OpenAI Humiliates Elon in Court

Two of the internet's least favorite main characters just had a courtroom cage match complete with mean emails, cross-examination fireworks, and the airing of plenty of big tech's dirty laundry. And I checked, there was no way for both of them to lose. But on one side you had Elon Musk, the man who proudly took a chainsaw to the federal government, who makes questionable hand signals, and who has become increasingly unhinged and unpopular since he took over Twitter. And on the other side is Sam Altman, the founder and CEO of OpenAI, who was ousted from his own organization's board for being, quote, not consistently candid with the board about his conflicts of interest, side hustles, and the safety of the products they were creating. Both of these characters have idly speculated about the existential threat that AI poses to human jobs, society, and life itself. Yet both of these men are still continuing to develop AI. And now they've concluded an incredible legal battle for the future of OpenAI, the company that created ChatGPT, the most widely used standalone AI application in the world. But now that the verdict is in, how did we get here? Well, Elon's version of the story starts back in 2014, when Google decided to purchase DeepMind. According to Elon, he was deeply concerned about this, not because of Google's market share, but because he was altruistically worried that Google wouldn't abide by its old motto, don't be evil. In 2015, Altman, who was also worried about Google's acquisition of DeepMind, apparently approached Musk to collaborate on an open letter urging US regulation of AI. And at around the same time, Altman pitched Elon on a not-Google artificial general intelligence project. And over the course of that summer and fall, Altman continued to court Elon to be part of a non-profit AI development and research organization. According to Elon's court filings, Altman promised that the organization would put safety first and would make the technology and research open for the good of the world. In November of 2015, Elon signed on to the project. He agreed to provide millions of dollars in funding and to help recruit the best and the brightest to work at OpenAI. Now it's important to note that this was back before Elon had torched his own reputation with Twitter hijinks, racist dog whistles, the destruction of the US federal government, and political machinations. This was a simpler time when Elon was comparatively well-respected, and Elon claims that Altman leveraged Elon's sterling reputation to recruit talent and build support for OpenAI. Altman quickly incorporated OpenAI as a non-profit and took it public in December 2015. Elon was made the co-chair with Altman, and the public message of OpenAI was stridently idealistic. Build AI for humanity, not shareholders. And according to Elon, he was OpenAI's biggest early backer, more than $15 million in 2016 and nearly $20 million in 2017. He paid for office space, overhead, and recruiting. But in late 2016, a new backer appeared, Microsoft. And according to Elon's legal filings, in September 2016, Microsoft had offered to sell one of its products to OpenAI at a steep discount if the non-profit would agree to publicly promote Microsoft's products. Elon claimed this was a marketing ploy, and in an email to Altman that was cited in Elon's complaint, Elon declared, quote, This actually made me feel nauseous. It sucks and is exactly what I would expect from them. And despite Elon's objections, the deal eventually went through, but without the public promotion and at a higher price. Microsoft's CEO eventually obtained 49% control in the company, and according to Elon, OpenAI later began exclusively licensing its technology to Microsoft. But in the first few years, the non-profit OpenAI upheld its early altruistic vision by regularly sharing its technological developments and methods with the public. But eventually, though, according to Elon, Altman took a turn toward profit generation and a consistent conflict developed between Elon and Altman. Apparently, Altman argued that OpenAI needed to be able to generate a profit in order to accomplish its technology development goals. Elon vigorously disagreed. They exchanged increasingly hostile emails, many of which were presented in their filings or during trial. This included a September 2017 email in which Elon declared, quote, Guys, I've had enough. This is the final straw. Either go do something on your own or continue with OpenAI as a non-profit. I will no longer fund OpenAI until you have made a firm commitment to stay, or I'm just being a fool who is essentially providing free funding for you to create a startup. Discussions are over. It took a while longer, though, for Elon to actually let go of OpenAI, and he finally left the board in February of 2018. Now, in his legal filings, Elon consistently casts himself as the altruistic benevolent hero of the story. He claims that he worried about the good of humanity, that he just wants to protect everyone from profit-motivated, unregulated AI. But Altman's lawyers and, of course, a lot of commentators have pointed out that this may be a bit disingenuous and that Elon may have some non-benevolent motivations for trying to kneecap OpenAI. First, in the midst of the fight over becoming a for-profit corporation, Elon proposed that OpenAI should attach to Tesla, one of Elon's companies, quote, as its cash cow. Altman rejected this idea, arguing that a car company didn't have the expertise to run OpenAI. I mean, what are they, a rocket ship company? And Altman's legal team also pointed out that Elon has recently been developing a competing AI product, XAI, which is now part of SpaceX, for reasons. And as we covered in a prior video, Grok was a prolific producer of non-consensual porn, including child porn, and Elon didn't seem very interested in fixing that, which was an interesting choice for someone who claimed to be worried about AI safety and responsible AI development. But back to Altman and OpenAI. A month after Elon quit, Altman set up a separate for-profit arm of OpenAI, and over the next few years, this blossomed into numerous related for-profit entities. For a little while, OpenAI continued to deliver on its promise to share technology. Then in March of 2023, when OpenAI released GPT-4, it decided not to reveal any of the background research and technology behind it. But Elon's departure didn't solve all of Altman's problems. Altman's conflict with OpenAI's board of directors ultimately resulted in the board dramatically firing him in November of 2023, and board members have since said that Altman wasn't candid about his potential financial conflicts of interest and didn't keep the board apprised about OpenAI's work. Former board member Helen Toner later publicly proclaimed that Altman had quote, withheld information, misrepresented things that were happening at the company, in some cases outright lied to the board. Toner said that the board didn't even know OpenAI was releasing chat GPT until it found out on Twitter. Now after Altman was fired, employees threatened to revolt, OpenAI was plunged into chaos, and Microsoft intervened. Microsoft announced that Altman and his supporters could join Microsoft to lead a new AI research group, and that changed the leverage overnight. If OpenAI would not take Altman back, OpenAI's talent and institutional knowledge might simply walk out the door and regroup at Microsoft. So the board folded, Altman returned, and soon after, he sacked most of the board and replaced them with people who were more aligned with his vision for OpenAI, including a board observer seat for Microsoft. And in May 2024, OpenAI suffered another scandal when several high-level safety leaders publicly quit. One of them, Jan Leckie, publicly stated that quote, safety culture and processes have taken a backseat to shiny products. Other departing employees cited similar safety and corporate ethics concerns. Then a few months later, in another minor scandal, Microsoft was forced to give up its board seat amid antitrust scrutiny by regulators in the US and Europe. Now Elon's lawyers zeroed in on these scandals when they filed a lawsuit against Altman, Microsoft, and OpenAI. Now if you've been paying attention, this isn't the only time that Elon has done something incredibly shady. As we covered, Grok, the AI built into X, formerly known as Twitter, has been letting people take a regular picture you've posted online, like a beach pic, a selfie, really anything it seems, and turn it into an explicit photo, and then post it publicly, to their followers, to strangers, often without the victim even knowing. Now we've covered this in depth, it was unbelievably gross and it was pervasive. But here's the thing, if this happened to you or your children or someone that you know, you're not actually powerless. Because we've partnered with one of the firms is going after Grok and XAI right now. And case reviews are free and confidential. All you have to do is visit the link down below to submit a claim now. In fact, it's super easy. It only takes a minute or two and you pay nothing unless you win. Now this channel may receive a small fee at absolutely no cost to you if you sign up. But click below to find out if you or a loved one might be entitled to compensation. Elon's basic contention is that Altman used Elon's money, reputation, and expertise to start a charity, then stole that charity by converting it to a for-profit corporation. That for-profit company betrayed OpenAI's altruistic origin and lucratively compensated Altman and his allies. Elon repeated the charity stealing line 17 times during his trial testimony. And he also included Microsoft as a defendant and claimed that they had aided and abetted Altman's theft of the OpenAI charity. And there were a ton of twists and turns in this case. Elon originally filed suit in state court in February of 2024, but he voluntarily dropped the state court case without prejudice and refiled in federal court that August. Then in November of 2024, Elon asked the court for a preliminary injunction to stop OpenAI from converting from a non-profit to a for-profit company. Judge Yvonne Gonzalez-Rogers denied the preliminary injunction, finding that on two of the counts Elon couldn't meet the high burden of proving a likelihood of success at trial. And on the other two counts, he didn't have standing. Now forcing OpenAI to convert back to a non-profit was a pretty unusual remedy, but Elon continued to demand this remedy through the eventual trial. And as legal commentators noted, this would be a pretty tricky thing to actually do, which is probably why no federal court has ever attempted to do it before. But Elon asked the judge to order that Altman and his co-founder and co-defendant Greg Brockman be removed from their leadership positions, which is another pretty unusual ask. And on top of that, Elon asked Judge Gonzalez-Rogers to sever the relationship between OpenAI and co-defendant Microsoft, who he accused of aiding and abetting the alleged breach. And lastly, he asked the judge to order the for-profit arm of OpenAI to And Elon's claims against Altman, OpenAI, and the rest of the defendants were originally much broader, including charges of fraud, racketeering violations, contract violations, unfair competition, and false advertising. But in early 2026, Judge Gonzalez-Rogers narrowed those claims somewhat by ruling on OpenAI's motion for summary judgment. Then, just before the case went to trial, Elon voluntarily dropped the fraud counts and focused only on three charges, breach of charitable trust, aiding and abetting breach of charitable trust, and unjust enrichment. Now, this can be a sign of weakness, but it can also be a really smart trial tactic. Elon probably withdrew those fraud charges because they are more difficult to prove, as we've talked about in some prior videos. Because to prove fraud, Elon would have to show that there was a knowingly false statement, an intent to deceive, reliance by Elon, and damages. And including more complicated and difficult to prove claims can distract from other meritorious claims if they are easier to prove. And the remaining three counts would be somewhat easier to prove. And before going to trial, the parties got to vet their arguments in competing motions before Judge Gonzalez-Rogers. And Elon's first two claims were related to the breach of a charitable trust. He alleged that Altman and OpenAI's leadership breached this charitable trust by converting OpenAI into a for-profit, closed-source entity, and that Microsoft aided and abetted that breach in order to forward its own profit interests. But Altman argued that Elon didn't have standing to even raise that claim in the first place. But Judge Gonzalez-Rogers found that Elon did have standing. I won't go into detail, but based on the restatement of trust, the Attorney General, other appropriate public officers, co-trustees, or successor trustees, and any other person who has a special interest in the enforcement of the trust can have standing. Based on that, Judge Gonzalez-Rogers found that Elon, as a significant donor, did in fact have a special interest in the enforcement of that trust. So then the judge analyzed the substantive claim of breach. Now in California, breach of charitable trust involves several factors. First, Elon would have to prove that a trust existed. Second, he would have to show that the defendant was a trustee or had responsibility over the trust. Third, he would have to show that the trust had enforceable terms or conditions. Fourth, he would have to prove that Altman had breached his fiduciary duty. And last, Elon would have to show that the remedy he was proposing was justified. Now Altman's defense focused mainly on the third factor. That is, whether there was an enforceable contract or a charitable trust. Altman claimed that the broad altruistic terms used—benefit of humanity, open, safe, non-profit—were too general to create an enforceable contract. Elon argued that his donations were not ordinary, no-strings-attached gifts. And to support this argument, Elon cited numerous emails that he had exchanged with Altman and others about his intentions and their plans for the company. He claimed that his $44 million gift had a specific charitable purpose and that he attached two fundamental terms to it—that OpenAI be open source and that it would remain a non-profit. According to Elon, OpenAI's letter broke that trust by shifting valuable assets, technology, and control into a for-profit structure tied to Microsoft. And Judge Gonzalez Rogers found that there was a genuine issue of material fact regarding the breach of charitable trust claim that should go to the jury. And the judge also allowed the aiding and abetting claim against Microsoft to proceed to trial as well. Now, to prove that claim, Elon would have to show that Microsoft knew that Altman's conduct constituted a breach of duty and that Microsoft gave Altman substantial assistance or encouragement to breach that duty. The judge found, though, that Elon could prove actual knowledge through inference or circumstantial evidence and that he did show enough evidence to create a triable issue of fact. She cited numerous emails, notes, and communications that Elon had produced, which evidence that Microsoft knew about OpenAI's public interest mission and Elon's objections to the for-profit transformation. Judge Gonzalez Rogers also allowed the unjust enrichment claim to move forward. Now, unjust enrichment is a very ambiguous claim in equity. A plaintiff has to prove an alleged receipt of a benefit and an unjust retention of that benefit at the expense of So, in order to prevail, Elon would have had to show that Altman had unjustly received a benefit through mistake, fraud, coercion, or request. Now, Altman argued that Elon couldn't pursue its claim because Elon never expected to be compensated by OpenAI, but the court ruled that this was irrelevant and allowed the claim to proceed to trial. But Altman's most important defense, though, ended up being the statute of limitations. Altman argued that even if Elon was right about everything, he was still out of luck because the statute of limitations for both breach of charitable trust and unjust enrichment had already run. Now, California's probate code applies to charitable trust and section 16460 sets a three-year statute of limitations for breach of charitable trust cases. It states that claims against trustees must be asserted quote within three years after the beneficiary discovered or reasonably should have discovered the subject of the claim. Now, statute of limitations questions are usually legal questions for the judge. It's pretty rare for a jury to decide a statute of limitations question and the reason they did so here is because it's a factual question about when someone reasonably should have discovered the subject of the claim. Generally speaking, judges decide issues of law, juries decide issues of fact. And here, Elon filed his lawsuit on August 5th, 2024, which means that if he discovered or should have reasonably discovered the breach any time before August 5th of 2021, then he was too late. And for unjust enrichment, the window is even shorter, only two years under California code. And Altman argued that Elon effectively discovered the breach as early as 2017 when the arguments about going private first began. Elon, however, argued that change in open AI was so gradual that he didn't really discover the breach until much later. And Judge Gonzalez Rogers ruled that this was an issue of fact for a jury to consider. So on April 27th, 2026, the case went to trial. The jury was left with five basic issues of fact. One, did Altman's assurances and Elon's subsequent donations actually create an enforceable contract between Elon and open AI? Did Microsoft have sufficient knowledge to qualify as aiding and abetting the breach of charitable trust? Did Altman unjustly benefit from this arrangement? And when did Elon actually know or when should he have reasonably known that the breach or unjust enrichment occurred? So on April 27th, 2026, the case went to trial. The jury was left with five basic issues of fact, and both sides got to call their witnesses. On cross-examination, Elon got snippy with opposing counsel and had to be reminded by the judge that he was not, in fact, a lawyer. Altman revealed that at one point that Elon floated the idea of open AI being passed on to his own children. Siobhan Zillis, who has four children with Elon via IVF, was forced to awkwardly recall that she hadn't disclosed this fact while she was serving on the board of open AI, and Elon's lawyers grilled Altman about his trustworthiness. And of course, Elon accused Altman of stealing a charity 17 times, and Altman countered that open AI had been left for dead by Elon. But in the end, that was mostly irrelevant because the entire case ended up turning on the statute of limitations. In just two hours of jury deliberations, the jury concluded that the statute of limitations applied, and therefore Elon was SOL in multiple ways. Though, in an interesting twist, because Elon's claims were in equity, the jury's decision wasn't binding for Judge Gonzales-Rogers, but she agreed with it anyway and dismissed the claims stating that there was a substantial amount of evidence supporting the jury's verdict. Elon, of course, took to Twitter to declare that this was a terrible precedent set by an activist Oakland judge. He claimed that he had lost on a technicality and vowed to appeal. But it doesn't really matter who wins on appeal, because we'll probably all lose when AI takes over. But remember, if you want to stick it to Elon and you've been harmed by Grok, just click on the link in the description and fill out a claim. It's super easy and free, and you might be entitled to compensation. So click below, or I'll see you in court.