A judge ruled that Twitter’s case against Elon Musk can move to trial in October, in a victory for the company as it tries to resolve its costly conflict with Musk as quickly as possible.
Twitter sued Musk earlier this month, after the billionaire attempted to walk away from a $44 billion acquisition offer he made in April. Musk shot back by claiming that Twitter had failed to provide him with adequate information about fake accounts, or “bots,” on the site, giving him license to renege on the deal.
Kathaleen McCormick, the chancellor of the Delaware Court of Chancery, ruled Tuesday that the case would go to trial in October, only slightly later than Twitter had requested, saying that an extended trial schedule like the one Musk’s team suggested could cause “irreparable harm” to the company.
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The ruling was good news for Twitter, which claimed in court filings that dragging out the highly public dispute—which, ironically, has played out on Twitter—was damaging its bottom line. Musk, meanwhile, had hoped to extend the timeline in order to delve into the bots issue more deeply.
In fiery oral arguments Tuesday, Twitter's counsel accused Musk of trying to “run out the clock” on the deal by suggesting a 10-day trial in February 2023.
“We suspect Mr. Musk wants to delay this trial long enough to ever really face a reckoning,” said attorney Bill Savitt.
Musk, he added, knew full well that justice delayed could be justice denied. In fact, he said, “he’s banking on it to wriggle out of the deal he signed.”
Savitt also accused Musk of trying to “sabotage” Twitter by relentlessly tweeting about the company and even suggesting that the SEC investigate it. Twitter was already struggling to retain staff because of the drama over the deal, Savitt said, and Musk’s “drumbeat of attacks” was only making matters worse.
Musk’s team responded by claiming that Twitter wanted to “railroad” the deal through in order to avoid disclosures about the number of bots on its platform. His lead attorney, Andrew Rossman, claimed Musk had persistently questioned how Twitter arrived at the claim that less than 5 percent of its users were spam accounts, or “bots,” since signing the acquisition deal. The billionaire, he said, was met with “obfuscation, generalities, and excuses.”
By way of example, Rossman claimed that Twitter had recently offered to give up more information, but would only make it available via hard copy at their lawyers offices.
“If they wanted to assure ... their would-be new owner that all is well with the spam and bot issue, they had every opportunity to do that,” Rossman said. “And they did the opposite.”
The battle between billionaire and business started in April, when Musk first disclosed his 9.2 percent stake in the company. He announced that month that he would be joining the board, then backed out, then offered to buy the company—all in the span of 10 days.
Twitter originally pushed back on the offer, even adopting what’s known as a “poison pill” to prevent him from acquiring more than a 15 percent stake. But the company eventually relented, and the two sides signed a legally binding acquisition deal on April 25.
Musk is now trying to back out of the deal, claiming the company misled him and the public about the number of bots on the site. Twitter claims the billionaire is using the bots as a scapegoat, when the real problem is his falling fortunes and the decline in Tesla’s stock price.
Twitter’s own stock price has fallen in recent months, and its lawyers argued that an extended trial scheduled would only further the damage. In a memo to staff members obtained by The New York Times, Twitter CEO, Parag Agrawal called the lawsuit an “opportunity to tell our story and defend our company, our people and our stockholders.” The company’s general counsel, Sean Edgett, added that it was “critically important for this matter to be resolved quickly.”
Musks’ lawyers countered by saying that the acquisition deal gave the businessman until at least early next year to complete the deal. They argued that they would need months to uncover how Twitter determines the number of bots on its service, claiming that the company had “deliberately erected artificial roadblocks” to keep him from getting such information.
McCormick, in making her ruling, said setting a five-day trial for October was consistent with how the court had scheduled similar cases in the past. Just because the deal Musk and Twitter signed allowed for some flexibility in the trial date, she said “does not mean that we must or should do so.”
She also fired back at Musk's team's concerns about hearing such a complicated case in such a short span of time.
“In my view, the defendants underestimate the ability of this court... to quickly process complex litigation,” she said.
