ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Monday, March 4, 2024

Musk v. Altman: The Breach of Contract Claims

RocketmanJust a quick one here.

Elon Musk rides again.  This one is much more up to his standards.  It is bold.  It is brash.  It seems pious and public-interested, yet also incredibly self-serving, hypocritical, self-aggrandizing, and vituperative.  He is suing OpenAI and its principals, Sam Altman and Greg Brockman, for breach of contract, promissory estoppel breach of fiduciary duty, unfair competition, and he is seeking an accounting.  I will limit myself here to the breach of contract and promissory estoppel claims.

According to the complaint, Mr. Musk provided tens of millions of dollars to OpenAI from 2015-2020 in return for a promise that the venture would be non-profit and open source.  It is now neither.*  Mr. Musk cites to various representations that OpenAI made over the years -- about how it was going to work for the betterment of humankind -- and it references a "Founding Agreement."  However, the three documents attached as exhibits to the complaint do not include any such agreement.  Rather, they include OpenAI's Certificate of Incorporation (in Delaware of all places!), an e-mail exchange that is clearly a statement of future intentions, and an OpenAI "blog" (whatever that is) from 2015.  If there was a contract between Mr. Musk and OpenAI setting out conditions for the use of his funds, one would expect it to be attached to the complaint.  Perhaps in the amended complaint?

With respect to this claim and his promissory estoppel claim arising out of the same factual allegations, Mr. Musk seeks unspecified damages but also specific performance of the alleged contractual or non-contractual promises.  The former seems like a doable settlement offer.  OpenAI and its buddies at Microsoft could refund Mr. Musk his paltry tens-of-millions-of-dollars investment and neither party would notice it any more than a shift in the breeze from the north to north-northwest.  As to specific performance, that's a big ask.  I don't see a court ordering a company to work for the betterment of humankind.  

If any court were to do so, it would be nice (but really surprising) if SCOTUS did so in about an hour by allowing states to take insurrectionists off their ballots.

*Technically, OpenAI is still a non-profit, but it created a wholly-owned subsidiary, OpenAI Global, LLC, which at one point had a valuation of $86 billion, and which expects to produce returns on investments for both employees and outside investors.

Commentary, In the News, Recent Cases, Web/Tech | Permalink