US Court Dismisses Fraud Allegations Against OpenAI, Amid Ongoing AI Trial

US Federal Judge Dismisses Fraud Claims in Elon Musk's Lawsuit Against OpenAI and Sam Altman

A US federal judge has thrown out Elon Musk's fraud allegations in his landmark lawsuit against OpenAI and co-founder Sam Altman, Reuters reported, but the case is far from over, with jury selection beginning Monday in what promises to be one of Silicon Valley's most explosive courtroom battles. US District Judge Yvonne Gonzalez Rogers, presiding in Oakland, California, issued the ruling just days before jury selection was set to begin.

The lawsuit, in which Elon Musk is seeking up to $134 billion in damages, centers on his claim that OpenAI, Altman, and company president Greg Brockman abandoned a founding promise to operate the artificial intelligence laboratory as a nonprofit in perpetuity. Since its inception, OpenAI has restructured to allow a for-profit subsidiary to operate alongside its charitable arm, a transformation that has seen the company's valuation soar past $850 billion.

Elon Musk, who was among the original cohort of technologists who co-founded OpenAI in 2015 out of shared anxieties about the unchecked advancement of AI, alleged in a 2024 filing that he was "assiduously manipulated" and "deceived" by promises that the company "would chart a safer, more open course than profit-driven tech giants."

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The two men were once close collaborators, bound by a mutual conviction that artificial intelligence posed existential risks requiring careful, humanity-centred stewardship. That relationship fractured in 2018, when Elon Musk departed OpenAI's board following a series of disagreements over the organisation's direction — including a failed bid to merge the startup with his electric vehicle company, Tesla. In the years since, the relationship has curdled into open hostility.

Of the 26 claims Elon Musk originally asserted against OpenAI, Altman, and Brockman in November 2024, only four survived to the eve of trial: unjust enrichment, breach of charitable trust, and two counts of aiding and abetting. Elon Musk's own legal team subsequently moved to drop the fraud and constructive fraud counts ahead of proceedings to "streamline the case." OpenAI's lawyers characterised the move as "evasive tactics," noting in a filing that "trial begins in five days but Plaintiff still refuses to state plainly what claims he will pursue and what remedies he will seek."

Microsoft, a longstanding OpenAI backer and co-defendant, is accused of aiding and abetting the alleged breach of charitable trust. Should Elon Musk prevail, he has stated he does not seek personal financial gain, rather, he wants "ill-gotten gains" returned to OpenAI's nonprofit, alongside the removal of Altman and Brockman from their respective roles and the unwinding of OpenAI's for-profit conversion.

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Judge Gonzalez Rogers has divided proceedings into two phases: a liability stage, in which nine jurors will determine whether any wrongdoing occurred, and a remedies phase, in which she alone will decide appropriate damages and next steps. The jury's verdict in the liability phase will be advisory only — meaning the judge retains final authority over the outcome in both stages. Attorneys for Elon Musk and OpenAI have each been allocated approximately 20 hours to present their respective cases; Microsoft's legal team will receive five hours.

Jury selection in Musk v. Altman begins Monday at the federal courthouse in Oakland, California. The liability phase is expected to run through mid-May, with court sitting Monday through Thursday from 8:30 a.m. to 1:40 p.m. PT. If OpenAI is found liable, the remedies phase is scheduled to begin on 18 May.