Elon Musk’s Ketamine Use Can’t be Probed in OpenAI Fraud Trial

Elon Musk’s use of the drug ketamine will be off limits to attorneys for OpenAI Inc. and its chief executive officer Sam Altman during an upcoming jury trial over claims that the generative AI company defrauded Musk by abandoning its nonprofit roots.

US District Judge Yvonne Gonzalez Rogers at a Friday hearing in Oakland, California, traced the contours of the high-profile trial — which will feature live testimony from Silicon Valley’s biggest names in AI — with a series of rulings about what evidence, topics, and witnesses can be presented to the jury.

The trial, scheduled to begin April 28, will revisit the founding years of OpenAI a decade ago, its falling out with Musk and Microsoft Corp.’s subsequent $13 billion investment in the startup.

The jury will determine whether OpenAI’s other co-founders, Altman and Greg Brockman, lied about their intentions to maintain a nonprofit structure when Musk initially donated $38 million to the startup. OpenAI has moved quickly in the past year to convert to a for-profit structure to allow for greater financial flexibility and investments.

Musk is seeking as much as $134 billion in damages from OpenAI and Microsoft — a staggering amount, that if awarded, would be one of the largest verdicts in history. OpenAI and Microsoft have denied his allegations.

Read More: Musk Seeks Up to $134 Billion Damages From OpenAI, Microsoft

The judge shot down OpenAI’s planned attempt to undermine Musk’s credibility on the witness stand by asking him about his alleged use of ketamine during key negotiations with the company. She said those questions would be irrelevant unless OpenAI can provide more concrete evidence about the mind-altering effects of ketamine, an anesthetic drug that can have hallucinogenic properties.

Gonzalez Rogers said she would allow limited questioning about Musk’s attendance at Burning Man, an annual festival in the Nevada desert where drug use is common. OpenAI’s attorneys said “a lot of significant communications” between Musk and OpenAI happened while he was at Burning Man.

William Frentzen of Morrison & Foerster LLP, on behalf of OpenAI, said that in Musk’s deposition for the case, he couldn’t recall if he had taken ketamine during key negotiation periods.

Musk has said he has used ketamine under a prescription years ago and has not used it since, although he has been plagued by media reports that he has engaged in extensive recreational drug use.

‘Not Particularly Persuasive’

The judge also issued a number of other tentative rulings during the marathon hearing. She said the jury’s damages determination will likely only be advisory, meaning she will determine the amount after trial. Musk likely won’t be allowed to pursue additional, punitive damages.

Gonzalez Rogers indicated that she’ll allow testimony by Musk’s sole expert witness who worked up damages calculations.

Financial economist C. Paul Wazzan said in a report earlier this year that Musk could be entitled to between $79 billion and $134 billion in ill-gotten profits from OpenAI and Microsoft. He reasoned that Musk is entitled to a chunk of the startup’s current valuation for having provided seed money.

Still, the judge expressed some skepticism of Wazzan’s report. “Do I find it convincing? Not really, not particularly persuasive,” Gonzalez Rogers said.

Lawyers for the companies said in a January filing that Musk was seeking as much as 2,900 times what he invested in the startup.

“Wazzan’s methodology is made up; his results unverifiable; his approach admittedly unprecedented; and his proposed outcome — the transfer of billions of dollars from a nonprofit corporation to a donor-turned competitor — implausible on its face,” lawyers for the companies wrote.

Among those set to testify at the trial, which is expected to last about four weeks, are Altman, Musk, Brockman, OpenAI co-founder Ilya Sutskever and Shivon Zilis, a former OpenAI board member and romantic partner of Musk. Microsoft CEO Satya Nadella and OpenAI’s former chief technology officer Ermira Murati are also possible live witnesses.

The judge, who is no stranger to overseeing high-profile Silicon Valley litigation, was quick to say the big names won’t get special treatment. All witnesses must enter through the courthouse’s public entrance.

And both parties will be required to pay for the jury’s lunch during the panel’s deliberations, a cost usually expensed by the court.

“You have plenty of money to pay for it,” she said.

--With assistance from Madlin Mekelburg.

To contact the reporter on this story:
Isaiah Poritz in San Francisco at iporitz@bloomberg.net

To contact the editors responsible for this story:
Stephanie Gleason at saerts1@bloomberg.net

Peter Blumberg

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