federal claims and dismissed the state-law claims against Musk and Tesla. The dismissals were without prejudice and with leave to amend. The court declined to exercise supplemental jurisdiction over the state-law claims against Qazi and Smick pending a plausible federal claim, and terminated the anti-SLAPP motion without prejudice to renewal as warranted. The court denied the requests for judicial notice.

Greenspan was permitted to file a fourth amended complaint by July 16, 2021. The court limited that complaint to 50 pages, prohibited new parties or claims without prior approval, and warned that failure to comply would result in dismissal with prejudice under Rule 41(b). The discovery stay remained in effect pending further order.