delaware court of chancery – Techdirt (original) (raw)

Vindictive Nonsense: Tesla Threatens To Fire Law Firm Over Expert’s Amicus Brief

from the thus-proving-the-point dept

It’s no secret that Elon Musk can be petty and vindictive over the dumbest shit. You may have heard that he fired the entire Supercharger team a few weeks ago entirely due to him getting upset at what the woman who led that team told him (he’s now scrambling to try to rehire the team he fired — another thing that’s happened before).

Sometimes it gets even sillier. You may recall a couple of years ago when Tesla demanded that law firm Cooley LLP fire a lawyer who happened to have worked at the SEC back when Elon was fined for tweeting about his supposed plans to take the company private.

Pressuring law firms is apparently becoming a pattern.

Charles Elson, a retired Finance Professor at the University of Delaware, is a well-recognized authority on corporate governance issues. And it seems that Elon is terrified he might give his opinions to the Delaware Court of Chancery that is handling his compensation lawsuit.

In the past, I’ve explained how this whole lawsuit doesn’t make that much sense to me. It’s one case where I think Elon’s argument is actually entirely plausible. I wouldn’t vote in favor of his $55 billion pay package, but I can see why some people might not find it problematic. But, it seems that Elon is really, really scared about losing that payday. Hell, Tesla, which is famous for not advertising anything, is advertising to shareholders to tell them to vote to reinstate Elon’s pay package.

Still, even if I find the lawsuit a bit perplexing, it seems that Musk wants to handicap the opposition.

Elson filed one hell of a motion, asking for leave to file his expected amicus brief, noting that the Musk Team started playing hardball to try to force him not to file.

Professor Elson, a leading authority on corporate law, moves for leave to submit a second proposed amicus curiae brief in this action. Professor Elson previously submitted an amicus brief concerning the development and goals of equity-linked executive compensation during the post-trial briefing stage of this action, which the Court found “persuasive.” Professor Elson now writes to provide the Court with additional context and analysis in connection with the Tesla Board’s unprecedented attempt to seek a post-trial stockholder vote to ratify the Award.

Additional context, you say? What sort of context? Perhaps some of it has to do with how badly Elon doesn’t want Elson to say anything.

It’s pretty typical for parties to consent to amicus briefs being filed as a matter of course. Even if they know the briefs will challenge or disagree with their arguments. It’s just professional courtesy, and courts expect it. Opposing efforts to file an amicus brief can raise eyebrows. And Tesla went all in trying to block Elson:

Plaintiff consents to this motion. Defendants do not and Musk was willing to go to extraordinary—and appalling—lengths to prevent this Court from reading the Brief.

Early Friday morning, Professor Elson’s counsel emailed a copy of the Brief to counsel for the parties, asking whether they would consent to a motion for leave to file it. Plaintiff’s counsel responded that they did not oppose its submission. Tesla’s counsel from DLA Piper telephoned Professor Elson’s counsel to assert, without further explanation, that Professor Elson “may have a conflict” and asked counsel to hold off on filing the brief.

Soon after, Professor Elson received an email from Holland & Knight LLP, a law firm with which Professor Elson had a consulting relationship. Holland & Knight informed Professor Elson that the firm represents Tesla in certain unrelated matters and that Tesla had threatened to fire Holland & Knight if Professor Elson submitted this amicus brief.

The assertion that Professor Elson was conflicted is risible—which is presumably why Tesla’s then-counsel raised no objection when Professor Elson submitted his prior amicus brief in this matter. The rules of professional conduct prevent a lawyer from representing a client if the representation of one client will be directly adverse to another client. None of those elements was present here:

I mean, all of this is incredible. The threat. The weak ass claims of a “conflict.” But, most of all, the very fact (as Elson points out) that his argument is actually in support of Tesla which benefits by not having to give out this massive pay package if Elon loses.

To avoid having his professional associates suffer because of Elon’s petty vindictiveness, Elson chose to resign from Holland & Knight, “ending a relationship of nearly thirty years.”

This is doubly ridiculous given all of the conflicts that Elon has between his various companies, and the fact that he’s been claiming that he “deserves” this $55 billion pay package for all his hard work. Does Elson not then deserve to continue his relationship with H&K for all of his work? Of course not. The primary motive of everything Elon is “what benefits Elon?”

And, of course, the whole thing acts as a kind of Streisand Effect highlighting the key point that Elson was trying to raise. Tesla and Elon’s interests are averse here, yet the company is acting as if they’re aligned, which at least gives pretty strong credence to the idea (at the heart of the lawsuit) that the board is focused on helping Musk, rather than looking out for Tesla’s best interests.

The Court should have no illusions about what happened here. The frivolous assertion of a conflict was a fig leaf for Musk, acting through Tesla, to try to bully a law professor by making a serious economic threat to a law firm with which the professor had a consulting relationship. This is not the first time that Tesla has threatened to fire a law firm for employing someone who annoyed Elon Musk by doing his job. That it did so again here only emphasizes the correctness of the Court’s conclusion that Musk controls Tesla

And, of course, it’s giving everyone yet another glimpse into the ways in which Musk will let any slight turn him into a vindictive asshole.

Meanwhile, at the very end of the week, Tesla filed with the court to “reject the amicus’s motion that it is ‘appalling’ or ‘bullying…” but still admitting that they did, in fact, everything that Elson said, though they claim they were just raising “a potential conflict issue.”

Um. No. Again, Elson’s brief was on behalf of Tesla suggesting that they shouldn’t have to pay Musk his huge compensation. If there’s any “potential conflict issue” here, it seems to be on the lawyers ostensibly representing “Tesla” but instead advocating for something that would harm Tesla, while benefiting Elon Musk.

Filed Under: amicus brief, charles elson, compensation, delaware court of chancery, elon musk, threats
Companies: holland & knight, tesla

Would You Trust A Cryptocurrency Whose Operator Sues Journalists For Reporting On Lawsuits Calling You A Scam?

from the slapp-silly dept

In the fall of 2022 an apparent investor in a cryptocurrency called “Bitcoin Latinum” sued the guy behind the currency, Donald Basile. You can see the whole case here. There has been a bunch of back and forth on the docket, but it appears the remaining parties at some point went to binding arbitration.

Soon after the lawsuit was filed, Cyrus Farivar, one of the best tech reporters around, working for Forbes, wrote a pretty straightforward article about the lawsuit, entitled, “A Cryptocurrency Named After The Fictional Money In Star Trek Is ‘Worthless’ And ‘A Scam,’ New Lawsuit Alleges.”

The article gives a pretty standard summary of what the lawsuit claimed, and also presented the side of the “Latinum” folks including a quote from the company. Given that the word “Latinum” apparently comes from a currency in Star Trek, and one of the claims in that original lawsuit, by Arshad Assofi, was that Basile had said “Bitcoin Latinum was a project that received $20 million from the producers of Star Trek,” it was only natural for Farivar to ask Paramount about this and get this response:

“No one is familiar with this claim or with this ‘Bitcoin Latinum,’” emailed Jennifer Verti, a Paramount spokesperson. “This is not something that Star Trek is officially involved in at all.”

In the article, Farivar also quoted SEC boss Gary Gensler saying that the crypto world is “rife with fraud, scams, and abuse.” That quote is also straight from Assofi’s complaint. Farivar also made the very factual statement: “The world of cryptocurrency is awash with scammers and companies that don’t have actual products.”

For whatever reason, the corporate entity behind this Latinum thing, GIBF GP, Inc., waited a year and a quarter then last week decided to sue Farivar in the Delaware Court of Chancery, in a ridiculously silly SLAPP suit that only serves to drive that much more scrutiny on Bitcoin Latinum. And, really, it should make everyone question whether or not you’d trust a cryptocurrency that is suing a reporter who merely quoted the lawsuit against them.

In a separate move, it appears the same company has also sued Poker.org and its reporter Haley Hintze over an article she wrote almost exactly two years ago about a different lawsuit that was filed over Latinum. Except, bizarrely, the complaint against Hintze seems to claim that her article was about the Assofi lawsuit, when… it’s not. It’s about a different lawsuit. Also, the Hintze article appears to have been written nine months before Assofi filed his lawsuit.

I’m pretty confused by all this. The lawsuit admits that Hintze’s article was written in February of 2022, and then… that Assofi filed his lawsuit in November:

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Time? How does it work. Also, again, the Hintze article doesn’t mention Assofi at all, because he hadn’t yet filed his lawsuit.

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It appears that Latinum’s lawyer actually meant to sue over a different Poker.org article, that was published in November about the Assofi lawsuit, but repeatedly claims that the article was published on February 5, 2022, rather than the actual publication date of the article she meant, which was November 21, 2022. Also, Latinum’s lawyer included the February 5th article as the exhibit, rather than the November 21st article. Such attention to detail to talk about the wrong article and include the wrong article as an exhibit. Top notch lawyering.

And, like, the date matters. The statute of limitations for defamation in Delaware, where the cases were filed, is two years. Which means that the original Hintze article, published on February 5th 2022, was already passed the statute of limitations when Latinum sued, claiming to be suing over that article, on February 7th, 2024. Great lawyering work. Just amazing. (For what it’s worth the profile of the lawyer who filed both of these terrible cases claims her expertise is in “estate planning and probate,” which is…. not defamation.)

Speaking of defamation, according to the excellent folks at Chancery Daily, for the most part, libel and defamation are not within the Court of Chancery’s jurisdiction. There are a few very narrow exceptions, that do not appear to have been met here.

Back to Farivar’s case. It’s a clear SLAPP case. Again, Farivar was writing about a filed lawsuit, quoting what that lawsuit said, and making a general truthful statement about the prevalence of scams in the cryptocurrency world. The complaint also says that it’s defamatory because Farivar refers to Latinum as a “fictional” currency in the Star Trek universe. Which… it is?

Notably, Latinum sued Farivar individually, and not his publisher, Forbes, which is also common in many SLAPP lawsuits, where plaintiffs looking to silence reporters will sue the reporters individually rather than the publishers, perhaps hoping that the publisher won’t be able to cover the cost of fighting the lawsuit. It’s also weird because the remedies sought in the lawsuit include demanding that Farivar “remove” the article, which he might not even be able to do as an employee of Forbes.

There are a bunch of other potential problems with the lawsuit. It fails to even mention actual malice, let alone plead how Farivar published his article with actual malice. It tries to pretend that the Delaware jurisdiction is proper based on a very barebones claim that Farivar “regularly does or solicits business, engages in other persistent courses of conduct in the State….” That’s not how that works.

The complaint also admits that both Latinum’s founder, Basile, who is listed as a plaintiff, and Farivar are based in California, which is a good reason to point out that California (with is strong anti-SLAPP laws) are the proper venue for this suit. There’s also an oddity of stating that the allegedly defamatory comments resulted in “damages to their reputation and trade, in an amount well in excess of $75,000.00,” which is… the number you would need to claim damages for getting the case into federal court under diversity jurisdiction, but is irrelevant here in the Court of Chancery, which we already noted almost certainly does not have jurisdiction for a wide variety of reasons.

And, I almost forgot to mention that the fair report privilege exists, and protects journalists from liability for reporting on public documents, such as a lawsuit. While not all states recognize fair reporting, Delaware absolutely does.

I’m sure Basile is unhappy with the Assofi lawsuit, and with it, the news coverage. But that’s how this works. If you get sued, people will write about the lawsuit. It’s not defamatory to do so, even if you don’t like how they covered it. But, also, if you then go and sue reporters for covering your lawsuit with sloppily written complaints, it’s only going to drive that much more scrutiny of whatever it is you’re trying to sell.

There’s always a point where you can stop digging, and if Basile wants to stop digging, it would be wise to dismiss both of these lawsuits, apologize to the reporters, and just focus on whatever thing he wants to build. If he disagrees with Assofi’s claims, he can just say that. He doesn’t need to sue reporters.

Anyway, this is yet another reminder that we need a federal anti-SLAPP law, along with strong anti-SLAPP laws in all 50 states.

Filed Under: anti-slapp, bitcoin latinum, california, cyrus farivar, defamation, delaware, delaware court of chancery, haley hintze, slapp
Companies: forbes, gibf gp, latinum, poker.org

I Remain Confused By The Ruling On Elon Musk’s Compensation Package

from the it's-a-crazy-plan,-but-not-nefariously-so dept

There are a number of people, both those who agree with me and those who disagree with me, who seem to think I have some sort of personal dislike of Elon Musk. That’s not true. I find it amazing that he gets away with some of the stuff he gets away with, and I am perplexed at why anyone thinks he “supports free speech,” when he clearly does not. I also have pointed out the many times he seems to make counterproductive decisions at ExTwitter.

But most of that is because I wish he wasn’t making those mistakes. I wish he actually would improve ExTwitter and fix many of the problems the old Twitter obviously had. I also think that while his role in his various other companies has been exaggerated at times, he absolutely deserves some amount of credit for jumpstarting the electric vehicle market, as well as the private space flight market (I’m a bit less sure about his role changing the “underground tunnel” market or the “brain implant market” but we’ll see).

And while I’ve seen a bunch of folks cheering on the Delaware Court of Chancery decision that may deprive him of $55.8 billion worth of his wealth… I’m somewhat confused by the ruling.

The ruling is an astounding 200 pages (exactly) and I didn’t write about it immediately because I wanted to read the whole thing (and because I believe in the value of “slow news” and taking our time to understand things). So I read the whole thing and… I’m left scratching my head. It doesn’t make sense to me.

Now, lots of people can have reasonable opinions on excessive CEO compensation, and I don’t disagree with any of that. And people can have reasonable opinions that no one human being should be paid $55.8 billion for anything. And I also might agree with that. But I still don’t see what was particularly egregious in this compensation package in a manner that harmed anyone.

The case was brought by Richard Tornetta — who every news org has to tell you is a thrash metal drummer who only held nine shares of Tesla stock. So the argument that he was harmed by Musk’s compensation package seems questionable.

On top of that, much of the opinion revolves around the fact that Tesla’s board is very, very closely tied to Musk and unlikely and unwilling to be adversarial to him. From the very opening of the ruling:

The process leading to the approval of Musk’s compensation plan was deeply flawed. Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf. He had a 15-year relationship with the compensation committee chair, Ira Ehrenpreis. The other compensation committee member placed on the working group, Antonio Gracias, had business relationships with Musk dating back over 20 years, as well as the sort of personal relationship that had him vacationing with Musk’s family on a regular basis. The working group included management members who were beholden to Musk, such as General Counsel Todd Maron who was Musk’s former divorce attorney and whose admiration for Musk moved him to tears during his deposition. In fact, Maron was a primary gobetween Musk and the committee, and it is unclear on whose side Maron viewed himself. Yet many of the documents cited by the defendants as proof of a fair process were drafted by Maron.

Given the collection of people tasked with negotiating on Tesla’s behalf, it is unsurprising that there was no meaningful negotiation over any of the terms of the plan. Ehrenpreis testified that he did not view the negotiation as an adversarial process. He said: “We were not on different sides of things.” Maron explained that he viewed the process as “cooperative” with Musk. Gracias admitted that there was no “positional negotiation.” This testimony came as close to admitting a controlled mindset as it gets. And consistent with this specific-to-Musk approach, the committee avoided using objective benchmarking data that would have revealed the unprecedented nature of the compensation plan.

In credit to these witnesses, their testimony was truthful. They did not take a position “on the other side” of Musk. It was a cooperative venture. There were no positional negotiations. Musk proposed a grant size and structure, and that proposal supplied the terms considered by the compensation committee and the board until Musk unilaterally lowered his ask six months later. Musk did not seem to care much about the other details. They got ironed out.

But… none of this was particularly secret. It’s widely known, and widely discussed publicly, that the board of Tesla are a bunch of Elon cronies who, basically, are happy to grant him whatever he wants. There are plenty of news articles about this going back years. Here’s a Barron’s piece from 2017. And a CBS piece from 2018. There are lots more.

The point is: if you were investing in Tesla, you should have done some pretty basic due diligence to know that the board was close to Musk, and if you didn’t like it… don’t invest?

The fact that the negotiation over the compensation package wasn’t that adversarial… doesn’t seem like a bad thing either. Yes, the board should be looking out for the interests of the shareholders, but that includes not making the relationship between the board and the CEO untenable. And it’s not like they just handed out a bunch of cash to Musk, rather they created a plan that was incredibly ambitious. To hit the targets that freed up that 55.8billion,itrequiredhimtoincreasethevalueofthecompanyfromaround55.8 billion, it required him to increase the value of the company from around 55.8billion,itrequiredhimtoincreasethevalueofthecompanyfromaround50 billion to $650 billion, and hit other growth milestones as well.

In defense of the historically unprecedented compensation plan, the defendants urged the court to compare what Tesla “gave” against what Tesla “got.” This structure set up the defendants’ argument that the compensation plan was “all upside” for the stockholders. The defendants asserted that the board’s primary objective with the compensation plan was to position Tesla to achieve transformative growth, and that Tesla accomplished this by securing Musk’s continued leadership. The defendants offered Musk an opportunity to increase his Tesla ownership by about 6% (from about 21.9% to at most 28.3%) if, and only if, he increased Tesla’s market capitalization from approximately 50billionto50 billion to 50billionto650 billion, while also hitting the operational milestones tied to Tesla’s top-line (revenue) or bottom-line (adjusted EBITDA) growth. According to the defendants, the deal was “6% for $600 billion of growth in stockholder value.”

And the company hit those targets under his leadership. Say whatever you want about Musk or Tesla (or its cars), but that’s just impressive. There certainly was no guarantee that Tesla would hit any of those milestones, and many people believe that the company remains massively overvalued. But the company did hit those milestones.

Reading through the entire opinion, there’s nothing in there that really suggests nefariousness, or even self-dealing. As silly as it may be, the board really did (and mostly still does) seem to believe that Musk is some sort of uber genius and super important to the future of Tesla. And they wanted him compensated accordingly. And it appears all of that went into the thinking behind the compensation package and how it was presented to shareholders.

While there were some worries early on about the speed with which Musk was pushing to ink the compensation plan, things actually slowed down at Musk’s request, where he admitted he wanted to spend more time focused on getting the Model 3 shipping to scale. Later on Musk himself noted (correctly!) that the proposal “should come across as an ultra bullish view of the future, given that this comp package is worth nothing if ‘all’ I do is almost double Tesla’s market cap.” And… that’s true.

Over and over throughout the negotiations, the discussion and considerations being reviewed seemed… pretty normal, once you get past the size. They were looking at rewarding Musk (who it could rightly be said was a big part of promoting Tesla to the world) for massively growing the company at a moment when it wasn’t at all clear the company would (or even could) grow to match those numbers.

It’s also not like there weren’t credible and public critics of the plan, which should have alerted shareholders to concerns about it:

The two largest proxy advisors, ISS and Glass Lewis, both recommended voting against the 2018 Grant.

Glass Lewis expressed concern with the size and potential dilutive effect of the grant, noting that “any relative comparison of the grant’s size would be akin to stacking nickels against dollars[]”and that “the lower tiers of the goals are relatively much more attainable given the time periods in question, potentially allowing for sizable payments without commensurately exceptional achievement.”

ISS described the grant value as “staggering” and concluded that even the “challenging” and “far-reaching performance goals do not justify the extraordinary grant magnitude[.]” In an internal email, ISS noted that it “steered clear of getting too deep into this[]” because “making that argument essentially puts us in the situation of saying Tesla’s board is not strong enough to stand up to Musk[.]”

Also, both recommendations expressed concern with Musk’s non-Tesla interests, although Glass Lewis stated that “Musk’s extracurricular exploits undoubtedly contribute to his value to the Company[.]”

Stockholders also criticized the Grant, noting that Musk’s Tesla equity provided sufficient motivation for Musk to perform, the Grant’s size and dilutive effects were excessive, the EBITDA milestones were too low, and that linear milestones were inappropriate for an “exponential company” like Tesla.

Again, all of this suggests to me that shareholders who didn’t like the compensation plan should have been fully aware of the concerns, and could have voted against it, or, if the plan was approved, could easily sell their shares and move on.

Separately, the opinion has some odd paragraphs, such as this one:

Events relevant to evaluating the fairness of the Grant occurred after stockholders approved the Grant. Namely, Tesla disclosed that several Grant milestones were greater than 70% probable of achievement, nearly all the tranches vested, Musk got in trouble with the SEC, named himself Technoking, and acquired Twitter, Inc.

While it’s true that having the grant milestones be probable seems relevant, I’m not at all clear why any of the other things are relevant to the Tesla compensation package. While they all do represent ways in which he did some crazy shit that could impact Tesla, if it impacted Tesla negatively, it seems that it would be reflected in not reaching the milestones in the compensation agreement, and thus, it shouldn’t be an issue.

And so, in the end, while the process seems a bit sleazy, there’s nothing that I can see indicating that any shareholders were mislead in a material way that damaged their own interests. Indeed, given the very high bars Tesla needed to reach (including in terms of overall valuation), it seems that the shareholders have done very well, even if their equity was slightly diluted by Musk getting more shares.

Either way, I have no idea where any of this goes, as Musk will appeal it. Musk also is making himself look a bit foolish in pretending that this is somehow a “Delaware” issue. The whole reason such a huge percentage of companies incorporate in Delaware is because the state (and the Court of Chancery) are somewhat infamously friendly to companies. I mean, this is just silly whining:

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Of course, since then Musk has actually started to make moves to transfer Tesla’s incorporation to Texas. And we’ll see what happens. If investors are truly upset about the compensation package, they can reject it. If they’re not and they agree to move it to Texas, it again raises questions as to how harmful this package really was to shareholders?

Again, there are lots of things that I think Musk does wrong, and lots of decisions he makes that I think are highly questionable. But reading through all of the details, I’m surprised at the outcome of this case, and don’t see how any actual Tesla shareholders were materially misled or harmed.

Filed Under: board, compensation, delaware, delaware court of chancery, elon musk, shareholders
Companies: tesla

Musk’s About Face: Tells Twitter He’s Now Planning To Move Forward With The Purchase

from the dafuq? dept

So this was unexpected (well, perhaps not that unexpected) but Elon Musk sent a letter to Twitter last night stating he now intends to move ahead with the original deal to buy Twitter, with no changes to the terms.

Gentlemen:

On behalf of X Holdings I, Inc., X Holdings II, Inc. and Elon R. Musk (the “Musk Parties”), we write to notify you that the Musk Parties intend to proceed to closing of the transaction contemplated by the April 25, 2022 Merger Agreement, on the terms and subject to the conditions set forth therein and pending receipt of the proceeds of the debt financing contemplated thereby, provided that the Delaware Chancery Court enter an immediate state of the action, Twitter v. Musk, et al…. (the “Action”) and adjourn the trial and all other proceedings related thereto pending such closing or further order of the Court.

The Musk Parties provide this notice without admission of liability and without waiver of or prejudice to any of their rights, including their right to assert the defenses and counterclaims pending in the Action, including in the event the Action is not stayed, Twitter fails or refuses to comply with its obligations under the April 25, 2022 Merger Agreement or if the transaction contemplated thereby otherwise fails to close.

Separately, Musk filed with the SEC about the letter he had sent.

What does this all mean? Well… there’s a shit ton of speculation, but not much is actually known.

This does make it significantly more likely that Musk will in fact own Twitter outright in the very near future. But it’s not a sure thing. Some are arguing that it’s just another stall tactic, which it could be — but if that’s true, Chancellor McCormick seems likely to rip Elon’s brain out of his skull and forcefeed it to him (metaphorically speaking).

I joked that he was paying 44billiontoavoidmoreofhisembarrassingtextmessagesfromcomingoutinthediscoveryprocess.Butafewpeoplesuggestedtheremightactuallybesomethingtothat:mainlyinthathewasgettingpressurefromhisfriendsandfinancierstomakethisgoawaysotheydon’tgetfurtherembarrassed.Thatcouldbe,buthonestly,ifthatwerethecase,I’dthinkhe’dhavebeenbetteroffofferingtosettlewithTwitterfor44 billion to avoid more of his embarrassing text messages from coming out in the discovery process. But a few people suggested there might actually be something to that: mainly in that he was getting pressure from his friends and financiers to make this go away so they don’t get further embarrassed. That could be, but honestly, if that were the case, I’d think he’d have been better off offering to settle with Twitter for 44billiontoavoidmoreofhisembarrassingtextmessagesfromcomingoutinthediscoveryprocess.Butafewpeoplesuggestedtheremightactuallybesomethingtothat:mainlyinthathewasgettingpressurefromhisfriendsandfinancierstomakethisgoawaysotheydon’tgetfurtherembarrassed.Thatcouldbe,buthonestly,ifthatwerethecase,I’dthinkhe’dhavebeenbetteroffofferingtosettlewithTwitterfor10 billion and getting out of the entire mess for cheaper.

Another, perhaps more realistic, issue is that in just a couple of days Musk was scheduled for a two day deposition by Twitter’s lawyers in the case. Given what we’ve seen in the case already, with Musk constantly trying to mislead the court and multiple bits of discovery being used to prove it, there was a good chance that the deposition was going to go very, very, very badly for Musk. It’s quite likely his own lawyers were well aware of that and may have finally gotten that across to him.

As the always excellent Chancery Daily notes, this is not over yet. Twitter can’t just assume that because Musk says now he’ll complete the deal he’ll actually complete the deal. He’s already proven quite clearly that you can’t take him at his word on a binding contract. So it seems likely that Twitter is rushing to put in place some fairly ironclad locks that are the legalistic equivalent of “if you fuck around again, you’re going to find out so bad you’ll to wish you’d never heard of Twitter.” And Twitter has the legal team to do that.

Here’s Twitter’s statement on the matter, which may be the most expensive tweet in history if you count the legal billing hours that presumably went into reviewing it before it went out:

https://twitter.com/TwitterIR/status/1577380758192197632

This is exactly what the company line should be. It’s the same line the company has been using since the beginning of this mess, and if it doesn’t want to get in trouble, it needs to keep the same message like that going forward.

But I can guarantee that an army of lawyers are scrambling in the background to figure out how all of this works and how to lock it all down.

My guess (and it’s purely a guess) is that this does lead to Elon owning Twitter. They will sign some sort of much-more-strict deal that leaves basically no room for Elon to wriggle out of it. He’ll have a month or two to collect up whatever money he was promised from others, and then… it’ll become Elon’s Twitter.

Just in time for the Supreme Court to tell him he’s now guilty of providing material assistance to ISIS. On that note, someone tell Elon and his fans that now might be a good time to start supporting Section 230.

Filed Under: deals, delaware chancery court, delaware court of chancery, elon musk, surprise
Companies: twitter

Techdirt Podcast Episode 330: Elon Musk Takes His Chances In The Court Of Chancery

from the expert-analysis dept

When the Elon Musk/Twitter drama landed in the Delaware Court Of Chancery, it thrust specialist publication The Chancery Daily into the spotlight, and they began offering up excellent explainers on this important court that most people knew very little about. The people behind the publication have decided to remain anonymous amidst the influx of attention, but today one of them joins us on the podcast to discuss just what’s going on as Elon Musk takes his chances in a court that seems pretty immune to his reality distortion field.

Follow the Techdirt Podcast on Soundcloud, subscribe via Apple Podcasts or Spotify, or grab the RSS feed. You can also keep up with all the latest episodes right here on Techdirt.

Filed Under: chancery daily, delaware court of chancery, elon musk
Companies: twitter