A FEDERAL JUDGE sitting in Oakland on Tuesday denied Elon Musk’s request for immediate relief in his high-stakes lawsuit against Sam Altman and the artificial intelligence company OpenAI. Yet while Musk lost the battle, the judge’s decision may prove pivotal to advancing Musk’s central argument in the war between the tech titans.
The case has its roots in a lawsuit filed in San Francisco Superior Court on Feb. 29, 2024, when Musk charged that Altman, the CEO of OpenAI, had perverted the company’s charitable mission.
According to Musk, OpenAI, the company that created ChatGPT and owns its technology, was created as a nonprofit corporation. Its mission was to develop artificial general intelligence or “AGI” for the benefit of all humankind, not for the private financial benefit of any individual or company. (AGI is an artificial intelligence smarter than humans in almost all matters.)
Musk, along with Altman, was one of the founders of OpenAI. He alleged that the founders had agreed on the charitable mission of the nonprofit and baked it into the company’s charter.
He said he provided OpenAI with tens of millions of dollars in charitable contributions, relying on the agreement that OpenAI would not be in it for the money but for humanity.
According to Musk, Altman made arrangements with Microsoft that led to the tech giant investing billions in the company through a for-profit subsidiary. Musk said that the relationship with Microsoft led to a web of for-profit subsidiaries that were being used to pursue financial rewards and power in violation of the company’s mission. He asked the court to prevent Altman from continuing those efforts.
Musk voluntarily dismissed that suit but filed a new and souped-up version in federal court on Aug. 5 and later added Microsoft as an additional defendant.
In the new version, Musk claimed that the defendants had violated federal antitrust and securities laws and that Altman’s alleged self-dealing amounted to racketeering. Those claims were accompanied by various claims under state law, including the one that had been the flagship of the original suit — that Altman had violated the charitable purposes of its charter.
Musk fails to clear a legal high bar
Musk asked U.S. District Judge Yvonne Gonzalez Rogers to enter “preliminary injunctions” against Altman and OpenAI that would block further allegedly improper conduct while the litigation was pending. In particular, Musk asked the judge to prevent OpenAI from “converting” its charter to a for-profit company while the litigation was pending.
Gonzalez Rogers heard lawyers for the parties argue the issue in early February 2025 and at that time, she emphasized what is a central principle of federal litigation.
She said preliminary injunctions are rarely given and only after a plaintiff surmounts significant hurdles. The plaintiff must show that it has a likelihood of success in the litigation and would suffer irreparable injury while the case was pending. In addition, the court must find that, as between the parties, the balance of fairness tips in the plaintiff’s favor and an injunction would be in the public interest.
In a 16-page opinion Tuesday, the judge batted away Musk’s requests for injunctions on the antitrust and securities claims. She found that Musk had not cleared the high bar the law imposed and his “evidence” included hearsay or media reports, in some cases directly contradicted by sworn declarations from the defendants.
She also denied Musk’s request that Altman be preliminarily enjoined from converting OpenAI to a for-profit company. In her view, Musk had not proven that he would ultimately win on a key legal issue of whether a charitable trust had been formed. In her view that issue was a “toss-up.”
Then she threw a curveball. She said she agreed with Musk that the issue of the charitable assets is of great public importance. She said, “the Court agrees that significant and irreparable harm is incurred when the public’s money is used to fund a non-profit’s conversion into a for-profit.”
Accordingly, she said she would put the other claims in the case on the backburner but would fast track the claim for breach of OpenAI’s charitable mission so it would be heard in the fall of 2025.
U.S. District Judge Yvonne Gonzalez Rogers agreed that the issue of charitable assets is of great public importance and that ‘significant and irreparable harm’ is incurred when the public’s money is used to fund a non-profit’s conversion into a for-profit.
The ruling likely gave Musk more than he was expecting. With an expedited path to a trial on the central issue, Musk will have an opportunity to take at least some “discovery,” that is, get internal documents from the defendants and take depositions of their key actors.
Second, the judge’s attention to the public interest involved will likely make OpenAI’s investors wary of what impact a future decision could have on their relationship with the company and its technology.
Third, the decision has — at least for the minute — blunted one of Altman’s primary approaches to defending against Musk’s suit: trying to discredit Musk as a disgruntled and jealous competitor who wants to obtain the benefits of OpenAI’s technology for himself.
While there was no indication that Gonzalez Rogers disagreed with that view of Musk, she clearly separated issues about Musk’s motives from the broader question that affects the public: that is, whether OpenAI is hewing to its charitable purposes.
A victory in disguise
Joe Grundfest is an emeritus professor of law at Stanford Law School and has longtime interest and expertise on corporate governance. Grundfest agreed that despite losing the request for a preliminary injunction, the decision is a win for Musk.
Grundfest read the opinion to mean that the judge had concluded “that there might well be a charitable trust,” as Musk alleged, “and there might well be a serious flaw in OpenAI’s plan to convert to a for-profit entity … but the court needs more evidence on that point and isn’t ready to issue the extreme remedy of a preliminary injunction.”
In sum, “the opinion clearly signals that the court sees potential merit in Musk’s claim, but needs more evidence before it can reach a conclusion,” he said.
The opinion will be read carefully by two external players.
Delaware and California, like most states, give their attorneys general jurisdiction over nonprofit corporations formed or doing business in their states. OpenAI was chartered in Delaware and is headquartered in California.
Their responsibilities, writ large, are to make sure that charitable assets are used for charitable purposes in accordance with the law.
In this case, those charitable assets are extraordinarily valuable. How valuable is not known, but in February, Musk and several investors floated an “offer” to buy those assets for $97.5 billion dollars. They made the offer while Gonzalez Rogers was considering the request for a preliminary injunction.
Altman and the other defendants thought that the offer so vividly demonstrated Musk’s ambition to obtain the technology for himself that they asked the judge to consider it, even though it came after the record was already made.
On Tuesday, Gonzalez Rogers denied that motion as “moot,” given her ruling, but the offer likely focused the attorneys general on what is at stake in the litigation and what their own role should be in protecting the public interest.
To put Musk’s nearly $100 billion offer in some context, if a new charitable enterprise was created and funded by the value of OpenAI’s assets — as advocated by Public Citizen, a national consumer advocacy organization — it would exceed the size of all but a handful of charitable foundations in the United States.
With a pot like that in play, the role of the public officials charged with protecting charitable assets is likely to be important in any resolution of the matter, particularly if it happens by way of settlement negotiations.
Invitations to comment on the decision were not immediately accepted by the lawyers for Musk or Altman.
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