![]() ![]() Jude McCormick, the court’s head judge who is presiding over the case, that something changed since the April merger agreement that justifies terminating the deal. But most legal experts believe he faces an uphill battle in convincing Chancellor Kathaleen St. Musk’s argument for winning his latest Delaware case largely rests on his allegation that Twitter misrepresented how it measures the magnitude of “spam bot” accounts that are useless to advertisers. “I think we’ve got a whole lot of players who, as loose a cannon as Elon Musk is, rely on the goodwill of the Delaware courts on an ongoing basis for their businesses,” Lipton said. He and his lawyers have other Delaware cases still pending, including one involving his compensation package at Tesla. He’s also taken a combative approach in Delaware Chancery Court, calling an opposing attorney a “bad human being” while defending Tesla’s 2016 acquisition of SolarCity against a lawsuit that blamed Musk for a deal rife with conflicts of interest and broken promises. He publicly feuded with California officials over whether Tesla’s electric car factory should remain shut down during the early stages of the COVID-19 pandemic. Securities and Exchange Commission, he was accused of defying a securities fraud settlement that required that his tweets be approved by a Tesla attorney before being published. “If you are an executive at a major American corporation incorporated in Delaware, it’s very hard for you to do business and defy the chancery court’s orders,” Lin said.Ĭoncerns about Musk’s compliance derive from his past behavior dealing with various arms of the government. “That’s not the way the court operates.”īut more important, Lin said Musk’s legal advisers will strongly urge him to comply with the rulings of a court that routinely takes cases involving Tesla and other firms incorporated in the state of Delaware. “At least, not for the Court of Chancery,” said the former judge. Speculation that Musk could be threatened with jail time for failing to comply with a ruling is unrealistic, said Berger. But after coercive sanctions didn’t work, the receiver asked the court five years later to issue bench warrants calling for the arrest of two senior executives the next time they visited the U.S. ![]() The court has made such moves before, such as in 2013 when it held Chinese company ZTS Digital Networks in contempt and appointed a receiver with power to seize its assets. The Delaware court has powers to enforce its orders, and could appoint a receivership to seize some of Musk’s assets, namely Tesla stock, if he doesn’t comply, according to Tom Lin, a law professor at Temple University. He’s getting some cash ready so he doesn’t have to dump his Tesla shares if it turns out he is ordered to buy the company.”Ī ruling of specific performance could force Musk to pay up his $33.5 billion personal stake in the deal the price increases to $44 billion with promised financing from backers such as Morgan Stanley. But he’s also being sort of practical about this. Maybe he’s got his own judgment as to what the odds are. “I take him at his word,” said Ann Lipton, an associate law professor at Tulane University. “And the courts in Delaware - courts all over - are very concerned about issuing a decision or issuing an order that then is ignored, flouted.”īerger, who was also a vice chancellor of the Chancery Court in the 1980s and 1990s, stood by those concerns in an interview with The Associated Press but said she doubted the Delaware institution would go so far as to make him complete the deal. “The problem with specific performance, especially with Elon Musk, is that it’s unclear whether the order of the court would be obeyed,” retired Delaware Supreme Court Justice Carolyn Berger told CNBC in July. He’s scheduled to be deposed by Twitter attorneys starting Thursday.īut the consequences of him losing badly - either by an order of “specific performance” that forces him to complete the deal, or by walking away from Twitter but still coughing up a billion dollars or more for breach of contract - has raised concerns about how the Delaware court would enforce its final ruling. Musk hopes to win the case that’s headed for an October trial. The Tesla billionaire’s reputation for dismissing government pronouncements has some worried that he might flout an unfavorable ruling of the Delaware Court of Chancery, known for its handling of high-profile business disputes. ![]()
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