The platform launched lawsuits last week against the boss of Tesla and SpaceX, to force him to honor his commitment to acquire it for 44 billion dollars.
A US judge on Tuesday set the start of Twitter’s trial against Elon Musk in October for five days, granting the social network’s request for a speedy procedure. The platform launched lawsuits last week against the boss of Tesla and SpaceX, to force him to honor his commitment to acquire it for 44 billion dollars. Twitter had requested an accelerated procedure, from September, so as not to prolong the period of uncertainty which partially paralyzes the company.
Judge Kathaleen McCormick, president of a court specializing in business law in Delaware (northeast), acknowledged that “delays risked causing irreparable damage to Twitter”. She also mentioned that it was not certain that the payment of damages from Elon Musk would be enough to repair the harm suffered. The hearing took place via Zoom because the judge has the Covid.
Elon Musk’s lawyers had filed an appeal on Friday for hostilities not to be opened before next year. They assure that the experts will have to analyze “mountains of data” to prove, as the multi-billionaire claims, that the platform is full of automated accounts and spam, well beyond the proportion of 5% officially indicated. This is the reason that Elon Musk had given for unilaterally ending the agreement to take over the social network which he considers to be a “public square” essential to “democracy”.
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“This topic that Musk says will require a complex review is a fabricated problem, designed to complicate things and cause delays,” said William Savitt, Twitter’s attorney. “The merger agreement doesn’t even mention bots or spam,” he insisted. “We suspect that Mr. Musk wants to delay this trial long enough that he never has to be held accountable. … He knows that in these kinds of circumstances, justice delayed is often justice not served. That’s even what he hopes for,” he said.
Although she is going through an image crisis after months of attacks and denigration from her ex-suitor, the platform is the favorite in this showdown. “Twitter’s stock has been in good shape” since the lawsuit was filed, noted Wedbush Securities analyst Dan Ives. “It seems that many investors who read it concluded that this Game of Thrones showdown in the courts is going to end in a Twitter victory.”
By “victory”, the expert means a decision by the judge which would force Elon Musk to buy the company at the price agreed at the end of April (54.20 dollars per share) or to pay substantial damages. The chances that he will get away with paying only the termination indemnities (one billion dollars), or that he will be declared in his rights, are considered to be very low.
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The litigation depends on the Delaware Court of Chancery, whose president Kathaleen McCormick – the first woman in this position – took up the case. “She is a very serious judge, who will not be intimidated by either party. (…) In the past, she has not been tender with those who show bad faith “, underlines Adam Badawi, professor of law at the university of Berkeley. In its complaint, Twitter accused Elon Musk of having shown “hypocrisy” and “bad faith”. Lawyers for the company believe he has changed his mind in the face of the recent drop in stock market valuations of technology companies. Kathaleen McCormick is best known for having forced Kohlberg, a company that had also tried to break off an engagement, to buy the company in question, DecoPac.
The fate of the bluebird, a social network used worldwide by politicians, celebrities, activists and influencers, seems to have little in common with that of less prominent organizations. But “it’s not different enough, I think, for Delaware to risk its reputation by deciding not to implement the terms of the agreement”, considers Adam Badawi.
The multibillionaire and the board of directors can still choose to agree on a slightly lower price and thus avoid the lawsuit. “But that would be rational reasoning,” remarks Adam Badawi, referring to the unpredictability of Elon Musk. In another case tried in Delaware, Elon Musk “showed his willingness to go all the way,” adds the professor. “And he won. I don’t think his instinct is necessarily to come to an arrangement.”