Judge rejects bid to disqualify Quinn Emanuel attorney in Elon Musk securities case

A San Francisco federal judge has rejected a bid by plaintiffs' attorneys in a securities fraud case against Elon Musk to disqualify Quinn Emanuel Urquhart & Sullivan LLP partner Alex Spiro from the case.

"Plaintiffs contend Musk has not shown how he has a strong interest in being represented by Spiro at trial," Senior U.S. District Judge Charles R. Breyer wrote in a Monday afternoon ruling.

"But the choice of counsel is a deeply personal one, particularly when the lawyer will represent a client before a jury," he added. "Accordingly, this factor weighs in Musk's favor." Pampena et al. v. Musk, 22-cv-05937 (N.D. Cal., filed Oct. 10, 2022).

The dispute concerns a class action filed by Twitter shareholders who sold their stock starting on May 13, 2022, when Musk tweeted that his deal to buy the company for $54.20 per share was 'temporarily on hold' pending verification of spam and fake account data -- a statement plaintiffs alleged was false.

Twitter shares plummeted 17.85% over the next two trading days.

Cotchett, Pitre & McCarthy LLP senior associate Caroline A. Yuen and Bottini & Bottini Inc. partner Francis A. Bottini Jr. argued that Spiro's dual role as both a firsthand witness to the events and Musk's lead trial counsel requires his removal.

"Allowing Spiro to unfairly play both of these roles would violate the advocate-witness rule, create a grave risk of jury confusion, make a mockery out of these proceedings, and inflict serious prejudice on Plaintiffs," Yuen and Bottini wrote.

Breyer wrote that their argument "would functionally lock Spiro out of working on major business disputes. And there is no basis to suggest Spiro's mere presence would suborn perjury."

He added that California Rule of Professional Conduct Rule 3.7(a) allows attorneys to act as advocates and witnesses in a trial if the client gives written consent, as Musk has done in this case.

That said, Breyer - who has scheduled the trial for Feb. 23 - conceded that the plaintiffs had legitimate concerns that he vowed to address.

"But just because Plaintiffs fail to make this heightened showing does not mean they make invalid points," Breyer wrote. "The Court and the parties can take steps to limit the risk of prejudice."

The judge wrote that he has the ability "to control counsel's questioning and argument" so that Spiro handles his dual role appropriately, including by providing limiting instructions to the jury, as necessary.

"As for the parties, Musk has suggested that other trial counsel can cross-examine witnesses that Plaintiffs believe have a high risk of conflict," he added. "Such negotiation and compromise are reasonable and expected by the Court."

Cotchett partner Mark C. Molumphy declined to comment on Tuesday. Spiro could not be reached.