Elon Musk and Twitter dispute: Judge orders October trial with lawsuit over litigation agreement

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CNN Business
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In an early victory for Twitter, a judge on Tuesday ruled that the company’s lawsuit against Elon Musk due to $44 billion acquisition The agreement must go to a five-day trial in October.

The decision came at the end of the first hearing in the case regarding expediting the proceedings. When the lawsuit was filed last week, days after Musk moved to close the deal, Twitter

(TWTR) Submit a request to expedite procedures and He requested a four-day trial in September. Musk’s legal team opposed the proposal.

Tuesday’s hearing was marked by hard-hitting arguments from both sides – including a Twitter lawyer at one point referring to Musk as a “committed enemy” – setting the stage for what is almost certain to be a contentious legal battle.

Twitter’s senior adviser William Savitt came out against Musk at the start of the hearing as he argued in favor of a speedy trial. Savit said the company’s ongoing uncertainty over the deal and pending litigation is “damaging Twitter every day, every hour, every day.” He also noted what he described as Musk’s continued disdain for Twitter, including on his own platform.

“Musk was and remains contractually obligated to do everything in his power to complete this transaction,” Savitt said. “What it does is just the opposite; it is sabotage.”

Musk’s attorney, Andrew Rossman, responded by saying that Musk “has no incentive to maintain this suspension for long,” noting that the billionaire remains one of Twitter’s largest contributors. He also noted that Twitter only sued Musk over his alleged violations of the deal after he moved to close the deal, suggesting that waiting for the company negated its desire for the expedition. (The judge said in her comments that the timing of Twitter was not “unreasonable.”)

Musk’s team suggested that the dispute should be tried early next year. “We are not opposed to a complete cessation of the expedition, nor are we asking for years here,” Rossman said. “What we are offering instead, Your Majesty, is an incredibly fast and reasonable schedule.”

After each side’s argument, the judge overseeing the case, Delaware Court Counsel Kathleen St. Judd McCormick, said Musk’s side “underestimates this court’s ability … to handle complex litigation quickly.”

The truth is that delay threatens to do irreparable harm [to Twitter] Announcing the scheduling plan… the longer the delay, the higher the risks,” McCormick said. She added that while there are few cases that warrant a trial longer than five days, she will receive a request from either side to extend the trial if necessary.

Even with this early disagreement over dates, the stakes were high for Twitter. The company was already struggling to grow its user base and advertising business before Musk’s involvement, and now it and several other tech companies are pulling back on costs amid rampant inflation and fears of a recession. Twitter needs a quick fix to the battle with Musk in order to reduce uncertainty for its shareholders, employees and customers, and any fallout for its business could be exacerbated by costly and protracted litigation.

Although Tuesday’s session was largely procedural, it provided a look at how each side is dealing with what is likely to be Chaotic litigation process. It may also provide a glimpse into how the judge supervising the case will approach the case dispute.

“There may be hints of what you ask and what you say, and what they say, during the hearing, that might tell us something,” said Carl Tobias, a professor at the University of Richmond Law School.

The case has already hit a small snag: While the hearing was originally scheduled in person, McCormick sent a letter to the parties on Monday alerting them that she tested positive for Covid-19 and will move the hearing to Zoom. .

Less than three months later Hot Deal Signed, Musk Skip to finish the agreement. Twitter has been accused of breaching the deal by making misleading statements about the number of bot accounts and spam on the platform, and by allegedly withholding data Musk says he needs to assess the extent of the problem.

Twitter responded last week in a more than 60-page lawsuit alleging that Musk had violated the agreement. In the lawsuit, Twitter suggested a mask He uses bots as an excuse to try and exit a deal where he now feels remorse on the part of the buyer, in the wake of a market downturn that has hurt Twitter shares, as well as Tesla shares.

(TSLA)which the billionaire relies on in part to finance the deal.

Rossman on Tuesday called the idea that Musk’s concerns about robots were an excuse to get out of the deal “nonsense.”

“We have reason to believe, based on what we’ve 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 violated the deal “were manufactured in order to attempt to strip Mr. Musk of his rights claim that he could terminate the agreement.”

Twitter asked the court to compel Musk to complete the deal to buy the company. While many legal experts say Twitter probably has the strongest argument in the dispute, some also expect the company to end up in a settlement with the billionaire if the case starts to spill over, in an effort to limit disruption to its business.

As with the controversy in general, Twitter and Musk were at odds over whether a speedy trial should take place. Twitter said in its movement that the campaign is necessary to ensure the completion of the deal before the October 24 date when the two sides previously agreed to close the deal, and to “protect Twitter and its shareholders from continued market risks and operational damages resulting from Musk’s attempt to bully his way out of an airtight merger agreement.”

In Friday’s court filing, Musk’s lawyers called Twitter asked for a “maximum expedition” and claimed the dispute is “very real and requires a lot of experts, and takes a significant amount of time to figure it out.” They also claimed that the original agreement stated that the final delivery date would not be in effect if one of the parties sued over the deal, calling Twitter’s request an “argument,” and that A 10-day trial is scheduled on or after February 13, 2023.

Twitter’s lawyer on Tuesday rejected Musk’s team’s claim that the discovery process would take months because it would require digging into details about the number of bot and fake accounts on the platform. Savit said the robot’s question “is not conclusively and clearly before the court in this case.”

“There is nothing in the merger agreement that diverts this question, and there is no representation or guarantee in the merger as to how many false accounts there may be on Twitter,” Savit said. He added that “Musk could have done his best on this issue” before signing the deal, but he did not.

In the meantime, Twitter continues to take the necessary steps to follow through with the acquisition. The company on Friday sent a letter to shareholders inviting them to vote on a deal to sell Twitter to Musk for $54.20 per outstanding share at a private meeting on an undisclosed date and time later this year, according to regulatory deposit. Twitter’s board of directors previously unanimously recommended that shareholders vote in favor of the deal, a position it reiterated in the letter.

Despite Musk’s move to terminate the deal, “we are committed to closing the merger on the price and terms agreed with Mr. Musk,” the Friday letter said. “Your vote at the private meeting is critical to our ability to complete the merger.”