IN A COURTROOM CROWDED with dozens of blue-suited lawyers, a federal judge has considered a score of motions and other logistical issues needed to clear the way for the April start of Elon Musk’s highly anticipated lawsuit against Sam Altman and OpenAI, Inc.
Despite passing references to ketamine, Burning Man, DOGE and the public personalities of the principal players, U.S. District Judge Yvonne Gonzalez Rogers ran a sober and unemotional four-hour hearing, taking care of business for the coming trial.
The trial — set to begin April 27 in Oakland and run for four weeks — will consider Musk’s claims that OpenAI, the artificial intelligence company that created ChatGPT, breached its duty as a nonprofit corporation to hold charitable assets for the purposes built into its corporate charter. The trial will also assess Musk’s claims that he was misled and defrauded by the defendants.
At Friday’s hearing, the judge resolved a number of issues from the bench and reserved others for further study, though in many cases she gave the parties her tentative views. Among the most significant takeaways was the judge’s clear message that the trial will begin as scheduled, and she will run the proceedings with efficiency and purpose.
Based on her comments, Gonzalez Rogers appeared unlikely to allow Musk to assert a claim for punitive damages. Such monetary awards are typically reserved for conduct so egregious that the defendant must pay an additional amount as punishment, in addition to the money needed to redress the other side’s injury.
While the loss of an opportunity to seek punitive damages can be a severe blow to a plaintiff, in this case the issue appeared of lesser import given that Musk’s claim — without punitive damages — could be as much as $134 billion.
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Expert testimony, ketamine claims and Burning Man
Another important issue arose with OpenAI’s motion to block expert testimony from Stuart Russell, a professor at the University of California, Berkeley. Russell has a reputation as one of the leading authorities on the development of artificial intelligence and the pursuit of “artificial general intelligence” or AGI.
AGI refers to machine intelligence that is equal or superior to human intelligence in almost all human endeavors.
OpenAI did not dispute Russell’s academic credentials but said that his opinions were based on inadequate scientific authority and, in the end, were simply Russell’s personal views.
The judge didn’t make a final ruling, but she said she would likely allow Russell’s opinion testimony.
OpenAI’s lawyer regrouped and argued that the judge should at least bar Russell from testifying about his view that AGI could be an existential risk for humankind.
He said that Russell had determined there was a 1 to 3 percent risk of such an occurrence each year over a 10-year period.
The lawyer argued that Russell had no scientific basis for that risk assessment. He added that the testimony was prejudicial because it might make the jury worry about the risk to themselves and their families.
Lawyers for Musk, the world’s richest person, didn’t quantify the level of risk and cited industry leaders’ estimates simply to support his view that there was such a risk.
The judge agreed to look at that specific issue again before ruling.
Another motion sought to preclude evidence about Musk’s alleged ketamine use and a claim that he made key decisions relating to OpenAI while attending Burning Man, the annual festival in the Nevada desert.
With respect to alleged ketamine use, the judge excluded the evidence largely on the ground that the defendants hadn’t organized evidence about the drug’s effects nor connected the alleged use to specific decisions by Musk.
On a motion to exclude evidence of Musk’s attendance at Burning Man as potentially prejudicial, the judge told Musk’s East Coast lawyer that in the Bay Area, Burning Man is no big deal. She said she’d allow testimony that Musk was at Burning Man during some of the relevant period.
Musk’s damages methodology
A potentially significant issue involved the testimony of the damage expert for Musk. The expert calculated the damages Musk would be entitled to receive if OpenAI is found to be liable.
The expert said that Musk would be owed not simply the return of his contributions but also be entitled to recover the value of the company attributable to those contributions.
In simple terms, the expert quantified Musk’s charitable contributions and other assistance to OpenAI in its early days as a start-up and then calculated the percentage of the value of the enterprise those contributions represented.
After some adjustment, he then applied the modified percentage to the value of OpenAI — no longer a start-up but now a multi-billion-dollar enterprise — to represent the amount that Musk is entitled to recover.
Open AI argued that there is no science to support that approach and the expert wasn’t qualified to offer such a methodology.
The judge said she was concerned by the point and pressed Musk’s lawyers to say on what basis the expert would be able to express an opinion on the valuation of a start-up in this industry. When she heard that the expert also served as a venture capitalist and had funded a number of companies over a 10-year period, she seemed persuaded that he was competent to testify.
Gonzales Rogers cautioned the lawyers that she would expect them to adhere to courtroom decorum, and while there were notable figures in the case — an apparent reference to both Musk and Altman — all of them “will come in through the front door of the courthouse, the same as everyone else.”