Musk asked the judge to move the trial out of San Francisco because of negative media coverage of the case.
Less than two weeks before the trial was scheduled to begin, Musk's lawyers filed a motion to move it to the federal court in Texas. The capital of the state of Austin is in that district.
The shareholder lawsuit is related to Musk's announcement in August of last year that he had enough financing to take the company private.
Judge Edward Chen ruled in favor of the shareholders when it came to Musk's statements.
If moving the trial isn't possible, Musk's lawyers want it postponed until negative publicity about the billionaire's purchase ofTwitter dies down
Alex Spiro said in a court filing that the local media had saturated the district with biased and negative stories about Musk. Spiro wrote that the news items blamed Musk for the recent layoffs at Twitter and that the job cuts may have violated laws.
The shareholders' attorneys said that Musk's concerns are unwarranted and his motion is meritless.
The lawsuit has been going on in the Northern District of California for over four years, according to the lawyer.
According to a filing by Musk's attorneys, the company has laid off about 1,000 people in the San Francisco area.
A lot of the jury pool is likely to hold a personal and material bias against Mr. Musk as a result of recent layoffs at one of his companies.
The mayor of San Francisco criticized Musk for the job cuts.