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Judge Sides with Twitter, Orders October Trial in Elon Musk Merger Lawsuit

— July 20, 2022

Attorneys for the Tesla C.E.O. had earlier asked the court to not schedule any trial before mid-February.

The Delaware Court of Chancery has ordered an October trial in Twitter’s lawsuit against Tesla C.E.O. and billionaire businessman Elon Musk.

As has reported before, Twitter recently followed through on its threat to take legal action against Musk.

Musk, a prolific Twitter, earlier this year circumvented securities guidance to acquire massive amounts of Twitter stock. According to Twitter, Musk failed to provide the necessary notification that he was—in effect—trying to take over the social media platform.

However, after Musk made his intent public, the Tesla founder has since expressed skepticism over the deal, indicating that he no longer wishes to follow through.

Twitter filed a lawsuit to pre-empt Musk’s likely withdrawal from the proposed merger.

ABC News reports that the Delaware court ordered an expedited trial on Tuesday, with arguments expected to commence in October.

Facebook and Twitter icons together on a smartphone screen; image by LoboStudioHamburg, via
Facebook and Twitter icons together on a smartphone screen; image by LoboStudioHamburg, via

Attorneys for Musk had protested the expedited timeline, saying they needed additional time to prepare.

“The reality is that delay risks irreparable harm [to Twitter],” attorneys for the social media platform told Court Chancellor Kathaleen McCormick on Tuesday.

Attorneys for both Twitter and Musk argued that the two sides had ulterior motives for pursuing their preferred timelines.

Twitter attorney William Savitt, of Wachtell, Lipton, Rosen & Katz, said that Musk was trying leverage his position against Twitter by delaying court proceedings.

“The company is faced with substantial increasing risk specifically by the overhanging of the merger agreement—and it’s by design,” Savitt said in court.

“Mr. Musk has been and remains contractually obligated to use his best efforts to close this deal,” Savitt added. “What he’s doing is the exact opposite of best efforts. It’s attempted sabotage.”

Musk had previously stated that he was inclined to withdraw from the merger agreement because Twitter allegedly refused to supply information how many “bot” accounts are active on the platform.

Musk’s representative, Andrew Rossman of Quinn Emmanuel Urquhart & Sullivan, pushed back against Twitter’s claims.

According to Rossman, Twitter seeks an expedited timeline to prevent Musk and his representatives from assessing the company’s estimate—provided in an S.E.C. filing—that less than 5% of its current, active accounts are operated by fraudulent users or bots.

“There’s no reason to try to do this in two months, except for one,” Rossman said. “The one reason is what Twitter wants to do is continue to shroud in secrecy the issue regarding their less than 5% spam and false accounts representation.”

“As long as is necessary to get this deal railroaded and force Mr. Musk to close,” he added.

Alex Spiro, another attorney for Musk, characterized Twitter’s recent motions as “desperate.”

“Twitter’s bid for extreme expedition rests on the false premise that the Termination Date in the merger agreement is October 24, glossing over that this date is automatically stayed if either party files litigation. By filing its complaint, Plaintiff has rendered its supposed need for a September trial moot,” Spiro wrote in a filing submitted to the Court of Chancery on Friday.

Twitter continues to contend that Musk is only backing out of the merger because he feels that acquiring Twitter would no longer serve his personal interests.

“Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests,” Twitter wrote in the original lawsuit. “Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.”


Judge orders October trial for lawsuit between Elon Musk and Twitter

Twitter trial against Elon Musk set for October

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