Elon Musk has lost his attempt to delay the Twitter trial until next year. Delaware Court of Chancery Judge Kathaleen McCormick scheduled a five-day trial for October, rejecting Musk’s request for a trial in February 2023.
McCormick’s ruling came far closer to Twitter’s preferred timeline than Musk’s. Twitter, which is suing Musk to force him to complete their agreed-upon merger, was seeking a four-day trial in September 2022.
“The reality is delay threatens irreparable harm to the sellers,” McCormick said today, as reported by Reuters. “Those concerns are on full display in the present case,” she also said, according to The Wall Street Journal. “Typically, the longer the merger transaction remains in limbo, the larger the cloud of uncertainty cast over the company and the greater the risk of irreparable harm to the sellers.”
McCormick is the Delaware court’s chancellor, or chief judge. Last year, she ordered a company to complete a merger in a case that has some similarities to the Twitter/Musk dispute.
Twitter: Musk’s spam complaint a “manufactured issue”
In today’s hearing, McCormick made an oral ruling after the sides argued their dueling motions. There was a dial-in number for the public to listen to the hearing, but the conference call was “at capacity” the first few times Ars tried it. We ended up getting on the call during the last couple minutes of McCormick’s ruling.
Musk claims that Twitter violated the merger deal by not providing all the data he requested on spam accounts. In today’s hearing, “Twitter’s lawyers said the lawsuit doesn’t turn on the amount of spam and fake accounts because the merger agreement didn’t make any promises about that metric,” the WSJ wrote.
“That’s not what this case is about,” Twitter attorney William Savitt said, calling Musk’s spam complaint a “manufactured issue.”
Twitter’s motion for an expedited trial said the Court of Chancery “has acknowledged that whenever a merger is held in ‘limbo’ by a buyer’s refusal to close, the seller is at risk of irreparable injury.” Twitter also said a quick trial “is essential to ensure sufficient time for this Court to grant effective relief and for the Delaware Supreme Court to review this Court’s decision.”
Musk claimed he needs months to evaluate data
Musk opposed the motion to expedite, claiming that a review of Twitter’s spam-account data “will require complex, technical discovery—including the forensic review and analysis of large swaths of data.” According to Musk’s filing, this “will likely involve sifting through hundreds of billions of actions on Twitter and reviewing related sampling and control processes.”
Musk disputes Twitter’s claim that fewer than 5 percent of its monetizable daily active users (mDAU) are spam or fake but hasn’t offered any hard evidence to refute the statistic. Musk pointed to Twitter’s recent restatement of the total mDAU statistic, but it was a small change. For Q4 2021, the incorrect mDAU statistic was 216.6 million daily users, and the corrected number was 214.7 million.
Twitter’s filing said Musk hasn’t “present[ed] even a shred of supporting evidence,” and that as “a party in breach of his obligations under a merger agreement, Musk should not be permitted to continue his smear campaign against his contractual counterparty without an obligation to face prompt legal accountability.”
Musk lawyer Andrew Rossman said at today’s hearing that “when Mr. Musk started asking questions [about spam accounts], the answers he got were alarming,” according to Reuters.
“Rossman also pushed back on the notion that Musk was trying to harm Twitter, pointing out the billionaire held a larger stake than the combined holdings of the directors of Twitter,” Reuters wrote.