Elon Musk vs Sam Altman: US Court drops fraud allegations against OpenAI, but biggest AI trial of the decade is still on
A US federal judge has dismissed allegations of fraud in Elon Musk’s landmark lawsuit against OpenAI and its co-founder Sam Altman, but the case is far from over with jury selection on Monday in what promises to be one of Silicon Valley’s most explosive courtroom battles, Reuters reports.
Elon Musk had said that dismissing his proposed allegations of fraud and constructive fraud would make the case easier and allow jurors to focus on OpenAI’s goal of ensuring it benefits humanity rather than being a “wealth machine.”
Fraud Allegations Dropped as Elon Musk-Sam Altman Trial Begins
A US federal judge on Friday dismissed fraud allegations at the center of Elon Musk’s sprawling lawsuit against OpenAI and its CEO Sam Altman; however, it cleared the way for the remaining claims for breach of charitable trust and unjust enrichment to be brought to trial.
U.S. District Judge Yvonne Gonzalez Rogers, presiding in Oakland, California, announced the verdict just days before jury selection was to begin.
What Does Musk Claim Against OpenAI and Sam Altman?
The lawsuit, in which Elon Musk is seeking damages of up to $134 billion, focuses on the claim that OpenAI, Altman and company president Greg Brockman reneged on their founding promise to operate the artificial intelligence laboratory as a nonprofit in perpetuity.
Since its founding, OpenAI has been restructured to allow a for-profit subsidiary to operate alongside its philanthropic arm; it’s a transformation that has caused the company’s valuation to rise to over $850 billion.
Elon Musk, who was among the original technologists who founded OpenAI in 2015 out of shared concerns about the unchecked advance of artificial intelligence, claimed in a 2024 filing that the company was “meticulously manipulated” and “deceived” by promises to “chart a safer, clearer path from the profit-driven tech giants.”
From Co-Founders to Courtroom Rivals: The Elon Musk-Sam Altman Breakdown
The two men were once close collaborators and had a shared conviction that artificial intelligence posed existential risks that required careful, human-centered management. That relationship soured in 2018 when Elon Musk left OpenAI’s board following a series of disagreements over the direction of the organization; including an unsuccessful bid to merge the venture with electric vehicle company Tesla.
In the years since, the relationship has turned into open hostility. Elon Musk launched his own AI startup xAI, a direct competitor to OpenAI, in 2023 and recently merged it with social media platform X in a deal that values the combined entity at $1.25 trillion.
Sam Altman didn’t shy away from the upcoming confrontation: “I’m really excited to swear in Elon in a few months, it’s Christmas in April!” he told X in February. he wrote. Elon Musk wrote in August: “Fraudulent Altman lies as easily as he breathes.”
$134 Billion Lawsuit: What’s at Stake?
Of the 26 claims Elon Musk made against OpenAI, Altman and Brockman in November 2024, only four survived on the eve of the trial: unjust enrichment, fraud, constructive fraud and breach of trust of charities.
Elon Musk’s own legal team then moved to drop the fraud and constructive fraud counts ahead of trial in an effort to, in his words, “make the case easier.” OpenAI’s lawyers called the move “escape tactics” and noted in a filing that “trial is set to begin in five days, but Plaintiff still refuses to clearly state what claims it will pursue and what remedies it will seek.”
Microsoft, a long-time OpenAI supporter and one of the defendants, is accused of aiding and abetting alleged breaches of trust in charities.
If Elon Musk prevails, he has stated that he is not seeking personal financial gain, but rather that “ill-gotten gains” be returned to OpenAI’s nonprofit, that Altman and Brockman be removed from their respective roles, and that OpenAI’s for-profit conversion be ended.
How Will the Elon Musk and OpenAI Trial Be Structured?
Judge Gonzalez Rogers, appointed by former President Barack Obama to the U.S. District Court for the Northern District of California in 2011, divided the proceedings into two phases: a liability phase, in which nine jurors will decide whether there was any wrongdoing, and a compensatory phase, in which he will decide appropriate damages and next steps. The jury’s decision at the liability stage will be advisory only; That is, in both stages, the final authority over the outcome belongs to the judge.
Lawyers for Elon Musk and OpenAI were each allocated approximately 20 hours to present their cases; Microsoft’s legal team will be given five hours.
All three parties submitted lists of witnesses, including Elon Musk himself, Altman, Brockman and Microsoft CEO Satya Nadella. CNBC report. The liability phase is expected to last until mid-May, with court hearings Monday through Thursday from 8:30 a.m. to 1:40 p.m. PT. If OpenAI is found responsible, the resolution phase is planned to begin on May 18.
Musk v. Jury selection in the Altman case begins Monday at the federal courthouse in Oakland, California.
