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Judge calls Elon Musk's legal team's efforts 'suboptimal' and takes a dig at his decision to waive due diligence on Twitter deal

Business Insider logo Business Insider 07.09.2022 19:52:17 gkay@insider.com (Grace Kay)
Elon Musk speaks at an oil and gas conference in Stavanger, Norway on Monday. Reuters

A Delaware judge took some digs at Elon Musk's legal team during a pre-trial hearing on Tuesday in Twitter's lawsuit to force the billionaire to honor his $44 billion purchase agreement.

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Chancery Court Judge Kathleen St. J. McCormick sounded irritated with Musk's team at several points during the hearing.

She told Musk's lawyers that their work to produce and identify people that had spoken with Musk about the deal for court discovery "bothered [her] a lot." 

"I ordered you to do the job," McCormick said. "You had two custodians. Have you heard the saying: 'You had one job?'" she added.

Her comments came after Twitter's legal team argued that the opposing side was withholding and delaying the information it shared - causing issues with Twitter's attempts to subpoena individuals involved in the acquisition. Over 100 subpoenas have been issued in the case so far. 

McCormick also called Musk's legal team "suboptimal" in its response to naming the parties involved in the deal.

"You could have been diligent in your efforts far sooner," she said.

The judge pushed back at multiple claims from Musk's legal team.

During the hearing, the lawyers discussed allegations made last month by a former executive-turned-whistleblower. Musk's legal team argued that Twitter would have hidden the accusations even if the billionaire had done an in-depth appraisal of the company leading up to signing the purchase agreement.

In reality, the Tesla CEO waived his rights to due diligence when he agreed to buy the social media company in July, experts have said. 

"We don't know what would have happened in diligence because there wasn't any due diligence, right?" McCormick said.

Musk's legal team argued in the hearing that the billionaire had bargained for information rights  - meaning the ability to look into financial statements and other company information like any other investor.

Ultimately, McCormick granted the motion for Musk to include the whistleblower's complaint in his countersuit. However, she denied Musk's efforts to delay the trial, saying Twitter has already started to see negative effects due to the case.

In July, she initially ruled in July that Twitter's lawsuit attempting to force Musk to close on his $44 billion agreement to acquire Twitter needed to be expedited, given the deal was set to close in late October and various financing agreements are contingent on that date. The five-day trial is set to take place in October.

It wasn't the first time that the judge has had sharp words for Musk's legal team. Last month, she called the lawyers' request for data from Twitter "absurdly broad."

"No one in their right mind has ever tried to undertake such an effort," McCormick said in the late-August order partially granting Musk's demand for more data from Twitter on the number of spam accounts on its site.

A spokesperson for Twitter told Insider that the company looks "forward to presenting our case in Court beginning on October 17th and intend to close the transaction on the price and terms agreed upon with Mr. Musk."

"We are hopeful that winning the motion to amend takes us one step closer to the truth coming out in that courtroom," Alex Spiro, a lawyer for Musk, said.

mercredi 7 septembre 2022 22:52:17 Categories: Business Insider

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