Effective Friday, users of Elon Musk’s X — formerly known as Twitter — can only file lawsuits against the social media platform in a federal district that includes North Texas, where a federal judge owns stock in Tesla.
As part of X’s updated terms of service that take effect Nov. 15, all disputes related to X must exclusively be brought in the Northern District of Texas or state courts in Tarrant County. All X users must agree to these terms to use the platform, and the contract will be governed by Texas laws.
Forum selection clauses like these are fairly common in contracts and are legal as long as the forum is reasonable, said David Taylor, a contract law professor at Southern Methodist University. Meta’s terms of service, for example, state users must bring any legal action against the company in the Northern District of California or a state court in San Mateo County.
Proponents say forum selection clauses provide efficiency and allow a company like X to handle a case in a forum in which it might know local lawyers and the procedures of the courts, Taylor said. Critics say it amounts to tipping the scales in one’s favor.
“What may raise some concern is the idea of a big company picking the forum that they like as compared to an individual who has really no negotiating power,” Taylor said. “It’s really a take-it-or-leave-it situation.”
While X announced earlier this year it would be relocating its headquarters from San Francisco to Bastrop, near Austin, that’s still not part of the Northern District of Texas, where it’s unclear if the company has any ties. That could be grounds for someone to legally challenge X’s rule as unreasonable or overreaching, Taylor said.
X also stipulates the company can bring legal action against users, “in any competent court in the country in which you reside that has jurisdiction and venue over the claim,” according to the new terms, which Taylor said could be another reason to challenge the legality of X’s terms of service.
Despite these concerns, Taylor said agreeing to a lengthy list of terms of service without reading them entirely doesn’t deter even his own students from using a certain app or website.
“Have I always read the terms of service for Facebook or X or whatever app I’m using? Probably not,” Taylor said. “And I teach contracts, right? So it’s just one of many terms.”
X did not respond to a request for comment on why it chose the Northern District of Texas and Tarrant County as its destinations for federal and state litigation.
The rule might also raise questions of forum shopping — the practice of filing suits in a venue more likely to provide a favorable outcome. Fort Worth has a mostly Republican judiciary and is home to a much smaller pool of federal judges, which includes U.S. District Judge Reed O’Connor.
O’Connor has presided over two lawsuits involving Musk and owns between $15,000 and $50,000 of stock in Tesla, where Musk is CEO, according to O’Connor’s most recent financial disclosure report covering 2023. NPR first reported O’Connor’s stock in the company.
The judge later recused himself without explanation from X’s lawsuit against the World Federation of Advertisers and member brands such as Unilever, in which O’Connor also holds stock. Unilever was dropped as a defendant in the lawsuit last month, The Washington Post firstreported.
How O’Connor’s ties to Tesla could affect his appearance of impartiality when it comes to cases involving X is a tougher question to answer, said Milan Markovic, a professor at the Texas A&M University School of Law with expertise in legal ethics.
“Certainly some people might think given that X and Tesla are wholly separate companies — notwithstanding the involvement of Musk — that there’s no problem here,” Markovic said. “But I know there are other ethicists who would probably say, ‘well, given the involvement of Musk in both companies, it would probably be a good idea for Judge O’Connor to recuse.'”
O’Connor is also presiding over Boeing’s plea deal agreement with the U.S. Department of Justice over two fatal Boeing airplane crashes, which had a hearing last month. Later, he asked the parties to explain how the DOJ’s diversity, equity and inclusion policies would play a role in the plea deal.
A spokesperson for the Northern District of Texas declined to comment. O’Connor did not respond to a request for comment when reached via his court deputy.
Judge Matthew Kacsmaryk of Amarillo, another Northern District of Texas judge, has also been named in criticisms of forum shopping. As the only judge in the district’s Amarillo division, his court has become a destination for lawsuits filed by Republican and conservative officials like Texas Attorney General Ken Paxton.
The U.S. Judicial Conference recommended in March that federal district judges change their case assignment processes to curb the practice of forum shopping, which Democratic Senate Majority Leader Chuck Schumer urged North Texas judges to do. But Chief Judge David Godbey of Dallas said after meeting to discuss it, judges within the district wouldn’t be adopting the Judicial Conference’s recommendations.
O’Connor separately criticized the Judicial Conference’s recommendations during a Federalist Society conference earlier this year.
As for Musk and X, Markovic said it’s unlikely the company or its owner will face legal consequences for the forum selection clause.
“You might think of it as maybe not a great way to treat your clients, customers,” Markovic said. “But it’s not unethical, certainly from the perspective of legal ethics.”