Elon Musk’s lawyers say Twitter Inc. officials are wrongfully pushing for a “warp speed” trial over allegations the billionaire unlawfully pulled out of his proposed $44 billion buyout of the social media platform, and requested the case be heard in 2023 instead.
Musk’s legal team on July 15 rejected Twitter’s argument the case over the wavering transaction can be concluded in a four-day trial starting in September in Delaware Chancery Court, saying it will need “forensic review and analysis of large swaths of data” about Musk’s allegations that Twitter’s customer base is filled with robot and spam accounts.
The Tesla CEO is seeking a February 13, 2023, trial at the earliest, “an extremely rapid schedule for a case of this enormous magnitude,” he said in a 14-page filing, according to a representative for Musk. The judge will call a hearing on July 19 on whether to speed up the case.
Notably, the Twitter acquisition agreement states that all legal disputes over the deal must be ruled in Delaware, corporate home to over half of US public companies, including Musk’s Tesla Inc. and Twitter, and over 60% of Fortune 500 companies.
Unlike some states, where it can take several years for a case to get to trial, Delaware Chancery Court acts quicker. The judges, business law experts, are known for analyzing legal thickets of complex merger-and-acquisition disputes quickly and closely. Complex business cases are often debated before a judge within six or seven months of being submitted.
Elon Musk Reacts To Twitter Trial
Until now, Musk had not reacted in court to Twitter’s claims that he’s using the bots issue as an excuse to bail out on the $54.20-per-share offer he made for the company in April.
The Tesla chief executive pulled out of the deal on July 8, saying in a regulatory filing that Twitter had made “misleading representations” concerning the number of spam bots on the platform.
In his response to Twitter’s fast-track request, Musk said the service’s officials delayed on supplying information about the robot and spam accounts to obtain a “tactical delay” that would support their demand for a quick trial. His lawyers said in a filing:
“Twitter’s sudden request for warp speed after two months of foot-dragging and obfuscation is its latest tactic to shroud the truth about spam accounts long enough to railroad defendants into closing. The core dispute over false and spam accounts is fundamental to Twitter’s value. It is also extremely fast and expert intensive, requiring substantial time” for pretrial exchanges of information.”
Musk even rebuked Twitter officials for being no fun. The filing added:
“With the sense of humor of a bot, Twitter claims Musk is damaging the company with tweets like a Chuck Norris theme and a poop emoji. Twitter ignores that Musk is its second-largest shareholder with a far greater economic stake than the entire Twitter board.”
Musk’s response includes an allegation that Twitter inspects only 100 accounts each day when trying to compute the number of spam bots on the platform, something Musk has mentioned in prior tweets. In those tweets, he proposed that Twitter inspects 100 accounts in total, not daily. The company says it inspects about 9,000 accounts every quarter, which would average out to around 100 a day.
Buy Crypto NowIn response to Musk’s requests for details on robot and spam accounts, Twitter officials said they provided all the information they had by supplying their whole “firehose” of data.
Musk opposed that the firehose did not supply a wealth of bots data, but instead provided “a bespoke partial data set structured to make the necessary machine analysis impossible.”
Furthermore, Musk criticized Twitter for breaching the deal’s “ordinary course” provisions by dismissing several executives and launching a hiring freeze. Such obligations need the target of acquisition to operate in the ordinary course of business while waiting for the deal to complete.
A Chancery judge recently decided that breaches of this obligation by the owner of a chain of luxury hotels let a potential buyer back out from the more than $5 billion buyout.
The case is Twitter v. Musk, 22-0613, Delaware Chancery Court (Wilmington).
