Judge Sets First Hearing in Twitter Lawsuits Against Elon Musk
Twitter and Elon Musk are engaged in a battle for control of the company, but the stakes couldn’t be higher. With the company’s user base dwindling and its advertising business struggling, a quick resolution to the Musk disputes is vital to Twitter’s continued growth. But what should Twitter do next? Will it sue Musk or let him go?
Twitter filed the lawsuits after claiming that Musk and other executives harmed its users. The social media site has more than 100 million users, and Musk has used the company’s popularity to taunt the company. Musk’s lawyers have sought more time for the hearing and the company to decide whether to settle, or withdraw from the deal if it loses. Musk’s lawyers have asked the judge to delay the trial by at least a year. However, the judge has denied Musk’s request.
A court in Delaware set the first hearing in the Twitter lawsuits against Elon Musk – on July 15 2022 – after tweets expressing dissatisfaction with the CEO’s decision to back out of the deal earlier this month. However, the longer the delay is, the greater the risk for Twitter and Elon Musk. This could have serious consequences for the public company.
The case was filed by Musk and Twitter and has been dragged through a court. Twitter claims Musk hid the truth and fake accounts from the public. The company has long been under scrutiny for using bots to manipulate Twitter. The Twitter lawsuits claim Musk and Twitter have breached their contracts by not properly reporting the presence of spam accounts. But Twitter argues that their merger agreement did not mention bots and obfuscated the truth about the existence of these accounts.
In February, a Delaware court set the first hearing in the Twitter lawsuits against Musk and Tesla. Musk is now the second-largest shareholder of the company, with a stake greater than the entire board. Twitter needs a trial date as soon as possible so it can make important business decisions. The court heard arguments by Twitter’s lead attorney, who argued for an expedited trial, citing Musk’s continued disparaging comments and tweets.
The court also granted Twitter’s request for an expedited trial. A Delaware court granted Twitter’s request for an early court date, setting a five-day trial for October. Twitter lawyers argued that Musk’s lawsuits may further damage the company. Musk’s lawyers could request damaging internal documents from Twitter to further harm the company. A longer delay means greater risks for Twitter.
The Facebook, Twitter and Tesla lawsuits filed against Musk will be heard by the Delaware Court of Chancery, which is the preeminent forum for business disputes. The state is home to more than 60% of Fortune 500 companies, and its laws govern business disputes. This court has one judge and no jury. It will be interesting to see the outcome of the case. The SEC has a stake in the matter, so it is not a surprising move.