By Nate Raymond

(Reuters) – A U.S. appeals court on Wednesday upheld a jury’s verdict clearing Tesla CEO Elon Musk and his company of liability over allegations they misled investors when the billionaire posted on social media in 2018 that he had “funding secured” to take the electric car company private.

The San Francisco-based 9th U.S. Circuit Court of Appeals rejected arguments by lawyers for Tesla investors that the instructions jurors received on the law from the judge presiding over the case before they delivered their verdict in February 2023 were flawed, warranting a new trial.

Lawyers for Tesla shareholders argued the jury instructions were confusing and impermissibly heightened their burden of proof by requiring them to establish Musk knowingly made false statements when he wrote his posts on Twitter, the platform now known as X following Musk’s $44 billion acquisition of it in 2022.

They said U.S. District Judge Edward Chen gave that flawed instruction even though before the trial he had held Musk’s tweets were inaccurate and that he acted recklessly, making it unnecessary for the shareholders in the class action lawsuit to prove Musk acted knowingly.

But Wednesday’s three-judge panel disagreed, saying that while Musk had been found to have, at a minimum, tweeted recklessly, the question of whether he acted knowingly was still relevant if jurors needed to decide how to apportion damages between the defendants in the case, including Tesla directors.

Ellyde Thompson, a lawyer for Musk and Tesla, welcomed the decision. A lawyer for the plaintiffs did not respond to requests for comment.

The case was filed in 2018 and concerned posts on Twitter that had also led to a $40 million securities fraud settlement later that year between Musk, Tesla and the U.S. Securities and Exchange Commission.

The SEC probe and investors’ lawsuit stemmed from a tweet Musk posted on Aug. 7, 2018, saying he was considering taking Tesla private at $420 per share, a premium of about 23% to the prior day’s close, and had “funding secured.”

Later that day, he tweeted: “Investor support is confirmed.”

Tesla’s stock price soared after the tweets and then fell again after Aug. 17, 2018, as it became clear the buyout would not happen. The shareholders’ lawyers accused Tesla and Musk of misleading investors, costing them billions of dollars.

(Reporting by Nate Raymond in Boston; Editing by Diane Craft)