In the scenario you described above, you would be entitled to sue for damages if you sold shares in a company under false pretenses because the other owners deceived you.
Imagine being the part-owner of a bread focused bakery. You tell the other owners that you think the business should focus on pastries – even if everybody agrees that bread products are more important – as pastries make more money (that money can in turn be invested into the bread business).
The other owners hard disagree and ask you to leave the company, because a) that does not fit into their bread-centric mission and b) you own a pastry-supplier in town and would obviously be profiting from this move. So you sell your shares and move on, no harm no foul.
But what if they then turn around and start producing pastries, claiming it's only doing so to financially support their bread business? What if they start entering lucrative deals with other pastry-suppliers and effectively stop making bread?
In this case I would argue that you would be entitled to some portion of your foregone gains. You sold your stock while being under the impression that the company would never go into the direction which you deem is the *only viable one*, only to find out that they did exactly what you suggested after you left.
> ... because it isn't working on tech I agree with, ...
Please notice that this is not what happened. They all agreed on the tech to be researched. The only disagreement was the business model and company structure required to fund the research.
> under false pretenses because the other owners deceived you.
Even your bread/pastry scenario doesn’t quite make this part clear. And this is what will be difficult to prove - did OpenAI know and discuss a rug-pull of “we willingly plan to say we’re going to be doing non-profit work, but actually our plan is to be a for-profit company”.
If their pivot was pre-meditated then I could see Musk having a case, but if they pivoted purely from market factors and realizing they wouldn’t be able to cut it as a non-profit, I’d think he’s SOL
But please reread the comment which is the root of this discussion:
> The (imo) shakier part of the argument is that he is entitled to damages even though he doesn't own shares in the company.
I was never arguing that Musk is entitled to damages. I am merely arguing that it is possible to not own the shares of a company and be entitled to damages. Whether Musk specifically is owed damages is something a judge has to decide.
In the exact case above, you would have to prove intentional deceit (which is quite difficult to do) and even then that isn't actually illegal on its face a lot of the time in non publically traded companies. Further, the timeline isn't as compressed as your comment suggests, if the bread focused bakery pivoted to pastries 4-5 years after you sold your stake in it I do not agree that you would be entitled to damages at all, businesses can and should be allowed to pivot. Selling stock under the impression that a company wouldn't go in a direction you expect, is a normal part of investment and there is nothing wrong with it, people make bad bets all the time.
IANAL but I don't think that intentional deceit is necessary to prove Musk's case, negligent misrepresentation might suffice. And I agree that the judge ultimately has to rule whether or not the time-period between the ousting and pivot is reasonable; this decision would probably be based on precedence, the specifics of the case and the judges opinions.
However, please remember your comment which is the root of this discussion:
> The (imo) shakier part of the argument is that he is entitled to damages even though he doesn't own shares in the company.
I was never arguing that Musk is entitled to damages. I am merely arguing that it is possible to not own the shares of a company and be entitled to damages.
Imagine being the part-owner of a bread focused bakery. You tell the other owners that you think the business should focus on pastries – even if everybody agrees that bread products are more important – as pastries make more money (that money can in turn be invested into the bread business).
The other owners hard disagree and ask you to leave the company, because a) that does not fit into their bread-centric mission and b) you own a pastry-supplier in town and would obviously be profiting from this move. So you sell your shares and move on, no harm no foul.
But what if they then turn around and start producing pastries, claiming it's only doing so to financially support their bread business? What if they start entering lucrative deals with other pastry-suppliers and effectively stop making bread?
In this case I would argue that you would be entitled to some portion of your foregone gains. You sold your stock while being under the impression that the company would never go into the direction which you deem is the *only viable one*, only to find out that they did exactly what you suggested after you left.
> ... because it isn't working on tech I agree with, ...
Please notice that this is not what happened. They all agreed on the tech to be researched. The only disagreement was the business model and company structure required to fund the research.