Jury Rejects All of Musk's Claims Against OpenAI in Federal Trial

A nine-member federal jury in Oakland, California needed less than two hours on May 18, 2026 to unanimously reject every claim Elon Musk brought against OpenAI, its CEO Sam Altman, co-founder Greg Brockman, and Microsoft [1][2]. The advisory verdict — adopted on the spot by U.S. District Judge Yvonne Gonzalez Rogers — ended the first phase of one of the most closely watched technology lawsuits in recent memory, not on its merits, but on a procedural finding: Musk simply waited too long to sue [3].

Deliberations began at 8:30 a.m. Pacific and concluded at 10:23 a.m. [4]. In that span, the jury of six women and three men disposed of claims that, had they succeeded, could have forced Altman's removal from OpenAI's leadership and unwound a corporate restructuring now valued at $852 billion [5].

Musk called the result a "calendar technicality" in a post on X and vowed to appeal to the Ninth Circuit [6]. His lead attorney, Marc Toberoff, was blunter at a post-verdict press conference: "This at its core is a travesty" [6].

The Claims and Why They Failed

Musk's lawsuit, originally filed in February 2024, centered on the allegation that Altman and Brockman committed a "breach of charitable trust" by converting OpenAI from its original nonprofit structure into a for-profit entity and then enriching themselves in the process [7]. Specifically, the complaint accused OpenAI of:

• Breach of charitable trust: Abandoning its founding mission to develop artificial intelligence "for the benefit of humanity" by creating a for-profit subsidiary and accepting billions in investment from Microsoft [7].
• Unjust enrichment: Altman and Brockman personally profiting from the structural changes at OpenAI's expense [2].
• Aiding and abetting: Microsoft facilitating the alleged trust breach through its multi-billion-dollar partnership with OpenAI [7].

The jury never reached the substance of these accusations. Instead, it found that Musk was beyond the applicable California statutes of limitations on every count [2][3]. For the breach of charitable trust claims, the jury applied a three-year limitations period and concluded Musk knew — or should have known — about OpenAI's shift toward for-profit status well before 2021, more than three years before his February 2024 filing [3]. For the unjust enrichment claims, the jury applied a two-year window and reached the same conclusion [2].

The evidence for this timeline finding was substantial. Testimony and documents presented during the three-week trial showed that Musk had been involved in discussions about restructuring OpenAI as a for-profit entity as early as 2017 [8][9].

The Timeline Gap: What Musk Knew and When

The central factual question at trial was not whether OpenAI changed — it obviously did — but when Musk became aware of the changes he challenged.

OpenAI was founded in December 2015 as a nonprofit artificial intelligence research laboratory. Musk was among the co-founders, alongside Sam Altman, Greg Brockman, Ilya Sutskever, and others, with an initial group of backers pledging up to $1 billion [10]. Musk himself contributed approximately $38 million to $45 million between 2015 and 2018 [8][11].

By 2017, both Musk and OpenAI's leadership agreed that the nonprofit structure could not sustain the capital requirements of frontier AI research [9]. OpenAI published a blog post in March 2019 announcing the creation of a "capped-profit" subsidiary [10]. Microsoft's initial $1 billion investment followed that same year, with additional rounds totaling roughly $13 billion by early 2023 [12].

Musk departed OpenAI's board in 2018. OpenAI has maintained that Musk left after his proposal to merge OpenAI into Tesla — with himself in control — was rejected. "When he didn't get majority equity and full control, he walked away and told us we would fail," OpenAI stated in a 2024 blog post [9].

The gap between these events and Musk's February 2024 lawsuit filing is the crux of the statute of limitations finding. OpenAI's for-profit subsidiary was publicly announced in 2019 — five years before the lawsuit. The Microsoft partnership was public knowledge from the same year. Even taking the most generous view of when the alleged breaches crystallized, the jury found Musk had constructive knowledge of them well before the limitations clock ran out [2][3].

The Financial Stakes

By any measure, this was among the largest rejected founder-grievance lawsuits in technology history.

Source: CNBC, Bloomberg, Fortune

Data as of Mar 31, 2026CSV

OpenAI's valuation has grown from effectively zero as a nonprofit to $852 billion as of its most recent funding round in March 2026, when it raised $122 billion in committed capital [5]. Musk's original donations of roughly $38 million to $45 million — substantial at the time — represent a fraction of a percent of the organization's current value [8][11].

But Musk's lawsuit was not primarily about recovering his donations. It sought equitable remedies including Altman's removal from leadership and a judicial order unwinding or restructuring OpenAI's for-profit conversion [7]. Had those claims succeeded, the financial consequences would have rippled across OpenAI's investor base, including Microsoft's 27% stake and the holdings of employees and outside investors who collectively own 47% of OpenAI Group PBC [13].

The stakes were high enough that Musk separately led a consortium that submitted a $97.4 billion unsolicited bid in February 2025 to buy the nonprofit entity that then controlled OpenAI. That offer was rejected [10].

The "Competitive Strike" Defense

OpenAI's defense strategy rested heavily on the argument that Musk's lawsuit was not a principled effort to protect a charitable mission, but a competitive maneuver timed to coincide with his own entry into the AI market.

The timeline supports at least the circumstantial version of this argument. Musk founded xAI — a public benefit corporation and direct OpenAI competitor — on March 9, 2023 [9]. His lawsuit followed less than a year later. OpenAI's attorneys pressed this point in closing arguments, telling the jury that "the finding of the jury confirms that what this lawsuit was was a hypocritical attempt to sabotage a competitor" [9][14].

The trial also surfaced evidence that cut against Musk's framing of himself as a defender of OpenAI's nonprofit ideals. Five witnesses who had worked with Musk testified that they considered Altman untrustworthy — a point Musk's attorney Steven Molo emphasized in closings [15]. But OpenAI countered with evidence that Musk himself had proposed making OpenAI a for-profit and merging it into Tesla, a claim supported by contemporaneous emails [9].

OpenAI's attorneys argued that Musk's $38 million in donations came without specific conditions or strings attached, and that the organization had continued to pursue its broad mission despite structural changes [15]. Musk's team countered that the entire premise of the nonprofit — openly sharing AI research for the public good — had been abandoned in favor of a closed, profit-maximizing model.

Steelmanning the Losing Side

The jury's procedural finding means the strongest version of Musk's substantive argument was never adjudicated. That argument, supported by multiple nonprofit law experts, runs as follows:

OpenAI was founded with a specific charitable purpose — developing AI safely and making it broadly available. Donations were solicited under that premise. When OpenAI's leadership restructured the organization to allow private investors to extract profits and restricted access to its most capable models, that constituted a breach of the charitable trust under which those assets were held [16].

Rose Chan Loui, founding executive director of the Lowell Milken Center on Philanthropy and Nonprofits at UCLA Law School, argued before the trial that OpenAI's conversion amounted to "a change of purpose" requiring court approval [16]. Computer scientist Oren Etzioni warned that the conversion set "a dangerous precedent for American charity law," noting that allowing charitable assets to migrate into private-equity-style structures as long as some equity flows back to the nonprofit "will shape the next decade of nonprofit-to-for-profit conversions in technology" [16].

Public Citizen, Nobel laureates, and fifty California foundations submitted letters and briefs to California's attorney general opposing the restructuring [16].

The reason this argument did not save Musk's case is straightforward: none of it matters if the lawsuit was filed too late. The statute of limitations is a procedural bar that prevents courts from reaching the merits, regardless of how strong the underlying claim might be. And under American charitable-trust doctrine, the power to police donor intent typically rests with state attorneys general, not with individual donors — a structural obstacle Musk would have faced even if he had filed on time [16].

Regulatory Proceedings: The Other Shoe

The jury verdict does not end the legal and regulatory scrutiny of OpenAI's restructuring. Two parallel tracks remain active.

California Attorney General: In October 2025, California Attorney General Rob Bonta signed off on OpenAI's conversion to a public benefit corporation after what his office described as an 18-month investigation [13]. The resulting memorandum of understanding imposed conditions: the OpenAI Foundation retains a 26% stake in the new PBC; PBC directors must prioritize the charitable mission over shareholder interests on safety decisions; the Foundation has approval rights over safety-critical decisions, including the power to halt model releases; and the nonprofit board has the sole right to hire PBC directors [13].

Critics, including consumer advocacy groups and nonprofit law scholars, called the deal "full of holes" [17]. CalMatters reported that the conditions lacked enforcement mechanisms and that the Foundation's 26% stake could be diluted in future funding rounds [17].

IRS: The Internal Revenue Service has independent authority to review whether a nonprofit's assets were transferred at fair market value and whether the conversion served private interests. No public IRS enforcement action related to OpenAI's restructuring has been announced, but the agency's review processes are typically confidential until completed [10].

The jury verdict does not insulate OpenAI from either of these proceedings. The attorney general's oversight authority exists independent of any private lawsuit, and the IRS operates under entirely separate statutory authority. If anything, the verdict's procedural basis — declining to rule on the merits — leaves the substantive questions about OpenAI's conversion as open as they were before trial.

Musk's Litigation Track Record

The OpenAI verdict adds to a pattern. Across his corporate empire and personal legal disputes, Musk's recent litigation record skews negative.

Source: Fortune, Wikipedia

Data as of May 18, 2026CSV

Among notable recent outcomes: a Miami federal jury found Tesla 33% liable for a fatal 2019 Autopilot crash and awarded $243 million in damages [18]. In March 2026, a San Francisco jury ruled Musk misled Twitter investors before his $44 billion acquisition [18]. A lawsuit X Corp filed against the Center for Countering Digital Hate was thrown out, with the judge writing that the case was about "punishing the defendants for their speech" [18]. On the other side, Musk won the 2023 "funding secured" class-action trial, and the Delaware Supreme Court restored his Tesla compensation package in December 2025 after a lower court had struck it down [18].

Legal scholars who study Musk's litigation patterns describe an approach that is "combative" and "often retaliatory," with lawsuits frequently serving strategic rather than purely legal purposes [18]. The OpenAI case fits this pattern: even in defeat, the lawsuit consumed three weeks of trial time and generated sustained media coverage during a period when OpenAI was navigating its IPO preparations [19].

What Comes Next: Appeal and Precedent

Musk has committed to appealing to the Ninth Circuit, though the path is narrow. Judge Gonzalez Rogers indicated during the trial that if the jury found the claims time-barred, she would adopt that finding — which she immediately did [3][15]. Appellate courts give substantial deference to factual determinations by juries, particularly on questions like when a plaintiff knew or should have known about the basis for a claim.

The more consequential question is what the verdict means for the broader ecosystem of AI nonprofit governance. Because the case was resolved on procedural grounds, it establishes no binding precedent on the substantive question of whether donors or co-founders can challenge nonprofit-to-for-profit conversions in the AI sector [16].

But the practical effect may be significant anyway. As a Fortune analysis noted before the verdict, "A ruling for OpenAI would set a precedent making it far harder for any future donor to challenge a nonprofit AI lab's conversion to commercial status" [20]. The difficulty and expense of litigating such a challenge — only to lose on a timing technicality — will likely discourage future plaintiffs.

This has implications beyond OpenAI. Anthropic, founded in 2021 by former OpenAI employees Dario and Daniela Amodei, is structured as a public benefit corporation with a separate "long-term benefit trust" that selects most board members [21]. Google DeepMind operates under AI Principles adopted in 2018 [22]. Neither entity faces the same nonprofit-to-for-profit conversion questions as OpenAI, but both exist within a governance landscape where the enforceability of safety commitments against commercial pressures remains legally untested.

The OpenAI case was the highest-profile attempt to test those boundaries. It ended not with a ruling on the merits, but with a finding that the person who brought the challenge waited too long. For critics of AI commercialization, the lesson is uncomfortable: the window to challenge structural changes at AI organizations may be far shorter than anyone realized, and by the time the consequences become clear, the statute of limitations may have already run.

For Musk, the verdict is the latest entry in a litigation record defined by ambition if not consistency. Whether the Ninth Circuit sees merit in his appeal — or whether the "calendar technicality" holds — will determine whether the substantive questions at the heart of this case ever get their day in court.