Lawyers for both Elon Musk and Twitter had their first chance to face off in court on Tuesday regarding whether or not the billionaire Tesla CEO should be forced to follow through with his $44 billion deal to buy the social media platform.
This Tuesday, Twitter and Elon Musk’s hearing over how soon their court case can go to trial took place. Twitter initially filed suit against Musk last week, just days after he announced that he would be terminating his $44 billion deal to purchase the social media company.
Twitter is filing a motion to expedite the court proceedings, requesting a four-day trial in September, a motion Musk and his legal team are opposing.
Twitter’s lead counsel William Savitt argued in favor of a speedy trial, stating that “the continued uncertainty hanging over the company from the outstanding deal and litigation inflicts harm on Twitter everyday, every hour and every day.”
“Musk has been and remains contractually obligated to use his best efforts to close this deal. What he’s doing is the exact opposite; it’s sabotage,” Savitt said.
Musk’s lawyer, Andrew Rossman, rebutted by stating that Musk “doesn’t have an incentive to keep this hanging for a long time, he remains one of Twitter’s largest shareholders. Twitter did not sue Musk over his alleged breaches of the deal until after he moved to terminate the deal, the company’s wait invalidates its desire for expedition.” Musk’s team is hoping to propose they go to trial early next year.
“We’re not opposing expedition full stop, we’re not asking for years here. What we’re offering instead, Your Honor, is an incredibly rapid and sensible schedule.”
Twitter has been struggling to build its user base and advertising business in recent months. Musk’s decision to terminate his deal has caused multiple shareholders to rethink their positions within the company. Tuesday’s hearing is mostly procedural, however, it will likely paint a picture of what this trial will look like whenever it does occur.
“There may be hints from what she [Delaware Court of Chancery chancellor Kathaleen St. Jude McCormick, the judge overseeing the case] 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.
Musk initially accused Twitter of breaching their deal by making misleading statements about the amount of bot and spam accounts on the platform. Musk alleged that Twitter was withholding data, and needed to “evaluate the scale of the issue” before going further in the deal, which eventually led to him terminating it completely.
Twitter replied with a 60-plus-page lawsuit that alleged it’s actually Musk who has violated the initial agreement, suggesting that Musk is using bots as a pretext to try to exit a deal that he wasn’t prepared to follow through with in the first place. Rossman replied by calling Twitter’s claims against Musk “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 what has been publicly reported, with enormous implications for the long-term value of the company.”
Rossman also added that Twitter’s claims against Musk are “manufactured in order to try to strip Mr. Musk of his rights claims that he can terminate the agreement.”
Twitter asked the court to help convince Musk to follow through with the deal. Twitter also said the “expedition for the trial is necessary to ensure the deal can be completed prior to the drop dead date of October 24,” which both Musk and Twitter previously agreed to close the deal by, and to “protect Twitter and its stockholders from the continuing market risk and operational harm resulting from Musk’s attempt to bully his way out of an airtight merger agreement.”
In a Friday court filing, Musk’s lawyers called Twitter’s request an “extreme expedition, the dispute is extremely fact and expert intensive, requiring substantial time for discovery. The original agreement stipulated that the drop-dead date would no longer apply if one party filed litigation over the deal.”
Musk’s legal team is requesting the trial be scheduled for on or after February 13, 2023.
Twitter’s lawyer pushed back on 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 bot and fake accounts on the platform. The bot question is emphatically and plainly not before the court in this case,” Savitt said.
“Nothing in the merger agreement turns on that question, there is no representation or warranty in the merger that is related to how many false accounts there may be on Twitter. Musk could have conducted diligence about this issue prior to signing the deal but did not,” Savitt argued.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
