Elon Musk v OpenAI, Court Filing, retrieved on April 30, 2024, is part of HackerNoon’s Legal PDF Series. You can jump to any part of this filing here. This part is 13 of 29.

COUNT I: PROMISSORY FRAUD (Against Altman, Brockman, and OpenAI, Inc.)

148. Plaintiff re-alleges and incorporates by reference paragraphs 1 through 147 inclusive, as though fully set forth herein.

149. Beginning in 2015, Altman and his collaborator Brockman preyed on Musk’s well-known concerns about the existential harms posed by AI/AGI, and convinced him to fund and back what they falsely claimed would be a “nonprofit” devoted to the safe and open development of AI to be “distributed . . . for the good of the world.”

150. On May 25, 2015, in correspondence by email, Altman proposed to Musk they start an AI lab and “structure it so that the tech belongs to the world via some sort of nonprofit[,]” and further represented: “Obviously we’d comply with/aggressively support regulation.”

151. On June 24, 2015, Altman corresponded with Musk by email and represented: “The mission would be to create the first general AI and use it for individual empowerment—ie [sic], the distributed version of the future that seems the safest. More generally, safety should be a first-class requirement.” “The technology would be owned by the foundation and used ‘for the good of the world[.]’”

152. Based on Defendants’ express promises, representations, and reassurances that the venture would be a non-profit devoted to the open-source development of AI for the benefit of humanity, Musk agreed to fund and back the endeavor.

153. Between 2015 and 2020, Altman and Brockman reaffirmed these material promises and representations to Musk on numerous occasions, intentionally inducing Musk to regularly contribute his valuable resources to OpenAI, Inc.

154. On December 11, 2015, OpenAI, Inc. made the following public announcement on its website, which Altman had previously emailed to Musk on December 8, 2015 for his review:

OpenAI is a non-profit artificial intelligence research company [whose] goal is to advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return. Since our research is free from financial obligations, we can better focus on a positive human impact. . . . We believe AI should be . . . as broadly and evenly distributed as possible. . . . As a non-profit, our aim is to build value for everyone rather than shareholders . . . and our patents (if any) will be shared with the world.

155. On December 11, 2015 (the same date as OpenAI, Inc.’s announcement), Musk emailed Altman and Brockman stating: “Our most important consideration is recruitment of the best people,” and pledged this would be his “absolute top priority 24/7[.]” Musk immediately contacted and recruited one of the top scientists in the AI field, Dr. Ilya Sutskever.

156. The false promises, representations, and assurances Altman and Brockman made to Musk were enshrined, among other places, in OpenAI, Inc.’s December 2015 Certificate of Incorporation: “[OpenAI’s] technology will benefit the public and the corporation will seek to open source technology for the public benefit when applicable. The corporation is not organized for the private gain of any person,” and “no part of the net income or assets of this corporation shall ever inure to the benefit of any director, officer or member thereof or to the benefit of any private person.”

157. In reliance on Defendants’ promises, representations, and assurances Musk thereafter contributed more than $15 million to the project and paid much of its overhead expenses in pricey San Francisco.

158. On March 14, 2017, with Brockman copied, Musk was emailed a draft online post for his review, promising: “We will share our research and techniques unless there is evidence that doing so would harm humanity.” The post explained “openness [is] desirable” because it helps to: “Ensure that AI progress benefits everyone, rather than primarily benefiting whoever controls the technology.” That same year, Musk contributed another $20 million to OpenAI, Inc. and helped recruit additional top scientists for the endeavor.

159. On April 2, 2018, Altman emailed Musk a draft OpenAI, Inc. Charter to review, which was later published on its website, representing: “We commit to use any influence we obtain over AGI’s deployment to ensure it is used for the benefit of all, and to avoid enabling uses of AI or AGI that harm humanity or unduly concentrate power. Our primary fiduciary duty is to humanity.” And in 2018, Musk contributed millions of dollars more.

160. Even in marketing the creation of OpenAI, L.P., on March 11, 2019, Defendants represented: “The General Partner’s duty to this mission and the principles advanced in the OpenAI Inc. Charter take precedence over any obligation to generate a profit.” Altman emailed a draft of this announcement to Musk on March, 6, 2019 promising: “We’ve designed OpenAI LP to put our overall mission—ensuring the creation and adoption of safe and beneficial AGI—over generating returns for investors.” Musk continued contributing to the non-profit OpenAI, Inc. based on these representations.

161. Altman and Brockman knew or could have reasonably foreseen that their express promises, representations, and assurances would be relied upon by Musk. Indeed, they obviously intended Musk to rely on such statements and in good faith, Musk reasonably did rely on them to his detriment. Based thereon, he contributed tens of millions of dollars of seed money to OpenAI, Inc. and, importantly, invested his time, reputation, and connections to recruit world-class AI scientists and engineers for the project.

162. Altman and Brockman knew their representations and promises were false when made; they had no intention of performing them and failed to perform them. In reality, Altman and Brockman wished to launch a competitor to Google, who was so far ahead of all other AI companies that a small for-profit start-up had zero chance of success without an angle. To Altman and Brockman, “non-profit” and “open source” were simply philanthropic hooks, altruistic buzzwords to attract wealthy, connected donors like Musk and talented scientists like Dr. Sutskever to back and participate in their endeavor.

163. Brockman essentially admitted as much. He wrote: “I hope for us to enter the field as a neutral group looking to collaborate widely and shift the dialog towards being about humanity winning rather than any particular group or company. (I think that’s the best way to bootstrap ourselves into being a leading research institution.)” (emphasis added).

164. Once they got Musk’s backing and a talented team of scientists in place, Defendants’ objective was to develop valuable AI/AGI and from there, convert the non-profit to a for-profit enterprise and cash in—essentially turning Musk’s contributions into free start-up capital and their years of section 501(c)(3) tax benefits into a free government subsidy.

165. Indeed, in 2017 Altman and Brockman guardedly approached Musk about converting the non-profit to a for-profit enterprise, but Musk refused and demanded further assurances from Altman and Brockman that they honor their promises and the non-profit’s mission or get out. In response, Altman reassured Musk: “[I] remain enthusiastic about the non-profit structure!” with Brockman following suit. Musk thereafter continued to contribute millions of dollars to the project in good faith reliance on Altman and Brockman’s representations and further assurances.

166. Defendants, still committed to their scheme, became even more cunning and deceptive. They sequestered OpenAI, Inc.’s technology and orchestrated an increasingly opaque corporate web in which they were major stakeholders, thus enabling them to covertly self-deal for enormous future profits.

167. On information and belief, Altman took full advantage of his position of trust within OpenAI, Inc., causing it to make deals worth tens of millions of dollars with side companies he owned or had major stakes in. On information and belief, in just a single deal between OpenAI, Inc. and Reddit, in which Altman is one of the largest shareholders, he scored a $69 million windfall. On information and belief, Altman further induced Microsoft to buy electricity from a power company he owned, and in turn, when Microsoft wanted an exclusive license to OpenAI, Inc.’s technology (itself, defying the non-profit’s mission and principles), Altman was happy to oblige.

168. Defendants also had no intention to “comply with/aggressively support regulation.” We now know such representations were false and intentionally misleading when made, as exposed in an open letter published by OpenAI employees on June 4, 2024, which criticized the company for having “strong financial incentives to avoid effective oversight,” maintaining “only weak obligations to share [safety] information with governments, and none with civil society,” and enforcing “broad confidentiality agreements block[ing] us from voicing our concerns.”[18]

169. In recent months, Altman has abandoned all pretense, displaying his true colors. With Musk out of the picture and OpenAI, Inc.’s Board stacked with compliant allies, Defendants are actively working to convert OpenAI, Inc. into an entirely for-profit business.

170. Defendants intentionally concealed their fraudulent conduct, which prevented Musk from discovering their scheme, notwithstanding his exercise of due diligence.

171. As a direct and proximate result of Altman, Brockman, and OpenAI, Inc.’s conduct, acts, and omissions alleged hereinabove, Musk is entitled to recover the damages he sustained and will sustain, including any income, gains, compensation, profits, and advantages obtained, received, or to be received by Defendants, or any of them, arising from the wrongful acquisition of Musk’s contributions to OpenAI, Inc., including prejudgment interest. Musk is entitled to an order requiring Defendants, jointly and severally, to render an accounting to ascertain the amount of such proceeds.

172. As a direct and proximate result of Defendants’ wrongful conduct, acts, and omissions alleged hereinabove, Musk has been damaged, and Defendants have been and will continue to be unjustly enriched, in an amount that shall be assessed at trial, but which vastly exceeds $75,000, and for which restitution and/or non-restitutionary disgorgement is appropriate. Such should include the imposition of a constructive trust; a declaration by this Court that Defendants are jointly and severally the constructive trustee(s) for the benefit of Musk; and an order that Defendants convey to Musk all of the profits, assets, property, and ill-gotten gains received or to be received by Defendants, which are traceable to Musk’s wrongfully acquired financial and other contributions to OpenAI, Inc.

173. Defendants’ wrongful conduct, acts, and omissions have proximately caused and will continue to cause Musk substantial injury and damage, much of which cannot be reasonably or adequately measured or compensated in money damages. The harm this wrongful conduct will cause to Musk is both imminent and irreparable, and the amount of damage sustained by Musk will be difficult to ascertain if such wrongful conduct is allowed to continue without restraint. Musk is entitled to an injunction during the pendency of this action, and permanently enjoining Defendants, their officers, agents, and employees, and all persons acting in concert with them, from engaging in such further tortious conduct.

174. Defendants’ wrongful conduct constitutes oppression, fraud, and/or malice under Cal. Civ. Code § 3294, entitling Musk to an award of punitive damages appropriate to punish or set an example of Defendants in an amount to be determined at trial.

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[18] Open Letter From AI Researchers: A Right to Warn about Advanced Artificial Intelligence (June 4, 2024), https://righttowarn.ai/.