Judge sets October trial for Elon Musk-Twitter lawsuit


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The decision was taken at the end of the first hearing on the issue of expediting the proceedings. When he filed the lawsuit last week, days after Musk decided to end the deal, Twitter (TVTR) filed a motion to expedite the proceedings and requested a four-day trial period in September. Musk’s legal team opposed the proposal.

At Tuesday’s hearing, strong-worded arguments from both sides were presented, including a Twitter lawyer once calling Musk a “nemesis,” setting the stage for what will almost certainly be a bitter legal battle.

Lead Twitter adviser William Savitt spoke out against Musk early in the hearing, advocating a speedy trial. Savitt said the ongoing uncertainty looming over the company due to the pending deal and litigation is “harming Twitter every day, every hour, every day.” He also pointed to what he called Musk’s continued snub of Twitter, including on his own platform.

“Musk was and remains contractually obligated to make every effort to close this deal,” said Savitt. “What he’s doing is the exact opposite, it’s sabotage.”

Musk’s lawyer Andrew Rossman countered, saying that Musk “has no incentive to keep this hanging for a long time,” noting that the billionaire remains one of Twitter’s largest shareholders. He also noted that Twitter did not sue Musk over his alleged breaches of the deal until after he decided to terminate the deal, suggesting that the company’s anticipation nullified its pursuit of the expedition. (The judge, in her comments, said that Twitter’s timing was not “unreasonable.”)

Musk’s team has proposed taking the dispute to court early next year. “We are not opposed to stopping the expedition completely, we are not asking for years here,” Rossman said. “In return, we offer, Your Honor, an incredibly fast and reasonable schedule.”

Following each side’s arguments, the judge in charge of the case, Delaware Chancery Chancellor Katalyn St. Jude McCormick, said that Musk’s side “underestimates this court’s ability … to handle complex lawsuits quickly.”

“The reality is that delay threatens with irreparable harm [to Twitter] … the longer the delay, the greater the risk,” McCormick said as she announced the schedule plan. She added that while few cases require a trial longer than five days, she will consider any party’s request for an extension of the trial if needed. .

Even with this early scheduling controversy, the stakes for Twitter were high. The company was already struggling to grow its user base and ad business before Musk’s involvement, and now it and many other tech companies are cutting costs amid rampant inflation and recession fears. Twitter needs a quick resolution to the Musk battle to limit uncertainty for its shareholders, employees and customers, and any impact on its business that could be exacerbated by costly and lengthy litigation.

While Tuesday’s hearing was largely procedural, it offered a glimpse into how each side might approach what is likely to be a convoluted lawsuit. It can also give an idea of ​​how the judge hearing the case is approaching. dispute.

“There may be hints that she is asking what she is saying and what they are saying during the hearing that they might tell us something,” said Carl Tobias, professor at the University of Richmond Law School.

The case has already run into a bit of a snag: while the hearing was originally scheduled to take place in person, McCormick sent a letter to both parties on Monday warning them that she tested positive for Covid-19 and that the hearing would be moved to Zoom. .

Less than three months after the blockbuster acquisition deal was signed, Musk decided to terminate the deal. He accused Twitter of breaking the deal by making misleading claims about the number of bots and spam accounts on the platform, as well as allegedly withholding data Musk said he needed to assess the extent of the problem.
Last week, Twitter launched a 60-plus page counterclaim alleging that it was Musk who violated the agreement. In a suit, Twitter suggested Musk is using bots as an excuse to try to get out of a deal that he now feels buyer remorse after a market downturn that wrecked Twitter shares as well as Tesla (TSLA)on which the billionaire relies in part to fund the deal.

Rossman on Tuesday called the idea that Musk’s concerns about bots are an excuse to get out of the deal “bullshit.”

“We have reason to believe, based on what we have seen so far, that the real numbers [of bots and fake accounts on Twitter] much higher [than Twitter has publicly reported]with huge implications for the long-term value of the company,” Rossman said. He added that Twitter’s allegations that Musk is violating the terms of the deal are “fabricated to try to deprive Mr. Musk of his rights to claim that he can terminate the deal.”

Twitter has filed a lawsuit to force Musk to complete the deal to buy the company. While many legal experts say Twitter likely has a stronger argument in the dispute, some also expect the company could end up settling with the billionaire if the case drags on to lessen the disruption to its business.

As with the controversy in general, Twitter and Musk were far apart on whether to pursue a speedy trial. In its proposal, Twitter said the expedition was necessary to ensure the deal could be completed before the “drop-dead” October 24 date by which both parties had previously agreed to close the deal, as well as to “protect Twitter and its shareholders from ongoing market risk and operational risk.” damage from Musk’s attempt to break out of the hermetic merger deal.”

At Friday’s court hearing, Musk’s lawyers called Twitter requested an “emergency expedition” and stated that the controversy is “extremely packed with facts and experts, requiring considerable time to discover.” They also said the original agreement stipulated that the rebuttal date would no longer apply if one of the parties filed a lawsuit over the deal, calling Twitter’s request “controversial” and asked that The 10-day trial will be scheduled on or after February 13, 2023.

A Twitter lawyer on Tuesday dismissed Musk’s team’s claim that the discovery process would take months as details related to the number of bots and fake accounts on the platform would need to be looked into. According to Savitt, the bot issue is “categorically and clearly not in court in this case.”

“Nothing in the merger agreement addresses this issue, there are no assurances or guarantees in the merger related to how many fake Twitter accounts can be,” said Savitt. He added that “Musk could have carefully looked into this matter” before signing the deal, but did not.

In the meantime, Twitter continues to take the steps necessary to proceed with the acquisition. On Friday, the company sent out a letter to shareholders inviting them to vote on the deal to sell Twitter to Musk at $54.20 a share outstanding at a special meeting on an undisclosed date and time later this year, according to a regulatory filing. Twitter’s board had previously unanimously recommended that shareholders vote in favor of the deal, a position confirmed in the letter.

Despite Musk’s decision to terminate the deal, “we intend to complete the merger at the price and terms agreed with Mr. Musk,” the letter said Friday. “Your vote at the special meeting is critical to our ability to complete the merger.”

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