Elon Musk changes X terms to steer lawsuits to his favorite Texas court

"It is common for companies to include venue clauses in their terms of service directing what forum would hear any disputes filed against them. But the choice of the Northern District of Texas stands out because X is not even located in the district," the Reuters article said.

X has filed multiple lawsuits in the Northern District of Texas. The case against Media Matters for America is being heard by US District Judge Reed O'Connor, who bought Tesla stock valued at between $15,001 and $50,000 in 2022. X sued Media Matters over its research on ads being placed next to pro-Nazi content on X.

O'Connor refused to recuse himself from the X case, despite Media Matters arguing that "ownership of Tesla stock would be disqualifying" for a judge because "an investment in Tesla is, in large part, a bet on Musk's reputation and management choices." O'Connor, a George W. Bush appointee, later rejected Media Matters' argument that his court lacked jurisdiction over the dispute.

New financial disclosures show that O'Connor still owned Tesla stock as of early 2024, NPR reported on Wednesday. Filings show "that O'Connor bought and sold Tesla stock [in 2023], with his position in Tesla still totaling up to $50,000," and that he "has not bought or sold Tesla stock in the first few months of 2024," NPR wrote.

Professor questions ethics of forum clause

O'Connor was also initially assigned to Musk's lawsuit alleging that advertisers targeted X with an illegal boycott. But O'Connor recused himself from the advertiser case because he invested in Unilever, one of the defendants. X has since reached an agreement with Unilever and removed the company from the list of defendants.

X's new terms don't guarantee that cases will end up before O'Connor. "The only place in the Northern District where you're guaranteed to draw O'Connor is Wichita Falls. Elsewhere in the district, you could draw other judges," Georgetown Law Professor Steve Vladeck wrote.

For any of the federal districts in Texas, appeals would go to the conservative-leaning US Court of Appeals for the 5th Circuit.