Judge orders October trial for lawsuit between Elon Musk and Twitter

The decision came at the end of the first hearing in the case on whether or not to expedite the proceedings. When it filed suit last week, days after Musk wanted to end the deal, Twitter (TWTR) has submitted a request to speed up the procedure and requested a four-day trial in September. Musk’s legal team opposed the motion.

Tuesday’s hearing featured sharply worded arguments from both sides — including Twitter’s attorney who at one point referred to Musk as a “devoted enemy” — that set the stage for what will almost certainly be a controversial legal battle.

Twitter’s lead attorney, William Savitt, spoke out against Musk at the beginning of the hearing while advocating a speedy trial. Savitt said the lingering uncertainty the company hangs over the open deal and the lawsuits is “damaging Twitter every day, every hour, every day.” He also pointed out what he described as Musk’s continued disdain for Twitter, including on his own platform.

“Musk was and remains contractually obligated to do his utmost to close this deal,” Savitt said. “What he’s doing is the exact opposite: it’s sabotage.”

Musk attorney Andrew Rossman pushed back, saying Musk “has no reason to let this hang around for long,” noting that the billionaire remains one of Twitter’s largest shareholders. He also noted that Twitter did not sue Musk for his alleged breaches of the deal until after he ended the deal, suggesting that the company’s wait invalidated his desire for expedition. (The judge said in her comments that Twitter’s timing was not “unreasonable”.)

Musk’s team proposed to take the dispute to court early next year. “We’re not against the full stop of the expedition, we haven’t been asking for this for years,” Rossman said. “What we’re offering instead, Your Honor, is an incredibly fast and sensible schedule.”

After arguing by both sides, the judge overseeing the case, Kathaleen St. Jude McCormick, Chancellor of the Delaware Court of Chancery, said Musk’s side “underestimates this court’s ability … to handle complex lawsuits quickly.” .”

“The reality is that delay threatens irreparable harm [to Twitter] …the longer the delay, the greater the risk,” McCormick said in announcing the planning plan. She added that while few cases require a process longer than five days, she would grant a request from both sides to extend the process if necessary .

Even with this early scheduling dispute, the stakes were high for Twitter. The company struggled to grow its user base and advertising business before Musk got involved, and now the company and many other tech companies are cutting costs amid rampant inflation and fears of a recession. Twitter needs a quick solution to its battle with Musk to mitigate uncertainty for its shareholders, employees, and customers, and any consequences for his company that could be exacerbated by costly, lengthy lawsuits.

While Tuesday’s hearing was largely a procedural one, it offered a look at how both sides can approach what will likely be a messy litigation process. It can also give a glimpse of how the judge overseeing the case is approaching the disagreement.

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

The case already has a small glitch: While the hearing was originally scheduled to take place in person, McCormick sent a letter to the two sides on Monday warning them that she tested positive for Covid-19 and would move the hearing to Zoom.

Less than three months after the blockbuster acquisition agreement was signed, Musk decided to end the deal. He accused Twitter of violating the deal by making misleading statements about the number of bot and spam accounts on the platform, and allegedly withholding data that Musk says he needs to evaluate the extent of the problem.
The SEC has asked Elon Musk more questions about his Twitter deal
Twitter hit back last week in a 60-plus page lawsuit alleging it was Musk who violated the agreement. In the suit, Twitter suggested Musk uses bots as a pretext to try and close a deal that he now regrets the buyer, following the market downturn that tanked Twitter shares, as well as those of 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 a pretext to end 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] are significantly higher [than Twitter has publicly reported]with huge implications for the company’s long-term value,” Rossman said, adding that Twitter’s claims that Musk is violating the deal “are fabricated to try to rob Mr. Musk of his rights claim that he can terminate the agreement.”

Twitter has asked the court to force Musk to finalize the deal to buy the company. While many legal experts say Twitter likely has the stronger argument in the dispute, some also expect the company to eventually settle with the billionaire if the case begins to drag, in an effort to lessen the disruption to his business.

As with the dispute in general, Twitter and Musk were far apart on whether or not to have a speedy trial. In its motion, Twitter said the expedition is needed to ensure the deal can be completed before the October 24 “drop-dead” date, which the two sides previously agreed to close, and to “Twitter and protect its shareholders from the lingering market risk and operational harm from Musk’s attempt to work its way out of an airtight merger agreement.”

In a lawsuit on Friday, Musk’s lawyers called… Twitter’s request for an “extreme expedition” and claimed the dispute is “extremely fact- and expert-intensive, taking a long time to be discovered”. They also claimed that the original agreement stipulated that the drop-dead date would no longer apply if one party filed a lawsuit over the deal, calling Twitter’s request “moot”, and asked that a 10-day trial will be scheduled for on or after February 13, 2023.

Twitter’s attorney on Tuesday pushed back on Musk’s team’s claim that the discovery process would take months because it would require investigating the details regarding the number of bot and fake accounts on the platform. The bot question is “emphatically and clearly out of court in this case,” Savitt said.

“Nothing in the merger agreement addresses that question. There is no representation or warranty in the merger as to how many fake accounts there may be on Twitter,” Savitt said. He added that “Musk could have been diligent about this matter” prior to signing the deal, but did not.

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

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