Judge orders October trial for the lawsuit between Elon Musk and Twitter

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Judge orders October trial for the lawsuit between Elon Musk and Twitter: A judge ruled on Tuesday that Twitter’s case against Elon Musk over their $44 billion takeover agreement should move to a five-day trial in October, giving the business an early victory.

The decision was made at the conclusion of the first hearing in the case on whether the procedures should be expedited. Twitter (TWTR) filed the claim last week, just days after Musk attempted to terminate the arrangement, with a motion to accelerate the proceedings and a request for a four-day trial in September. The motion was contested by Musk’s legal team.

The meeting on Tuesday saw harshly worded comments from both sides, with Twitter’s lawyer referring to Musk as a “dedicated enemy” at one point, laying the stage for what is virtually expected to be a lengthy legal battle.

At the opening of the hearing, Twitter’s main counsel, William Savitt, came out swinging against Musk, arguing for a swift trial. According to Savitt, the ongoing uncertainty around the company as a result of the outstanding deal and litigation “inflicts harm on Twitter every day, every hour, and every day.” He also referred to Musk’s ongoing disparagement of Twitter, particularly on its own platform.

“Musk has been and continues to be contractually required to make his best efforts to close this sale,” said Savitt. “What he’s doing is the inverse; it’s sabotage.”

Musk’s lawyer, Andrew Rossman, argued that the billionaire “doesn’t have a motive to keep this hanging for a long period,” given that Musk is still one of Twitter’s major shareholders. He also pointed out that Twitter did not sue Musk for claimed breaches of the agreement until after he tried to cancel it, implying that the company’s hesitation negated its need for speed. (In her comments, the court stated that Twitter’s timing was not “unreasonable.”) )

Musk’s side requested that the case be tried early next year. “We’re not opposed to the trip in general, and we’re not asking for years here,” Rossman added. “Instead, Your Honor, we’re giving a very quick and sensible schedule.”

Following each side’s arguments, the judge presiding over the case, Delaware Court of Chancery chancellor Kathaleen St. Jude McCormick, stated that Musk’s side “underestimates this court’s ability… to efficiently conduct complex litigation.”

“The reality is that delay poses irreversible harm [to Twitter]… the longer the wait, the bigger the risk,” McCormick stated when announcing the schedule. She said that, while few instances warrant a trial lasting more than five days, she would consider extending the trial if either side requested it.

Even with this early scheduling conflict, Twitter’s stakes were considerable. Before Musk’s engagement, the company was already struggling to build its user base and advertising business, and now it and many other big companies are cutting costs in the face of rising inflation and economic fears. Twitter requires a quick resolution to its dispute with Musk in order to limit the uncertainty for its shareholders, employees, and consumers, as well as any commercial damage that could be worsened by costly, protracted litigation.

Although Tuesday’s session was mostly procedural, it provided insight into how each side will handle what is sure to be a protracted legal process. It may also reveal how the judge presiding over the case approaches the dispute.

“There may be signals from what she asks and says, and what they reply, throughout the hearing that may tell us something,” Carl Tobias, a law professor at the University of Richmond, said.

The case has already encountered a minor snag: The hearing was originally supposed to take place in person, but McCormick informed the parties on Monday that she had tested positive for Covid-19 and would be transferring the hearing to Zoom.

Musk moved to terminate the arrangement less than three months after the blockbuster acquisition agreement was signed. He accused Twitter of breaking the agreement by making false representations about the number of bot and spam accounts on the network, as well as withholding data Musk claims he needs to assess the scope of the problem.

Twitter responded last week with a 60-page complaint charging that Musk broke the agreement. According to the claim, Musk is employing bots as a ruse to try to get out of a contract on which he now has buyer’s remorse, following the market collapse that has sunk Twitter shares as well as those of Tesla (TSLA), on which the billionaire is depending in part to finance the deal.

Rossman said on Tuesday that Musk’s fears about bots are a ruse to get out of the arrangement are “nonsense.”

“Based on what we’ve seen so far, we have reason to assume that the true numbers [of bots and false accounts on Twitter] are much greater [than Twitter has publicly stated], with enormous consequences for the company’s long-term value,” Rossman said. He went on to say that Twitter’s assertions that Musk has broken the agreement are “fabricated in order to try to strip Mr. Musk of his rights claim that he can terminate the agreement.”

Twitter has petitioned the court to compel Musk to finalize the acquisition of the company. While many legal experts believe Twitter has the superior case, some believe the firm may end up settling with the billionaire if the case drags on in order to minimize the interruption to its operations.

As with the rest of the issue, Twitter and Musk disagreed on whether a swift trial was necessary. In its motion, Twitter stated that the expedition is required to ensure that the deal is completed before the “drop dead” date of October 24, which the two parties previously agreed to, and to “protect Twitter and its stockholders from the continuing market risk and operational harm resulting from Musk’s attempt to bully his way out of an airtight merger agreement.”

Musk’s lawyers termed Twitter’s request a “extraordinary expedition” in a court filing on Friday, claiming that the issue is “very fact and expert heavy, requiring substantial time for discovery.” They also claimed that the original agreement stated that the drop-dead date would no longer apply if one party initiated a lawsuit over the arrangement, labeling Twitter’s motion “moot,” and requesting a 10-day trial on or after February 13, 2023.

Twitter’s lawyer pushed back on Musk’s team’s argument that the discovery process would take months since it would entail diving into the minutiae of the platform’s bot and phony accounts. The bot issue is “clearly and unequivocally not before the court in this instance,” according to Savitt.

“There is no representation or warranty in the merger that is tied to how many fraudulent accounts there may be on Twitter,” Savitt added. He further stated that “Musk might have undertaken due diligence on this matter” before to signing the agreement, but did not.

Twitter’s lawyer pushed back on Musk’s team’s argument that the discovery process would take months since it would entail diving into the minutiae of the platform’s bot and phoney accounts. The bot issue is “clearly and unequivocally not before the court in this instance,” according to Savitt.

“There is no representation or warranty in the merger that is tied to how many fraudulent accounts there may be on Twitter,” Savitt added. He further stated that “Musk might have undertaken due diligence on this matter” before to signing the agreement, but did not.