As Tesla (TSLA) CEO Elon Musk's hearing is expected to kick off at 2 p.m. in the Southern District of Manhattan, it is worth considering the woman holding his fate in her hands: Judge Alison Nathan.
Nathan has been on the bench in New York since 2011, after being appointed by President Obama amidst Republican protest.
Prior to donning the robes, she began her career as a law clerk in the office of former Supreme Court Justice John Paul Stevens before embarking on a career at a private practice and becoming a well respected law professor in New York at such prestigious institutions as Fordham University Law School and NYU Law.
Re-entering the public sphere, she acted as special counsel to the solicitor general of New York and associate White House counsel and special assistant to President Obama just prior to being appointed.
In short, Musk is not dealing with a "green" judge.
If found guilty, Musk could have serious fines levied on him or see his beloved Twitter (TWTR) taken away. He could even be removed from his perch atop the automaker in what would likely be the most extreme punishment.
With such massive implications, it might be dutiful to review her recent cases to assess her temperament and judgment as a jurist.
Yellow Taxis v. Uber, Lyft
Apropos of recent stock news, one of Nathan's notable recent decisions involves ride-sharing options Uber and Lyft (LYFT) .
In a suit brought by yellow taxi medallion holders, Nathan ruled in favor of the ride-sharing operations on the basis that the two operate differentiated business models.
"The City's for-hire ground transportation industry - like its analogues in other parts of the country and the world - may well, as Plaintiffs allege, be rapidly evolving. And a notable feature of that evolution may indeed be that the Ubers and Lyfts of the world increasingly share important characteristics with traditional medallion taxicabs, including, as identified by Plaintiffs, the customers they serve, the drivers they employ, the manner in which they transact sales, and even the immediacy with which their services are delivered," she acknowledged in her decision. "But marshaling such similarities risks obscuring persistent (and undisputed) differences in the manner in which these industry participants interact with and relate to their consumers."
She cited the "spontaneous street hails" of the yellow cab industry as a key contrast with Uber and Lyft's app-driven services.
"Such differences, easily "justify" Defendants' decision to subject these participants to "differential" regulatory treatment on the basis of legitimate government policy to serve the sorts of interests discussed above," she said. "Under the deferential standards of rational basis review, nothing more is required for the challenged regulations to survive."
The implication is certainly favorable toward new age business models like Tesla's. What it means for a specific case like Elon's remains a stretch.
Ferrick v. Spotify
In another tech darling case, Judge Nathan ruled in favor of Spotify (SPOT) after a class action suit was brought against the company for not fairly compensating musicians and publishers.
The suit alleged that $43 million proposed to settle a suit for infringement on the artists and music executives was wholly insufficient for the Stockholm-based streaming service to atone for its infractions.
"The Settlement Agreement is procedurally and substantively unfair to Settlement Class Members because it prevents meaningful participation by rights holders and offers them an unfair dollar amount in light of Spotify's ongoing, willful copyright infringement of their works," a statement from a consortium of artists led by Wixen Music Publishing decried in the 2017 case.
The suit instead pursued a hefty $1.6 billion settlement ahead of Spotify's blockbuster IPO.
However, again Nathan sided with the industry upstart, citing the impracticability of the plaintiff's requests.
"The combination of the immediate and future monetary relief, along with the non-monetary benefits provided, constitutes a significant recovery," Nathan wrote in her opinion. "Ultimately, the Court is persuaded that determining how many infringements occurred or defining the exact size of the class at this stage would undermine the benefit of the settlement in reducing litigation burden. As noted, if Plaintiffs proceeded with litigation, it is far from clear that they would have been able to establish liability or damages - or damages as significant as the recovery established in the settlement."
Additionally, she noted that the group's decision to opt out of a settlement disqualified them from challenging the decision further, marking a big win for Spotify.
Again, not the greatest analogy to Musk, but it does again speak to Nathan's experience with high-profile cases, focused on much-discussed stocks.
SEC v. Anvil Partners, Inc.
Likely less high profile, but more pertinent to Elon Musk's case was Judge Nathan's ruling in the case of the Securities Exchange Commission v. Anvil Partners.
The judge ruled in late 2017 that the Buffalo, New York-based registered investment adviser Anvil Partners and its owner, president, and chief investment officer, Jeremy Beck, to be in civil contempt of court for not complying with the court's order enforcing a previously issued SEC investigative subpoena.
The case examined whether or not the firm inflated its assets under management in public filings, which subsequently came under subpoena. After failing to comply with the SEC's subpoena, Nathan ruled the firm in contempt of court and ordered Beck arrested and assigned hefty fines to the firm in early 2018.
Not the most heartening precedent for Elon.
SEC v. Benjamin Wey
In another SEC-involved case, Judge Nathan was more sympathetic to the defendant due to mitigating circumstances.
In a case against Chinese-American private equity tycoon Benjamin Wey, head of New York Global Group, the commission alleged that Wey typically structured reverse mergers between clients and publicly traded shell companies in such a way that he and other family members secretly obtained ownership interests of more than five percent of the newly listed companies.
It also alleged that he intentionally evaded regulation by hiding proceeds offshore, thus generating millions in illegal and untaxed profits.
Wey also had criminal charges brought against hm by the U.S. Department of Justice based on the actions.
Nathan ultimately ruled that prosecutors' case was built on overly broad and unconstitutional searches and dismissed the case, calling the searches "grossly negligent."
At the very least, she is not unfailingly sympathetic to the Feds in antifraud cases, such as the one in front of her with Musk.
How she decides in this case will be one to watch, but it certainly isn't her first rodeo and her leanings based on her relatively balanced decision history are far from certain.
