Judge orders trial in October for lawsuit between Elon Musk and Twitter
Tuesday’s hearing contained sharply worded arguments from both sides – including Twitter’s lawyer who at one point referred to Musk as a “committed enemy”[ads1]; – which set the stage for what will almost certainly be a controversial legal battle.
Twitter’s lead lawyer William Savitt came out and swung at Musk at the start of the hearing as he argued for a speedy trial. Savitt said the continued uncertainty hanging over the company from the outstanding deal and the lawsuit “inflicts damage on Twitter every day, every hour and every day.” He also pointed to what he described as Musk’s continued downgrading of Twitter, including on his own platform.
“Musk has been and remains contractually obligated to do its best to terminate this agreement,” Savitt said. “What he is doing is the exact opposite; it is sabotage.”
Musk lawyer Andrew Rossman pushed back, saying Musk “does not have an incentive to keep this going for long,” noting that the billionaire remains one of Twitter’s biggest shareholders. He also noted that Twitter did not sue Musk for his alleged breach of the agreement until after he moved to terminate the agreement, suggesting that the company’s waiting period invalidated the request for an expedition. (The judge in her comments said Twitter’s timing was not “unreasonable.”)
Musk’s team suggested that the dispute go to trial early next year. “We are not opposed to the expedition’s sentence, we are not asking for more years here,” Rossman said. “What we offer instead, Your Honor, is an incredibly fast and sensible schedule.”
After each side’s argument, the judge overseeing the case, Chancellor Kathaleen St. Jude McCormick of the Delaware Court of Chancery, said Musk’s side “underestimates this court’s ability … to deal quickly with complex cases.”
“The reality is that delay threatens irreparable damage [to Twitter] “the longer the delay, the greater the risk,” McCormick said in the announcement of the planning plan. She added that although few cases warrant a trial for longer than five days, she will receive a request from both sides to extend the trial. necessary.
Even with this early planning dispute, the stakes were high for Twitter. The company was already struggling to increase its user base and advertising business before Musk’s involvement, and now it and many other technology companies are pulling back on costs amid fierce inflation and fears of a recession. Twitter needs a quick solution to the battle with Musk to limit the uncertainty for its shareholders, employees and customers, and any consequences for the business that could be exacerbated by costly, lengthy lawsuits.
“There may be hints from what she asks and what she says, and what they say, during the hearing that may tell us something,” said Carl Tobias, a professor at the University of Richmond School of Law.
The case has already hit a chord: While the hearing was originally scheduled to take place in person, McCormick sent a letter to the two parties on Monday informing them that she tested positive for Covid-19 and wanted to move the hearing to Zoom.
Rossman on Tuesday called the idea that Musk’s concerns about robots a pretext for leaving the deal “nonsense”.
“We have reason to believe, based on what we have seen so far, that the real numbers [of bots and fake accounts on Twitter] is significantly higher [than Twitter has publicly reported]with huge implications for the long-term value of the company, “Rossman said. He added that Twitter’s claims that Musk was violating the agreement were” produced to try to deprive Mr. Musk of his rights claim that he could terminate the agreement. ”
Twitter has asked the court to force Musk to complete the deal to buy the company. While many legal experts say that Twitter probably has the stronger argument in the dispute, some also expect the company to end up settling with the billionaire if the case begins to drag out, in an attempt to reduce the disruption in the business.
As with the dispute in general, Twitter and Musk were far apart on whether they should have a speedy trial. In its motion, Twitter said the expedition is necessary to ensure that the deal can be completed before the “drop dead” date of October 24, with which the two sides previously agreed to end the deal, and to “protect Twitter and its shareholders from continuing. market risk and operational damage as a result of Musk’s attempt to bully itself out of an airtight merger agreement. ”
In a lawsuit Friday, Musk’s lawyers called Twitter called for an “extreme expedition” and claimed that the dispute is “extremely factual and expert-intensive, and requires considerable time for discovery.” They also claimed that the original agreement stated that the deadline would no longer apply if one of the parties sued the agreement, calling Twitter’s request “moot”, and requested that a 10-day trial period is scheduled for February 13, 2023 or later.
On Tuesday, Twitter’s lawyer pushed back Musk’s team’s claim that the discovery process would take months because it would require digging into the details related to the number of fines and fake accounts on the platform. The fine issue is “emphatically and clearly not before the court in this case,” Savitt said.
“Nothing in the merger agreement addresses that issue, there is no representation or guarantee in the merger that is related to how many fake accounts there may be on Twitter,” Savitt said. He added that “Musk could have been careful about this problem” before signing the agreement, but did not.
Despite Musk’s move to terminate the agreement, “we are committed to closing the merger on the price and terms agreed with Mr. Musk,” the Friday letter said. “Your vote at the special meeting is crucial to our ability to complete the merger.”