Will Elon Musk's Lawsuit Against California Authorities Cause a Landslide of Similar Cases?

Tesla CEO Elon Musk has found himself in skirmish with California's Alameda County authorities who have prevented his car company from restarting production during the coronavirus pandemic. The rock star engineer has since hit back, slamming the ban, arguing that it runs contrary to the governor’s orders and even to “plain common sense”.

Tesla’s lawsuit against Alameda County will definitely be not be an “easy” one, says Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. The researcher warns that a recent case filed by the electric vehicle manufacturer against local authorities forbidding the company’s plant to re-open could put the whole “stay at home” order at risk.

“If the governor lifts these restrictions for Elon Musk, he can actually lift it for everybody else. And perhaps he will”, says Elson.

“If it were a simple lawsuit - there'd be thousands of these cases”, the expert adds.

Musk earlier tweeted that the decision by Alameda health authorities to not allow Tesla’s factory to resume its work runs contrary to California governor Gavin Newsom's advice, US president Donald Trump's wishes, the American Constitution and “just plain common sense”. Last week, Newsom said that state businesses, including manufacturers, would be allowed to re-open in California where around 68,000 cases of coronavirus have been reported.

But this apparently did not override the decision made by local Alameda County officials, which Musk has been so critical of, prompting the entrepreneur to begin a legal battle and announcing plans to shift Tesla’s headquarters and future programmes to Texas or Nevada.

However, Peter Henning, a law professor at Wayne State University and a former SEC lawyer, believes that Musk’s plea is more a “threat” rather than a “realistic possibility”.

“I suspect this is a threat that will not come to pass because moving out of Fremont would be a major headache for the company”, Henning argued.

“It would be very difficult for Tesla to simply up and move its facility to Nevada or Texas. It does have a facility outside Reno, but it is not equipped to build all the Model 3 Teslas that the company is hoping for”, the professor explained.

On the other hand, the noise created by the lawsuit could still have a political costs for Musk who has been “on the vanguard on many issues” during his career, according to Elson, as the American media has been quite tough on those governors and CEOs who have called on the government to lift lockdown restrictions in order to bring the country back to work as soon as possible.

If the situation with coronavirus gets worse then, the expert notes, Musk might find himself "in the sights of the media”. But that might not unduly worry Musk. It is not something the eccentric inventor isn't used to after all.